Foreign Trade Policy (2009-2014)

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FTP OBJECTIVE To arrest and reverse the declining trend of exports. • To provide support especially to those sectors which have been hit badly by recession. • To double India’s share in global trade by 2020

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HIGHLIGHTS OF FOREIGN TRADE POLICY 2009-2014 Higher Support for Market and Product Diversification Technological Upgradation EPCG Scheme Relaxations Support for Green products and products from North East Status Holders Stability/ continuity of the Foreign Trade Policy Marine sector Gems & Jewellery Sector Agriculture Sector Measures

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Leather Sector Tea Pharmaceutical Sector Handloom Sector EOUs Thrust to Value Added Manufacturing DEPB Flexibility provided to exporters Waiver of Incentives Recovery, On RBI Specific Write off Simplification of Procedures Reduction of Transaction Costs Directorate of Trade Remedy Measures

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Higher Support for Market and Product Diversification    26 new markets added under Focus Market Scheme. These include 16 new markets in Latin America and 10 in Asia-Oceania. Incentive under: Focus Market Scheme (FMS) has been raised from 2.5% to 3%.  Focus Product Scheme(FPS) has been raised from 1.25% to 2%. Engineering products (machines, hand tools musical instruments, clocks and watches, railway locomotives etc.), Plastic, Jute and Sisal products, Technical Textiles, Green Technology products (wind mills, wind turbines, electric operated vehicles etc.), Project goods, vegetable textiles and Electronic items are added to FPS.

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Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by inclusion of products like Pharmaceuticals, Synthetic textile fabrics, value added rubber products, value added plastic goods, textile made ups, knitted and crocheted fabrics, glass products. Simplified application form introduced for FPS, FMS, MLFPS and VKGUY.  Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) schemes .

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Technological Upgradation  EPCG Scheme at Zero Duty has been introduced for engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products.  Jaipur, Srinagar and Anantnag have been recognised as Towns of Export Excellence for handicrafts; Kanpur, Dewas and Ambur have been recognised as Towns of Export Excellence for leather products; and Malihabad for horticultural products.

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EPCG Scheme Relaxations • To increase the life of existing plant and machinery, export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific export obligation. • Taking into account the decline in exports, the facility of Re-fixation of Annual Average Export Obligation has been extended for the 5 year Policy period 2009-14.

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Status Holders  To accelerate exports and encourage technological upgradation, additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports. Support for Green products and products from North East Focus Product Scheme benefit extended for export of ‘green products’ and for exports of some products originating from the North East.

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Stability/continuity of the Foreign Trade Policy  Duty Entitlement Passbook (DEPB) Scheme is extended beyond 31-12- 2009 till 31.12.2010.  Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been extended till 31.3.2010 in the Budget 2009-10.  Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been extended for the financial year 2010-11 in the Budget 2009-10.   The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC cover at 95%, to the adversely affected sectors, is continued till March, 2010.

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Marine sector Fisheries have been included in the sectors which are exempted from maintenance of average EO under EPCG Scheme.  Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for Status Holders has been given to Marine sector. Agriculture Sector  To reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been introduced.

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Gems & Jewellery Sector  • To neutralize duty incidence on gold exports.  • It is planned to establish Diamond Bourse (s) to make India a diamond international trading hub.  • A new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification purposes has been introduced. • The value limits of personal carriage have been increased from US$ 2 million to US$ 5 million in case of participation in overseas exhibitions.

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Leather Sector  • Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses. • Enhancement of FPS rate to 2%, would also significantly benefit the leather sector. Tea  • Minimum value addition under advance authorization scheme for export of tea has been reduced from the existing 100% to 50%.  • DTA sale limit of instant tea by EOU units has been increased from the existing 30% to 50%.  • Export of tea has been covered under VKGUY Scheme benefits.

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Pharmaceutical Sector  • Export Obligation Period for advance authorizations issued with 6-APA as input has been increased from the existing 6 months to 36 months.  • Pharma sector extensively covered under MLFPS for countries in Africa, Latin America, Oceania and Far East. Handloom Sector  • To simplify claims under FPS, requirement of ‘Handloom Mark’ for availing benefits under FPS has been removed.

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EOUs EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%. To provide clarity to the customs field formations, DOR shall issue a clarification to enable procurement of spares beyond 5% by granite sector EOUs.  EOUs will now be allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards.  During this period of downturn, Board of Approvals (BOA) to consider, extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs.  EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education Cess on DTA sale.

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Thrust to Value Added Manufacturing  To encourage Value Added Manufactured export, a minimum 15% value addition on imported inputs under Advance Authorization Scheme has now been prescribed.  Coverage of Project Exports and a large number of manufactured goods under FPS and MLFPS. DEPB DEPB rate shall also include factoring of custom duty component on fuel..

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Flexibility provided to exporters  Payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of Duty Credit scrips.  Import of restricted items, as replenishment, shall now be allowed against transferred DFIAs.  Time limit of 60 days for re-import of exported gems and jewellery items, for participation in exhibitions has been extended to 90 days in case of USA.  Transit loss claims received from private approved insurance companies in India will now be allowed for the purpose of EO fulfillment under Export Promotion schemes.

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Directorate of Trade Remedy Measures  To enable support to Indian industry and exporters, in availing their rights through trade remedy instruments, a Directorate of Trade Remedy Measures shall be set up. Waiver of Incentives Recovery, On RBI Specific Write off RBI specifically writes off the export proceeds realization, the incentives under the FTP shall now not be recovered from the exporters subject to certain conditions.

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Simplification of Procedures  To facilitate duty free import of samples by exporters, number of samples/pieces has been increased from the existing 15 to 50. To allow exemption for up to two stages from payment of excise duty in lieu of refund. Customs shall now permit the conversion of Shipping Bills from one Export Promotion scheme to other scheme within three months, instead of the present limited period of only one month. To reduce transaction costs, dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorization scheme for deemed supplies.  Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable excise duty, even before fulfillment of export obligation under Advance Authorization and EPCG Scheme.  Regional Authorities have now been authorized to issue licenses for import of sports weapons by renowned shooters, on the basis of NOC from the Ministry of Sports & Youth Affairs. The procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years. Automobile industry, having their own R&D establishment, would be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum

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Reduction of Transaction Costs For all other Authorizations/ license applications, maximum applicable fee is being reduced to Rs. 100,000 from the existing Rs. 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs. 75,000 (for EDI applications).  To further EDI initiatives, Export Promotion Councils/ Commodity Boards have been advised to issue RCMC through a web based online system.  Electronic Message Exchange between Customs and DGFT in respect of incentive schemes under Chapter 3 will become operational by 31.12.2009. This will obviate the need for verification of scrips by Customs facilitating faster clearances.  For EDI ports, with effect from December ’09, double verification of shipping bills by customs for any of the DGFT schemes shall be dispensed with. An Inter Ministerial Committee will be formed to redress/ resolve problems/issues of exporters. An updated compilation of Standard Input Output Norms (SION) and ITC (HS) Classification of Export and Import Items has been published.

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Thank you!!!

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