Overview of Foreign Trade Policy Gptaie Ms Alka: Amity International Business School Amity International Business School

Amity International Business School Amity International Business School
Overview of Foreign Trade Policy GPTAIE Ms Alka

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Understanding Foreign Trade Policy

Drafted by the DGFT under the Foreign Trade Development & Regulation Act 1992 and rules framed thereunder Implemented with the help of various other Departments mainly Customs, Excise and RBI In order to understand the co-relation, one must get familiar with the various laws and functions of various departments
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Understanding Foreign Trade Policy

Export or import involves movement of goods as well as receipt/remittance of foreign exchange Though foreign exchange regulations are relaxed, monitoring of forex operations is still being carried out by RBI
Understanding Policy provisions
Promotional Measures
Assistance to States for Infrastructure Development of Exports [ASIDE] Market Access Initiative [MAI] Marketing Development Assistance [MDA] Towns of Export Excellence [TEE] Export and Trading Houses [Status certificate] Served from India Scheme [SFIS] Vishesh Krishi and Gram Udyog Yojana [VKGUY] Focus Market Scheme [FMS] Focus Products Scheme [FPS] High-Tech Products Export Promotion Schemes
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Assistance to States for Infrastructure Development of Exports [ASIDE] Market Access Initiative [MAI] Marketing Development Assistance [MDA] Towns of Export Excellence [TEE] Export and Trading Houses [Status certificate] Served from India Scheme [SFIS] Vishesh Krishi and Gram Udyog Yojana [VKGUY] Focus Market Scheme [FMS] Focus Products Scheme [FPS] Market Linked Focus Products Scrip Status Holder Incentive Scrip High-Tech Products Export Promotion Schemes
Handbook of Procedure
Handbook of Procedure
Assistance to States for Infrastructure Development of Exports [ASIDE]
to encourage State Governments to participate in promoting exports, and is administered by Department of Commerce (DoC)
i. ii. iii. iv. v. vi. vii. viii. ix. Developing infrastructure such as roads connecting production centers with ports, Setting up of Inland Container Depots (ICD) and Freight Stations (CFS), Creation of new State level export promotion industrial / zones, Augmenting common facilities in existing zones, Equity participation in infrastructure projects, Development of minor ports and jetties, Assistance in setting up of common effluent treatment Stabilizing power supply, and Any other activity as may be notified by DoC.
Market Access Initiative [MAI]
MAI scheme is intended to provide financial assistance for medium term export promotion efforts with sharp focus on a country / product Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Governments, Indian Commercial Missions (ICMs) abroad and other eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others,
(i) Market studies, (ii) Setting up of showroom / warehouse, (iii) Sales promotion campaigns, (iv) International departmental stores, (v) Publicity campaigns, (vi) Participation in international trade fairs, (vii) Brand promotion, (viii) Registration charges for pharmaceuticals, and term promotion efforts with sharp focus on a country / ( Most Important) and clinical trials (ix) Testing charges for engineering products.
Each of these export promotion activities can receive assistance from Government ranging from 25% to 100% cost depending upon activity and implementing agency.
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Marketing Development Assistance [MDA] to provide financial assistance for a range of export promotion activities implemented by EPCs. The scheme is administered by DoC. Assistance includes, amongst others, participation in (i) Trade Fairs and Buyer Seller meets abroad or in India, and (ii) Export promotion seminars. Financial assistance with travel grant is available to exporters traveling to Latin America, Africa, CIS region, ASEAN countries, Australia and New Zealand. In other areas, financial assistance without travel grant is available. MDA assistance is available for exporters with annual export turnover upto Rs 15 Crores.
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Meeting Legal Expenses for Trade Related Matters DOC would provide financial assistance to deserving exporters on recommendation of EPCs for meeting cost of legal expenses for trade related matters.
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Towns of Export Excellence [TEE] towns emerged as dynamic industrial clusters contributing handsomely to Indias exports Selected towns producing goods of Rs. 750 Crore or more will be notified as TEE based on potential for growth in exports. TEE in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs. 150 Crores. able to access funds under MAI scheme for creating focused technological services. Common service providers in these areas shall be entitled for EPCG scheme. Further such areas will receive priority for assistance under ASIDE scheme.
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Export and Trading House Merchant as well as Manufacturer Exporters, Service Providers,Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zones (AEZs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) shall be eligible for Status total FOB (FOR - for deemed exports) export performance during current plus previous three years (taken together) upon exceeding limit given below.
