Foreign trade policy

INTRODUCTION The policy aims at developing export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange India's FTP seeks to enhance its global trade, offer incentives to exporters, expand markets to diversify trade, and create more returns and employment.

Foreign Trade Policy The foreign trade policy announced by the UPA Government in 2004 had set two objectives, namely, (i) to double percentage share of global merchandize trade within 5 years and (ii) use trade expansion as an effective instrument of economic growth and employment generation.

Foreign Trade Policy The key strategies Unshackling of controls Creating an atmosphere of trust and transparency Simplifying procedures and bringing down transaction costs Duties and levies should relaxed Identifying and nurturing special focus areas

Foreign Trade Policy Special focus initiatives Agriculture Gems and Jewellery Handlooms and handicrafts Leather and footwear

Foreign Trade Policy Export promotion schemes –Target plus –For incremental growth of exports for over 20%,25%and 100%,the duty free credits would be 5%,10%and 15% of FOB value –VKUY-Vishesh Krishi Upaj Yojana –Served from Indian scheme –EPCG- Export Promotion Capital Goods Scheme The scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty –DFRC Duty Free Replenishment Certificate(DFRC) Scheme It is an export promotion scheme under which DFRC licences are issued permitting duty free import of inputs which were used in the manufacture of export product on post export basis as replenishment –DEPB Duty Entitlement Pass Book(DEPB) Scheme It is an export promotion scheme and envisages grant of DEPB Credit Entitlement to an exporter at the time of export at an ad-valorem rate notified by DGFT, in relation to FOB value of the export product

Foreign Trade Policy New status holder categorization Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zone (AEZ’s), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs) shall be eligible for applying for status as Star Export Houses. Star houses shall be eligible for a number of privileges –Fast track clearance procedures –Exemption from furnishing of bank guarantee –Eligibility for consideration under target plus scheme

Foreign Trade Policy Category Performance (in rupees) One Star Export House 15 crore Two Star Export House 100 crore Three Star Export House 500 crore Four Star Export House 1500 crore Five Star Export House 5000 crore

Foreign Trade Policy The State Governments shall be encouraged to participate in promoting exports from their respective States. For this purpose, Department of Commerce has formulated a scheme called ASIDE. Assistance to States for Infrastructure Development of Exports (ASIDE)

Foreign Trade Policy Export oriented units(EOU)’s –They shall be exempted from service tax in proportion to their exported goods and services –Income tax benefits –An EOU/EHTP/STP/BTP unit may import and/or procure from DTA or bonded warehouses in DTA/international exhibition held in India without payment of duty all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import –("Domestic Tariff Area" means area within India which is outside the Special Economic Zones and EOU/ EHTP/ STP/BTP)

Foreign Trade Policy FREE TRADE & WAREHOUSING ZONES Creating world-class infrastructure for warehousing of various products, state-of-the-art equipment, transportation and handling facilities, commercial office-space, water, power, communications and connectivity, with one-stop clearance of import and export formality, to support the integrated Zones as ‘international trading hubs’. These Zones would be established in areas proximate to seaports, airports or dry ports so as to offer easy access by rail and road.

Foreign Trade Policy In the last five years exports witnessed robust growth to reach a level of US$ 168 billion in from US$ 63billion in Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008.

Foreign Trade Policy India’s total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.

Foreign Trade Policy Policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, expectations are to double India’s exports of goods and services. The long term policy objective for the Government is to double India’s share in global trade by 2020.

References International finance and trade,ICFAI publications