FOREIGN
TRADE POLICY 2004-2009
HIGHLIGHTS
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:
- to double India’s
percentage share of global merchandise trade by 2009; and
- 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:
- Unshackling of
controls;
- Creating an atmosphere
of trust and transparency;
- Simplifying procedures
and bringing down transaction costs;
- Adopting the fundamental
principle that duties and levies should not be exported;
- Identifying and
nurturing different special focus areas to facilitate development
of India as a global hub for manufacturing, trading and services.
2. Special
Focus Initiatives:
(a) Sectors
with significant export prospects coupled with potential for employment
generation in semi-urban and rural areas have been identified as
thrust sectors, and specific sectoral strategies have been
prepared.
(b) 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.
(c) The
threshold limit of designated ‘Towns of Export Excellence’
is reduced from Rs.1000 crores to Rs.250 crores in these thrust
sectors.
3. Package
for Agriculture:
The
Special Focus Initiative for Agriculture includes:
(a) 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.
(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 Agri Export Zone.
(d) ASIDE
funds to be utilized for development for Agri Export Zones also.
(e) Import
of seeds, bulbs, tubers and planting material has been liberalized.
(f) Export
of plant portions, derivatives and extracts has been liberalized
with a view to promote export of medicinal plants and herbal products.
4. 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.1
lakh.
(d) Import
of gold of 18 carat and above shall be allowed under the replenishment
scheme.
5. Handlooms
& Handicrafts:
(a) Duty free import
of trimmings and embellishments for Handlooms & Handicrafts
sectors increased to 5% of FOB value of exports.
(b) Import of trimmings
and embellishments and samples shall be exempt from CVD.
(c) Handicraft Export
Promotion Council authorised to import trimmings, embellishments
and samples for small manufacturers.
(d) A new Handicraft
Special Economic Zone shall be established.
6. Leather
& Footwear:
(a) Duty
free entitlements of import trimmings, embellishments and footwear
components for leather industry increased to 3% of FOB value of
exports.
(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.
7. Export
Promotion Schemes:
(a) Target
Plus:
A new
scheme to accelerate growth of exports called ‘Target Plus’
has been introduced.
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).
Rewards
will be granted based on a tiered approach. 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:
Another
new scheme called Vishesh Krishi Upaj Yojana (Special Agricultural
Produce 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
‘Served from India’ brand instantly recognized and respected
the world over, the earlier DFEC scheme for services has been revamped
and re-cast into the ‘Served from India’ scheme.
Individual
service providers who earn foreign exchange of at least Rs.5 lakhs,
and other service providers who earn foreign exchange of at least
Rs.10 lakhs will be eligible for a duty credit entitlement of 10%
of total foreign exchange earned by them.
In the
case of stand-alone restaurants, the entitlement shall be 20%, whereas
in the case of hotels, it shall be 5%.
Hotels
and Restaurants can use their duty credit entitlement for import
of food items and alcoholic beverages.
(d) EPCG:
(i) Additional
flexibility for fulfillment of export obligation under EPCG scheme
in order to reduce difficulties of exporters of goods and services.
(ii) Technological
upgradation under EPCG scheme has been facilitated and incentivised.
(iii) Transfer
of capital goods to group companies and managed hotels now permitted
under EPCG.
(iv) In
case of movable capital goods in the service sector, the requirement
of installation certificate from Central Excise has been done away
with.
(v) Export
obligation for specified projects shall be calculated based on concessional
duty permitted to them. This would improve the viability of such
projects.
(e) DFRC:
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) DEPB:
The
DEPB scheme would be continued until replaced by a new scheme to
be drawn up in consultation with exporters.
8. 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
(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.
9. 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 accounts.
(c) Income
Tax benefits on plant and machinery shall be extended to DTA units
which convert to EOUs.
(d) Import
of capital goods shall be on self-certification basis for EOUs.
(e) For
EOUs engaged in Textile & Garments manufacture leftover materials
and fabrics upto 2% of CIF value or quantity of import shall be
allowed to be disposed of on payment of duty on transaction value
only.
(f) Minimum
investment criteria shall not apply to Brass Hardware and Hand-made
Jewellery EOUs (this facility already exists for Handicrafts, Agriculture,
Floriculture, Aquaculture, Animal Husbandry, IT and Services).
10. Free
Trade and Warehousing Zone:
(i) 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 free currency. This is aimed at making
India into a global trading-hub.
(ii) FDI
would be permitted up to 100% in the development and establishment
of the zones and their infrastructural facilities.
(iii) Each
zone would have minimum outlay of Rs.100 crores and Five Lakh sq.
mts. built up area
(iv)
Units in the FTWZs would qualify for all other benefits as applicable
for SEZ units.
11. Import of
Second Hand Capital Goods:
a. Import
of second-hand capital goods shall be permitted without any age
restrictions.
b. Minimum
depreciated value for plant and machinery to be re-located into
India has been reduced from Rs.50 crores to Rs.25 crores.
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.
13. Common
Facility Centres:
Government
shall promote the establishment of Common Facility Centres to be
used by home-based service providers, particularly in areas like
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.
14.
Procedural Simplification & Rationalisation Measures:
(a) All
exporters with minimum turnover of Rs.5 crores and good track record
shall be exempted 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 exempted from Service Tax.
(c) Validity
of all licences/entitlements issued under various schemes has been
increased to a uniform 24 months.
(d) Number
of returns and forms to be filed have been reduced. This process
shall be continued in consultation with Customs & Excise.
(e) Enhanced
delegation of powers to Zonal and Regional offices of DGFT for speedy
and less cumbersome disposal of matters.
(f) Time
bound introduction of Electronic Data Interface (EDI) for export
transactions. 75% of all export transactions to be on EDI within
six months.
15. Pragati
Maidan:
In
order to showcase our industrial and trade prowess to its best advantage
and leverage existing facilities, Pragati Maidan will be transformed
into a world-class complex. There shall be state-of-the-art, environmentally-controlled,
visitor friendly exhibition areas and marts. A huge Convention Centre
to accommodate 10,000 delegates with flexible hall spaces, auditoria
and meeting rooms with high-tech equipment, as well as multi-level
car parking for 9,000 vehicles will be developed within the envelope
of Pragati Maidan.
16. Legal
Aid:
Financial
assistance would be provided to deserving exporters, on the recommendation
of Export Promotion Councils, for meeting the costs of legal expenses
connected with trade-related matters.
17. Grievance
Redressal:
A new
mechanism for grievance redressal has been formulated and put into
place by a Government Resolution to facilitate speedy redressal
of grievances of trade and industry.
18. Quality
Policy:
(a) DGFT
shall be a business-driven, transparent, corporate oriented organization.
(b) Exporters
can file digitally signed applications and use Electronic Fund Transfer
Mechanism for paying application fees.
(c) All
DGFT offices shall be connected via a central server making application
processing faster. DGFT HQ has obtained ISO 9000 certification by
standardizing and automating procedures.
19. Bio Technology Parks
Biotechnology
Parks to be set up which would be granted all facilities of 100%
EOUs.
20.
Co-acceptance/ Avalisation introduced
as equivalent
to irrevocable letter of credit to provide wider flexibility in
financial instrument for export transaction.
21.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.
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