EXIM POLICY 2004-2009

Presented By:
Group 6,Section B-2
 Exim Policy
 The foreign trade of India is guided by the Export-Import
policy of the Government of India
 Exim policy contain 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
 EXIM Policy of India
2004-2009
 Hon. Shri Kamal Nath minister for commerce and
industry has announced on 31st Aug 2004, India’s first
Exim policy.
 The duration of the policy 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
 Two Major Objectives
Objectives

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 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.
 Key Strategies to achieve these
objectives
 Unshackling of controls
 Simplifying Procedures
 Neutralizing Incidence
 Facilitating development of India
 Identifying special focus areas
 Facilitating technological upgradation
 Key Strategies cont….

 Facilitating technological upgradation

 Avoiding inverted duty structure
 Upgrading the Infrastructure
 Revitalizing the Board of Trade
 Activating Indian Embassies
 Special Focus Initiative:

a) Sectors with significant export prospects

b) Further sectoral initiatives
c) The threshold limit of Towns of Export
Excellence is reduced
Provisions of New Exim Policy
 Agricultural Sector:

Agriculture has the potential to bring

prosperity in rural areas, and also has the
largest potential for promoting employment.
Some special provisions for the agricultural
sector under the EXIM policy are as follows:
a) Vishesh Krishi Upaj Yojana
b) Import of Capital Goods
c) Agri Export Zones
d) Import of seeds
 Gems and Jewellery
Industry:
To provide employment among artisans and
to develop their skills, special package has
been announced for this sector. Some of
them are:
a) Duty Free Import
b) Commercial Samples
c) Import of gold
 Handloom and Handicraft
Sector:
Increased exports from this sector will
benefit the workers at grass root level.
a) Handicraft Export Promotion Council
b) Leather and footwear industry
c) Towns of Export Excellence
d) Status holder exporter
e) Vishesh Krishi Upaj and Gram Udyog
Yojana
 Leather & Footwear:

 Duty free entitlements of import trimmings,

embellishments and footwear components for
leather industry increased to 3% of FOB value of
exports.
 Duty free import of specified items for leather
sector increased to 5% of FOB value of exports.
 Machinery and equipment for Effluent Treatment
Plants for leather industry shall be exempt from
Customs Duty.
 New Export Promotion
Schemes:
A new scheme to accelerate growth of exports called “Target
plus” has been introduced. Under the scheme exporters who exceed
the annual export target were to be rewarded under the Target Plus
scheme. This reward was in terms entitlement to duty-free credit based
on incremental export earnings.

Special Schemes for Export Promotion:

 Vishesh Krishi Upaj and Gram Udyog Yojna
 Target Plus
 ‘Focus Product’ and ‘Focus Market’ Scheme
 Served from India
 Duty-Entitlement Pass Book Scheme
 Duty-Free Import Authorisation Scheme
 SEZ (Special economic zone):
A scheme for setting up special economic zones(Sezs)in the country to
promote exports was announced by the government in the export and
Import Policy on March 31st , 2000. During 2006-07, exports from
functioning Sezs were Rs. 34,615 crores.

Main Objectives of SEZs Act:

 Generation of additional economic activity
 Promotion of exports of goods and services
 Promotion of investments from Domestic and Foreign sources
 Creation of employment opportunities and
 Development of infrastructure facilities
 Star Export Houses:

A Star Export House was entitled to get license, certificate, permission

and customs clearances for both import and exports on self declaration
basis. The FTP announced a new categorization of status holders.
Under new scheme, Export House were divided into five categories
depending upon their export performance in three years:

The categories were:

 One Star (export of Rs 15 crores)
 Two Star (export of Rs 100 crores)
 Three Star (exportof Rs 500 crores)
 Four Star (export of Rs.1500 crores)
 Five Star (export of Rs 5000 crores)
 Free Trade & Warehousing
Zones (FTWZ):
Objective:
 The objective is 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. The scheme envisages creation of world-class infrastructure
for warehousing of various products, state-of-the-art equipment,
transportation, handling facilities etc.
 The Free Trade & Warehousing Zones (FTWZ) shall be a special category of
Special Economic Zones with a focus on trading and warehousing
Functioning:
 The scheme envisages duty free import of all goods
 Such goods shall be permitted to be re-sold.
 Payment of duty will become due only when goods are sold.
 Packing or re-packing without processing and labelling as per customer or
marketing requirements could be undertaken within the FTWZ.
 The maximum period that goods shall be permitted to be warehoused within
the FTWZ will be two years.
 Export oriented units (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.
 Procedural Simplification

 Bank Gurantee
 Second-hand-capital goods
 Validity of all lincences
 No. of Returns and forms has been
simplified
 Redressal of grievances
 Physical examination of export cargo
 Board of Trade:
 The role is to advising government on relevant
issues connected with Foreign Trade Policy. 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.
 Other Provisions:

 Pragati Maidan
 Convention center
 Free Trade agreement
 Service Export Promotion Council
 Implications of The Foreign
Trade 2004-09

