Foreign Trade Policy of India

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This site provides comprehensive information on Foreign Trade Policy of India . The site also focuses on India's achievements as a result of its well designed Foreign Trade Policy.

As per the Annual Supplement 2012-13 to Foreign Trade Policy 2009-14 the interest subvention scheme of 2 percent will continue to be effective till March 31, 2013. Previously this facility was available only sectors such as handlooms, carpets, handicraft, and the small and medium enterprises until March 31, 2012.

Now the program will also include the following sectors, which have been classified as labor intensive:

  1. Toys
  2. Processed agricultural products
  3. Sports goods
  4. Ready made clothes

EPCG Scheme for Technological Upgradation

The Zero Duty EPCG Scheme had previously ended on March 31, 2012. The program’s tenure has now been extended to March 31, 2013 and its main purpose is to help in the technological improvement of the various export sectors. However, the benefits of different sectors will stay the same.

The scope of the program has been increased. As of now units that are receiving the advantages of the Technology Up-gradation Fund Scheme (TUFS) are not covered by it but one applicant can use the Zero Duty EPCG Authorisation for a different business line.

If a company surrenders or refunds the TUFS benefits with the appropriate interest then they will be able to use the Zero Duty program. Till March 31, 2012 companies that were availing the privileges of the Status Holder Incentive Scrip (SHIS) were not allowed to avail the Zero Duty EPCG scheme.

Now it has been decided that if a company hands back the SHIS benefits to the concerned RA with the proper interest then it will be allowed to avail the Zero Duty program.

New Post Export EPCG Scheme

From now on exporters will be able to import goods after paying the applicable duty in cash and then receiving the duty credit scrip once the export processes are completed. Duty will not be exempted or remitted for these transactions. The applicants will be required to provide necessary information regarding the import to the Regional Office of DGFT (RA).

The RA will determine the export obligation (EO) on the basis of this information. Under normal circumstances this EO is 85% of the normal EO as the duties have already been paid when the capital goods were imported.

The RA will provide a Duty Credit Scrip based on the way the export fares – the Scrips are normally given in accordance with the EO. It is expected that this would call for reporting and monitoring requirements since the program is basically self monitored. Less EO and transaction expenses are expected to make this an attractive proposition.

As per the EPCG Scheme, as of now, certain sectors do not need to maintain a certain average when it comes to exports:

  • Handicraft
  • Horticulture
  • Handlooms
  • Pisciculture
  • Cottage sector
  • Viticulture
  • Tiny sector
  • Poultry
  • Agriculture
  • Sericulture
  • Aquaculture – this also includes fisheries

Now three sectors – carpet, jute, and coir – have been added to the above mentioned list. This addition is expected to assist labor intensive industries that find it hard to maintain a certain level of exports on an annual basis.

At present the EPCG program allows only one usage of the catalysts for an initial charge. Companies will now be given the permission to use a second charge. From now on Common Service Providers (CSP) will be allowed to provide Bank Guarantees so that Common Service Centers can be established at towns that have good potential for exports.

The amount of duty will be equal to the duty that has been exempted. The CSP can provide the bank guarantee by themselves or share it with other entities that use the common service.

Supporting Export of Products from Northeastern India

Products from Arunachal Pradesh, Mizoram, Assam, Nagaland, Manipur, Tripura, Meghalaya, and Sikkim will now carry an EO of 25% as per the EPCG Scheme. This will be done to foster employment and manufacturing activities in this part of the country.

In case of export of certain products through certified Land Customs Stations of North Eastern Region, there will be an extra incentive of 1 percent of the exports’ FOB value. This benefit will be an additional one.

Supporting Export of Environment Friendly Products

16 green technology products have been identified and they will now have a manufacturing EO of 75% of the normal EO. The facility being provided as part of the EPCG program aims to promote the export of these. The products may be mentioned as below:

  • Equipment for solar energy decentralized and grid connected products
  • Solar Collector and Parts
  • Bio-Mass Gassifiers
  • Water Treatment Plants
  • Bio-Mass/Waste Boilers
  • Wind Mills
  • Vapor Absorption Chillers
  • Wind Turbines/Engines
  • Waste Heat Boilers
  • Waste Heat Recovery Units
  • Electrically Operated Vehicles – Motor Cars
  • Unfired Heat Recovery Steam Generators
  • Electrically Operated Vehicles – Lorries and Trucks
  • Wind Turbines
  • Electrically Operated Vehicles – Motor Cycles and Mopeds
  • Solar Cells

Infrastructure Support for Agricultural Sector

Export products that fall under Chapters 1-24 of the ITC (HS) will be provided Duty Credit Scrip that will be equal to 10 percent of the agricultural produce being exported. These scrips are normally provided for importing pack house and cold storage equipments and capital goods but will, now, also include the aforementioned equipments that are necessary for creating pack houses:

  • Packing grading equipments for fruits and vegetables
  • Nitrogen generators
  • Equipments for ripening of fruits including ethylene generator
  • Gas controlling systems for CA stores
  • Adiabatic humidifies for cold rooms
  • Bulk bins for CA stores
  • Gas sensor and controlled system covering CO2, ethylene and oxygen levels, ethylene scrubbers
  • Reach stakers for cold stores and warehouses
  • CO2 Scrubbers
  • Belt driven conveyors for bulk handling of cargo
  • Blast freezers for IQF plants
  • Gantry cranes
  • Doors for gastight rooms, applications like CA, Banana/fruit ripening
  • Unloading, mechanized loaders for bulk and break bulk cargo

