INTERNATIONAL BUSINESS STRATEGY
FOREIGN TRADE POLICY
27th August 2009 - 31st March 2014
DR. P.R.S. SARMA
OM PALANI RAJA
• ST -To arrest and reverse the declining trend of
exports and to provide additional support
especially to those sectors which have been hit
badly by recession in the developed world.
• LT- To double India’s share in global trade by
• DEPB scheme – upto December 2010
• Income Tax benefits for IT industry under 100% EOU extended
• Insurance coverage – exports – ECGC – 2010
• Encourage value addition in exports.
• Additional resources under Market Development Assistance
Scheme & Market Access Initiative Scheme.
• Comprehensive Economic Partnership Agreement - South Korea
• Trade in Goods Agreement with ASEAN (Look East Policy)
• Made in India shows – 6 or more in the world
• Towns of Export Excellence – support
SPECIAL FOCUS INITIATIVES
a) Focus market scheme
b) Market linked focus product scheme
a) EPCG scheme relaxed
b) Value addition of imports
c) Encouraging project exports.
SUPPORT TO STATUS HOLDERS
a) Leather ,engineering, textiles, plastics, handicrafts and jute.
b) Credit strip – import of capital goods.
AGRICULTURE AND VILLAGE INDUSTRY
a) Vishesh Krishi & Gram Udyog Yojana
b) Capital goods – under EPCG permitted – installed in AEZ.
c) Import of pesticides & panels – permitted.
d) Certian flowers , fruits & vegetables – VKGUY – Credit strip applied.
SPECIAL FOCUS INITIATIVES CONTD..
a) Special funds under MAI & MDI
b) Duty free import- old pieces of hand knotted carpet– for re export.
Machinery – effluent treatment – custom duty relaxed.
a) Treated as special focus products and given high incentives.
b) Same as handlooms.
GEMS AND JEWELLERY
a) Import of gold- >= 8k under replenishment scheme subject to import being
accompanied by an Assay Certificate specifying purity, weight and alloy content.
b) Duty Free Import Entitlement for :
• Precious metals (other than Gold &Platinum)– 2%
• Gold and Platinum – 1%
• Rhodium finished Silver – 3%
• Cut and Polished Diamonds – 1%
LEATHER & FOOTWEAR
a) Re export of raw hides & skins and wet blue leathers is permitted
b) Same as Handlooms
a) Import for technological upgradation – under fisheries – exempted from avg export
b) Marine exports considered for VKGUY scheme.
SPECIAL FOCUS INITIATIVES CONTD..
ELECTRONICS / IT HARDWARE MANUFACTURING
a) Expeditious clearance of approvals required from DGFT shall be
SPORTS GOODS & TOYS
a) Applications relating to Sports Goods and Toys shall be considered
for fast track clearance by DGFT.
b) Special focus products and entitled to higher incentives.
GREEN PRODUCTS &TECHNOLOGIES
a) Special initiative will be taken to promote development and
manufacture of such products and technologies for exports
b) Focus would be on items relating to transportation, solar and wind
power generation and other products as may be notified which will
INCENTIVES FOR EXPORTS FROM THE NORTH EAST REGION
a) In order to give a fillip to exports of products from the northeastern States, notified products of this region would be
incentivized under Reward Schemes
GENERAL PROVISIONS REGARDING
IMPORTS AND EXPORTS
- Import of rough diamond from Ivory Coast is prohibited under
- Import/export of rough diamond from Venezeula is prohibited
- Import / export of arms and related material from / to Iraq shall be
- All items, materials equipment, goods and technology which could
contribute to DPRK’s nuclear-related, ballistic missile-related or other
weapons of mass destruction-related programmes.
- Direct or indirect export and import of all
items, materials, equipment, goods and technology which could
contribute to Iran’s enrichment-related, reprocessing or heavy water
related activities, or to development of nuclear weapon delivery
systems, as mentioned below, whether or not originating in Iran, to /
• Exemption from policy/procedure
• Restricted Goods
may be exported or imported only in accordance with an
Authorisation or in terms of a public notice issued in this
• Importer – Exporter Code (IEC) Number
• Transit Facility
Transit of goods through India from / or to countries adjacent to
India shall be regulated in accordance with bilateral treaties between
India and those countries
• Second Hand Goods
All second hand goods, except second hand capital goods, shall be
restricted for imports
• Scrap/Waste in SEZ
Shall be allowed to be disposed in DTA freely subject to payment of
applicable Customs Duty.
