Change In Exim Policy 3z1m6d

ASSIGNMENT CHANGE IN EXPORT IMPORT POLICY Submitted By: Ambika Gupta Jain 06417003909 05817003909

Akanksha

Submitted To: Dr. Ajay Rathore

BUSINESS ENVIRONMENT

EXIM POLICY ► ►

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EXIM stands for export and import. EXIM POLICY OR FOREIGN TRADE POLICY is a set of guidelines and instructions and various policy decision taken by the government in the sphere of foreign trade i.e. with respect to import and export of the country. It is prepared and announced by the central government(Ministry OF Commerce)

Aspect of EXIM Policy:  

Import policy:- which is concerned with regulation and management of imports. Export policy:- which is concerned with exports not only promotion but also regulation.

Legal framework 

Legal framework for foreign trade has provided by Foreign Trade (Development And Regulation) Act 1992 which replaced the Imports and Exports (Control) Act 1947.

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Beside this act there are some other laws also which control the trade in certain items like export of coffee is regulated by Indian Coffee Act 1942 and export of tea is regulated by Tea Act 1953 etc.

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Section-5 of this act gives power to central government to announce the Export Import policy for the country.

General objective of EXIM policy: Promoting exports and augmenting foreign exchange earnings.  Regulating export when ever it is necessary for the purpose of either avoid competition among the Indian exporters or ensuring domestic availability of essential items.  To restrict country’s imports and provide a sheltered market for domestic industries for rapid growth. Initially the EXIM Policy was introduced for the period of three years with main objective to boost the export business in India. After 1992, it is being made for 5 years. Some change has also been introduced annually in it.

EXIM Policy 1985 ► In the year 1985, the government of India adopted three

year EXIM Policy for first time which was advocated by Alexandra committee in 1978.

► Its main objectives were:  To stablize the export and import policy.  To

remove uncertainity so that industries could frame long term goals.

► Following steps were announced:-

Strengthening the base of export production.  Improvement in istration.  Relaxation in imports to promote exports.  To provide facility for technological improvements.  Import substitution method in selected spheres.  To help Indian products to compete in foreign market.  Relaxing the process of getting inputs. 

EXIM POLICY 1990 ►

The government announced on April 30, 1990 a new export import policy for a 3 year period.

► Objectives:    

To encourage rapid and sustained growth in export. To facilitate availability of necessary imported inputs. To simplify and streamline the procedures of import licensing and export promotion. To research and development institution for building up their scientific and technological capability. To promote efficient import substitution and self reliance.

► Sailent feature of policy are:

List of items imported under open general licence(OGL) were expanded.

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Number of capital goods item permitted under OGL was increased was increased from 1261 to 1343.

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Import of certain raw materials such as petroleum, products, fertilizers, seeds etc. were canalised through public sector agencies.

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An automatic licensing was introduced under which upto some percent of the value of previous year’s licence can be imported.

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For ed exporters, the concept of net foreign exchange earning was made a guiding criterion for issue of licences.

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Under the scheme of registration of export house, the average annual of net foreign exchange earning for base period should not be less than Rs. 5 crores and for trading houses, it should not be less than Rs. 20 crores.

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Scheme of Star Trading House was introduced for exported with average annual of net foreign exchange earning of Rs. 75 crore in the preceeding three licensing period of the base period.

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Under the Duty Exemption Scheme, Blanket Advance licensing was introduced for manfacturer exporters having a minimum net foreign exchange earning of Rs. 10 crore in the preceeding three years.

► Evaluation of policy:-

Critics have noted following points: Adverse effect on the growth of capital goods industry in india.  Import policy likely to hit small scale industries.  Adverse effect on indigeneous industry.  Technological degrading in the name of technological upgrading.

► the

Government of India for the first time introduced the Indian Exim Policy on April I, 1992. In order to bring stability and continuity, the Export Import Policy was made for the duration of 5 years. However, the Central Government reserves the right in public interest to make any amendments to the trade Policy in exercise of the powers conferred by Section-5 of the Act. ► Objective: liberalise imports  boost exports.

Export Import Policy  is believed to be an important step towards the economic reforms of India Main steps taken are:► introduction of the duty-free Export Promotion Capital Goods (EPCG) scheme ► strengthening of the Advance Licensing System ► waiving of the condition on export proceeds realisation ► rationalisation of schemes related to Export Oriented Units and units in the Export Processing Zones. ►

EXIM POLICY(1997 -2002) ►

With time the Exim Policy 1992-1997 became old, and a New Export Import Policy was need for the smooth functioning of the Indian export import trade. Hence, the Government of India introduced a new Exim Policy for the year 1997-2002.

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This policy has further simplified the procedures and reduced the interface between exporters and the Director General of Foreign Trade (DGFT) by reducing the number of documents required for export by half

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Import has been further liberalized and better efforts have been made to promote Indian exports in international trade.

