EXIM POLICY OF INDIA 2004-09

Introduction:-

 The foreign trade of India is guided by the Export-Import policy of

the Government of India.
 Regulated by The Foreign Trade Development and Regulation
Act 1992.
 Exim policy contains various policy decisions with respect to
import and exports from the country.
 Exim Policy is prepared and announced by the central
government.
 Exim Policy of India aims to developing export potential,
improving export performance, encouraging foreign trade and
creating favorable balance of payment position.

About the Policy:-

 Mr. Kamal Nath, minister for commerce and industry

announced this policy on 31st Aug 2004.
 The duration of the policy is from 1st Sept. 2004 to 31st
March 2009.
 It takes an integrated view of the overall development of
India’s foreign trade.
 Aim of the policy is to double the global merchandise trade
within the policy time period of 5 years

General Objectives of Exim Policy:-

 To establish the framework for globalization.

 To promote the productivity competitiveness of Indian
Industry.
 To encourage the attainment of high and internationally
accepted standards of quality.
 To augment export by facilitating access to raw material,
intermediate, components, consumables and capital goods
from the international market.
 To promote internationally competitive import substitution
and self-reliance.
 To double our percentage of share of global merchandise
trade within the five year.
 To act as an effective instrument of economic growth by
giving a thrust to employment generation.
 Highlights of the New Foreign Trade Policy
2004-2009
1. Special Focus Initiatives: Semi-urban and Rural Area.

2. Agriculture: Vishesh Krishi Upaj Yojana and Agri Export Zones.

3. Handlooms and Handicrafts: Mark under Market Access

Initiatives Scheme and Proposed to start new SEZ.

4. Gems and Jewellery: Import of gold of 18 carat and above has

been permitted under the replenishment scheme

5. Leather and Footwear: Duty free import entitlement of specified

items shall be 5% of FOB value of exports during the preceding
year.

6. Export Promotion Schemes

a. Assistance to States for Infrastructure Development of
Exports [ASIDE]
b. Market Access Initiative [MAI]
c. Marketing Development Assistance [MDA]
d. Towns of Export Excellence
e. Target Plus Scheme.
f. Served from India Scheme
g. Service Export Promotion Council

7. New Status Holder Categorization

Category Total Performance

(In Rs.)
One Star Export House 15 crore

Two Star Export House 100 crore

Three Star Export House 500 crore

Four Star Export House 1500crore

Five Star Export House 5000 Crore

8. Board of Trade: The role is to advising government on relevant
issues connected with Foreign Trade Policy.

Implications of the Foreign Trade 2004-09

 Implications on Indian Economy:
– This policy propose to simplify procedures and develop
technology and infrastructure.
 Implications on Agriculture:
– Special Agricultural Produce Scheme has been introduced
for promoting the export of fruits, vegetables, flowers, and
their value added products.
 Implications on Handlooms and Handicraft:
– Establishment of Handicraft SEZ and Handicraft Export
Promotion Council would promote development of
Handloom and Handicraft Industry.
 Implications on Gem and Jewellery Sector :
– This is special thrust area in this policy.
– Duty free imports of other inputs would give a further
boost to this sector
 Implications on Leather and Footwear Industry :
– Duty free import as a specified percentage of exports.
– Exemption on customs duty on equipment for effluent
treatment plants would help promoting export form this
sector.
 Implications on Service Industry :
– An exclusive service promotion council has been set up in
order to map the opportunities for key services in key
market.
– Develop strategic market access programmes like brand
building in co-ordination with sectoral players and
recognize nodal bodies of the service industry.
Annual Supplement to Foreign Trade Policy 2004-09
Minister for Commerce and Industry, Government of India keeps on
announcing the annual supplements to increase the efficiency of the
exim policy.
Eg.- He has announced Annual Supplement for this year, as well, to the
Foreign Trade Policy 2004-09.

Highlights of the Supplement (2008-09)

DUTY ENTITLEMENT PASSBOOK SCHEME (DEPB)

To impart continuity and stability to our foreign trade regime, DEPB

scheme is being extended till May 2009.

REFUND OF SERVICE TAX

The Government has already announced refund of service tax on

almost all the services, which are directly relatable to export
production and supply. Some services related to export, which do not
attract service tax have also been clarified through a Circular. A few
remaining issues regarding refund of service tax will also be resolved
shortly.

INCOME TAX ON EOUs

Income tax benefit to 100% EOUs under Section 10B of I.T. Act, being
extended by Govt. for one more year, beyond 31.3.2009.

