You are on page 1of 44

What is EXIM policy?

Exim Policy or Foreign Trade Policy is a set of

guidelines and instructions established by the
DGFT in matters related to the import and export of
goods in India.

The Foreign Trade of India is guided by the Export
Import Policy (EXIM Policy ) of the Indian
Government and is regulated by the Foreign Trade
Development and Regulation Act, 1992.

DGFT (Directorate General of Foreign Trade) is the
main governing body in matters related to Exim

NDIM SECTION B 2 6/9/2014
Who announces EXIM policy?

The Government of India notifies the Exim Policy for
a period of five years.

The Exim Policy is updated every year on the 31st
of March and the modifications, improvements and
new schemes became effective from 1st April of
every year.

All types of changes or modifications related to the
EXIM Policy is normally announced by the Union
Minister of Commerce and Industry who co-
ordinates with the Ministry of Finance, the
Directorate General of Foreign Trade and its
network of regional offices.
NDIM SECTION B 3 6/9/2014
Objectives Of The Exim Policy
Government control import of non-essential
items through the EXIM Policy. At the same
time, all-out efforts are made to promote exports.
Thus, there are two aspects of Exim Policy; the
import policy which is concerned with regulation
and management of imports and the export
policy which is concerned with exports not only
promotion but also regulation.
The main objective of the Government's EXIM
Policy is to promote exports to the maximum
To stimulate sustained economic growth by
providing access to essential raw materials,
intermediates, components,' consumables and
capital goods required for augmenting
NDIM SECTION B 4 6/9/2014
Exim Policy
The foreign trade of India is guided by the Export-
Import policy of the Government of India.
Regulated by The Foreign Trade Development and
Regulation Act 1992.
Exim policy contain various policy decisions with
respect to import and exports from the country.
Exim Policy is prepared and announced by the central
Exim Policy of India aims to developing export
potential, improving export performance,
encouraging foreign trade and creating favorable
balance of payment position.
General Objectives of Exim Policy
To establish the framework for globalization.
To promote the productivity competitiveness of
Indian Industry.
To Encourage the attainment of high and
internationally accepted standards of quality.
To augment export by facilitating access to raw
material,intermediate, components, consumables and
capital goods from the international market.
To promote internationally competitive import
substitution and self-reliance.

Exim Policy of I ndia 2004-2009
Hon. Shri Kamal Nath minister for commerce and
industry has announced on 31
Aug 2004, Indias
first Exim policy.
The duration of the policy from 1
Sept. 2004 to
March 2009.
It takes an integrated view of the overall
development of Indias foreign trade.
Aim of the policy is to double the global
merchandise trade within the policy time period of
5 years
Objectives of Exim Policy 2004-2009
To double our percentage of share of global
merchandise trade within the five year.
To act as an effective instrument of economic growth
by giving a thrust to employment generation.
Highlights of the New Foreign Trade
Policy 2004-2009
Special Focus Initiatives: Semi-urban and Rural Area
Agriculture : Vishesh Krishi Upaj Yojana and Agri Export
Handlooms and Handicrafts: Mark under Market Access
Initiatives Scheme and Proposed to Start new SEZ.
Gems and Jewellery: Import of gold of 18 carat and above
has been permitted under the replenishment scheme
Leather and Footwear : Duty free import entitlement of
specified items shall be 5% of FOB value of exports during the
preceding year

Export Promotion Schemes
Assistance to States for Infrastructure Development of
Exports [ASIDE]
Market Access Initiative [MAI]
Marketing Development Assistance [MDA]
Towns of Export Excellence
Target Plus Scheme.
Served from India Scheme
Service Export Promotion Council

