Você está na página 1de 16

Copy Right : Ra i Unive rsit y

11.675.3 141
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Export Import Policy of India
Introduction
Meaning
General Objectives.
Export-Import Policy 1997-2000
Objective.
Highlights.
Implications.
Export-Import Policy 2002-2007
Objective.
Highlights.
Implications.
Introduction
Trade policy governs exports from and imports into a country.
It is one of the various policy instruments used by a country to
attain her goals of economic develop-ment. This policy is thus,
formulated keeping in view, the national priorities for economic
development and the international commitments made by the
country. It is essential that the entrepreneurs and the export
managers understand the trade policy as it provides the vital
inputs for the formulation of their business growth strategies.
In India, the trade policy Le., export-import policy is formu-
lated by the Ministry of Commerce, Government of India in
terms of section 5 of the Foreign Trade (Development and
Regulation) Act,1992Besides, the Government of India also
announced on January 30,2002 a Medium Term Export
strategy, to guide the formulation the Export-Import Policy:
2002 - 07 with the, objective of achieving a share of 1 % in
world trade by the end of 2006 - 07 from the present I share of
0.6% (2000 - 01). The text of this strategy is given as Appendix
VII at the end of the book. The present Export - Import Policy
was announced on 31.3.2002 for a period of 5 years with effect
from 1.4.2002 to 31.3.2007 co-terminus with Tenth Five Year
Plan. It covers both the trade in merchandise and services. The
present chapter explains legal framework affecting foreign trade
of India particularly with reference to Export-Import Policy;
2002 - 2007. It also discusses the preferential trading arrange-
ments affecting exports and imports of India.
Meaning
The foreign trade of India is guided by the Export-Import
(Exim) Policy of the government of India arid is regulated by
the Foreign Trade (Development and Regulation) Act, 1992.
Exim Policy contains various policy decisions taken by the
government in the sphere of foreign trade, i.e., with respect to
imports and exports from the country and more especially
export promotion measures, policies and procedures related
thereto. It is prepared and announced by the Central Govern-
LESSON 19:
EXPORT- IMPORT POLICY OF INDIA
ment (Ministry of Commerce). Indias EXIM policy, in general,
aims at developing export potential, improving export perfor-
mance, encouraging foreign trade and creating favourable
balance of payments position.
Legal Framework for Foreign Trade of India
In India, the legal framework for the regulation of foreign trade
is mainly provided by the Foreign Trade (Development and
Regulation) Act, 1992, Garments Export Entitle-ment Policy:
2000-2004, Export (Quality Control and Inspection) Act, 1963,
Customs and Central Excise Duties Drawback Rules, 1995,
Foreign Exchange Management Act, 1999 --and the Customs
and Central Excise Regulations.
The main objective of the Foreign Trade (Development and
Regulation) Act is to provide for the development and regula-
tion of foreign trade by facilitating imports into, and
augmenting exports from India. This Act has replaced the
earlier law namely, the imports and Exports (Control) Act1947.
A comparison of the nomenclature of the two Acts makes it
very dear that there is a shift in the focus of the law from
control to development of foreign trade. This shift in the focus
is the outcome of the emphasis on liberalisation and
globalisation as a part of the process of economic reforms
initiated in India since June 1991.
The application of the provisions of the Foreign Trade
(Development & Regulation) Act 1992 has been exempted for
certain trade transactions vide Foreign Trade (Exemption from
application of Rules in certain cases) Order 1993
General Objectives of the Exim Policy
Government control import of non-essential items through an
import policy. At the same time, all-out efforts are made to
promote exports. Thus, there are two aspects of trade policy;
the import policy which is concerned with regulation and
management of imports and the export policy which is
concerned with exports not only promotion but also regula-
tion. The main objective of the Government policy is to
promote exports to the maximum extent. Exports should be
promoted in such a manner that the economy of the country is
not affected by unregulated exports of items specially needed
within the country. Export control is, therefore, exercised in
respect of a limited number of items whose supply position
demands that their exports should be regulated in the larger
interests of the country. In other words, the policy Aims at
(i) Promoting exports and augmenting foreign exchange
earnings; and
(ii) Regulating exports wherever it is necessary for the purposes
of either avoiding competition among the Indian
exporters or ensuring domestic availability of essential
items of mass consumption at reasonable prices.
142 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
The government of India announced sweeping changes in the
trade policy during the year 1991. As a result, the new Export-
Import policy came into force from April I, 1992. This was an
important step towards the economic reforms of India. In
order to bring stability and continuity, the policy was made for
the duration of 5 years. In this policy import was liberalised and
export promotion measures were strengthened. The steps were
also taken to boost the domestic industrial production. The
more aspects of the export-import policy
(1992-97) include: introduction of the duty-free Export
Promotion Capital Goods (Epcg) scheme, strengthening of the
Advance Licensing System, waiving of the condition on export
proceeds realisation, rationalisation of schemes related to
Export Oriented Units and units in the Export Processing
Zones. The thrust area of this policy was to liberalise imports
and boost exports.
The need for further liberalisation of imports and promotion
of exports was felt and the Government of India announced
the new Export-Import Policy (1997, 2002). This policy has
further simplified the procedures and reduced the interface
between exporters and the Director General of foreign Trade
(Dgft) by reducing the number of documents required for
export by half. Import has been further liberalised and efforts
have been made to promote exports.
The new Exim Policy 1997-2002 aims at consolidating the gains
made so far, restructuring the schemes to achieve further
liberalisation and increased transparency in the changed trading
environment. It focusses on the strengthening the domestic
industrial growth and exports and enabling higher level of
employment with due recognition of the key role played by the
SSI sector. It recognises the fact that there is no substitute for
growth, which creates jobs and generates income. Such trade
activities also help in stimulating expansion and diversification
of production in the country. The policy has focussed on the
need to let exporters concentrate on the manufacturing and
marketing of their products globally and operate in a hassle free
environment. The effort has been made to simplify and
streamline the procedure.
The objectives will be achieved through the coordinated efforts
of all the departments of the government in general and the
ty1inistry of Commerce and the Directorate General of Foreign
Trade and its network of Regional Offices in particular. Further
it will be achieved with a shared vision and commitment and in
the, best spirit of facilitation in the interest of export.
Objectives of the Exim Policy 1997-2002
The principal objectives of the EXIM Policy 1997 -2002 are as
under: -
a. To accelerate the economy from low level of economic
activities to high level of economic activities by making it
a globally oriented vibrant economy and to derive
maximum benefits fro~ expanding global market
opportunities.
b. To stimulate sustained economic growth by providing
access to essential raw materials, intermediates,
components, consumables and capital goods required for
augmenting production.
c. To enhance the technoloca1 strength and efficiency of
Indian agriculture, industry and services, thereby,
improving their competitiveness.
d. To generate new employment. Opportunities and
encourage the attainment of internationally accepted
standards of quality.
e. To provide quality consumer products at reasonable prices.
Highlights of the Exim Policy 1997-2002
a. Period of the Policy
This policy is valid for five years instead of t}:1ree
years as in the case of earlier policies. It is effective from
1st April 1997 to.31st March 2002.
b. Liberalisation
A very important feature of the policy is liberalisation.
It has substantially eliminated licensing, quantitative
restrictions and other regulatory and discretionary
controls. All goods, except those coming under
negative list, may be freely imported or exported.
c. Imports Liberalisation
Of 542 items from the restricted list 150 items have
been transferred to Special Import Licence (SIL) list and
remaining 392 items have been transferred to Open
General Licence (OGL) List.
d. Export Promotion Capital Goods (EPCG) Scheme
The duty on imported capital goods under EPCG
scheme has been reduced from 15% to 10%.
Under the zero duty EPCG Scheme, the threshold
limit has been reduced from Rs. 20 crore to Rs. 5 crore
for agricultural and allied! Sectors
e. Advance Licence Scheme
Under Advance License Scheme, the period for export
obligation has been extended from 12 months to 18
months.
