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EXIM POLICY 2004-2009

Presented By:

ABDU RAHIMAN

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Exim Policy

The foreign trade of India is guided by the Export-Importpolicy of the Government of India

Exim policy contain various policy decisions with respectto import and exports from the country

Exim Policy is prepared and announced by the centralgovernment

Exim Policy of India aims to developing export potential,improving export performance, encouraging foreign tradeand creating favorable balance of payment position

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EXIM Policy of India

2004-2009 Hon. Shri Kamal Nath minister for commerce and

industry has announced on 31st Aug 2004, Indias 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 Indias foreign trade.

Aim of the policy is to double the global merchandise

trade within the policy time period of 5 years

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Two Major Objectives

Objectives

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General Objectives of Exim Policy

To establish the framework for globalization.

To promote the productivity competitiveness ofIndian Industry.

To Encourage the attainment of high andinternationally accepted standards of quality.

To augment export by facilitating access to rawmaterial, intermediate, components, consumables

and capital goods from the international market.To promote internationally competitive import

substitution and self-reliance.

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Key Strategies to achieve these

objectives

Unshackling of controls

Simplifying Procedures

Neutralizing Incidence

Facilitating development of India

Identifying special focus areas

Facilitating technological upgradation

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Key Strategies cont.

Facilitating technological upgradation

Avoiding inverted duty structure

Upgrading the Infrastructure

Revitalizing the Board of Trade

Activating Indian Embassies

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Special Focus Initiative:

a) Sectors with significant export prospects

b) Further sectoral initiatives

c) The threshold limit of Towns of Export

Excellence is reduced

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Provisions of NewExim Policy

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AgriculturalSector:

Agriculture has the potential to bringprosperity in rural areas, and also has thelargest potential for promoting employment.Some special provisions for the agriculturalsector under the EXIM policy are as follows:

a) Vishesh Krishi Upaj Yojana

b) Import of Capital Goodsc) Agri Export Zones

d) Import of seeds

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Gems and Jewellery

Industry:To provide employment among artisans and

to develop their skills, special package has

been announced for this sector. Some ofthem are:

a) Duty Free Import

b) Commercial Samples

c) Import of gold

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Handloom and Handicraft

Sector:Increased exports from this sector willbenefit the workers at grass root level.

a) Handicraft Export Promotion Councilb) Leather and footwear industry

c) Towns of Export Excellence

d) Status holder exportere) Vishesh Krishi Upaj and Gram Udyog

Yojana

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Leather & Footwear:

Duty free entitlements of import trimmings,

embellishments and footwear components for

leather industry increased to 3% of FOB value ofexports.

Duty free import of specified items for leather

sector increased to 5% of FOB value of exports.

Machinery and equipment for Effluent TreatmentPlants for leather industry shall be exempt from

Customs Duty.

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New Export Promotion

Schemes:A new scheme to accelerate growth of exports called Target

plus has been introduced. Under the scheme exporters who exceed theannual export target were to be rewarded under the Target Plusscheme. 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

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SEZ (Special economic zone):

A scheme for setting up special economic zones(Sezs)in the country topromote exports was announced by the government in the export andImport Policy on March 31st , 2000. During 2006-07, exports fromfunctioning 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

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Star Export Houses:

A Star Export House was entitled to get license, certificate, permissionand customs clearances for both import and exports on self declarationbasis. 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)

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Free Trade & Warehousing

Zones (FTWZ):Objective:

The objective is to create trade-related infrastructure to facilitate the importand export of goods and services with freedom to carry out trade transactionsin free currency. The scheme envisages creation of world-class infrastructurefor warehousing of various products, state-of-the-art equipment,transportation, handling facilities etc.

The Free Trade & Warehousing Zones (FTWZ) shall be a special category ofSpecial 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 withinthe FTWZ will be two years.

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Export oriented units (EOUs):

(a) EOUs shall be exempted from Service Tax inproportion to their exported goods and services.

(b) EOU

s shall be permitted to retain 100% of exportearnings in EEFC accounts.

(c) Income Tax benefits on plant and machineryshall be extended to DTA units which convert to

EOUs.(d) Import of capital goods shall be on self-

certification basis for EOUs.