SECTORAL INITIATIVES

a. IT hardware sector as Special focus initiative - Specific items to

be included for benefits under High Tech Product Scheme. There
will also be earmarked funds for this sector under the MDA and
MAI Schemes.
b. Setting up a new Export Promotion Council for Telecom Sector to
provide institutional support to exports from telecom sector.
c. Export of Toys & Sports Goods will be given an additional duty
credit scrip @ 5 % (in addition to the existing benefits under
 Focus Product scheme). Separate funds for market promotion
activities will also be given for promoting these exports under
ongoing MDA Scheme and MAI Scheme.
d. Additional duty credit scrip of 2.5% over and above the normal
benefit available under VKGUY, for export of certain flowers,
vegetables and fruits.

RELIEF TO SECTORS AFFECTED BY RUPEE APPRECIATION

a. Interest subvention provided last year to sectors affected by

rupee appreciation and to SMEs, has been extended by one more
year.
b. Reduced average export obligation under EPCG, for sectors,
which have witnessed decline in exports in the previous year.

PROMOTION OF HIGH VALUE ADDED MANUFACTURED PRODUCTS

An enhanced duty credit scrip of 2.5% (instead of the normal 1.25%

under FPS) would be allowed for export of High value added
manufactured products. The list of products will be notified separately.

EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG)

a. The customs duty payable under EPCG Scheme has been

reduced from 5% to 3%.
b. To improve export competitiveness of Indian exports, all exports
made towards fulfillment of export obligation under EPCG
scheme will now be eligible for incentives/rewards under
promotional schemes.
c. Average export obligation under EPCG for Premier Trading
Houses shall, as an option, be calculated, based on the average
of last 5 year’s export, instead of the present 3 years.

FOCUS MARKET & PRODUCT SCHEMES

a. Coverage of FMS has been increased and additional 10 countries

have been included. These are Mongolia, Bosnia-Herzegovina,
Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana
and Colombia.

MEASURES TO REDUCE TRANSACTION COST TO EXPORTERS

a. Payment of duty under EPCG scheme through debit of duty credit

scrips under the promotional schemes or DEPB w.e.f. 1.1.2009.
b. Reduction of fee in case of supplementary claims from 10% to
2%.
BENEFITS TO THE IMPORTERS AND EXPORTERS

Duty Exemption / Remission Schemes of Exim Policy 2004-2009

1. The Duty Exemption Scheme enables import of inputs

required for export production. It includes the following
exemptions:-

Duty Drawback:
The Duty Drawback Scheme is administered by the Directorate of
Drawback, Ministry of Finance. Under Duty Drawback scheme, an
exporter is entitled to claim Indian Customs Duty paid on the imported
goods and Central Excise Duty paid on indigenous raw materials or
components.

Excise Duty Refund:

Excise Duty is a tax imposed by the Central Government on goods
manufactured in India. Excise duty is collected at source, i.e., before
removal of goods from the factory premises. Export goods are totally
exempted from central excise duty.

Octroi Exemption:
Octroi is a duty paid on manufactured goods, when they enter the
municipal limits of a city or a town. However, export goods are
exempted from Octroi.

2. The Duty Remission Scheme enables post export

replenishment/ remission of duty on inputs used in the export
product.

DEPB:
Duty Entitlement Pass Book in short DEPB Rate is basically an export
incentive scheme. The objective of DEPB Scheme is to neutralize the
incidence of basic custom duty on the import content of the exported
products.

DFRC:
Under the Duty Free Replenishment Certificate (DFRC) schemes,
import incentives are given to the exporter for the import of inputs
used in the manufacture of goods without payment of basic customs
duty. Duty Free Replenishment Certificate (DFRC) shall be available for
exports only up to 30.04.2006 and from 01.05.2006 this scheme is
being replaced by the

Duty Free Import Authorisation (DFIA):

It is issued to allow duty free import of inputs which are used in the
manufacture of the export product (making normal allowance for
wastage), and fuel, energy, catalyst etc. which are consumed or
utilised in the course of their use to obtain the export product. Duty
Free Import Authorisation is issued on the basis of inputs and export
items given under Standard Input and Output Norms (SION).

INTERNATIONAL
MARKETING
PROJECT

TOPIC:-
WHAT ARE THE HIGHLIGHTS
OF THE EXIM POLICY 2004-
09? EXPLAIN THE BENEFITS
TO IMPORTERS AND
EXPORTERS.