A further extension for six months can be given on
payment of 1 % of the- value of unfulfilled exports.
f. Duty Entitlement Pass Book (DEPB) Scheme
Under the DEPB, an exporter may apply for credit, as a
specified percentage of FOB value of exports, made in
freely convertible currency.
Such credit can be can be utilised for import of raw
materials,intermediates, components, parts, packaging
materials, etc. for export purpose.
g. Special Import Licence (SIL) :-
150 items from the restricted list have been transferred
to SIL.
SIL on exports from SSIs has been increased from 1 %
to 2%.
Export houses and all forms of trading houses are
eligible for additional SIL of 1 % on exports of
products from SSIs from North Eastern States.
Copy Right : Ra i Unive rsit y
11.675.3 143
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Additional SIL has been declared for exploration of
new markets and for export of agro products.
The SIL entitlement of exporters holding ISO 9000
certification has been? Increased from 2% to 5% of the
FOB value of exports.
h. Export Houses and Trading Houses
The criteria for recognition of export houses and all forms of
trading houses has been modified.
(i) Deemed Exports .
Deemed exports facilities have been extended to oil
and gas sectors in addition to power sector.
(j) Software
Software units can undertake exports using data
communication links or through courier service.
Import of computer systems has been brought under
the purview of EPCG scheme. .
(k) Computerisation of DGFT Offices
By 1998, most DGFT transactions will be on line so as
reduce paper work and avoid delay in disposal of
applications.
(l) SSI Units
SIL on exports from SSls has been increased from
1 % to 2%.
Export houses and all forms of trading houses are
eligible for additional SIL of
1 % on exports of products from SSls from North
eastern States.
Reduction of threshold level to Rs. 5 crore from Rs.
20 crore under EPCG scheme will benefit SSls.
(m) Agriculture Sector
Double weightage will be given for agro exports in
calculating the eligibility for export houses and all
forms of trading houses.
Additional SIL of 1 % has been declared for export of
agro products.
EOUs and units in EPZs in agriculture and allied
sectors can sell 50% of their output in the
domestic tariff area (DT1) on payment of duty.
Under the zero duty EPCG Scheme, the threshold level
has been reduced from Rs. 20 crore to Rs. 5 crore for
agriculture and allied sectors.
Implications of the Exim Policy 1997 - 2002
The major implications of the EXIM Policy 1997-2002 are :-
(a) Globalisation of Indian Economy :-
The EXIM policy 1997-02
proposed to prepare a framework
for globalisation of Indian
economy.
This is evident from the very first
objective of the policy, which states
To accelerate the economy from
low level of economic activities to-
high level of economic activities by
making it a globally oriented
vibrant economy and to derive
maximum benefits from expanding
global market opportunities.
The Indian economy has been
exposed to more foreign
competition. The regime of high
protection is gradually vanishing.
It means, in order to survive, Indian
companies will have to pay due attention to
cost reduction, improvement in quality,
delivery schedules and after sales service.
At the same time, Indian industrys have also been
given an opportunity to globalise their business by
allowing them to import machineries and raw materials
from abroad on liberal terms.
(a) Impact on the Indian Industry :-
In the EXIM policy 1997-02, a series of reform
measures have been introduced in order to give boost
to Indias industrial growth and generate employment
opportunities in non-agricultural sector.
The reduction of duty from 15% to 10% under EPCG
scheme will enable Indian firms to import capital
goods. This will improve the quality and
productivity of the Indian industry.
However, liberalisation of imports by transferring 542'
items from restricted list to OGL and SIL list would
adversely affect the growth of, consumer goods
industry in India, as most of .these items are
consumer goods items.
(b) Impact on Agriculture Many encouraging steps have been
taken in order to give a boost to Indian agricultural sector.
Double weightage for agro exports while calculating the
eligibility for export houses and all forms of trading
houses.
Additional SIL of 1 % for export of agro products.
EOUs and units in EPZs in agriculture and allied
sectors can sell 50% of their output in the domestic
tariff area (DTA) on payment of duty.
(Amount In Rs. Crores) For 2000-01 Period
Fob Criterion Nfe Criterion
Annual
Average FOB
value of export
made during
preceding 3
licensing
FOB value
of export
made
during
preceding
licensing
years
Annual
Average FOB
value of export
made during
preceding 3
licensing years
FOB value
of export
made
during
preceding
licensing
years
Eh 15 22 12 18
Th 75 112 62 90
Sth 375 560 312 450
Ssth 1125 1680 937 1350
144 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Under .the zero duty EPCG Scheme, the threshold
level has been reduced from Rs. 20 crore to Rs.. 5 crore
for agriculture and allied sectors.
(c) Impact on. Foreign Investment .:.
In order to encourage foreign investment in India, the
EXIM policy 1997-02 has permitted 100% foreign
equity participation in the case of 100% EOUs, and
units set up in EPZs.
Due to liberalisation of procedural formalities, foreign
companies may bee attracted to set up manufacturing
units in India.
Full Convertibility of Indian Rupee on revenue
account would also give a fillip to foreign investment
in India.
(d) Impact on Quality Upgradation
The SIL entitlement of exporters holding ISO 9000
certification has been increased from 2% to 5% of the
FOB value of exports.
This would encourage Indian industries to undertake
research and development programmers and upgrade
the quality of their products.
Liberalisation of EPCG scheme would encourage
Indian industries to import capital goods and improve
quality and increase productivity of goods.
(e) Impact on Self-reliance
One of the long-term objectives of the Indian
planning is to become self- reliant. This objective is
well reflected in the EXIM Policy 1997-02.
The policy aims at encouraging domestic sourcing of
raw materials, so as to build up a strong domestic
production base.
In order to achieve this the policy has also extended the
benefits given to exporters to deemed exporters. This
would lead to import substitution.
Oil, power and natural gas sectors have also been
brought under the purview of deemed exports.
However, the globalisation policy of the government may harm
the interests of SSls and cottage industries, as they may not be
able to compete with MNCs.
Export- Import Policy 2002 - 2007
The Export- Import Policy: 2002 - 2007 deals with both the
export and import of merchandise and services. It is worth
mentioning here that the Export -Import Policy: 1997 - 2002
had accorded a status of exporter to the business firm export-
ing services with effect from1.4.1999. Such business firms are
known as Service Providers.
The Export- Import Policy has been described in the following
documents:
Export- Import Policy: 2002- 2007
Handbook of Procedures Volume I
Handbook of Procedures Volume II
ITC(HS) Classification of Export- Import Items
The main policy provisions are given in the policy document
entitled Export -Import Policy 2002-2007. An exporter will
have to refer to the Handbook of Procedures Volume-I to
know the procedures, the agencies and the documentation
required to take advantage of a certain provision of the policy.
There is a para-by-para correspondence between the Policy and
the Handbook of Procedures Volume-I. Thus, if an exporter
finds that para 6.2 of the policy is relevant for his business
enterprise then he should also refer to the corresponding para
of the Handbook of Procedures Volume- I to know precisely
what is to be done t01ake advantage of the policy provision.
The Handbook of Proce-dures Volume-II provides a very vital
information as regards the standard input-output norms in
regard to items of export from India. Based on these norms,
exporters are provided the facility to make duty-free import of
inputs required for manufacture of export products under the
Duty Exemption Scheme/ Duty Remission Scheme. The policy
regarding import or export of a specific item is given in the
document entitled ITC (HS) Classifications of Export -
Import Items.
In addition to these policy documents, an export enterprise
should also refer to the various policy circulars and trade notices
issued by various regulatory authorities deal-ing with different
aspects of foreign trade. One can refer to these notices either by
visiting the relevant web site of the authority concerned or by
referring to various trade magazines which circulate them.
