Introduction Foreign Trade 3vbb

INTRODUCTION India Exim Policy - Foreign Trade Policy Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT (Directorate General of Foreign Trade) in matters related to the import and export of goods in India. The Foreign Trade of India is guided by the Export Import Policy in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992. DGFT is the main governing body in matters related to Exim Policy. The main objective of the Foreign Trade (Development and Regulation) Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. Foreign Trade Act has replaced the earlier law known as the imports and Exports (Control) Act 1947. Indian EXIM Policy contains various policy related decisions taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports from the country and more, especially export promotion measures, policies and procedures. In the year 1962, the Government of India appointed a special Exim Policy Committee to review the government previous export import policies. The committee was later on approved by the Government of India. Mr. V. P. Singh, the then Commerce Minister had announced the Exim Policy on the 12th of April, 1985. Initially the EXIM Policy was introduced for the period of three years with main objective to boost the export business in India.

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OBJECTIVES OF EXIM POLICY Main objectives of Exim Policy / Foreign Trade Policy are:To strengthen the base for, export production for promoting exports. 2) To create sound and favourable situation for export promotion through diversification.. 3) To facilitate technological upgradation of domestic production so as to make Indian goods globally competitive. 4) To reduce imports through import substitution and encouragement to indigenous production. 5) To simplify and streamline import-export procedures. 6) To enable exporters to draw long term export plans and strategies. 7) To provide necessary institutional to export initiatives by exporters / export organizations. 8) To provide liberal import facilities to promote exports. 9) To offer different types of export incentives, concessions and facilities so as to encourage manufacturers and exporters to take more initiative in export promotion. Exports are made attractive / profitable through such export incentives. 10) To facilitate availability of necessary imported inputs for sustaining industrial growth. 11) To impart continuity and stability to foreign trade policy. 12) To establish the framework for globalization of India's foreign trade. 13) To place special emphasis on exports to generate high foreign exchange. 14) To encourage the attainment of high and internationally accepted standards of quality and thereby enhance the image of India's product abroad. 15) To act as an effective instrument of economic growth by giving thrust to employment generation, especially in semi-urban and rural areas. 1)

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HIGHLIGHTS OF FOREIGN TRADE POLICY 1. Strategy: (a) It is for the first time that a comprehensive Foreign Trade Policy is being notified. The Foreign Trade Policy takes an integrated view of the overall development of India's foreign trade. (b) The objective of the Foreign Trade Policy is two-fold: i.

To double India's percentage share of global merchandise trade by 2009. ii. To act as an effective instrument of economic growth by giving a thrust to employment generation, especially in semi-urban and rural areas. (c) The key strategies are: i. Unshackling of controls and creating an atmosphere of trust and transparency, ii. Simplifying procedures and bringing down transaction costs, iii. Identifying and nurturing different special focus areas to generate additional employment opportunities, particularly in semi- urban and rural areas.

2. Special Focus Initiatives: Further sectoral initiatives in other sectors will be announced from time to time. For the present, Special Focus Initiatives have been prepared for Agriculture, Handicrafts, Handlooms, Gems & Jewellery and Leather & Footwear sectors.

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1. Package for Agriculture: The Special Focus Initiative for Agriculture includes: <

A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products. (a)

(b) Duty free import of capital goods under EPCG scheme. (c) Capital goods imported under EPCG for agriculture permitted to be installed anywhere in the Agriculture Export Zone. (d) Import of seeds, bulbs, tubers and planting material has been liberalized.

2. Gems & Jewellery: (a) Duty free import of consumables for metals other than gold and platinum allowed up to 2% of FOB value of exports. (b) Duty free re-import entitlement for rejected jewellery allowed up to 2% of FOB value of exports. (c) Duty free import of commercial samples of jewellery increased to Rs.l lakh. (d) Import of gold of 18 carat and above shall be allowed under the replenishment scheme.