New Status Holder Categorization

Category Total Performance
(In Rs)
One Star Export House 15 crore
Two Star Export House 100 crore
Three Star Export House 500 crore
Four Star Export House 1500crore
Five Star Export House 5000 Crore
Board of Trade: The role is to advising government
on relevant issues connected with Foreign Trade
I mplications of The Foreign Trade 2004-
Implications on Indian Economy:
This policy propose to simplify procedures and develop
technology and infrastructure.
Implications on Agriculture:
Special Agricultural Produce Scheme has been introduced
for promoting the export of fruits, vegetables, flowers, and
their value added products.
Implications on Handlooms and Handicraft:
Establishment of Handicraft SEZ and Handicraft Export
Promotion Council would promote development of
Handloom and Handicraft Industry.
Implications on Gem and Jewellery Sector :
This is special thrust area in this policy.
Duty free imports of other inputs would give a further
boost to this sector
Implications on Leather and Footwear Industry :
Duty free import as a specified percentage of exports.
Exemption on customs duty on equipment for effluent
treatment plants would help promoting export form this

Implications on Service Industry :
An exclusive service promotion council has been set up in
order to map the opportunities for key services in key
Develop strategic market access programmes like brand
building in co-ordination with sectoral players and
recognize nodal bodies of the service industry.

Annual Supplement to Foreign Trade
Policy 2004-09
Minister for Commerce and Industry, Government of
India has announced Annual Supplement 2005, to
the Foreign Trade Policy 2004-09 on the 8
Highlights of the Supplement
Inter State Trade Council : To engage the State Government
in providing an enabling environment for boosting
international trade, by setting up an Inter State Trade Council.
Removal of Export Cess : Proposed to abolish cess on export
of all agricultural and plantation commodities levied under
various Commodity Board Acts.
Export Promotion Capital Goods Scheme (EPCG) : This
scheme is extended to Agricultural sector, SSI sector, Retail
Sectors in order to promote exports from them.
Service Export : To upgrade infrastructure in the service
related companies.
Agri Export : Benefits under Vishesh Krishi Upaj Yojana
have been extended to exports of poultry and dairy products in
addition to export of flowers, fruits, vegetables and their value
added products.
Package for Marine Sector : Duty free import of
specified specialized chemicals and flavoring oils as per a
defined list shall be allowed to the extent of 1% of FOB value
of preceding financial years export.
Advance Licensing Scheme : The Scope of Advance
License for annual requirement has been extended to all
categories of exporters having past export performance.
Duty Free Replenishment Certificate : Brass scrap,
Additives, paper board, and dye stuff have been removed from
the list of items prescribed for import under DFRC.
Procedural Simplification : Proposed to simplify
procedures and reduce the documentation requirements so as
to reduce the transaction cost of the exporters and thereby
increase their competitiveness.
EDI Initiatives : DGFT shall introduce an automated
electronic system for filing, retrieval and authentication of
documents based on agreed protocols and message exchange
with other authorities such including Customs and banks.
Negative List of Exports 2002-07
The negative list consists of goods, the import or export of which
is ether prohibited, restricted through licensing or otherwise to be
canalized through a designate government agency.
The negative list of exports, as per the EXIM Policy 2002-07
Prohibited Items : Which items completely banned from the
All forms of wild animals including their parts and products.
Special Chemicals as notified by the DGFT.
Exotic birds as notified by the DGFT.
Sea Shells, as specified
Human Skeleton.
Peacock Tail
Red sanders wood in any form.
Restricted Items : which items allowed for exports under
special license issued by the DGFT.
Dress materials, ready-made garments, fabrics or textile
items with imprints of excerpts or verses of the Holy
Horses Kathiawadi, Marwari, and Manipuri breeds.
Fresh and frozen silver prom frets of weight less than
Paddy (Rice in husk).
Seaweeds of all types.
Chemical Fertilizer all types.

Canalized Items : can be exported without an export license
through designated State Trading Enterprise

Items Canalizing Agency
Onions (Except Bangalore Rose onion
and Krishnapuram Onion)
Export Permitted through Specified
Niger Seeds Tribal Cooperative Marketing
Federation of India (TRIFED) New
National Agricultural Cooperative
Marketing Federation of India(NAFED)
Gum Karaya Tribal Cooperative Marketing
Federation of India(TRIFED), New
Iron ore, Manganese ore, and Chrome
Metals and Minearals Trading
Corporation (MMTC).
Crude Oil Indian Oil Corporation Limited
Freely Exportable Items : can be exported without an export
license from DGFT. However export of such items is subject to
certain procedures or conditions.