Objectives of The Export- Import Policy 2002 - 2007
The export-import policy 1997-2002 carried forward the process
of liberalization and globalization set in motion by the process
of economic reforms initiated since June, 1991. These reforms
had aimed at restructuring the Indian economy to increase the
productivity and competitiveness of foreign trade enterprises in
order to achieve a higher rate of growth in exports. It also
enabled the foreign trade grow in an environment of liberaliza-
tion from licensing procedures, quantitative restrictions,
discretionary bureau-cratic controls and cumbersome documen-
tation procedures. The present Export-Import-Policy:
2002-2007 aims at facilitating the growth in exports to attain a
share of at least 1 % of global merchandise trade by the end of
2006-07. Specifically, main objectives of the present policy are as
follows:
1). To stimulate sustained economic growth by providing
access to essential raw ma- terials,intermediates,
components, consumables and capital goods required for
augmenting production and providing services.
2). To enhance the technological strength and efficiency of
Indian agriculture, indus-try and services, thereby
improving their competitive strength while generating new
employment opportunities and encourage the attainment
of internationally accepted standards of quality; and
3). To provide consumers with good quality products and
services at internationally competitive prices while at the
same time creating a level playing field for the domestic
producers
Copy Right : Ra i Unive rsit y
11.675.3 145
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Features of Exim Policy
Union Commerce and Industry Minister Mr. Murasoli Maran
announced the Exim policy for the 5 year period (2002-07) on
March 31, 2002. The main thrust of the policy is to push Indias
exports aggressively by undertaking several measures aimed at
augmenting exports of farm goods, the small scale sector,
textiles, gems and jewellery, electronic hardware etc. Besides
these, the policy aims to reduce transaction cost to trade
through a number of measures to bring about procedural
simplifications. In addition, the Exim policy removes quantita-
tive restrictions (QRs) on exports, except a few sensitive items.
1. Special Economic Zones (SEZs)
(a) Offshore Banking Units (OBUs) shall be permitted in
Special Economic Zones
(SEZs).
(b) Units in SEZ would be permitted to undertake hedging of
commodity price- risks, provided such transactions are
undertaken by the units on stand- alone basis.
(c) Units in SEZ shall be permitted External Commercial
Borrowings (ECBs) for a tenure of less than three years.
(d) Four existing EPZs have been converted into SEZs and 13
New SEZs have
already been given approval.
2. Employment Oriented Measures:- Exim (2002-07) policy
initiated a number of measures which would help
employment orientation. Among them were the following:
(a) Agriculture
Removal of quantitative and packaging restrictions on
wheat and its products,
Butter, pulses, grain and flour of barley, maize, bajra,
ragi and jowar.
Removal of restrictions on export of all cultivated
(other than wild) varieties of seed, except jute and
onion.
20 Agricultural Export Zones have been notified.
Transport subsidy for export of fruits, vegetables,
floriculture, poultry and dairy products.
3% special DEPB rate for primary and processed foods
exported in retail packaging of 1 kg. or less.
(b) Cottage Sector and Handicrafts :-
An amount of Rs. 5 crore under Market Access
Initiative (MAl) has been earmarked for promoting
cottage sector exports coming under the Khadi and
Village Industries Commission (KVIC).
Market Access Initiative (MAI) scheme for the
development of website for virtual exhibition of
products from the handicrafts sector. ,
Entitlement for Export House Status at Rs. 5 crore
instead of Rs.15 crore for others.
Entitlement to duty free imports of an enlarged list of
items as embellishments upto3% of FOB value of
exports.
(c) Small Scale Industry
With a view to encouraging further development of centres of
economic and export excellence such as Tirpur for hosiery,
woollen blankets in Panipat, woollen knitear in Ludhiana,
following benefits would be available to small-scale sector.
EPCG facility for the common service providers in
these areas.
Market Access Initiative (MAl) for creating focused
technological services and marketing abroad to the
recognised associations of units in SSI.
Entitlement for Export House Status at Rs. 5 crore
instead of Rs.15 crore for others.
(d) Leather
Duty free imports upto 3% of f.o.b. value combined to leather
garments has been extended to all leather products.
(e) Textiles
Sample fabrics permitted duty free within the 3% limit
for trimmings and embellishments.
Additional items such as zip fasteners, inlay cards,
eyelets, rivets, toggles, Velcro tape, cord and cord
stopper included in input output norms.
Duty Entitlement Passbook (DEPB) rates for all kinds
of blended fabrics permitted.
(f) Gem and Jewellery :-
Import of rough diamonds is allowed freely at 0%
customs duty.
Licensing regime for rough diamond is being
abolished.
Value addition norms for export of plain jewellery
reduced to 7% and for all merchandised unstudded
jewellery to 3%.
Personal carriage of jewellery allowed through
Hyderabad and Jaipur airport as well.
Technology Oriented
(a) Electronic Hardware
Conversion of the Electronic Hardware Technology
Park (Ehtp) into zero duty regime under the ITA
(Information Technology Agreement)-I
Net Foreign Exchange as Percentage of Exports
(Neep) to be made positive in 5 years.
No other export obligation for units in Ehtp.
(b) Chemicals and Pharmaceuticals :-
65% of DEPB rate for pesticides formulations.
No limit on export of samples. .
Reimbursement of 50% of registration fees on
registration of drugs.
(c) Projects:
Free import of equipment and other goods used
abroad for more than one year.
146 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Growth Oriented
(a) Strategic Package for Status Holders:
Licence, certificate, permissions. and customs clearances for
both imports and exports on self-declaration basis.
Priority finance for medium and long term capital
requirement as per conditions notified by the RBI.
Exemption from compulsory negotiation of documents
through banks, However, the remittance would continue
to be received through banking channels.
100% retention of foreign exchange in Exchange Earners
Foreign Currency 1EEFC) account.
Enhancement in normal repatriation period from 180 days
to 360 days,
(b) Diversification of Markets :-
Setting up of Business Centre in Indian missions
abroad for visiting Indian exporters/ businessmen..
ITPO portal to host a permanent virtual exhibition of
Indian export products.
Focus Latin American Countries (LAC) has been
extended upto March 2003.
Focus Africa has been launched for developing trade
relations with the Sub-Saharan African region. The
exporters exporting to these markets shall be given
Export House Status. on export of Rs. 5 crore.
Links with the Commonwealth of Independent States
(CIS) countries to be revived.
(c) North Eastern States, Sikkim and Jammu and Kashmir :-
Transport subsidy for exports to be given to units
located in North East, Sikkim and-Jammu and
Kashmir so as to offset the disadvantage of being far
from ports.
(d) Neutralising High Fuel Cost:-
Fuel costs to be rebated for all export products. This
would enhance the cost competitiveness of our export
products.
Procedural Reforms
(a) Dgft
The new 8 digit commodity classification for imports
introduced by the Director General of Foreign Trade
(DGFT) would also be adopted by the Customs and
Director: General of Commercial Intelligence and
Statistics (DGCI&S) shortly. This will eliminate the
classification disputes and hence reduce transaction
costs and time.
The maximum fee limit for electronic application under
various schemes has been reduced from Rs. 1.5 lakh to
Rs. 1.00 lakh.
Same day licensing introduced in all regional offices.
(b) Customs
Adoption and harmonisation of the 8 digit Indian
Trade Classification (ITC) Harmonised System (HS)
code.
The percentage of physical examination of export
cargo has already been reduced to less than 10%
except for a few sensitive destinations.
Fixation of special brand rate of drawback within 15
days.
(c) Banks
Direct negotiation of export documents to be
permitted.
100% retention in Exchange Earners Foreign Currency
(EEFC) accounts.
Enhancement in normal repatriation period from 180
days to 360 days.
Trust Based
(a) Import and export of samples to be liberalised for
encouraging product up gradation
(b) Penal interest rate for bonafide defaults to be brought
down from 24% to 15%.
(c) No penalty for non-realisation of export proceeds in
respect of cases covered. by ECGC insurance package.
(d) No seizure of stock in trade so as to disrupt the
manufacturing process affecting delivery
schedule of exporters.