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Exporters in Small Scale Industry (SSI) / Tiny Sector / Cottage Sector, Units registered with KVICs / KVIBs, Units located in North Eastern States, Sikkim and Jammu & Kashmir, Units exporting handloom / handicrafts / hand knotted or silk carpets, exporters exporting to countries in Latin America / CIS / sub-Saharan Africa as listed in Appendix-9, Units having ISO 9000 (series) / ISO 14000 (series) / WHOGMP / HACCP / SEI CMM level-II and above status granted by agencies listed in Appendix-6 of HBP v1, exports of services and exports of agro products shall be entitled for double weightage on exports made for grant of status. Double Weightage shall be admissible to Merchant as well as Manufacturer Exporters shipment can get double weightage only once in any one of above categories.
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A Status Holder shall be eligible for following facilities: i) Authorisation and Customs clearances for both imports and exports on selfdeclaration basis; ii) Fixation of Input-Output norms on priority within 60 days; iii) Exemption from compulsory negotiation of documents through banks. Remittance / Receipts, however, would be received through banking channels; IV)100% retention of foreign exchange in EEFC account; v) Enhancement in normal repatriation period from 180 days to 360 days; vi) Exemption from furnishing of Bank Guarantee in Schemes under FTP; and vii) SEHs and above shall be permitted to establish Export Warehouses viii) For status holders, a decision on conferring of ACP Status shall be communicated by Customs within 30 days from receipt of application with Customs. x) Premier Trading House (PTH), the average level of exports under EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of 3 years.
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Served from India Scheme [SFIS] accelerate growth in export of services Duty Credit scrip equivalent to 10% of free foreign exchange earned during preceding financial year
Promotional Measures (Chapter 3)
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Hotels of one-star and above (including managed hotels) and heritage hotels approved by Department of Tourism (DOT) and other Service providers in tourism sector registered with DOT as well as Clubs having residential facility of minimum 30 rooms shall be entitled to duty credit scrip equivalent to 5% of free foreign exchange earned during preceding financial year. Stand-alone restaurants will be entitled to duty credit scrip equivalent to 10% of free foreign exchange earned during preceding financial year.
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Vishesh Krishi and Gram Udyog Yojana Objective of VKGUY is to promote exports of (i) Agricultural Produce and their value added products; (ii) Minor Forest Produce and their value added variants; (iii) Gram Udyog Products (iv) Forest Based Products (v) Other products, as notified from time to time.
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Focus Market Scheme [FMS]
offset high freight cost and other externalities to selected international markets
Duty Credit scrip equivalent to 3% of FOB value of exports for each licensing year commencing from 1st April, 2006.
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Focus Products Scheme [FPS] incentivise export of such products, which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products. Duty Credit scrip equivalent to 2% of FOB value of exports
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Market Linked Focus Products Scheme [MLFPS]
Export of Products/Sectors of high export intensity / employment potential (which are not covered under present FPS List) would be incentivized at 2% of FOB value of exports (in free foreign exchange) under FPS when exported to the Linked Markets (countries), which are not covered in the present FMS list,
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High-Tech Products Export Promotion Schemes incentivise export of High Technology products Duty Credit Scrip equivalent to: a) 1.25 % of FOB value of exports; or b) 5% of incremental growth in FOB value Exporter may opt for either (a) or (b) above.
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Duty Exemption / Remission Scheme [Chapter 4]
I. Duty Exemption Scheme Advance Authorisation Advance Authorisation for Annual Requirement Duty Free import Assistance [DFIA] II. Duty Remission Scheme Duty Entitlement Passbook Scheme [DEPB] Duty Drawback
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Duty Exemption/Remission Scheme
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Duty Exemption/ Remission Scheme
Exemption from payment of duty on inputs-prior or after to Exports/ Deemed Exports Advance Authorization to allow duty free import of inputs, which are physically incorporated in export product fuel, oil, energy, catalysts which are consumed / utilised to obtain export product Duty free import of mandatory spares upto 10% of CIF value of Authorisation issued for inputs and export items given under SION can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) supplies made to United Nations Organisations or under Aid Programme of the United Nations or other multilateral agencies and which are paid for in free foreign exchange.
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Standard Input Output Norms (SION)