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Objectives:To accelerate the economy from low level of economic activities to high level of economic activities by making it a globally oriented vibrant economy and to derive maximum benefits from expanding global market opportunities.

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To motivate sustained economic growth by providing access to essential raw materials, intermediates, components,' consumables and capital goods.

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To improve the technological strength and efficiency of Indian agriculture, industry and services, thereby, improving their competitiveness.

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To create new employment. Opportunities and encourage the attainment of internationally accepted standards of quality

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To give quality consumer products at practical prices.

Policy were:►

Liberalization:- A very important feature of the policy is liberalization. It has substantially eliminated licensing, quantitative restrictions and other regulatory and discretionary controls. All goods, except those coming under negative list, may be freely imported or exported.

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Imports Liberalization:- Of 542 items from the restricted list 150 items have been transferred to Special Import Licence (SIL) list and remaining 392 items have been transferred to Open General Licence (OGL) List.

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Export promotion capital goods (EPCG) scheme:- the duty on imported capital goods under EPCG scheme has been reduced from 15% to 10%. Under the zero duty EPCG scheme, the threshold limit has been reduced from rs. 20 crore to rs. 5 crore for agricultural and allied sectors.

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Advance licence scheme:- under advance license scheme, the period for export obligation has been extended from 12 months to 18 months. A further extension for six months can be given on payment of 1 % of the value of unfulfilled exports.

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Duty entitlement book scheme:- under the depb scheme an exporter may apply for credit, as a specified percentage of fob value of exports, made in freely convertible currency. Such credit can be can be utilized for import of raw materials, intermediates, components, parts, packaging materials, etc for export purpose.

Implications of Exim Policy 1997 –2002  The Exim Policy 1997-02 proposed with an aim to prepare a framework for globalizations of Indian economy. 

In the EXIM policy 1997-02, a series of reform measures have been introduced in order to give boost to India's industrial growth and generate employment opportunities in non-agricultural sector.

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It encourage foreign investment in India.

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The Exim Policy 1997-2002 successfully fulfills one of the India’s long objective of Self-reliance.

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It encouraged Indian industries to undertake research and development programmers and upgrade the quality of their products.

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 providers.

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Objectives: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. To improve the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade.

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o o

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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 producers.

► 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)

Employment-Oriented 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 book (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

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Technology-oriented 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.

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Growth-Oriented 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 InputOutput 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 banks.

Implications: ► This policy focused on all round development of India

whather it was technology oriented or growth oriented. ► 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 exports. ► It also focused on small and medium sector enterprises. ► 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.

► Objectives:

To double India’s percentage share of global merchandise trade from 0.7% in 2003 to 1.5% in 2009.

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To act as an effective instrument of economic growth by giving a thrust to employment generation especially in semiurban 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 development. Facilitating technological and infrastructural upgradation of all the sectors of Indian Economy.

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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 Scheme.

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

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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

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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.

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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.

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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.

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

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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 etc.

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

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Bio technology park is setup.

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Duty Drawback: The Duty Drawback Scheme is istered 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.

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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.

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Foreign Trade Warehousing Zones: Proposals for setting up of FTWZs may be made by public sector undertakings or public limited companies or by t 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.

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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

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Implication of policy:-

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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.

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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.

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

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It also focussed on service industry.

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Target plus scheme act as an incentive to exporter.

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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 1999-2000 ►

Failure to increase exports and facilitate imports as well as to keep the trade balance gap within reasonable limits during 199697 and 1998-99 forced Mr. Ramkrishna Hedge, former commerce minister to announce on 31ST March 1999 the exim policy for 1999-2000.

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Main highlights: 894 items were added to free list of imports and an additional 414 items put on special import licence route. The concept of free trade zones without customs intervention and with “greater operational freedom in export activity” would be implemented. All export promotion zone is converted into Free Trade Zone. Under the EPCG Scheme the threshold limit for zero duty capital goods was reduced from Rs. 20 crore to Rs. 1 crore for chemicals, plastic and textile.

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EXIM POLICY 2000-2001 The policy highlighted two important measures: ► Setting up of special economic zone This unit would be able to import raw material and capital goods duty free. It deemed to be foreign territory for the purpose of trade and tarrifs and goods going to it treated as deemed export. It would be able to obtain products from the domestic tariff area(DTA) without paying terminal excise duty. ► Alligning EXIM procedures with WTO norms. India did not remove quantitative restrictions on its import fully with respect to consumer products and certain agriculture products. India negotiated with many countries and aggreed to phase out it by 2003. EXIM Policy-2000 removed it on 714 items out of 1429 items.