(e) Foreign Inward Remittance Certificate (FIRC) to be
accepted in lieu of Bank Realisation
Certificate for documents negotiated directly.
(f) Optional facility to convert from one scheme to another
scheme. In case the exporter is denied the benefit under
one scheme, he shall be entitled to claim benefit under
some other scheme.
(g) Newcomers. to be entitled for licences without any
verification against execution of Bank Guarantee.
Duty Neutralisation Instruments
(a) Advance Licence
Duty Exemption Entitlement Certificate (DEEC)
book to be abolished. Redemption on the basis of
Shipping Bill and Bank Realisation Certificate.
Withdrawal of Advance Licence for Annual
Requirement (AAL) scheme. The exporters can avail
Advance Licence for any value.
(b) Duty Entitlement Passbook (DEPB) Scheme:-
Value cap exemption granted on 429 items to continue.
DEPB rates slashed on 8 out of 10 items.
Reduction in rates only after due notice.
No Present Market Value (PMV) verification except on
specific intelligence
Same DEPB rate for exports whether as CBUs or in
CKD/ SKD form. .
DEPB for transport vehicles to Nepal in free foreign
exchange.
Copy Right : Ra i Unive rsit y
11.675.3 147
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
(c) Export Promotion Capital Goods (EPCG):-
EPCG licences of Rs. 100 crore or more to have 12
year export obligation period with 5 year moratorium
period.
Export obligation fulfillment period extended from 8
years to 12 years in respect of units in Agricultural
Export Zones and in respect of companies under the
revival plan of BIFR. .
Supplies under Deemed Exports to be eligible for
export obligation fulfilment along with deemed export
benefit
Implications of The Exim Policy 2002- 07
The implications of the EXIM Policy 2002-07 are as follows :-
(a) All-round Development of Indian Economy:. The Exim
2002-07emphasises all-round development of Indian
economy by giving due weightage to different sectors of
the economy. That is why. the policy has been described as
Employment Oriented.
Technology Oriented.
Growth Oriented. .
This has also been reflected in its objectives :-
To facilitate sustained growth in exports.
To stimulate sustained economic growth.
To enhance the technological strength and efficiency of
Indian agriculture, industry and services.
To generate new employment opportunities
To attain internationally accepted standards of quality.
To provide consumers with good quality goods and
services at internationally competitive prices.
(b) Implications on Agricultural Sector :- Agriculture being the
backbone of Indian economy, the EXIM policy has
initiated a series of measures for its growth and
development, especially for promotion of exports from
agricultural sector.
Removal of quantitative and packaging restrictions on
certain agricultural products and on export of all
cultivated varieties of seed would give a major boost to
the export of these items.
Identification of 20 Agricultural Export Zones would
help in development
Of specific geographical areas for export of specific
products.
Extension of export obligation fulfilment period from
8 years to 12 years in respect of units in Agricultural
Export Zones.
Other measures such as transport subsidy, 3% special
DEPB rate, would definitely give a fillip to exports
from agricultural sector.
(c) Implications on Development of Cottage Industries :. The
small scale sector, alongwith the cottage and handicraft
sector, has been contributing to more than half of the
total exports of the country. In recognition of the export
performance of these sectors and to further increase their
competitiveness, the following facilities have been extended
to this sector :-
Incentives such as Market Access Initiative (MAl), duty
free imports upto 3% of FOB value of exports,
EPCG facility, etc.
Entitlement for Export House Status at Rs. 5 crore
instead of Rs.15crore for others. These steps would
encourage units in cottage industries to develop their
export potentiality.
(d) Implications on Small Scale Industry :- With a view to
encourage further development of centres of economic and
export excellence as Tripura for hosiery, woollen blankets in
Panipat, woollen knitwear in Ludhiana, the following
benefits have been made available to the small scale sector :-
Common service providers in these areas shall be
entitled for facility of EPGC Scheme. .
Availability of Market Access Initiative Scheme for
creating focused technological services and marketing
abroad.
Entitlement for Export House Status at Rs. 5 crore
instead of Rs.15 crore for others.
These steps would lead to development of new centres of
economic and export excellence.
(e) Implications on Gem and Jewellery Industry :. Having
already achieved leadership position in diamonds, the
Exim. Policy 2002-07 aims at achieving a quantum jump
on jewellery exports as well. In order to achieve this, the
following steps have been taken in the new Exim Policy
Import of rough diamonds is allowed freely at 0%
custom duty.
Abolition of licensing regime for rough diamonds
would help the country emerge as a major international
centre for diamonds.
Value addition norms for export of plain jewellery
reduced to 7% and for all merchandised unstudded
jewellery to 3%
Personal carriage of jewellery allowed through
Hyderabad and Jaipur airports as well.
(f) Implications on Industrial Sector
Liberalisation of EPCG scheme would help Indian
industries to promote. quality up gradation and would
also enable sick units to revive.
Extension of repatriation period for realisation of
export proceeds from180 days to 360' days -would help
Indian industries to be more competitive in offering
liberal payment terms to foreign importers.
Licence, certificate, permissions and customs clearances
for both imports and exports on self-declaration basis,
priority finance for medium and long term capital
requirement and 100% retention of foreign exchange
in Exchange Earners Foreign Currency (EEFC)
account would definitely benefit Indian industries and
would encourage Indian producers to enter the export
field.
148 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Exemption from compulsory negotiation of
documents through banks would help exporters to
save bank charges.
Transport subsidy for exports from units located in
North East, Sikkim and Jammu and Kashmir would
offset the disadvantage of being far from ports.
(g) Diversification of Indian Industrial Sector :- In order to
promote Indian industries to diversify their business and
markets, the following measures have been taken in the
Exim Policy 2002-07
Setting up of Business Centre in Indian missions
abroad would enable India exporters and businessmen
to visit abroad.
Launching of Focus LAC (Latin American Countries)
in Novernber 1997 has greatly accelerated Indian trade
with Latin American countries. Extension of this
programme upto March 2003 would enable Indian
exporters to consolidate the gains of this programme.
There is a tremendous potential for trade with the Sub-
Saharan African region. Launching of Focus Africa
programme would help exporters to diversify their
exports to these markets. .
Permission granted to External. Commercial
Borrowings (ECBs) for tenure of less than three years
in SEZs would provide opportunities for accessing
working capital loan for these units at internationally
competitive rates.
(h) Implications on Technology Upgradation :-
Conversion of Electronic Hardware Technology Park
(Ehtp) into zero duty regime under the ITA
(Information Technology Agreement)- I would give
encouragement to setting up of more units in EHTP.
Liberalisation of import and export of samples would
encourage product upgradation.
Liberalisation of EPCG scheme would encourage
Indian industries to import capital goods and improve
quality and increase productivity of goods.
This would also encourage Indian industries to
undertake research and development programmes and
upgrade the quality of their products.
(i) Implications on Procedural Formalities :- Various
procedural simplifications would reduce transaction costs
and save time. Some of such steps include :-
Adoption of a new 8 digit commodity classification for
imports by Customs and Director General of
Commercial Intelligence and Statistics (DGCI&S)
would eliminate the classification disputes and hence
reduce transaction costs and time.
Reduction of the maximum fee limit for electronic
application under various schemes from Rs. 1.51akh to
Rs. 1.00 lakh.
Foreign Inward Remittance Certificate (FIRC) to be
accepted in lieu of Bank Realisation Certificate for
documents negotiated directly.
Fixation of special brand rate of drawback within 15
days.
Reduction. in percentage of physical examination of
export cargo to 10%.
Penal interest rate for bonafide defaults to be brought
down to 15%.
No penalty for default where payment is covered by
ECGC policy.
No seizure of stock in trade..
Same day licensing introduced in all regional offices.
Newcomers to be entitled for ljcences against execution
of Bank Guarantee.
Optional facility to convert from one scheme to
another scheme.
Questions Bank
Q.1. What is an EXIM Policy? What are its objectives?