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ProceduralSimplification

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

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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 aclear 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 BudgetHead, and will be serviced by the Department of

Commerce.

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Other Provisions:

Pragati Maidan

Convention centerFree Trade agreement

Service Export Promotion Council

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Implications of The Foreign

Trade 2004-09

Implications

on Indian

Economy

ImplicationsImplicationsonon

AgricultureAgriculture

ImplicationsImplications

on Handloomson Handlooms

and Handicraftand Handicraft

ImplicationsImplicationson Gem andon Gem and

JewelleryJewellery

SectorSector

ImplicationsImplicationson Leatheron Leather

and Footwearand Footwear

IndustryIndustry

ImplicationsImplicationson Serviceon Service

IndustryIndustry

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Annual Supplement to Foreign

Trade Policy 2004-09Shri Kamal Nath, Minister for Commerce

& Industry, Government of India

announced Annual Supplement 2008, to theForeign Trade Policy 2004-09 on the 11th

April 2008.

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Highlights of Supplement

DUTY ENTITLEMENT PASSBOOK

SCHEME (DEPB)

REFUND OF SERVICE TAX

INCOME TAX ON EOUs

SECTORAL INITIATIVES

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PROMOTION OF HIGH VALUE

ADDED MANUFACTURED PRODUCTS

EXPORT PROMOTION CAPITAL

GOODS SCHEME (EPCG)

FOCUS MARKET & PRODUCT SCHEMES

Highlights of Supplement cont

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Thus from the supplement, I am pleased to

say that our achievements have exceeded

our expectations. Not only have we fulfilledour promises in substantial measure, but we

have achieved these remarkable results in

just four years, instead of five.

Supplement in gist

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Supplement Cont.

In 2004 our exports stood at a little overUS $ 63 billion.

In 2007-08, they have exceeded US $ 155 billion;

our exports are not just double what they were 4 years ago,

but 2 times that. We have managed an averagecumulative 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

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Evaluation of EXIM Policy

Means to boost economic growth

Employment-Generation

Towns of Export-Excellence

Export of services

Setting up ofFree Trade and WarehousingZones

Import of Second-hand Capital Goods

MERITS

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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 inExports

Diversification of Exports

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Evaluation Cont.

Liberal Imports

Encouragement to Gems and Jewellery

Setting up of Bio-Tech-Parks

Income tax concessions and exemptions.

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Evaluation Cont.

Burden of export promotion schemes

Danger of circular trading

Risk of importing outdated machinery

Policy fails to take a holistic view of

trade

DEMERITS

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Negative List of Exports 2002-07

The negative list consists of goods, the

import or export of which is ether

prohibited, restricted through licensing orotherwise to be canalized through a

designate government agency.

The negative list of exports, as per theEXIM Policy 2002-07

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Negative List Cont

Prohibited Items : Which items completely banned fromthe 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.

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Negative list cont

Restricted Items : which items allowed for exportsunder special license issued by the DGFT.

Dress materials, ready-made garments, fabrics or textile

items with imprints of excerpts or verses of the HolyQuran.

Horses Kathiawadi, Marwari, and Manipuri breeds.

Fresh and frozen silver prom frets of weight less than300gm.

Paddy (Rice in husk). Seaweeds of all types.

Chemical Fertilizer all types.

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What is new in new FTP of

Govt. Of India ?

This policy comes at a time when Indias

foreign trade is growing robustly.

The FTP hopes to double the countrys percentage

share of global trade within next five years

and also generate substantial employment.

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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 andduties on inputs used in export products,

iv) facilitate technological and infrastructural

upgradation in all the sectors of the company.

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Whats new? Cont.

The new initiatives announced foragricultural and other thrust areas such

as handicrafts, handlooms, gem andjewellery and leather and footwear andcommendable. But the promotionalsteps proposed are not exactly original;

they involve a liberal import of capitalgoods and raw materials to aid exporteffort.

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Conclusion:

The EXIM Policy 2004-2009 is one of the most ambitious policies ofthe government to liberalise the Indian economy and the governmenthas also come a long way in achieving the same. However the currentpolicy 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,Indias largest trading partner, uncertainty of the rupee-dollar exchangerate continues which in turn affects the economy.

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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/

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Thank You