EXIM POLICY 2001-02 It highlighted: ► Removal of quntitative restrictions from all remainig items. ► Import restriction of the remaining 715 items were removed. ► Imports of the second hand good, meat and primary agriculture product were allowed. ► Import of farm products were permitted only through state trading agencies. ► EPCG Scheme and DES eas extended to agriculture export as well. ► Agri economic zones were formed.

EXIM Policy 2003-2004 ► ►

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Poicy suggested:Promotional measures To promote export related infrastructure, rupee payments received for Port handling services issible for discharge of export obligation under EPCG To boost R &D activity, import of Prototypes shall be allowed to Actual s without any limit (presently restricted to 10 nos. per annum) Boost to Tourism Heritage Hotels, 1 and 2 star hotels and Stand Alone Restaurants extended the benefits of duty free imports issible to Tourism Sector. Import of all kinds of Capital Goods including office and professional equipment allowed under the Duty Free Entitlement scheme. However, import of agriculture/dairy products and cars shall not be permitted. Duty Free Entitlement Certificate scheme liberalized

Duty Exemption Scheme To offset the high power costs faced by the manufacturing industry, duty free Fuel shall be allowed. ► Project Exports Equity base of ECGC being raised from Rs 500 crores to Rs 800 crores for a better risk management of Indian exporters. National Export Insurance being created for ECGC to underwrite high value projects implemented by Indian Companies abroad. Details will be worked out in consultation with Ministry of Finance. Gold Card Scheme for credit worthy exporters with good track record for easy availability of export credit on best being worked out by RBI. ►

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Deemed Exports Deemed export facility extended for items having Zero% basic Customs duty. Deemed export facility extended to Fertiliser & Refinery projects spilled over from 8th and 9th Plan periods. Removal of Quantitative Restrictions Imports allowed freely for Gold and Silver Technical Regulations on Imports Technical regulations applicable on imports for export production rationalised for food & textile items. BIS Mandatory Quality Certification scheme on imports amended for importers having captive consumption and in-house testing facilities.

EXIM POLICY 2005-06 ► The

main focus of this policy is not only to increase export earning but the creation of more job also.

► The

main area for boosting export and job creation are: agriculture, diary, polutory, marine etc.

► A package of incentives and strategy has been put. ► For jems and

jewellery sector, duty free imports of samples upto Rs. 3 lakh are allowed.

EXIM POLICY 2007-2008 It highlighted: ► Encouragement to agro exports and employment generation in the agriculture sector. ►

New initiative for infrastructure development namely cold storage units, pack houses, reefer vans/containers, etc.,For agro sector, is being launched.

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In line with the government objective of having all inclusive growth, vishesh krishi and gram udyog yojana scheme expanded further to include forest based and agricultural products.

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A new scheme to give impetus to exports of high tech products, is being launched. Exports of specified high tech products are proposed to be rewarded.

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Long standing major grievance of trade is being addressed by providing service tax exemption/remission on services rendered in India and utilised by exporters. This should bring cheers to the exporting fraternity.

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In line with the government approach to address genuine grievances, services rendered abroad and charged on exports from India to be exempted from service tax.

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For effectively ensuring all inclusive growth for farmers and tribals, focus products scheme expanded further to include new agro and forest products.

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Exports and employment in handloom and handicraft sectors provided further push through duty free access to machinery and equipment for effluent treatment plants.

► To

sharpen core strength of promising gems and jewellery sectors and handicraft sector, duty free access to tools, machinery and equipment proposed to be provided to give them competitive edge.

► Export

further.

of rhodium polished silver jewellery to be encouraged

► Rationalisation

in the threshold criteria and reclassification of status holder scheme.

EXIM POLICY 2008-2009 Policy highlighted: DEPB scheme has been extended till May 2009. 

Refund of service tax on almost all the services.

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Income tax benefit to 100% EOUs has been extended by Government.

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Coverage of FMS has been increased and additional 10 countries have been included. These are Mongolia, Bosnia-Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia.

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Split-up facility under DFIA Scheme introduced.

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EOUs shall be allowed to pay excise duty on monthly basis, instead of the present system of paying duty on consignment basis.

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Customs duty payable under EPCG Scheme has been reduced from 5% to 3%.

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Setting up a new Export Promotion Council for Telecom Sector.

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Value of jeweler parcels, through Foreign Post Office is raised to US$ 75,000. Earlier it was from US$ 50,000.

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Duty free import of samples has been increased from Rs.75 000 to Rs. 1, 00,000.

EXIM POLICY 2009-2010 IT HIGHLIGHT ► 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.

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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 guidelines.

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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.

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In view of the prevailing global slowdown, the threshold limit for recognition as Premier Trading House has now been reduced to Rs.7500 crores.

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

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Export of blood samples is now permitted obtaining ‘no objection certificate’ from Health Services (DGHS).

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Independent office of DGFT being opened at Srinagar.

without license after Director General of