Q.2. What are the objectives of EXIM policy 1997-02 ?
Q.3. Explain the major highlights of EXIM policy 1997-02.
Q.4. Explain the effect of EXIM Policy 1992-97 on the
following:-
(i) Foreign Exchange. (ii) Technology Upgradation. (iii)
Export Promotion.
Q;5.What are the objectives of EXIM policy 2002-07 ? ..
Q.6. Explain the major highlights of EXIM policy 2002-07.
Q.7. Explain the implications of the EXIM Policy 2002-07.
Terms Used in EXIM Policy
Notes.
Special Economic zones (SEZs)
Agriculture Export zones. (AEZs)
Negative List for Exports.
Open general Licence.
Export Obligations.
Counter Trade.
Note on Special Economic Zones (Sezs)
Special Economic Zones (SEZs) Scheme in India was conceived
by the Commerce and Industries Minister Murosoli Maran
during a visit to Special Economic Zones in China in 1999. The
scheme was announced at the time of annual review of EXIM
Policy effective from 1.4.2000. The basic idea is to establish the
zones as areas where export production could take place free
from all roles and regulations governing imports and exports
and to give them operational flexibility.
Special Economic Zone (SEZ) is a specifically delineated duty
free enclave, which shall be deemed to be a foreign territory for
the purposes of trade operations and duties and tariffs. .
Features of Special Economic Zones (Sezs)
(a) Goods going into the SEZ area from DTA shall be treated
as. deemed exports and the domestic suppliers are. eligible
for deemed export benefits. Similarly, goods coming from
the SEZ area into DTA shall be treated as if the goods are
being imported.
Copy Right : Ra i Unive rsit y
11.675.3 149
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
(b) SEZ units may be set up (or manufacture of goods and
rendering of services, production, processing,
c:l.8sembling, trading, repair, remaking, reconditioning, re-
engineering including making of gold, silver or platinum
jewellery and articles thereof.
(c) Foreign Direct Investment (FDI) upto 100% is allowed
through automatic I route for all manufacturing activities
except arms and ammunition, items of defense
equipments, narcotic. And psychotropic substances,
hazardous chemicals, brewing of alcoholic drinks, cigarettes
and tobacco.
(d) Procurement of raw materials and exports of finished
products are exempted from central levies
(e) The entire production of the units in the SEZs must be.
exported and DTA sales is permitted
only on the payment of full applicable customs duties.
(e) SEZ units are eligible for a corporate tax holiday upto
2010, under the I . provisions of section 10A of the
Income Tax Act.
(f) SEZ units can retain 100% of their exports proceeds in
Exchange Earners Foreign Currency (EEFC) account.
(g) Realisation of exports proceeds extended to 12 months
from the date of export.
(h) State Trading Enterprises Policy will not apply to SEZ
manufacturing units.
(i) Creating special windows under existing rules and
regulations of the Central Govt. and State Govt. for SEZ
is developing a framework
(j) State Government have a lead role in the setting up of
SEZ.
Special Packages for Sezs in The Exim Policy 2002-07
(a) Offshore Banking Units (OBUs) shall be per1Ilitted in
Special Economic Zones (SEZs).
(b) Units in SEZ would be permitted to undertake hedging of
commodity price-risks, provided such transactions are
undertaken by the units on stand- alone basis..
(c) Units in SEZ shall be permitted External Commercial
Borrowings (ECBs) for a tenure of less than three years.
(d) Four existing EPZs namely, Kandla, Santacruz, Kochin
and Surat have been converted SEZs and 13 New SEZs
have already been given approval.
Export Performance Of The Four Functional Sez
Export performance of the four functional SEZ are as given
below
Special Economic Zones- Legal Prospective
Eligibility
(a) Special Economic Zone (SEZ) is a specifically delineated
duty free enclave and shall be deemed to be foreign territory
for the purposes of trade operations and duties and tariffs
(b) Goods and services going into the SEZ area from DTA
shall be treated as exports and goods coming from the
SEZ area into DTA shall be treated as if these are being
imported
(c) SEZ units may be set up for manufacture of goods and
rendering of services
Export and Import of Goods
(a) SEZ units may export goods and services including agro-
products, partly processed goods, sub-assemblies and
components except prohibited items of exports in ITC
(HS). The units may also export by-products, rejects, waste
scrap arising out of the production process. Export of
Special Chemicals, Organisms, Materials, Equipment and
Technologies (SCOMET) shall be subject to fulfillment of
the conditions indicated in the ITC (HS) Classification of
Export and Import Items. SEZ units, other than trading/
service unit, may also export to Russian Federation in
Indian Rupees against repayment of State Credit/ Escrow
Rupee Account of the buyer, subject to RBI clearance, if
any.
(b) SEZ unit may import/ procure from the DTA without
payment of duty all types of goods and services, including
capital goods, whether new or second hand, required by it
for its activities or in connection therewith, provided they
are not prohibited items of imports in the ITC(HS).
However, any permission required for import under any
other law shall be applicable. Goods shall include raw
material for making capital goods for use within the unit.
The units shall also be permitted to import goods required
for the approved activity, including capital goods, free of
cost or on loan from clients.
(c) Sez units may procure goods required by it without
payment of duty, from bonded warehouses in the DTA
Zone
2000-2001
(Rs millions)
2001-2002
(Rs millions)
2002-2003
(Rs. millions)
KandlaSEZ 5278.90 4759.80 7292.90
SEEPZ, SEZ 51937.00 52256.00 60830.20
Cochin SEZ 3043.00 2585.00 2704.20
Surat SEZ 622.80 3118.60 2807.10
NoidaSEZ 10342.00 9804.10 10011.70
Madras SEZ 6908.40 7625.90 8191

Vishakhapatnam
SEZ
2190.80 2530.20 3572.7

Faltz SEZ
5199.70 9236.30 5123.90
Total : 85523.00 91895.50 100533.70

150 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
set up under the Policy and/ or under Section 65 of the
Customs Act and from International Exhibitions held in
India.
(d) Sez units, may import/ procure from Dta, without
payment of duty, all types of goods for creating a central
facility for use by units in SEZ. The Central facility for
software development can also be accessed by units in the
Dta for export of software
(e Gem & Jewellery units may also source gold/ silver/
platinum through the nominated agencies
(f) Sez units may import/ procure goods and services from
Dta without payment of duty for setting up, operation and
maintenance of units in the Zone
Leasing of Capital Goods
(a) Sez unit may, on the basis of a firm contract between the
parties, source the capital goods from a domestic/ foreign
leasing company. In such a case the SEZ unit and the
domestic/ foreign leasing company shall jointly file the
documents to enable import/ procurement of the capital
goods without payment of duty.
Net Foreign Exchange Earning (Nfe)
SEZ unit shall be a positive Net Foreign exchange Earner. Net
Foreign Exchange Earning (NFE) shall be calculated cumula-
tively for a period of five years from the commencement of
production according to the formula given in Appendix -14-II
of the Handbook (Vol-I)
Monitoring of Performance
(a) The performance of SEZ units shall be monitored by the
Unit Approval Committee
(b) The performance of SEZ units shall be monitored as per
the guidelines given in Appendix 14-II of Handbook
(VolI).
Legal Undertaking
The unit shall execute a legal undertaking with the Develop-
ment Commissioner concerned and in the event of failure to
achieve positive foreign exchange earning it shall be liable to
penalty in terms of the legal undertaking or under any other law
for the time being in force.
Approvals and Applications
(a) Applications for setting up a unit in SEZ other than
proposals for setting up of unit in the services sector
(except software and IT enabled services, trading or any
other service activity as may be delegated by the BOA), shall
be approved or rejected by the Units Approval Committee
within 15 days as per procedure indicated in Annexure to
Appendix 14-II of Handbook (Vol-I) . In other cases
approval may be granted by the Board of Approval.