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Are from Sri Lanka 3. Handlooms & Handicrafts: Duty free import of trimmings and embellishments for Handlooms & Handicrafts sectors increased to 5% of FOB value of exports. (a)

Import of trimmings and embellishments and samples shall be exempt from countervailing duty (CVD). (b)

(c) Handicraft Export Promotion Council authorized to import trimmings, embellishments and samples for small manufacturers. (d) A new Handicraft Special Economic Zone shall be established.

4. Leather & Footwear: (a) Duty free entitlements of import trimmings, embellishments and footwear components for leather industry increased to 3% of FOB value of exports.

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(b) Duty free import of specified items for leather sector increased to 5% of FOB value of exports. (c) Machinery and equipment for Effluent Treatment Plants for leather industry shall be exempt from Customs Duty. (d) Reduction in the incidence of customs duties on the inputs and on plant and machinery.

5. Automobile Industry: Import of new vehicles by auto component manufacturers R&D purposes without homologation is being introduced. However, the new vehicles would not be allowed to under the Motor Vehicle Rules in the country.

6. BPO/ITES Sector: Procedural changes have been introduced in order to enable this sector to avail of refund of central sales tax.

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7. SEZ supplies under DEPB: Material suppliers to the SEZ units receiving payments in Indian rupees will not be entitled for the DEPB scheme benefit. Provide the payment for such supplies is made from the foreign currency of the SEZ unit.

8. New Export Promotion Schemes: (a) Target plus: A new scheme to accelerate growth of exports called 'Target Plus^ has been introduced. Under this scheme, exporters who have achieved a quantum growth in exports would be entitled to duty free credit based on incremental exports substantially higher than the general actual export target fixed. (Since the target fixed for 2004-05 is 16%, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year). For incremental growth of over 20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% of FOB value of incremental exports.

(b) Vishesh Krishi Upaj Yojana: This scheme has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products. Export of these products shall qualify for duty free credit entitlement equivalent to 5% of FOB value of exports. The entitlement is freely transferable and can be used for import of a variety of inputs and goods.

(c) * Served from India" Scheme:To accelerate growth in export of services so as to create a powerful and unique 'Servedfrom India' brand instantly recognized and respected the world over, the earlier DFEC scheme for services has been revamped and re-cast into the 'Servedfrom India'' scheme. In the case of stand-alone restaurants, the entitlement shall be 20%, whereas in the case of hotels, it is 5%.Hotels and Restaurants can use their duty credit entitlement for import of food items and alcoholic beverages.

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(d) Export Promotional Capital Goods (EPCG): Additional flexibility for fulfillment of export obligation under EPCG scheme in order to reduce difficulties of exporters of goods and services. Technological upgradation under EPCG scheme has been facilitated and incentives. Transfer of capital goods to group companies and managed hotels now permitted under EPCG.

(e) Duty Free Replenishment Certificate (DFRC) Scheme: Import of fuel under DFRC entitlement shall be allowed to be transferred to marketing agencies authorized by the Ministry of Petroleum and Natural Gas.

(f) Duty Entitlement Book (DEPB) Scheme: The DEPB scheme would be continued until replaced by a new scheme to be drawn up in consultation with exporters.

9. New Status Holder Categorization: (a) A new rationalized scheme of categorization of status holders as Star Export Houses has been introduced as under: Category

Total performance over three years

One Star Export House

15 crores

Two Star Export House

100 crores

Three Star Export House

500 crores

Four Star Export House

1500 crores

Five Star Export House

5000 crores

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(b) Star Export Houses shall be eligible for a number of privileges including fast-track clearance procedures, exemption from furnishing of Bank Guarantee, eligibility for consideration under Target plus Scheme etc.

10. EOUs: (a) EOUs shall be exempted from Service Tax in proportion to their exported goods and services. (b) EOUs shall be permitted to retain 100% of export earnings in EEFC s.

