Foreign Trade Policy 2009-14

Agneshwar Sen
Jt.DGFT Kolkata

Agartala, 15 July 2010

CERTIFICATES / AUTHORISATIONS ISSUED
BY REGIONAL OFFICES OF DGFT.

• IEC Number
• Authorisations under Duty Neutralization Schemes and Export Promotion
Schemes (Incentive Schemes)
• Import licences for Restricted Items
• Export Licences including SCOMET licences
• Status Certificates
• Preferential (GSP) & Non-preferential certificates of origin
• Tariff rate quota allocation
• Authorisations for Imports at concessional duty for R& D purpose for
Pharmaceuticals and Bio-technology Sectors
• Authorisation for Duty Free import of consumables by Gems & Jewellery Sector
• Terminal Excise Duty (TED) refund and Duty Drawback on deemed exports
Foreign Trade Policy 2009-14

Short Term Objectives:

To arrest and reverse the declining trend of exports; and
To provide additional support to those sectors which have been hit
badly by recession in the Developed World.

Medium term Policy Objectives :

To achieve an Annual Export growth of 15% with an Annual Export
Target of US$ 200 billion by March 2011.
To achieve an Annual Export growth of around 25% by 2014.
To double India’s exports of goods and services by 2014.

Long Term Objective :

To double India’s share in Global Trade by 2020.
Foreign Trade Policy
Components and Schemes

Import / Exports controls

Schemes for Duty Exemption/Remission

Promotional Measures/ Incentive Schemes

Technological Upgradation

Deemed Exports

Export Oriented Units (EOUS), Electronics Hardware Technology Parks (EHTPS),

Software Technology Parks (STPS) and Bio-Technology Parks (BTPS)

Special Economic Zones

Foreign Trade Policy
Import / Export Controls

Import:
• Around 5% Tariff Lines are under Import Controls.
• 11600 Tariff Lines are free for import.
• Almost total control on imports in 1991,
• Restrictions removed over the next 10 years, removing almost
all the Quantitative Restrictions.
• Presently:
§ Prohibited items - 53 Lines
§ Restricted items - 485 Lines
§ State Trading Items - 33 Lines.
Foreign Trade Policy
Import / Export Controls

Exports

Controls primarily on account of security, public health, public morals, exhaustible resources and environment
grounds.
Ø Prohibited items - 59
Ø Restricted items - 155
Ø State Trading Items - 12.

Restrictions fall under two Categories

Ø Dual Use Items (SCOMET* items) – Special provision for these items under Weapons of Mass Destruction
Act, 2005.
Ø General Trading Items - Export Facilitation Committee looks into applications for license for these items.

*Special Chemicals, Organisms, Materials, Equipment and Technologies

Foreign Trade Policy
Schemes for Duty Exemption/Remission

Principle - Goods and Services are to be exported and not the Taxes and Levies.

Purpose: Procure inputs and capital goods without the component of Central Indirect
Taxes & Levies

Pre Export Schemes :

1. For Inputs: Advance Authorisation Scheme
Duty Free Import Authorisation (DFIA) Scheme
Schemes for Gems & Jewellery Sector
2. For Capital Goods: Export Promotion Capital Goods (EPCG) Scheme

Post Export Schemes : Duty Entitlement Pass Book (DEPB)

Duty Drawback Scheme
Terminal Excise Duty (TED) Refund
 Advance Authorization Scheme

For making available duty free Inputs required to manufacture the export product.

Inputs allowed as per Standard Input Output Norms and with Actual User condition

Facility available for Physical exports (including supplies to SEZ units & SEZ Developers),
deemed exports and Intermediate supplies.

Minimum 15% V.A.

Time period for import & export

Penalty clauses

§ 2008-09 – 19,146 authorizations issued for CIF value of Rs. 1,04,333 crores
 Duty Free Import Authorisation
(DFIA)
Scheme made operational from 1.5.06.
This was introduced to facilitate transfer of
the authorisation or the inputs imported, once
export is completed
Minimum 20% value addition stipulated.
Based on SION
22 sensitive items
Validity – similar to advance authorisation
2008-09 – 3,815 authorizations issued for CIF value of Rs. 8,779 crores
 Duty Entitlement Passbook
Scheme (DEPB)

Post Exports scheme to neutralize the Basic customs duty on inputs.