(b) Proposals for setting up units in SEZ requiring Industrial
Licence may be granted approval by the Development
Commissioner after clearance of the proposal by the SEZ
Board of Approval and Department of Industrial Policy
and Promotion within 45 days on merits.
Dta Sales and Supplies
(a) Sez unit may sell goods, including by-products, and
services in DTA in accordance with the import policy in
force, on payment of applicable duty.
(b) Dta sale by service/ trading unit shall be subject to
achievement of positive NFE cumulatively. Similarly for
units undertaking manufacturing and services/ trading
activities against a single LOP, DTA sale shall be subject to
achievement of NFE cumulatively.
(c) The following supplies effected in DTA by SEZ units will
be counted for the purpose of fulfilment of positive NFE:
(i) Supplies made to bonded warehouses set up under the
Policy and/ or under Section 65 of the Customs Act.
(ii) Supplies to other EOU/ SEZ/ EHTP/ STP units
provided that such goods are permissible for procurement
by units
(iii) Supplies against special entitlement of duty free import of
goods.
(iv) Supplies of goods and services to such organizations
which are entitled for duty free import of such items in
terms of general exemption notification issued by the
Ministry of Finance.
(v) Supply of services (by services units) relating to exports
paid for in free foreign exchange or for such services
rendered in Indian Rupees which are otherwise considered
as having been paid for in free foreign exchange by RBI.
(vi) Supplies of Information Technology Agreement (ITA-1)
items and notified zero duty telecom/ electronic items
indicated in the Appendix 14-II of Handbook.
Export through Status Holder
SEZ unit may also export goods manufactured/ software
developed by it through a merchant exporter/ status holder
recognized under this Policy or any other EOU/ SEZ/ EHTP/
STP unit.
Inter-unit Transfer
(a) SEZ units may transfer manufactured goods, including
partly processed/ semi-finished goods and services from
one SEZ unit to another SEZ/ EOU/ EHTP/ STP unit.
(b) Goods imported/ procured by a SEZ unit may be
transferred or given on loan to another unit within the
same SEZ which shall be duly accounted for, but not
counted towards discharge of export performance
(c) Capital goods imported/ procured may be transferred or
given on loan to another SEZ/ EOU/ EHTP/ STP unit
with prior permission of the Development Commissioner
and Customs authorities concerned.
(d) Transfer of goods in terms of sub-paras (a) and (b) above
within the same SEZ shall not require any permission but
the units shall maintain proper accounts of the transaction.
Sub- Contracting
(a) Sez unit, may subcontract a part of their production or
production process through units in the DTA or through
other SEZ/ EOU/ EHTP/ STP, with the annual
Copy Right : Ra i Unive rsit y
11.675.3 151
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
permission of Customs authorities. Subcontracting of
part of production process may also be permitted abroad
with the approval of the Development Commissioner.
(b) Sub-contracting by SEZ gems and jewellery units through
other SEZ units or EOUs or units in DTA shall be subject
to following conditions.
(i) Goods, finished or semi finished, including studded
jewellery, taken outside the zone for sub- contracting shall
be brought back to the unit within 30 days. No cut and
polished diamonds, precious and semi-precious stones
(except precious and semi precious stone having zero duty)
shall be allowed to be taken outside the zone for sub-
contracting.
(ii) Receive plain gold/ silver/ platinum jewellery from DTA in
exchange of equivalent quantity of gold/ silver/ platinum,
as the case may be, contained in the said jewellery.
(iii) SEZ units shall be eligible for wastage as applicable for
sub-contracting and against exchange
(iv) The DTA unit undertaking job work or supplying jewellery
against exchange of gold/ silver/ platinum shall not be
entitled to export benefits.
(c) All units, including gem and jewellery, may sub-contract
part of the production or production process through
other units in the same SEZ without permission of
Customs authorities subject to records being maintained by
both the supplying and receiving units.
(a) Sez units other than gems and jewellery units may be
allowed to undertake job-work for export, on behalf of
Dta exporter, provided the finished goods are exported
directly from SEZ units. For such exports, the DTA units
will be entitled for refund of duty paid on the inputs by
way of Brand Rate of duty drawback.
(b) Scrap/ waste/ remnants generated through job work may
either be cleared from the job workers premises on
payment of applicable duty or returned to the unit.
(c) SEZ units engaged in production/ processing of
agriculture/ horticulture products, may on the basis of
annual permission from the Customs authorities take out
inputs and equipments to the DTA farm subject to the
procedure indicated in
Appendix 14-II of The Handbook (Vol-I)
Exit From Sez Scheme
(a) SEZ unit may opt out of the scheme with the approval of
the Development Commissioner. Such exit from the
scheme shall be subject to payment of applicable Customs
and Excise duties on the imported and indigenous capital
goods, raw materials etc. and finished goods in stock. In
case the unit has not achieved positive NFE, the exit shall
be subject to penalty, that may be imposed by the
adjudicating authority under Foreign Trade (Development
and Regulation) Act, 1992.
(b) SEZ unit may also be permitted by the Development
Commissioner, as one time option, to exit from SEZ
scheme on payment of duty on capital goods under the
prevailing EPCG Scheme, subject to the unit satisfying the
eligibility criteria of that Scheme and standard conditions
for exit indicated in Appendix 14-II of Handbook (Vol-I).
Export Through Exhibitions/ Export Promotion Tours/
Export Through Show Rooms Abroad / Duty Free Shops:-
Sez, Units May
(a) Export goods for holding/ participating in exhibitions
abroad with the permission of Development
Commissioner.
(b) Personal carriage of gold/ silver/ platinum jewellery,
precious, semi-precious stones, beads and articles.
(c) Export of jewellery is also permitted for display/ sale in
the permitted shops set up abroad
(d) Display/ sell in the permitted shops set up abroad or in the
show rooms of their distributors/ agents
(e) Set up show rooms/ retail outlets at the International
Airports.
Personal Carriage of Export/ Import Parcel
Import/ export through personal carriage of gem and jewellery
items may be under-taken as per the procedure prescribed by
Customs. Import/ export through personal carriage for units,
other than gem and jewellery unit , shall be allowed provided
the goods are not in commercial quantity.
Export /Import by Post/ Courier
Goods including free samples, may be exported/ imported by
airfreight or through Foreign Post Office or through courier,
subject to the procedure prescribed by Customs.
Disposal of Rejects/Scrap/ Waste/ Remnants
Rejects/ scrap/ waste/ remnants arising out of production
process or in connection therewith may be sold in the DTA on
payment of applicable duty. No duty shall be payable in case
scrap/ waste/ remnants/ rejects are destroyed within the Zone
after intimation to the Custom authorities or destroyed outside
the SEZ with the permission of Custom authorities. Destruc-
tion as stated above shall not apply to gold, silver, platinum,
diamond, and precious and semi precious stones.
Replacement/ Repair of Goods
(a) The general provisions of Policy relating to export of
replacement/ repaired goods shall apply equally to SEZ
units, save that, cases not covered by these provisions shall
be considered on merits by the Development
Commissioner.
(b) The goods sold in the DTA and found to be defective may
be brought back for repair/ replacement under intimation
to Development Commissioner.
(c) Goods or parts thereof, including gem stones and precious
metal components for jewellery making, on being
imported/ indigenously procured and found defective or
otherwise unfit for use or which have been damaged or
become defective after import/ procurement may be
returned and replacement obtained or destroyed. In the
event of replacement, the goods may be brought back
from the foreign suppliers or their authorised agents in
India or the indigenous suppliers. Destruction shall
however not apply to gem stones and precious metals.
152 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
(d) Goods may be transferred to DTA/ abroad for repair/
replacement, testing or calibration, quality testing and R &
D purpose under intimation to Customs authorities and
subject to maintenance of records.
Management of Sez
(a) SEZ will be under the administrative control of the
Development Commissioner.