Implications Implications Implications

on Indian on Handlooms on Leather
Economy and Handicraft and Footwear
Industry
Implications Implications Implications
on on Gem and on Service
Agriculture Jewellery Industry
Sector
 Annual Supplement to
Foreign Trade Policy 2004-
09
Shri Kamal Nath, Minister for
Commerce & Industry, Government of
India announced Annual Supplement
2008, to the Foreign Trade Policy 2004-
09 on the 11th April 2008.
Highlights of Supplement

DUTY ENTITLEMENT PASSBOOK

SCHEME (DEPB)

REFUND OF SERVICE TAX

INCOME TAX ON EOUs

SECTORAL INITIATIVES
 Highlights of Supplement cont…

PROMOTION OF HIGH VALUE

ADDED MANUFACTURED
PRODUCTS

EXPORT PROMOTION CAPITAL

GOODS SCHEME (EPCG)

FOCUS MARKET & PRODUCT SCHEMES

 Supplement in gist

Thus from the supplement, I am pleased to

say that our achievements have exceeded
our expectations. Not only have we fulfilled
our promises in substantial measure, but we
have achieved these remarkable results in
just four years, instead of five.
 Supplement Cont….
In 2004 our exports stood at a little over US $ 63 billion.
In 2007-08, they have exceeded US $ 155 billion;
our exports are not just double what they were 4 years ago,
but 2½ times that. We have managed an average
cumulative annual growth rate (CAGR) of 23%,
year on year, way ahead of the average
growth rate of international trade.

The task is difficult, but the prize is great.

If we achieve it, India will once more become
the trading superpower it was two centuries ago
 Evaluation of EXIM Policy
MERITS

 Means to boost economic growth

 Employment-Generation
 Towns of Export-Excellence
 Export of services
 Setting up of Free Trade and Warehousing
Zones
 Import of Second-hand Capital Goods
 Evaluation Cont…..

 Setting up of Special Economic Zones-SEZs

 Procedural Simplification
 Boost for Small, Cottage and Handicraft
Industries
 Boost for Agriculture Sector
 More Incentives for Higher Growth Rate in
Exports
 Diversification of Exports
 Evaluation Cont….

 Liberal Imports
 Encouragement to Gems and Jewellery
 Setting up of Bio-Tech-Parks
 Income tax concessions and exemptions.
 Evaluation Cont….
DEMERITS

 Burden of export promotion schemes

 Danger of circular trading
 Risk of importing outdated machinery
 Policy fails to take a holistic view of
trade
 Negative List of Exports 2002-07

The negative list consists of goods, the

import or export of which is ether
prohibited, restricted through licensing or
otherwise to be canalized through a
designate government agency.
The negative list of exports, as per the
EXIM Policy 2002-07
 Negative List Cont…
 Prohibited Items : Which items completely banned from
the 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.
– Beef.
– Sea Shells, as specified
– Human Skeleton.
– Peacock Tail
– Red sanders wood in any form.
 Negative list cont…
 Restricted Items : which items allowed for exports
under special license issued by the DGFT.
– Dress materials, ready-made garments, fabrics or textile
items with 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
300gm.
– Paddy (Rice in husk).
– Seaweeds of all types.
– Chemical Fertilizer all types.
 What is new in new FTP of
Govt. Of India ?

This policy comes at a time when India’s

foreign trade is growing robustly.
The FTP hopes to double the country’s percentage
share of global trade within next five years
and also generate substantial employment.
 The government will rely on
some established strategies like:

i) loosen controls and create an atmosphere of trust,

ii) simplify procedure and reduce transaction costs
iii) neutralize the incidents of levies and
duties on inputs used in export products,
iv) facilitate technological and infrastructural
upgradation in all the sectors of the company.
 What’s new? Cont….

The new initiatives announced for

agricultural and other thrust areas such
as handicrafts, handlooms, gem and
jewellery and leather and footwear and
commendable. But the promotional
steps proposed are not exactly original;
they involve a liberal import of capital
goods and raw materials to aid export
effort.
 Conclusion:
The EXIM Policy 2004-2009 is one of the most ambitious policies of
the government to liberalise the Indian economy and the government
has also come a long way in achieving the same. However the current
policy also has its flaws which are not only because lack of radical
thinking by the government but also because of the global scenario.
Some of the flaws are as follows:
i) No concrete solution o reduce delays and transaction costs.
ii) Software Technology Parks of India not given income tax exemption.
iii) Poor export in growth, in rupee terms, and in volume terms, ignored.
iv) The rising crude oil prices and inflationary pressures in the economy.
v) Due to global economic slowdown and recession in the USA economy,
India’s largest trading partner, uncertainty of the rupee-dollar
exchange rate continues which in turn affects the economy.
 References:

 http://www.eximkey.com
 http://www.eximinfo.com
 http://www.eximbankindia.in/
 http://exim.indiamart.com/index.html
 http://dgft.gov.in
 http://finmin.nic.in/
Thank You