• Import of Gifts
It is permitted if they are freely importable under FTP. Otherwise,
Customs Clearance Permit (CCP) shall be required from DGFT
• Passenger Baggage
Bonafide household goods and personal effects may be imported
(as per Baggage Rules, Ministry of Finance)
• Re-import of goods repaired abroad
for repairs, testing, quality improvement or upgradation or
standardization of technology and re-imported without an
• Import of goods used in projects abroad
After completion of projects, may import without any
authorisation provided, they have been used for atleast one year
• Free Exports
All goods may be exported without any restriction except to extent
such exports are regulated by ITC (HS) or any other provision of FTP
or any other law for time being in force.
• Export of Passenger Baggage
Bonafide personal baggage may be exported either along with
passenger or, if unaccompanied, within one year before or after
passenger’s departure from India.
• Export of Gifts
Goods, including edible items, of value not exceeding Rs.5,00,000 /- in a
licensing year, may be exported as a gift. (not for restricted)
• Private Bonded Warehouses for Exports
Such warehouses procure goods from domestic manufacturers without
payment of duty. Payments are made in foreign currency for the supplies
• Export Promotion Council (EPC)
promote and develop Indian exports.
• Registration cum Membership Certificate (RCMC)
Inorder to apply for an authorisation to import/export or any other
benefit or concession from FTP, shall furnish RCMC
• Trade Facilitation through EDI initiatives
simplification, standardization and harmonization of trade documents
using international best practices.
• Grievance Redressal Committee (GRC)
• Export of Perishable Agricultural Products
- a single window system to facilitate export of perishable agricultural
- creation of multi-functional nodal agencies
Market Access Initiative (MAI)
Market Development Assistance (MDA)
Towns Of Export Excellence (TEE)
Export And Trading Houses
REWARD / INCENTIVE SCHEMES IN
• Served From India Scheme (SFIS)
• Vishesh Krishi And Gram Udyog Yojana
• Focus Market Scheme (FMS)
Duty Exemption Scheme
• Duty Exemption:
Enable duty free import of inputs (DFII) recquired for
export production. The scheme consists of advance
authorisation and duty free import autorisation
An advance autorisation can be issued either to a
manufacturer exporter or merchant exporter tied to
supporting manufacturer for
- Physical exports
- Intermediate supplies
- Supply of goods ( depend on the category)
• Remisssion scheme:
Enable post export replenishment or
remission of duty on inputs used in export
product. It consists of duty entitlement
passbook scheme and duty drawback scheme
Duty entitlement passbook is to neutralise
incidence of customs duty on import content
of export product.
• Refers to any goods manufactured in India and
exported, means rebate of duty chargeable on
any imported material or excisable material
used in manufacture of such goofs in india.
• Goods include imported spares, if supplied
with capital goods manufactured in India.
EXPORT PROMOTION CAPITAL
GOODS SCHEME (EPCG)
• Zero duty EPCG Scheme :
-allows import of capital goods at zero Customs
duty, subject to an export obligation equivalent to
6 times of duty saved on capital goods imported
under EPCG scheme
• 3 % duty EPCG :
- allows import of capital goods at 3 % Customs
duty, subject to an export obligation equivalent to
8 times of duty saved on capital goods imported
under EPCG scheme.
EPCG for projects
EPCG for Retail Sector
Conditions for import of capital goods
• Reduced EO for domestic sourcing of capital
• Reduced EO for units in the state of Jammu &
• EPCG for Agro units.
• Fixation of export obligation.
• Technological upgradation of existing EPCG
• Incentives for fast track company.
EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE
TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS
(STPs) AND BIO-TECHNOLOGY PARKS (BTPs).
Eligibility :Units undertaking to export their entire
production of goods and services maybe setup under the
Export Oriented Unit(EOU)Scheme.
Trading units are not covered under these schemes.
Application : applications for conversion into an
EOU/EHTP/STP/BTP unit from existing DTA units, having
an investment of Rs.50 crores and above in plant and
machinery or exporting Rs. 50crores and above annually,
shall be placed before BoA for decision.
Regected in 15 days
Approved/clearance of proposal in 45 days
• The EOU scheme is, at present, governed by the provisions of
Export and Import (EXIM) Policy. The Export Oriented Units (EOUs)
scheme, introduced in early 1981, is complementary to the SEZ
• EOUs are mainly concentrated in textiles and yarn, food processing,
electronics, chemicals, plastics, granites and minerals/ores
• It adopts the same production regime but offers a wide option in
locations with reference to factors like
• Source of raw materials
• Ports of export
• Land facilities
• Availability of technological skills
• Existence of an industrial base
• The main objectives of the EOU scheme is
• To increase exports
• Earn foreign exchange to the country
• Transfer of latest technologies stimulate direct
• Generate additional employment.
• Procurement and export of spares/components up to one and half percent
of the FOB value of exports will be allowed to the same consignee/buyer
of the export article within the warranty period. The exports of such
spares/components could be effected separately from the capital goods.
• In order to facilitate the smooth functioning of the EOU units, the
Development Commissioners will fix time limits for finalizing the disposal
of matters relating to EOUs.