S. No. C835 C207 Export Item Stainless Straps Steel Watch Quantity 1.0 Kg 1 No. S. No. 1 1 2 3 4 5 6 7 C208 Exhaust Fan 12"/300MM Sweep Industrial type 1 No. 1 2 3 4 5 6 7

Import Item Quantity Stainless Steel Coils CRGO Steel Sheets Copper Wire(SE)/Wire Rod Aluminium Ingots/Alloy/Scrap Steel Sheet Bearing Plain/Sealed Capacitor Steel Bar CRGO Steel Sheets/ CRNGO Steel Sheet Copper Wire(SE)/Wire Rod Aluminium Ingots/Alloy/Scrap Steel Sheet Bearing Plain/Sealed Capacitor Steel Bar 1.20 Kgs 1.26 kg. 0.29 kg. 0.81 kg. 2.92kgs. 2.00 Nos. 1.00 No. 0.14 kg. 1.68 kg. 0.53 kg. 1.84 kg. 4.80 kgs. 2.00 Nos. 1.00 No. 0.19 kg. 29
Exhaust Fan 12"/300MM Sweep Domestic
Advance Authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty actual user condition. It will not be transferable even after completion of export obligation. Authorisation holder will have option to dispose off product manufactured out of duty free inputs once export obligation is completed. positive value addition. Exports to SEZ Units / supplies to Developers / Codevelopers, irrespective of currency of realization, would also be covered.
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Annual Advance Authorization issued for annual requirement Status Certificate holder and all other categories of exporters having past export performance (in preceding two years) 300% of the FOB value of physical export and / or FOR value of deemed export in preceding licensing year or Rs 1 crore, whichever is higher Advance Release Order (ARO) or Invalidation letter source inputs from indigenous sources / State Trading Enterprises in lieu of direct import avail of the facility of Back-to-Back Inland Letter of Credit instead of ARO or IL
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Duty Free Import Authorization for duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product Authorisations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified minimum 20% value addition shall be required for issuance of such authorisation except for items in gems and jewellery sector Transferability of Authorisation or inputs imported against it may be made after EO, Fuel cannot be transferred and paymnet of custom duty.
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Duty Exemption/ Remission Scheme
Remission of duty on inputs- Post-Exports by way of Duty Credit Entitlement DEPB Scheme neutralise incidence of customs duty on import content of export product provided by way of grant of duty credit against export product at specified percentage of FOB value of exports option to pay additional customs duty in cash items imported against it are freely transferable. for import at specified port, which shall be the port from where exports have been made.
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DEPB Rate
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Duty Drawback Additional customs duty / Excise Duty and Special Additional Duty paid in cash may also be adjusted as CENVAT Credit or Duty Drawback as per DoR rules
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Drawback Rate
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Export Promotion Capital Goods [EPCG] Scheme
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Export Promotion Capital Goods This scheme allows import of capital goods and spares Scheme [EPCG] [@3% of Customs Duty] at concessional rate of duty
coupled with export obligation equivalent to 8 times the duty saved amount to be completed in 8 years.
In case CVD is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated.
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Export Oriented Units [EOUs]
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Units undertaking to export their entire production of goods and services except permissible sales in Domestic Tariff Area (DTA) are known as Export Oriented Units (EOUs). Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) or Bio-Technology Parks (BTPs) are also covered under EOU scheme. These are product specific units availing the same benefits as EOUs. EOUs/EHTPs/STPs/BTPs are allowed to manufacture goods including repair, re-making, reconditioning, reengineering, and rendering of services wherever applicable.
Export Oriented Units [EOUs]
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Deemed Exports
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This is a special facility provided for supplies of indigenous products which can be consumed ultimately in the production of goods to be exported. The conditions are that supplied goods as it is do not leave the country but get consumed in the process of manufacture, payment for which is received in Indian Rupees or in foreign exchange.
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Deemed Exports
Deemed Exports
Supplies to Authorisation Holder [Adv. Autho./AAA/DFIA/EPCG] Supplies to EOUS/EHTPs/STPs/BTPs Supplies to Projects Supplies to Fertilizer Plant Marine Freight Containers by 100% EOUs
(Domestic Freight Containers Manufacturers)
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Overview : FTPAmity International Business School 2009-14 Amity International Business School
Assistance to States for Infrastructure Development of Exports [ASIDE] assistance to the States Governments for creating appropriate infrastructure for the development and growth of exports All activities as per 3.2 of HBP Trade Fairs and Buyer Seller meets abroad or in India and Export promotions seminars towns have emerged as dynamic industrial clusters contributing handsomely to Indias exports. financial assistance under MAI scheme EPCG scheme for Common Service Providers Approval under ASIDE 44 Approval on case to case basis
Market Access Initiative [MAI] Marketing Development Assistance [MDA]
25-100%
Towns of Export Excellence [TEE]
MDA
Sl. No Area/Sector
No. of visits eligible
Maximum Financial ceiling per event Rs. 1,80,000
1.
Focus LAC
2.
Focus Africa (Including WANA countries) Focus CIS