11. Free Trade and Warehousing Zone: A new scheme to establish Free Trade and Warehousing Zone has been introduced to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in convertible currency. FDI would be permitted up to 100% in the development and establishment of the zones and their infrastructural facilities. Units in the FTWZs would qualify for all other benefits as applicable for SEZ units.

12. Services Export Promotion Council; An exclusive Services Export Promotion Council shall be set up in order to map opportunities for key services in key markets, and develop strategic market access programmes, including brand building, in co-ordination with sectoral players and recognized nodal bodies of the services industry.

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13. Procedural Simplification & Rationalisation Measures: (a) All exporters with minimum turnover of Rs.5 crores and good track record shall be exempt from furnishing Bank Guarantee in any of the schemes, so as to reduce their transactional costs. (b) All goods and services exported, including those from DTA units, shall be exempt from Service Tax. (c) Validity of all licenses/entitlements issued under various schemes has been increased to a uniform 24 months. (d) Time bound introduction of Electronic Data Interface (EDI) for export transactions.75% of all export transactions to be on EDI within six months.

14. Board of Trade: The Board of Trade shall be revamped and given a clear and dynamic role. An eminent person or expert on trade policy shall be nominated as President of the Board of Trade, which shall have a Secretariat and separate Budget Head, and will be serviced by the Department of Commerce.

Major destination of

India's

Exports (Apr-Oct) 2006-07 ■ EU Countries (25)

10% I

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■ WAN A n North America aNEAsia ■ ASEAN ■ South Asia ■ Rest ol Hie World

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Negatives List of Exporters Negative list is the list of items which cannot be imported or exported freely or are banned for imports or exports. Negative list includes the following three categories of items:a)

Prohibited items: This means items which are banned for imports and exports. Such prohibited /banned items cannot be imported or exported.

b)

Restricted items: Such items can be imported or exported with the special permission/licence from DGFT.

c)

Canalized items: These are the items are to be imported/exported through canalizing agencies like STC.

The negative list in the EXIM Policy has lost its importance in the recent period as such list is reduced considerably due to liberalization of our imports and exports. Negative list includes negative list of imports and exports. The prohibited or banned items of exports are: All forms of wild animals, exotic birds, beef, human skeleton, chemicals as notified by DGFT, oils of any animals origin, wood and wood products and sandalwood items are notified by DGFT. The restricted items of exports are: Total restricted items are 31. Restricted items of exports includes camels and skins, fodder including wheat and rice straw, fur of domestic animals and textile items with imprints of verses of HOLY QURAN. The canalized items of exports are: Petroleum products (through Indian Oil Corporation Ltd.), Onions (through NAFED), Mica Waste and Scrap (through MMTC), mineral oils and concentrates (MMTC & MOIL), Gum Karaya (through TRIFED).

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CONCLUSION The new measures will be vital for modernization of the manufacturing sector and accelerating exports. The export growth target of $ 200 billion for 2008-09 and export, target of 5% of world exports by 2020 are achievable but are very challenging, especially in the wake of global slowdown and rupee appreciation. Exports are also for boosting our manufacturing sector, creating large scale economic activity and generating fresh employment opportunities. The objective of creating one crore jobs during 2008-09 is linked with our export performance. The export growth target for 2008-09 is fixed at $ 200 billon. Whether we achieve it or not is likely to depend on a host of factor other than the FTP (inflation rate, agricultural production, industrial production, rupee appreciation, recession in other countries, etc). And therein les the tragedy of growing irrelevance of the FTP.

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Duty Exemption/Remission Schemes of Exim Policy 2004-2009 The Duty Exemption Scheme enables import of inputs required for export production. It includes the following exemptionsDuty 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 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. Octroi Exemption: - Octroi is a duty paid on manufactured goods, when they enter the municipal limits of a city or a town. However, export goods are exempted from Octroi. The Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export product.

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BIBLIOGRAPHY <

This information is taken from the:>

www.google.com

> Export Marketing:- By N.G.Kale & M. Ahmed > Export Marketing:- By Michael Vaz > Foreign Trade Policy ( Volume I & II)

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