Overview of Foreign Trade Policy

World merchandise trade Exports in 2007 World - $12,083 billion Germany - $1327 billion 9.5% (1 st place) China - $1218 billion 8.8% (2 nd place) USA $ 1163 billion 8.4% (3 rd place) India $ 145 billion 1% (26 th place) Imports in 2007 World - $ 12,413 billion USA - $2017 billion 14.2% (1 st place) Germany - $1059 billion 7.5% (2 nd place) China $ 956 billion 6.7% (3 rd place) India $ 217 billion 1.5% (18 th place)

World trade in commercial services Exports in 2007 World - $3260 billion USA - $454 billion 13.9% (1 st place) UK - $263 billion 8.1% (2 nd place) Germany $ 197 billion 6.1% (3 rd place) India $ 86 billion 2.7% (11 th place) Imports in 2007 World - $ 3060 billion USA - $336 billion 11% (1 st place) Germany - $245 billion 8% (2 nd place) UK $ 193 billion 6.3% (3 rd place) India $ 78 billion (13 th place)

Understanding Foreign Trade Policy Drafted by the DGFT under the Foreign Trade Development & Regulation Act 1992 and rules framed thereunder Implemented with the help of various other Depts mainly Customs, Excise and RBI In order to understand the co-relation, one must get familiar with the various laws and functions of various depts

Study the following Acts, Laws & Regulations Customs Act 1962 Customs Tariff Act 1975 FEMA 1999 Central Excise Act 1944 Central Excise Tariff Act 1985 Industrial Policy Resolution 1956 Industries Development and Regulation Act 1951 Laws of Weights and Measures

Ministry of Finance Dept of Revenue Customs-Coverage Validity of imports and exports Assessment and valuation Determination of import/export duty applicable Collection of duty Inspection and supervision of cargo Examining co-relation and compliance with other laws Excise-Coverage Export Under bond – clearance of excisable goods for export under bond Rebate of excise duty post exports where exports have been effected after payment of excise duty Monitoring factory stuffed containers in certain cases Import Monitoring CENVAT

Understanding Foreign Trade Policy Export or import involves movement of goods as well as receipt/remittance of foreign exchange Though foreign exchange regulations are relaxed, monitoring of forex operations is still being carried out by RBI

Understanding Policy provisions

Promotional Measures (Chapter – 3) Assistance to States for Infrastructure Development of Exports [ASIDE] Market Access Initiative [MAI] Marketing Development Assistance [MDA] Towns of Export Excellence [TEE] Export and Trading Houses [Status certificate] Served from India Scheme [SFIS] Vishesh Krishi and Gram Udyog Yojana [VKGUY] Focus Market Scheme [FMS] Focus Products Scheme [FPS] High-Tech Products Export Promotion Schemes

Duty Exemption / Remission Scheme [Chapter 4] I. Duty Exemption Scheme Advance Authorisation Advance Authorisation for Annual Requirement Duty Free import Assistance [DFIA] II. Duty Remission Scheme Duty Entitlement Passbook Scheme [DEPB] Duty Drawback

EPCG Scheme (Chapter 5) Import of capital goods and spares at concessional rate of duty of Customs Duty] coupled with export obligation equivalent to 8 times the duty saved amount to be completed in 8 years. [as per Annual Supplement to FTP ]

EOU / EHTP/ STP/ BTP Scheme (Chapter 6) Units undertaking to export their entire production of goods and services except permissible sales in Domestic Tariff Area (DTA) are known as Export Oriented Units (EOUs). Permits import of capital goods and inputs without payment of duty

Deemed Exports (Chapter 8) Goods supplied do not leave country and payment is received in Indian Rupees or in Free Foreign Exchange.

Vishesh Krishi and Gram Udyog Yojana [VKGUY] 5% Duty credit entitlement to promote export of (i) Agricultural Produce and their value added products; (ii) Minor Forest Produce and their value added variants; for exports w.e.f ; (iii) Gram Udyog Products, for exports w.e.f ; (iv) Forest Based Products, for exports w.e.f ; and (v) Other products, as notified from time to time. List of eligible products is given in App 37A of HBP V1.

Focus Market Scheme [FMS] Export of all products to the notified countries. Entitlement – 2.5% of the FOB value of exports [ w.e.f ]. List of Countries eligible for benefit under this scheme is given in Appendix 37C of HBPv1. Exports made by EOUs/EHTPs/BTPs who do not avail direct tax benefits/exemptions, will be eligible to get benefits under this scheme.

Focus Product Scheme (FPS) Eligibility: Exports of notified products to all countries (including SEZ units). List of notified products is given in Appendix 37D of HBPv1. Entitlement: Duty Credit scrip equivalent to 1.25% of FOB value of exports for each licensing year commencing from 1st April, 2006.

Duty Exemption/Remission Scheme

Exemption from payment of duty on inputs-prior or after to Exports/ Deemed Exports Adv. Autho./DFIA for 1) Phy. Exports 2) Deemed Exports Annual Adv. Autho. 1) Phy. Exports 2) Deemed Exports Remission of duty on inputs- Post-Exports by way of Duty Credit Entitlement DEPB Scheme Duty Drawback

Export Promotion Capital Goods [EPCG] Scheme

Export Promotion Capital Goods Scheme [EPCG] This scheme allows import of capital goods and spares at concessional rate of duty of Customs Duty] coupled with export obligation equivalent to 8 times the duty saved amount to be completed in 8 years. In case CVD is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated.

Export Oriented Units [EOUs]

Units undertaking to export their entire production of goods and services except permissible sales in Domestic Tariff Area (DTA) are known as Export Oriented Units (EOUs). Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) or Bio-Technology Parks (BTPs) are also covered under EOU scheme. These are product specific units availing the same benefits as EOUs. EOUs/EHTPs/STPs/BTPs are allowed to manufacture goods including repair, re-making, reconditioning, reengineering, and rendering of services wherever applicable.

Deemed Exports

This is a special facility provided for supplies of indigenous products which can be consumed ultimately in the production of goods to be exported. The conditions are that supplied goods as it is do not leave the country but get consumed in the process of manufacture, payment for which is received in Indian Rupees or in foreign exchange.

Deemed Exports Supplies to Authorisation Holder [Adv. Autho./AAA/DFIA/EPCG] Supplies to EOUS/EHTPs/STPs/BTPs Supplies to Projects Supplies to Fertilizer Plant Marine Freight Containers by 100% EOUs (Domestic Freight Containers Manufacturers)

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