Item Description Procedures or Conditions
Military Stores as notified by
No objection certificate from the Department
of Deface Production and Supplies
Exotic Birds, such as Bangali
finches, White finches and
Subject to Pre- shipment inspection.
Bones and bone products Subject to a certificate from chemical and
Allied Products Export Promotion Council
Basmati Rice Subject to registration of contracts with
Agriculture and Processed food Products
Export Development Authority.
Exim Policy 2002 2007
Mr. Murasoli maran, Former commerce minister announced the
exim policy 2002 - 2007 . it deals with both the export and
import of merchandise and services. It is worth mentioning here
that the exim policy: 1997 - 2002 had accorded a status of
exporter to the business firm exporting services with effect
from1.4.1999. Such business firms are known as service

o To encourage economic growth of India by providing supply of
essential raw materials, intermediates, components, consumables
and capital goods required for augmenting production and
providing services.
o To improve the technological strength and efficiency of Indian
agriculture, industry and services, thereby improving their
competitive strength
o To facilitate sustained growth in exports to attain a share of
atleast 1% of global merchandise trade.

o To provide consumers with good quality products and
services at internationally competitive prices while at the
same time creating a level playing field for the domestic

Policy are:-
Special economic zones (sezs):- offshore banking
units shall be permitted in sezs to indian banks. Units in
SEZ would be permitted to undertake hedging of
commodity price risks, provided such transactions are
undertaken by the units on stand-alone basis. It has also
been decided to permit external commercial borrowings
for a tenure of less than three years in sezs. It is
exempted from CRR and SLR.
a) Agriculture: Export restrictions like registration and packaging
requirement are removed. Quantitative and packaging
restrictions have been removed. Restrictions on export of all
cultivated varieties of seed, except jute and onion, removed. To
promote export of agro and agro based products, 20 agri export
zones have been notified. In order to promote diversification of
agriculture, transport subsidy shall be available.

b) Cottage Sector and Handicrafts: An amount of Rs. 5 crore
under Market Access Initiative (MAI) has been earmarked for
promoting cottage industry. These units shall be entitled to the
benefit of Export House status on achieving lower average export
performance of Rs.5 crore as against Rs. 15 crore for others. The
units in handicraft sector shall be entitled to duty free imports of
an enlarged list of items as embellishments upto 3% of FOB
value of their exports.

c) Small Scale Industry: Common service providers in these areas
shall be entitled for facility of EPCG scheme. Such areas will
receive priority for assistance for identified critical infrastructure
gaps from the scheme on Central Assistance to States.
Entitlement for Export House status at Rs. 5 crore.

d) Textiles: Sample fabrics permitted duty free within the 3% limit
for trimmings and embellishments. Duty Entitlement Passbook
(DEPB) rates for all kinds of blended fabrics permitted. Such
blended fabrics to have the lowest rate as applicable to different
constituent fabrics.

e) Gem & Jewellery : Customs duty on import of rough diamonds
is being reduced to 0%. Licensing regime for rough diamond is
being abolished. This should help the country emerge as a major
international centre for diamonds
Electronic Hardware: The electronic hardware technology park
(EHTP) scheme is being modified to enable the sector to face the
zero duty regime under ita(information technology agreement).
Projects: Free import of equipment and other goods used abroad
for more than one year.

Strategic Package for Status Holders:-The status holders shall
be eligible for the following new/ special facilities:
Licence/Certificate/Permissions and Customs clearances for both
imports and exports on self-declaration basis. Fixation of Input-
Output norms on priority. Priority Finance for medium and long
term capital requirement as per conditions notified by RBI.
Exemption from compulsory negotiation of documents through

This policy focused on all round development of
India whather it was technology oriented or growth
The contribution of agriculture and allied sector was
also increased to exports with the help of certain
privilleges and incentives.
The cottage industry has also started to contribute to
It also focused on small and medium sector
It also helped in developing the industrial sector by
importing capital and raw material goods duty free.