• New units engaged in export of Agriculture/Horticulture/Aqua-Culture
products have been now allowed to remove capital goods inputs to the
DTA farm on producing bank guarantee equivalent to the duty foregone on
the capital goods/input proposed to be taken out.
• The EOU units in Textile Sector are allowed to dispose off the left over
material/fabrics up to 2 per cent of Cost Insurance Freight (CIF) value of
imports, on consignment basis. Recognizing that settling the accounts for
every consignment is complex and time consuming it has been decided to
allow disposal of left over material on the basis of previous year's imports.
Import of second-hand capital goods to be permitted without any age restrictions. Minimum
depreciated value for plant and machinery to be relocated into India reduced from Rs.50 crores to
All exporters with minimum turnover of Rs.5 crores and good track record to be exempt from
furnishing bank guarantee in any of the schemes.
All goods and services exported, including those from Domestic Tariff Area (DTA) units, to be
exempt from Service Tax .
Export Oriented Units (EOUs) to be exempted from Service Tax in proportion of export of goods and
EOUs to be permitted to retain 100 per cent of export earnings in Export Earners Foreign Currency
Income Tax benefits on plant and machinery to be extended to DTA units, which convert to EOU.
Biotechnology Parks to be set up and granted all facilities of 100 per cent EOUs.
Facility of filing digitally signed applications and use of Electronic Fund Transfer Mechanism for
paying application fees made available to exporters.
• EXPORT THROUGH EXHIBITONS/ PROMOTIONAL TOURS/ SHOWROOMS
ABROAD/DUTY FREE SHOPS :Export goods for display/sale in permitted
shops set up abroad. Display/sell in permitted shops set up abroad, or in
showrooms of their distributors agents. Setup showrooms/retail outletsat
• PERSONAL CARRAIGE OF IMPORTS/EXPORT VIA FOREIGN BOUND
PASSENGERS : Import/export through personal carriage of gems and
jewellery items maybe undertaken as per Customs procedure. Import /
export through personal carriage by units ,other than gems and jewellery
units ,shall be allowed provided goods are not in commercial quantity.
An authorized person of Gems &Jewellery EOU may also import gold in
primary form,upto10 Kgs in a financial year through personal carriage ,as
per guidelines prescribe by RBI andDoR.
• Export / Import by Post / Courier :Goods
including free samples, maybe exported
/imported by airfreight or through foreign post
office or through courier, as per Customs
• Approval of BT Bio-Technology Parks (BTP) would be notified
by DGFT on recommendations of Department of case of units
in BTP,necessary approval or permission under relevant
provisions of this chapter will be granted by designated office
of Department of Biotechnology.
• Approval of EHTP / STP : In case of units under EHTP / STP
schemes, necessary approval shall be granted by officer
designated by Ministry of Communication,ITdept,instead of
DC and by Inter Ministerial Standing Committee(IMSC)instead
The concept of deemed exports
Covers supply of goods against:
Advance authorization/ DFIAS
Projects under International competitive
Deemed exports contd.
• Projects approved by ministry of finance
• Supplies of capital stock to fertilizer plants
• Supplies of goods to Refineries and power
• Supplies of goods to UN- funded projects
• Supplies of goods to Nuclear power projects
thro competitive bidding
Benefits to deemed exports
• Advance authorization / DFIAS
• Deemed duty drawback
• Exemption from terminal excise duty if
supplies are against International competitive
• In other cases refund of terminal excise duty
paid will be given
Advance Authorization Scheme …
(Erstwhile ‘Advance License Scheme’)
• Issued on the basis of
– Inputs and export given under Standard Input Output Norms
– Adhoc norms or self declared norms
• Para 4.7 of the Handbook of Procedure
– Authorization can also be applied for annual requirement for a
particular product group by Status holders and by the other
exporters having at least past two years export performance
– Manufacturer/Exporter as well as Merchant/Exporter tied up
with supporting manufacturer
Special Economic Zones (SEZ)
SEZs an engine for economic growth supported
by quality infrastructure complemented by an
attractive fiscal package
• IT SEZs Exports (2012-2013): 1.40 lakh crore
registering a growth of over 70%.
• No Exit Policy.
Free Trade Agreement
• India Singapore Trade Agreement , 2009
• India-South Korea, 2009
• Exemption of Customs duty on certain goods
when imported into India from the Malaysia,
Singapore & Thailand
• India-UN FTA
• The free trade and warehousing zones (FTWZ)
shall be a special category of Special Economic
Zones with a focus on trading and
• India needs to try diversifying its exports
• Although India has made major strides in
diversifying its exports, a lot needs to be done
not only to diversify the export basket but also
to have a perceptible share in the top items of
• Thus we can say that India is trying to be more
liberal in its foreign trade policy.