(b) All activities of SEZ units within the Zone, unless
otherwise specified, including export and re-import of
goods shall be through self certification procedure
Setting up of SEZ in Private/ Joint/ State Sector
A SEZ may be set up in the public, private, joint sector or by
state Government as per details indicated in Appendix 14-II of
the Handbook(Vol-I).
Samples:-SEZ units may, on the basis of records maintained by
them, and on prior intimation to Customs authorities:-
(a) Supply or sell samples in the DTA for display/ market
promotion on payment of applicable duties;
(b) Remove samples without payment of duty, on furnishing
a suitable undertaking to Customs authorities for bringing
the goods back within a stipulated period
(c) Export free samples, without any limit, including samples
made in wax moulds, silver mould and rubber moulds
through all permissible mode of export including through
couriers agencies/ post
Sale of Un-Utilised Material/ Obsolete Goods
(a) In case an SEZ unit is unable, for valid reasons, to utilize
the goods, including capital goods and spares, it may
dispose them in the DTA in accordance with the import
policy in force and on payment of applicable duties or
export them
(b) Capital goods and spares that have become obsolete/
surplus may either be exported or disposed of in the DTA
on payment of applicable duties. The benefit of
depreciation, as applicable, will be available in case of
disposal in DTA.
(c) No duty shall be payable in case capital goods, raw material,
consumables, spares, goods manufactured, processed or
packaged and scrap/ waste/ remnants/ rejects are destroyed
within the Zone after intimation to the Custom authorities
or destroyed outside the Zone with the permission of
Custom authorities. However destruction shall not apply
to precious and semi precious and precious metals
(d) SEZ unit may be allowed by Customs authorities
concerned to donate imported/ indigenously procured
computer and computer peripherals without payment of
duty, two years after their import/ procurement and use by
the units, to recognized non-commercial educational
institutions, registered charitable hospitals etc as per the
details given in Appendix 14-II in Handbook (Vol-I)
Entitlement for SEZ Developer: - For development, operation
and maintenance of infrastructure facilities in SEZs, the
developer shall be eligible for the following entitlements
(a) Income tax exemption as per 80 IA of the Income Tax Act.
(b) Import/ procure goods without payment of Customs/
Excise duty
(c) Exemption from Service tax
(d) Exemption from CST.
Difference Between Sezs and Epzs
The main difference between the SEZ and the EPZ is that the
SEZ is an integrated township with fully developed infrastruc-
ture on international standards whereas EPZ is just an
industrial part. In fact, all existing EPZs have been asked to
convert themselves into SEZs. However, some units are not
interested in the conversion on account of the sale into DTA at
concessional rate of duty is not available in SEZs. The Govern-
ment has asked such units to move out to the Domestic Tariff
Area (Dta).
A Note Agriculture Export Zones (Aezs)
Agricultural. Export Zones (AEZs) have been set up by. the
Ministry of Commerce, GOI, with a view to promote agricul-
tural exports from the country and provide remunerative
returns to the farming community in a substantial manner.
Further, with the intention to give primacy to promotion of
agricultural exports, it has been decided to identify product
specific Agricultural Export Zone from geographically contigu-
ous area.
State Governments may identify product specific Agri export
zone for end to end development for export of specific
products from a geographically contiguous area. State Govern-
ment may evolve a comprehensive package of services provided
by all State Government Agencies, State Agricultural Universities
and all institutions and agencies of the Union Government for
intensive delivery in these zonesSuch services which would be
managed and co-ordinated by State Government would include
provision of pre/ post harvest treatment and operations, plant
protection, processing, packaging, storage and related research &
development, etc. APEDA will supplement, within its
schemes and provisions, efforts of State Governments for
facilitating such exports.
Objective
In a fast changing international trade environment and with a
view to providing remunerative returns to the farming commu-
nity in a sustained manner, efforts will be made to provide
improved access to the produce/ products of the Agriculture
and Allied sectors in the international market.
Epcg Scheme
Agriculture exporters shall be eligible for the facility of EPCG
scheme as described in Chapter-6 of the Policy. The export
obligation shall be determined in accordance with paragraph 6.2
of the Policy but the licence holder shall not be required to
maintain the average level of exports as specified in sub
paragraph 6.5(v) of the Policy.
Such exporter shall have the facility to move or to shift the
capital goods within the zone provided he maintains accurate
record of such movements. However such equipments shall
not be sold or leased by the licence holder. This facility shall also
be available to service providers, setting up common
infrastructural facilities such as sorting, grading, polishing,
Copy Right : Ra i Unive rsit y
11.675.3 153
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
packaging, cold storage, transport equipment/ refrigerated vans,
vapour treatment heat treatment plant, X-ray screening facility
etc.
The units setup in the notified Agriculture Export Zone shall
be entitled to the benefits available under the scheme. A service
provider in the Agriculture Export Zone may import equip-
ment under the EPCG scheme for supplying services to
agriculture exports. The export obligation may be offset by the
service provider by earning foreign exchangein lieu of services
rendered.
Duty Exemption/Remission Scheme
(a) The agriculture exporter shall be entitled to the facility for
import of inputs like fertilizers, pesticides, insecticides,
packing material etc. under Advance Licence/ DFRC/ DEPB
scheme as given in Chapter-7 of the Policy subject to the
eligibility criteria and conditions enumerated under the
scheme.
(b) The agriculture exporter shall be eligible for recognition as
Export House/ Trading House/ Star Trading House/
Super Star Trading House on achieving the performance
level as mentioned below.
In addition to the double weightage available under paragraph
12.7, the double weightage on FOB or NFE on the export of
agriculture product for recognition as status holders shall be
available.
Information Requirements
A database on agricultural products and markets including
aspects of commercial intelligence relevant to exports will be
established. Assistance shall be provided to the exporters,
growers organisations, trade association for conducting
surveys/ feasibility studies, market studies etc.
Some Important Agricultural Export Zones
Location Name of
product (s)
Location Name of
Product (s)
West
Bengal
Pineapple Maharashtra Grapes &
Grape Wine
Karnataka Gherkins Tripura Pineapple
Uttaranchal Lychee Uttar
Pradesh
Mangoes
Punjab Vegetables Maharashtra Mangoes
Uttar
Pradesh
Potatoes Jammu
&Kashmir
Apple
Punjab Potatoes Tamil Nadu Flowers
Andhra
pradesh
Mangopulp
& Fresh
Vegetables
Madhya
Pradesh
Potatoes,
Onions &
Garlic
AEZ would be identified by the State Government, who may
evolve a comprehensive package of services provided by all
State Government agencies, State agricultural universities and. all
institutions and agencies of the Union Government for
intensive delivery in these zones.
Such services, which would be managed and co-
ordinated by the State Government, would include
provision of pre-harvest and post-harvest treatment
and operations; plant protection, processing, packag-
ing, storage and related research and development, etc.
Agricultural and Processed Food Products Export
Development Authority (APEDA) will supplement,
within its schemes and provisions, efforts of the State
Governments for facilitating such exports.
Facilities for Units Located In Aezs
(a) The agriculture .exporters are entitled to
import of capital goods under EPCG
Scheme...
(b) The agricultural exporters are entitled to
imports of inputs like, fertilizers, pesticides,
insecticides; packing materials, etc., under
Advance Licence, Duty Free Replenishment
Certificate (DFRC) and Duty entitlement
Passbook (DEPB) Schemes.
A Note on Negative List of Exports 2002-07:-
The negative list consists of goods the import or
export of which is either .prohibited, restricted
through licensing or otherwise to be canalised through
a designated government agency. The negative list of exports, as
per the Exim Policy 2002-07, contains the following four
categories of export items
(a) Prohibited Items :- The prohibited items are completely
banned from exports. The following categories of. items
are banned from exports :-
All forms of wild animals including their parts and
products.
Special chemicals as notified by the DGFT.
Exotic birds as notified by the DGFT.