EXIM POLICY(2004-2009)
Mr. Kamal Nath, Union Commerce Minister
announced the foreign trade policy for 5 years on 31
august 2004.

To double Indias percentage share of global
merchandise trade from 0.7% in 2003 to 1.5% in

To act as an effective instrument of economic growth
by giving a thrust to employment generation
especially in semi-urban or rural areas.

Strategies to achieve these objective are:-
Unshackling of control.
Creating an atmosphere of trust and transparency.
Simplifying procedures and bringing down transaction costs.
Adopting fundamental principle that duties and levies should
not be exported.
Facilitating development of India as a global hub for
manufacturing, trading and services
Identifying and nuturing special focus areas to facilitate
Facilitating technological and infrastructural upgradation of all
the sectors of Indian Economy.

Policy are:-
Special Focus Initiatives:- With a view to doubling
percentage share of global trade within 5 years and expanding
employment opportunities, especially in semi urban and rural
areas, certain special focus initiatives have been identified for
the agriculture, handlooms, handicraft, gems & jewellery and
leather sectors.

Agriculture:- A new scheme called the Vishesh Krishi Upaj
Yojana (Special Agricultural Produce Scheme) for promoting
the export of fruits, vegetables, flowers, minor forest produce,
and their value added products has been introduced. Import of
capital goods shall be permitted duty free under the EPCG

Handlooms and Handicraft:- specific funds would be
earmarked for promoting handloom and handicraft exports.
Duty free import entitlement of specified trimmings and
embellishments shall be 5% of FOB value of exports during
the previous financial year. New towns of export excellence
with a threshold limit of Rs 250 crore shall be notified.

Gems & Jewellery:- Import of gold of 18 carat and above
shall be allowed under the replenishment scheme. Duty free
import entitlement of consumables for metals other than Gold,
Platinum shall be 2% of FOB value of exports during the
previous financial year. Duty free re-import entitlement for
rejected jewellery shall be 2% of the FOB value of exports

Board of Trade: The Board of Trade shall be revamped and
given a clear and dynamic role in advising government on
relevant issues connected with Foreign Trade Policy. There
would be a process of continuous interaction between the Board
of Trade and Government in order to achieve the desired
objective of boosting India

Export promotion scheme: A new scheme called target plus
has been introduced. Duty free credit would be entitled to
exporters on incremental exports. For incremental growth of over
20%, 25% and 100%, the duty free credit would be 5%, 10% and
15% respectively, of fob value of incremental export.

Service export: Scheme called served from india as a brand
instantly recognized abroad in which individual service providers
earning foreign exchange of Rs. 10 lakh would be elligible for
10% of total foreign exchange earning.

Duty free import under EPGC (Export promotion Capital
goods): The scheme allows import of capital goods for pre
production, production and post production at 5% Customs duty.
Capital goods would be allowed at 0% duty for exports of
agricultural products.

Export Oriented unit(EOUs):- EOUs shall be exempted from
service tax in proportion to their exported goods and services.

New stautus hoder categorization:- One star export house: Rs.
25 crore, two star export house: Rs. 100 crore, three star export
house: Rs. 500 crore, four star export house: Rs. 1500 crore and
five star export house: Rs. 5000 crore
It will be entitled to a number of privileges including fast track
clearance procedure, exemption from furnishing back guarantees

Import of second hand capital goods shall be permitted without
any age restriction

Bio technology park is setup.

Duty Drawback: The Duty Drawback Scheme is administered
by the Directorate of Drawback, Ministry of Finance. Under
Duty Drawback scheme, an exporter is entitled to claim. Indian
Customs Duty paid on the imported goods and Central Excise
Duty paid on indigenous raw materials or components.

Excise Duty Refund: Excise Duty is a tax imposed by the
Central Government on goods manufactured in India. Excise
duty is collected at source, i.e., before removal of goods from the
factory premises. Export goods are totally exempted from central
excise duty.