Incentives for Promotion of Investment in Labor Intensive Sectors

Status holders will be provided Status Holders Incentive Scrip (SHIS) for importing capital goods. This is expected to foster investment that will assist in the technological improvement in some sectors that have been classified as labor intensive such as the following:
  • Leather
  • Engineering
  • Textile and Jute
  • Plastics
  • Handicraft
  • Basic chemicals

The authorities have now opted to provide a maximum limit of 10% of the worth of these scrips to be used for importing spares and components of previously imported capital goods. This is a new facility. As of now these scrips will be subjected to Actual User Condition rules and cannot be transferred.

All the status holders may not own a manufacturing unit. So for the time being it has been decided to permit the SHIS Scrip to be transferred on a limited basis. However, the scrips can only be transferred between status holders and the recipient should have manufacturing unit.

Encouraging Domestic Market Manufacturing Sector

As per the present policy scrips are provided in different schemes that are part of the Foreign Trade Policy’s Chapter 3. They may be mentioned as below:
  • Focus Product Scheme (FPS)
  • Market Linked Focused Product (MLFPS) Scheme
  • Focus Market Scheme (FMS)
  • Served From India Scheme (SFIS)
  • Vishesh Krishi and Gram Udyog Yojana (VKGUY) Scheme
  • Agri. Infrastructure Incentive Scrip (AIIS) Scheme
  • S
  • tatus Holder Incentive Scrip (SHIS) Scheme

The scrips are provided for importing goods as per previously mentioned conditions but from now on they can be used for paying off excise duty applicable for domestic procurement. Previously scrips were only provided as per the SFIS program in these cases.

The main aim of this step is to encourage the manufacturing sector and help in its value addition and employment. This is expected to be a major step for substitution of imports, help in generating more jobs, and also save a lot of foreign exchange.

Use of DA Terms

From now on “Delivery Against Acceptance (DA)” terms will not be accepted in case of handicraft and carpet exports if they are not covered by ECGC or bank guarantees. It will also include the following products:
  • Woolen durries
  • Namdhas
  • Druggets
  • Shaggy
  • Gabbas

This step is expected to safeguard the smaller exporters’ financial and business interests.

Simplifying Processes Import certified by Advance Authorization (AA) will from now on be permitted at all the EDI ports even if certain ports are not AA registered. The Transfer Release Advice (TRA) will not be necessary. It is expected that this would substantially reduce the transaction expenses and also make imports under AA easier.

Export shipments that are done through post, e-commerce, or courier from Mumbai and Delhi will now receive trade benefits as per the FTP. The union Ministry of Finance has set up a task force comprising ministers for analyzing the different aspects of making shipments through various postal areas easier.

They will also be looking into the overall viability of this process. Exporters, from now on, will be allowed to issue one revolving bank guarantee for various deals.

The Visakhapatnam Airport has been certified as a new port for receiving benefits as per various export promotion schemes. As of now, the following embellishments are exempted from import duty:

  • Handloom made-ups
  • Polyester made-ups
  • Cotton made-ups

This will include the synthetic made-ups from now on as well.

e-BRC Initiative The DGFT has introduced the e-BRC, which is being viewed as an important and difficult EDI initiative. As per this program, foreign exchange will be transmitted electronically from the banks to the DGFT server and this will be done on a regular basis.

Exporters will not be required to ask banks for Bank Export and Realization Certificates (BRC). This will make EDI connectivity within the DGFT, exporters and banks a very convenient process. This will also help in quick release and settlement of FTP entitlements and incentives. This is being seen as an important step in bringing down the transaction expenses of the exporters.

ITC (HS) Facility on DGFT Website

The DGFT has brought out a fresh and updated ITC (HS) classification that deals with import and export goods. Anyone can visit the website and get the latest information on the current import policies for a particular item by providing its ITC (HS) code or a small description of the same. This is expected to benefit researchers and academicians as well as industry and trade entities.

Making HBP/FTP More Convenient for Users

The DGFT is trying to revise the Foreign Trade Policy/Handbook of Procedures Vol.1 to make sure users find it easier. A lot of efforts are being made to make sure that the language is clearer, the content is in tune with policy amendments and announcements, and there are no repetitions.

Diversification of Product and Market

The following markets are being added to different schemes:

Focus Market Scheme
  • Algeria
  • Myanmar
  • Aruba
  • Netherland Antilles
  • Austria
  • Ukraine
  • Cambodia
Special Focus Market Scheme
  • Belize
  • Honduras
  • Chile
  • Morocco
  • El Salvador
  • Uruguay
  • Guatemala

The Market Linked Focus Product Scheme will be bigger by 48 items. The program will also be extended till the March 31, 2013 for export of items classified in the Chapters 61 and 62 to EU and the US.

The FPS list will increase by 110 items and the VKGUY will have two new items – textured protein substances and protein concentrates, and roasted cashew kernel. Ahmedabad and Kolhapur have been declared Towns of Export Excellence (TEE) for textiles and the same honor has been accorded to Shaharanpur for handicraft.

Last Updated on 12 June 2012