Category Average
FOB
Value
During
The
Preceding
Three
Licensing
Years, In
Rupees
FOB
Value
During
The
Preceding
Licensing
Year, In
Rupees
Average
NFE
Earnings
Made During
The
Preceding
Three
Licensing
Years, In
Rupees

NFE
Earned
During
The
Preceding
Licensing
Year, In
Rupees
(1) (2) (3) (4) (5)
Export
House

4 Crores 6 Crores 3 Crores 5 Crores
Trading
House

20 Crores 30 Crores 15 Crores 25 Crores
Star Trading
House

100 Crores 150 Crores 75 Crores 125 Crores
Super Star
Trading
House
300 Crores 450 Crores 225 Crores 375 Crores
154 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Beef.
Sea shells, as specified.
Human skeleton.
Peacock tail feathers including handicrafts and articles
made there of.
Manufactured articles and shavings of Shed Antlers of
Chital and Sambhar.
All items of plants as specified by the DGFT.
Tallow, fat and/ or oils of any animal origin excluding
fish oil.
Sandalwood items as notified by the DGFT.
Red sanders wood in any form.
..
,
(b) Restricted Items :- The restricted items are allowed for
exports under special licence issued by the DGFT. Some of
restricted export items are as follows:-
Dress materials, ready-made garments, fables or textile
its wit imprints of excerpts or verses of the Holy
Quran.
Horses - Kathiawadi, Marwari and Manipuri breeds. ,
Fresh and frozen silver prom frets of weight less than
300 gms.
Paddy (Rice in husk).
Seaweeds of all types. ,
Fodder including wheat and rice straw.
Chemical fertilizer of all types.
Whole human blood and all products derived from it.
Silkworm, silkworm seeds and silkworm cocoons.
Deoiled groundnut cakes containing more than 1% oil.
(c) Canalised Items :- The canalised items can be, exported
without an export licence through designated State
Trading Enterprises (STEs). Some of the canalised items
are
(d) Freely Exportable Items :- The freely exportable items, can
be exported without an export licence or permission from
the DGFT. However, export of such items is subject to
certain procedures or conditions.
Item Description
Procedures or Conditions

Military stores as notified by
DGFT
'No objection certificate
from the Department of
Defence Production and
supplies.

Exotic birds, Such as bangali
finches, White finches and
Zebra finches.
Subject to Pre-shipment
inspection;
Bones and bone products Subject to a certificate from
Chemicals and Allied
Products' Export ,Promotion
Council
Basmati Rice Subject to registration of
contracts with the
Agricultural and processed
Food products export
Development Authority
(APEDA)
A Note on Open General Licence (Ogl) List
Open General Licence (OGL) list contains those items, which
can be exported without any restrictions or licensing formalities
to all permitted destinations. The following four OGLs are in
operation :-
Items Canalising Agency
Onions (Except
Banglore Rose
onion and
Krishnapuram
onion)
Export permitted through
Specified STEs
Niger Seeds
Tribal Cooperative Marketing
Federation of India(TRIFED),
NEW Delhi.
National Agriculture Coopertive
Marketing Federation Of India
(NAFED)
Gum Karaya Tribal Coopertives Marketing
Federation of India (TRIFED),
New Delhi.
Iron ore,
manganese ore,
and Chrome ore.
Metals and Minerals Trading
Corporation (MMTC)

Crude oil Indian oil Corporation Limited.
Copy Right : Ra i Unive rsit y
11.675.3 155
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
(a) OGL No.1 :- Applies to export by land to any country
adjacent to India and having no sea port of its own.
(b) OGL No.2 :- Applies to export of bonafide samples.
(c) OGL No.3 :- Applies to the items that can be exported on
fulfilment of the conditions against each of the items.
I(d) OOL No.4:. Applies to items that can be exported directly
by the canalising agency mentioned against each items.
A Note on Export Obligation
Export obligation means the obligatioI1 of the importer to
undertake export of product or products in term of quantity,
value or both, as may be prescribed or specified by the licensing
or competent authority in order to compensate for the imports
undertaken.
Objectives of Export Ob1igation
(al The main objective of export obligation is to compensate
for the outflow of foreign currency due to imports
undertaken under certain schemes such as EPCG scheme.
(b) The EPCG scheme enables the Indian exporters to import
capital goods at 5% customs duty subject to export
obligation.
Advantages of Export Obligations
(a) Accessibility to imported raw materials and capital goods
subject to export obligation would enhance the
competitiveness of Indian exporters in terms of quality up
gradation.
(b) Due to, export obligation, importers will be required to
export compulsorily. This would increase exports and
would generate foreign exchange for the economy.
A Note on Counter Trade
Counter trade is a form of international trade in which certain
export and import transactions are directly linked with each
other and in which import of goods are paid for by export of
goods, instead of money payments;
In the modern economies, most transactions involve monetary
payments and receipts, either immediate or deferred. As against
this, counter trade refers to a variety of unconventional
international trade practices which link exchange of goods,
directly or indirectly, in an attempt to dispense -with currency
transactions.
The Philippine International Trade Corporation (PITC) is
tasked with countertrade, an international transaction premised
on some form of reciprocity. It is used to leverage government
importation with trade and investments to be provided by
foreign suppliers.
Counter trade helps government offices or other local institu-
tions by facilitating the introduction of investments, technology
transfer, research and development, donations, specialized
training/ skills and related activities without additional cost to
the government.
Forms of Counter Trade
(a) Barter: Barter refers to direct exchange of goods against
goods of equalvalue, with no money and no third party
involved in it.
(b) Compensation Deal: Under this arrangement, the seller
receives a part of the payment in cash and the .rest in
products.
(c) Buy Back: Under the buy back agreement, the supplier of
plant, equipment or technology agrees to purchase goods
manufactured with that equipment or technology.
(d) Counter purchase : Under the counter purchase agreement,
the seller receives the full payment in cash but agrees to
spend an equivalent amount of money in that country
within a specified period.
(d) Trade-for-Debt or Debt-for-Goods. A loan or credit
obtained by the government is paid for (fully or partially)
in goods or services of the debtor country.
(e) Offset. Foreign suppliers commit to introduce
investments, technology transfer, training and skills
upgrade, research and development, donation or other
similar products that will promote the industrial and
economic growth of the country as well as provide
employment opportunities, support social and civic
programs, generate/ save foreign exchange, and fund and
support environmental projects for sustainable growth.
Checklist for Counter-Trade
Counter-trade and barter are trading techniques used by
countries with a limited supply of foreign currency, but which
need to import goods. Instead of paying in precious hard
currency, the customer asks to pay in goods. In many cases these
will not be goods for which there are already established trading
patterns, rather they will be goods that would not otherwise be
exported. This will mean that there is unlikely to be a means of
pricing them (as there would be, for example, for a fixed grade
of a mineral).
Use a lawyer to write the agreements
Use a counter-trade specialist (e.g a commodity trader with
counter-trade expertise)
Insure the risk of the traders insolvency
Arrange payment for sales of the customers (exported)
product before you lose control of your goods
Use an escrow account for receipts, and export goods to the
value of the amount of hard currency in escrow (foreign
exchange permission for the escrow account may be needed
from the buyers country)
Ask the customer to provide a government guarantee for
any shortfall of the amounts expected from the proceeds
of sale counter-traded goods, especially if you are
committing resources to make goods to order
Insure the risk of non-honoring of the government
guarantee
Obtain political risk cover on the buyers country in relation
to the risk of frustration of your export contract and on
the frustration of the import contract .
156 11.675.3
Copy Right : Ra i Unive rsit y
I
N
T
E
R
N
A
T
I
O
N
A
L

T
R
A
D
E
Question Bank
Q.1 Write a note on the Negative List of Export.
Q.2 Write a brief note on canalisation of exports.
Q.3 Explain Niche Marketing as an export strategy.
Q.4 Write note on the Open General Licence (OGL).
Q.5 Write note on the Special Economic Zones.
Q.6 Write note on the Agriculture Export Zones.

Você também pode gostar