Focus ASEAN +2 General Areas TOTAL
Rs. 1,50,000
3.
4. 5.
1
1 1 5
Rs. 1,50,000
Rs. 1,50,000 Rs. 80,000* General Areas
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Export and Trading Houses [Status certificate] Served from India Scheme [SFIS] investment in upgradation of technology of some specified sectors @1% of FOB value of exports made during 200910, 2010-11 and during 2011-12
Promote export of services 10% of Export earnings who have free foreign exchange earning of at least Rs. 10 Lakhs in preceding financial year/ current financial year shall qualify for Duty Credit Scrip. For Individual Indian Service Providers, minimum free foreign exchange earnings would be Rs 5 Lakhs. Agriculture, Gram Udyog, Forest based products and Forest Produce 5% of FOB value of exports Additional 2% for some Flowers, Fruits, Vegetables and other products, as listed in 46 Table 2 of Appendix 37A
Vishesh Krishi and Gram Udyog Yojana [VKGUY]
Focus Market Scheme [FMS]
offset high freight cost
Duty Credit Scrip equivalent to 3% of FOB value of exports 2% of FOB value of exports incentivized at 2% of FOB value of exports when exported to linked market (Appendix 37D)
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Focus Products Scheme [FPS]
incentivise export of such products which have high export intensity / employment potential, Products/Sectors of high export intensity / employment potential (which are not covered under present FPS List)
Market Linked Focus Product Scheme (MLFPS)
Benefits to Status Holder
A Status Holder shall be eligible for privileges as under: (i) Authorization and Customs Clearances for both imports and exports on selfdeclaration basis; (ii) Fixation of Input-Output norms on priority within 60 days; (iii) Exemption from compulsory negotiation of documents through banks. Remittance / Receipts, however, would be received through banking channels; (iv) 100% retention of foreign exchange in EEFC account; (v) Exemption from furnishing of BG in Schemes under FTP; (vi) SEHs and above shall be permitted to establish Export Warehouses, as per DoR guidelines. (vii) For status holders, a decision on conferring of ACP Status shall be communicated by Customs within 30 days from receipt of application with Customs. (viii) As an option, for Premier Trading House (PTH), the average level of exports under EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of 3 years. (ix) Status Holders of specified sectors shall be eligible for Status Holder Incentive Scrip under Para 3.16 of FTP. (x) Status Holders of Agri. Sector (Chapter 1 to 24) shall be eligible for Agri. Infrastructure Incentive Scrip under VKGUY
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Thank you
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Overview of Foreign Trade Policy Gptaie Ms Alka: Amity International Business School Amity International Business School

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