Foreign Trade Policy

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• Foreign Trade Policy Highlights
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• Anti Dumping Duty
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• Custom Duty
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• Trade Regulations
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• Baggage Rules

Foreign Trade Policy Highlights

For the first time, the government terminated the five-year Exim
Policy, 2002-07 and replaced it with Foreign Trade Policy (FTP)
for a term of five-year starting the fiscal year on the 31st August
2004. It takes an integrated view of the overall development of
the country's foreign trade.

Strategy
The objective of Foreign Trade Policy is of two-fold:
i. To make India's percentage share of global merchandiser
trade double by 2009; and
ii. To act as an effective instrument of economic growth by
giving a thrust to employment generation, especially in
semi-urban and rural areas.
The key strategies are of FTP are:
i. Unshackling of controls;
ii. Creating an atmosphere of trust and transparency;
iii. Simplifying the procedures and bringing down transaction
costs;
iv. Adopting the fundamental principle that duties and levies
should not be exported;
v. Identifying and nurturing different special focus areas to
facilitate development of India as a global hub for
 manufacturing, trading and services.
Special Focus Initiatives
Those sectors which have significant export prospects abreast of
potential for employment generation in the semi-urban and rural
areas have been identified as the thrust sectors. For these areas,
special sectoral strategies have been prepared.

Further, from time to time, sectoral initiatives in other sectors will

be announced. Currently Special Focus Initiatives have been
prepared for the agriculture, handicrafts, gems & jewellery,
handlooms and leather & footwear sectors.

The threshold limit of designated 'Towns of Export Excellence'

has been reduced to Rs. 250 crore from Rs. 1,000 crore in these
thrust sectors.

Package for Agriculture

The Special Focus Initiative for Agriculture are as follows:

A new scheme, Vishesh Krishi Upaj Yojana is introduced to

boost exports of fruits, vegetables, flowers, minor forest produce
and the value added products of these.

Duty free import of capital goods under EPCG scheme.

The capital goods which are imported under EPCG for agriculture
are permitted to be installed anywhere in the agri export zone.

ASIDE funds is to be utilized for the development for Agri

Export Zones also.

The import of seeds, bulbs, tubers and planting material has been
liberalised.

The export of plant portions, derivatives and extracts has been

liberalised with a few to promote export of medicinal plants and
herbal products.

Gems & Jewellery

The consumables for metals other than gold and platinum is
allowed to be imported duty free up to 2% of FOB value of
exports.

Duty free re-import entitlement for rejected jewellery is allowed

up to 2% of FOB value of exports.

Duty free import of commercial samples of jewellery is increased

to Rs. 1 lakh.

The import of gold of 18 carat and above shall be allowed under

replenishment scheme.

Handlooms & Handicrafts

Duty free import of trimmings and embellishments for handlooms
& handicrafts sectors is increased to 5% of FOB value of exports.

The import of trimmings and embellishments and samples shall

be exempt from CVD.

Handicraft Export Promotion Council (HEPC) is authorised to

import trimmings, embellishments and samples for small
manufacturers.

A new handicraft special economic zone will be established.

Leather and Footwear

For leather industry, duty free entitlements of import trimmings,
embellishments and footwear components is increased to 3% of
FOB value of exports.

For specified items for leather sector, duty free import increased
to 5% of FOB value of exports. The machinery and equipment for
effluent treatment plants for the leather industry shall be exempt
from customs duty.

Export Promotion Schemes

Target Plus :
Target Plus, a new scheme is introduced to accelerate growth of
exports.

Exporters having achieved a quantum growth in exports will be

entitled to a duty free credit based on incremental exports,
substantially higher than the general actual export target fixed.

Based on the tiered approach, rewards will be granted. For the

incremental growth of more than 20%, 25% and 100%, the duty
free credits will be 5%, 10% and 15% of FOB value of
incremental exports.

Vishesh Krishi Upaj Yojana :

One more new scheme, Vishesh Krishi Upaj Yojana (Special
agricultural produce scheme) is introduced to boost exports of
fruits, vegetables, flowers, minor forest produce and their value
added products. The export of the mentioned products shall
qualify for duty free credit entitlement equivalent to 5% of FOB
value of exports. The entitlement is transferable freely and can be
used for import of a variety of inputs and goods.

'Served from India' Scheme :

To accelerate growth in export of services in order to create a
powerful and unique 'Served from India' brand which will be
instantly recognised and respected the world over.

Individual service providers earning foreign exchange of at least

Rs. 5 lakh, and Rs. 10 lakh for other service providers will be
eligible for a duty credit entitlement of 10% of total foreign
exchange earned by them.

For stand-alone restaurants and for hotels, the entitlement shall be

20% and 5% respectively.

Hotels and restaurants may use their duty credit entitlement for
import of food items and alcoholic beverages.