Post export Freely transferable Duty Credit Scrips issued at notified
percentage of FOB value of Exports.
§ Duty Credit Scrips used for payment of customs duty on imports
§ DEPB rates notified for 2137 items
Most popular scheme
DEPB on pre realisation and post realisation

§ 2008-09 – 1,12,764 DEPB scrips issued for duty credit worth Rs.7,713
crores.
Gems & Jewellery Scheme

Ø Duty Free Procurement of precious metal (Gold / Silver /

Platinum) from the nominated agencies either in advance or as
replenishment.
Ø Duty Drawback scheme notified

Ø Duty Free Import of Consumables for export production upto a

specified percentage of FOB value of previous years’ export.
Promotional Measures/ Incentive
Schemes

Vishesh Krishi and Gram Udyog Yojana (VKGUY)

Focus Market Scheme (FMS)
Focus Product Scheme (FPS)
Market Linked Focus Product Scheme (MLFPS)
Status Holder Incentive Scrip (SHIS) Scheme
Served From India Scheme (SFIS)
 Vishesh Krishi & Gram Udyog Yojana
(VKGUY)
To promote exports of :
(i) Agricultural Produce and their value added products;
(ii) Minor Forest Produce and their value added variants;
(iii) Gram Udyog Products;
(iv) Forest Based Products; and
(v) Other Products, as notified from time to time.
VKGUY benefits are granted with an aim to compensate high transport
costs, and to offset other disadvantages.
Duty Credit Scrip benefits, at 5% of FOB value of exports; Lower rate of
3% when specific DEPB/ Drawback more than 1% /Advance
Authorisation benefit availed; Additional 2% provided for a few items.

2008-09 - Duty credit scrips issued under VKGUY Rs.2676 crores

 Focus Market Scheme

Objective is to offset high freight cost and other externalities to select

international markets with a view to diversify the markets and to
enhance India’s export competitiveness in these countries.

Currently 109 markets have been notified;

Exports of all products (except some in-eligible items / categories) to

notified countries entitled for Duty Credit Scrips equivalent to 3 % of FOB
value of exports.
Pre realisation & post realisation

● 2008-09 - Duty credit scrips issued under FMS Rs.347 crores

 Focus Product Scheme

Objective is to incentivise export of such products which have high

export intensity / employment potential, so as to offset
infrastructure inefficiencies and other associated costs involved in
marketing of these products.
Exports of notified products to all countries entitled for Duty Credit
scrip equivalent to 2 % of FOB value of exports. Special focus
products entitled @ 5% of FOB value.
Currently over 1000 Products (at 8 digit level) covered under FPS.

●
2008-09 - Duty credit scrips issued under FPS Rs 215 crores.
Market Linked Focus Product Scheme
(MLFPS)

To promote Export of Products/Sectors of high

export intensity / employment potential (which
are not covered under present FPS List) ;

Incentivized @ 2 % of FOB value of exports.

Currently over 1550 products (at 8 digit level)

covered under MLFPS.
 Served From India Scheme (SFIS)

To accelerate growth in export of Services to create a powerful and

unique “Served from India” Brand;

All service providers (except a few ineligible sectors / services)

entitled to duty credit scrips equivalent to 10 % of free foreign
exchange earned during the year;
Validity
Utility
Actual User

§ 2008-09 – 785 SFIS scrips issued for duty credit worth

Rs.736 crores.
Schemes for Technological
Upgradation

Export Promotion Capital goods Scheme

(EPCG)

Status Holders Incentive Scrip (SHIS)

 Export Promotion Capital Goods
(EPCG) Scheme
Import of capital goods for modernization and technological
upgradation at a concessional import duty of 3% and at Zero
duty for certain export sectors (against normal basic customs
duty of 5% to 7.5%)
Zero Duty Scheme valid for specified sectors and till
31.3.2011.
Export obligation:
Subject to export obligation of 8 times duty saved over 8
years (3% duty scheme) and 6 times duty saved over 6 years
(zero duty scheme); Exceptions for Small scale, tiny industries,
agri sector etc.
Penalty clauses
2008-09 - 19,931 authorisations issued for duty saved amount
Rs.17,038 crores
Status Holders Incentive Scrip