Neutralising high fuel costs: Fuel costs to be
rebated by it in Standard Input Output Norms
(SIONs) for all export products. This would enhance
the cost competitiveness of our export products.

Re-location of industries: To encourage re-location
of industries to India, plant and machineries would be
permitted to be imported without a licence, where the
depreciated value of such relocating plants exceeds
Rs. 50 crores.

Foreign Trade Warehousing Zones: Proposals for setting up of FTWZs may
be made by public sector undertakings or public limited companies or by joint
ventures in technical collaboration with experienced infrastructure developers.
The proposals shall be considered by the Board of Approval in the Department
of Commerce. On approval, the developer will be issued a letter of permission
for the development, operation and maintenance of such FTWZ. Foreign
Direct Investment would be permitted up to 100% in the development and
establishment of the zones and their infrastructural facilities. The proposal
must entail a minimum outlay of Rs.100 crores for the creation and
development of the infrastructure facilities, with a minimum built up area of
five lakh sq.mts.

DFIA: Effective from 1st May, 2006, Duty Free Import Authorisation or
DFIA in short is issued to allow duty free import of inputs which are used in
the manufacture of the export product (making normal allowance for wastage),
and fuel, energy, catalyst etc. which are consumed or utilised in the course of
their use to obtain the export product. Duty Free Import Authorisation is
issued on the basis of inputs and export items given under Standard Input
and Output Norms(SION).
Deemed Export is a special type of
transaction in the Indian Exim policy in
which the payment is received before the
goods are delivered. The payment can be
done in Indian Rupees or in Foreign
Exchange. As the deemed export is also
a source of foreign exchange, so the
Government of India has given the benefit
duty free import of inputs
Implication of policy:-
It is claimed that first time the nation has presented such a comprehensive
policy. But in it there is not anything significant about import development.

This policy provide benefit to some thrust areas which are agriculture,
handicrafts, handlooms etc. which are dominated by small and medium
enterprises so it helped in boosting export and generating employment.

By rationalizing star export houses into five star export house, it helped in
encouraging small export house.

It also focussed on service industry.

Target plus scheme act as an incentive to exporter.

All goods and services were exempted from service tax.

No additional custom duty on import of capital
goods for marine and electronic sector.
In an attempt to encourage small scale sector,
they are given triple weightage to include in
export house or trade house.
All goods and services were exempted from
service tax
Uneffective implementation make difficult to
achieve the real objective of the policy.

EXIM POLICY 2009-2010
Rupees 325 Crores would be provided under Promotional
Schemes for Leather, Textile etc. for exports made with effect
from 1.4.09.

Technical textiles and stapling machine have been added under
Focus Product Scheme.

STCL Limited, Diamond India Limited, MSTC Limited, Gem &
Jewellery Export Promotion Council and Star Trading Houses
(for gem and jewellery sector) have been added under the list of
nominated agencies notified under Para 4A.4 of Foreign Trade
Policy for the purpose of import of precious metals.The
procedure and monitoring provisions for implementation of these
additional agencies would be notified separately in line with RBI
Export obligation period against advance authorizations has
been extended upto 36 months in view of the present global
economic slowdown.
At present, DEPB/Duty Credit Scrip can be used for payment
of duty only on items which are under free category. The
utilization is now extended for payment of duty for import of
restricted items also.
Value cap applicable under DEPB have been revised upwards
for products.
Under EPCG scheme, in case of decline in exports of a
product(s) by more than 5%, the export obligation for all
exporters of that product(s) is to be reduced proportionately.
This provision has been extended for the year 2009-10, for
exports during 2008-09.
In view of the prevailing global slowdown, the threshold limit
for recognition as Premier Trading House has now been
reduced to Rs.7500 crores.

Bhilwara in Rajasthan and Surat in Gujarat have been
recognized as Towns of Export Excellence, for textiles and
diamonds respectively.

Export of blood samples is now permitted without license after
obtaining no objection certificate from Director General of
Health Services (DGHS).

Independent office of DGFT being opened at Srinagar.