EPCG :
i. Under EPCG scheme, additional flexibility to be given for
fulfillment of export obligation so that the difficulties of
exporters of goods and services are reduced.
ii. The technological upgradation under this scheme has been
facilitated and incentivised.
iii. Transfer of capital goods is now permitted under EPCG to
group companies and managed hotels.
iv. For movable capital goods in service sector, requirement
of installation certificate from Central Excise has been
done away with.
v. The export obligation for specified projects shall be
calculated based on the concessional duty which are
permitted to them. This would rather improve the viability
of such projects.
DFRC :
Fuel imported under DFRC entitlement shall be allowed to be
transferred to the marketing agencies which are authorized by the
Ministry of Petroleum and Natural Gas.

DEPB :
This scheme will continue until replaced by a new scheme to be
drawn up in consultation with exporters.

New Status Holder Categorisation

A new rationalised scheme of categorization of status holders has
been introduced as Star Export Houses. They are as mentioned
below:

Category - Total performance over three years

One Star Export House - Rs 15 crore
Two Star Export House - Rs 100 crore
Three Star Export House - Rs 500 crore
Four Star Export House - Rs 1,500 crore
Five Star Export House - Rs 5,000 crore

This houses will be eligible for a number of privileges including

fast-track clearance procedures, exemption from furnishing of
bank guarantee, eligibility for consideration under the target plus
scheme etc.

EOUs
Exemption of EOU from service tax in proportion to their goods
and services exported.

100% retention permission to EOU of export earnings in EEFC

accounts.

Income tax benefits on plant & machinery will be extended to

DTA units which convert to EOUs.

Import of capital goods will be on self-certification basis for

EOUs.

Up to 2% of CIF value or quantity of import shall be allowed to

be disposed of for EOUs engaged in Textile & Garments
manufacture leftover materials and fabrics on payment of duty on
transaction value only.

To brass hardware and handmade jewellery EOUs, minimum

investment criteria shall not be applied. This facility already
exists for handicrafts, agriculture, floriculture, aquaculture,
animal husbandry, IT and services.

Free Trade and Warehousing Zone

i. A new scheme to establish Free Trade and Warehousing
Zone is introduced to create trade-related infrastructure to
facilitate the import and export of goods and services with
the freedom to carry out trade transactions in free
currency. This is aimed to make India a global trading-
hub.
ii. Up to 100% FDI permitted in the development and
 establishment of the zones and their infrastructural
facilities.
iii. Each zone to have minimum outlay of Rs. 100 crores and
five lakh sq. mt. built up area.
iv. Units in the FTWZs would qualify for all other benefits as
applicable for SEZ units.
Import of Second-Hand Capital Goods
The imports of second-hand capital goods to be permitted without
any age restrictions.

The minimum depreciated value for plant and machinery is to be

re-located.

Services Export Promotion Council

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

Common Facilities Centre

Government to promote the establishment of the common facility
centres for the use by home-based service providers, especially in
the fields of engineering & architectural design, multi-media
operations, software developers etc., in State and District-level
towns, to draw in a vast multitude of home-based professionals
into the services export arena.

Procedural Simplification & Rationalisation Measures

Exporters having minimum turnover of Rs. 5 crores and good
track record shall be exempt from furnishing bank guarantee in
any of the schemes. This is to reduce their transactional costs.

Goods and services exported (including from the DTA units)

shall be exempt from service tax.

Validity of all the licences/entitlements issued under various

schemes is increased to a uniform 24 months.

The numbers of returns and forms used for filing has been
reduced. It will continue in consultation with Customs & Excise.

Enhanced delegation of powers to Zonal and Regional offices of

DGFT for a speedy and a less cumbersome disposal of matters.

Time bound introduction of Electronic Data Interface (EDI) for

export transactions. 75% of all export transactions to be on EDI
within six months.

Pragati Maidan
To showcase industrial and trade prowess to its best advantage
and leverage existing facilities, the Pragati Maidan will be
transformed into a world-class complex. It should be state-of-the-
art, environmentally-controlled, visitor friendly exhibition areas
and marts. To accommodate 10,000 delegates, a huge Convention
Centre with flexible hall spaces, auditoria and meeting rooms
with high-tech equipment, as well as multi-level car parking for
9,000 vehicles is to be developed within Pragati Maidan's
envelop.

Legal Aid
Deserving exporters will be provided with financial assistance on
the recommendation of Export Promotion Councils, so that they
can meet the costs of legal expenses connected with trade-related
matters.

Grievance Redressal
A new mechanism for grievance redressal is formulated and put
into place by a Government resolution in order to facilitate
speedy redressal of grievances of trade and industry.

Quality Policy
DGFT shall be a business-driven, transparent, corporate oriented
organization.

Exporters can file digitally signed applications and use Electronic

Fund Transfer Mechanism for paying application fees.

All the DGFT offices shall be connected via a central server

making the application processing faster. DGFT HQ has obtained
ISO 9000 certification.

Biotechnology Parks
Biotechnology parks is to be set up and to be granted all facilities
of 100% EOUs.

Co-Acceptance / Avalisation Introduced

It is as equivalent to the irrevocable letter of credit to provide the
wider flexibility in financial instrument for export transaction.