With an objective to promote investment for

upgradation of technology of specified sectors
Status Holders shall be entitled to incentive
scrip @1% of FOB value of exports in those
sectors made during 2009-10 and during
2010-11, in the form of duty credit scrip.
Mutually exclusive with EPCG
Export Oriented Units (EOUS), Electronics
Hardware Technology Parks (EHTPS), Software
Technology Parks (STPS) and Bio-Technology Parks
(BTPS)

Ø EOUs are permitted for manufacture of goods including repair, remaking,

reconditioning, re-engineering and rendering of services. Trading activity
is not permitted.
Ø Duty free imports of all inputs.
Ø Exemption from Income Tax under Section 10 B (presently extended till
31.3.2011.)
Ø Refund of Central Sales Tax (CST) paid on supply of goods from Domestic
Tariff Area (DTA) to EOU.
Ø 50% of FOB value of exports allowed to be sold in the DTA on payment of
concessional duty (50%).
Ø EOUs have to be a positive net foreign exchange earner. NFE is to be
achieved cumulatively in a block of 5 years.
Deemed Export Drawback /
Terminal Excise Duty Refund

Ø Supply of goods manufactured by Domestic Units to certain

authorisation holders / recognised projects which are
otherwise entitled for Duty Free Imports.

Ø Purpose is:
•
Import Substitution.

Ø Benefits available in the form of:

•
Advance Authorisation / DFIA;
•
Deemed Export Duty Drawback and TED Refund.
Incentives to Exports from
NE States

Handicrafts items:
Special Focus Products under the FPS: All
handicraft products covered & entitled to
higher Duty Credit Scrip incentive @ 5% of
FOB value of exports.

FMS – Exports to notified 110 countries are

eligible for duty credit scrip @ 3% of FOB value
of exports.
Incentives to Exports from
NE States
Handlooms
Market Linked Focus Product Scheme (MLFPS): (Incentive @ 2% of FOB
value of exports)
All readymade garments (which include hand-woven garments) for exports to 15
linked markets;
Readymade garments exported to EU and USA incentivised for six months from
1.4.2010 to 30.9.2010;
All clothing accessories on their export to 15 linked market.
FPS: (Incentive @ 2% of FOB value of exports):
Some specific handloom clothing accessories like shawls, scarves, mufflers, dress
material, running fabric, silk woven fabric, and sarees;
To facilitate export of handlooms, requirement of ‘Handloom Mark’ dispensed with.
FMS: Exports to notified 110 countries entitled to Duty Credit Scrip
incentive @ 3% of FOB value of exports.
Incentives to Exports from
NE States
Horticulture and Agro-products
VKGUY Scheme: Edible fruits, vegetables,
honey, medicinal and herbal plants incentivised
@ 5% of the FOB value of exports.

Some varieties of fruits and vegetables like

oranges, bananas, pine-apples, potatoes are
eligible for 2% additional incentive.
Incentives to Exports from
NE States
Tea
VKGUY Scheme: @ 3.5% of FOB value of
exports. Assam Tea eligible for incentive under
the Scheme.

FMS: Exports of all other products from North

Eastern States (except some specific in-eligible
items) to notified 110 countries eligible for
incentive @ 3% of FOB value of exports.
Incentives to Exports from
NE States
Other Benefits
Status Holders Incentive Scrip: Status holders belonging to Handicraft and
Handloom Sectors entitled for Duty credit scrips @ 1% of the FOB value of
past exports, for procurement of Capital Goods with Actual User condition.
Facility available for exports upto 31.3.2011.
Zero Duty EPCG Scheme: Handicraft sector and Textile Sector (which includes
Handloom sector) with certain exclusions, included under Zero Duty EPCG
Scheme, for import of Capital Goods for at zero duty. Facility available upto
31.3.2011.
2% Interest Subvention allowed till 31st March, 2011 for Handicraft,
Handloom & all SMEs.

General Measures
Double Weightage for grant of Status Certificate: Export units located in North
Eastern States entitled for double weightage on their exports turnover, for
grant of Status certificate.
Details Available on…

Department of Commerce:
http://commerce.nic.in

DGFT:
http://dgft.gov.in

Thank You