exim policy project

Study of EXIM policy

INDEX

SR NO. TOPIC

PAGE NO.

1 PRE – 1991 SCENARIO OF FOREIGN TRADE

Brief Review of India’s Trade Policy India’s Share In World Trade General Provisions Regarding Imports And Exports

2 JOURNEY OF EXIM POLICY Exim Policy, 1992-97 Exim Policy, 1997-2002 Modified Exim Policy, April 1998 Exim Policy 1999-2000 Exim Policy 2000-2001 Exim Policy 2001-2002 Exim Policy 2002-2007 Exim Policy, 2003-2004 Mini EXIM Policy, Jan 2004 Foreign Trade Policy, 2004-2009

3 HIGHLIGHTS OF EXIM POLICY & ITS IMPACT Special Economic Zone (SEZ) Duty Free Replenishment Certificate (DFRC) Scheme Duty Entitlement Pass Book (DEPB) Scheme Quantitative Restrictions (QR) Agricultural Export Zones (AEZ) Status Holders Export Promotion Capital Goods Scheme (EPCG) Deemed Exports Advance License Scheme

4 EXIM BANK5 EXPORTS, IMPORTS & TRADE BALANCE6 INDIA V/S WORLD: ANNUAL EXPORT GROWTH RATE7 FUTURE OF EXIM8 BIBLIOGRAPHY


PRE – 1991 SCENARIO OF FOREIGN TRADE

Exim is the principal financial institution in the country for co-

coordinating working of institutions engaged in financing exports and

imports. The import policy in the post independence period was guided

by consideration of a growth oriented policy which should ultimately lead

us to the objective of self reliance:

a) Imports should be limited as far as possible so as to conserve

foreign exchange.

b) Imports of those items were to be encouraged which would help the

industrialization of the economy and imports of such items which

could be produced at home were discouraged or completely banned.

This distinction between essential and non-essential items of imports

were necessary in view of the fact that even the demand for imports

of capital goods and other equipment in a developing economy could

be of such a magnitude that it might become difficult to find foreign

exchange for developmental imports.

c) The nature of imports should be so modified that it helped export

promotion, and thus mitigate the deficit in the balance of payments

position ultimately.

The government appointed the Import and Export Policy

Committee headed by Mr. Mudaliar in 1962 to review Government’s

trade policy. The recommendations of the committee were accepted by

the government. Mr.V.P.Singh, the then Commerce Minister, announced

the Export Import policy on the 12th of April, 1985.It was here that for the

first time the Government announced the policy on a three year basis.

The basic aim of the policy was to facilitate production through easier

and quicker access to imported inputs, impart continuity and stability of


Exim Policy, strengthen the export production base, facilitate

technological up gradation and affect all possible savings in imports.

Brief Review of India’s Trade Policy

India’s foreign trade policy during the last five decades may be

broadly split into import substitution policy, export drive policy and export

acceleration policy. The import substitution was followed in the first two

decades. With fears of external dominance, the Indian planners adopted

a somewhat introvert external trade strategy which relied on encouraging

domestic production for the domestic market with the help of high tariffs

and high degree of protection. Far from viewing foreign trade as an

engine of growth, Indian planners sought to minimise import demand by

adopting an import substitution policy and gave secondary place to

exports primarily as a source to generate the foreign exchange earnings

to meet that part of the import bill not covered by external assistance.

There were controls over both imports and exports. However, this policy

of import substituting industrialisation and system of controls failed to

produce rapid growth and self-reliance.

With the realisation of the drawbacks of the excessively inward-

looking strategy on one hand and the need for modernisation and

technology upgradation on the other, certain policy measures were

initiated in the late seventies. Export incentives in the form of cash

compensatory support (CCS), import replenishment (REP), duty

drawback (DDS), market development assistance (MDA) etc and export

services in the form of export promotion councils, commodity boards and


specialised services institution were introduced. The strategy towards a

greater integration of the Indian economy with the rest of the world has

been pursued since then. In 1975-76 import policy was liberalised to

make available imported inputs for registered exporters. In mid-1980s

the government adopted a three-year import-export policy (1985-88) with

the aim to provide easy access to imports, essential for maximizing

production and exports. The main policy changes were abolition of

automatic licensing, inclusion of 201 items of industrial machinery under

capital goods import under OGL, decentralisation of 53 import items and

granting facility for import of capital goods against REP license from Rs

1 lakhs to Rs 2 lakhs.

The second three-year policy (1988-91) carried forward the

process of trade liberalisation to make exports more competitive. The

policy was designed to stimulate industrial growth by providing easy

access to essential imported capital goods, raw materials and

components to industry so as to sustain movements towards

modernization, technological upgradation and making Indian industry

competitive internationally. The liberal imports of capital goods and

technology were viewed as a means to enable exporters to undertake

technological upgradation in order to compete more effectively in the

international market.

In the 1990s many short run adjustments were made in the trade

policy in order to overcome the external sector crisis, which hit the

country in 1991. Two major measures taken in trade policies were (a)

liberalisation of imports entailing successive expansion in the OGL list

and (b) linking expansion in exports to import liberalisation. CCS scheme

was suspended; REP license was substituted by EXIM scrips. The rupee


was devalued in July 1991 and the country saw transition towards the

market-based exchange rate regime.

From Independence in 1947 till mid 1990s, India with some

exceptions, always faced deficit in its balance of payments i.e. imports

always exceeded exports. This was characteristic of a developing

country struggling for reconstruction and modernization of its economy.

Imports galloped because of increasing requirements of capital goods,

defence equipments, petroleum products, and raw materials. Exports

remained relatively sluggish owing to lack of exportable surplus,

competition in the international market, inflation at home, and increasing

protectionist policies, of the developed countries.

India embarked on the path of globalization in the early 1990s

with the objective of improving overall productivity, competitiveness and

efficiency of the economy in order to attain a higher growth profile.

Concomitantly, industrial, financial and external sector reforms were

initiated with a view to creating an environment conductive for the

expansion of trade. As a result, growth in trade accelerated in the early

part of the 1990s. This momentum however could not be sustained in

the face of various domestic bottlenecks and exogenous constraints like

East Asia crisis and slowdown in the US economy. These external

factors along with stagnation in investment rate, sluggish industrial

growth and slow down in manufacturing productivity, predicted India’s

trade during the closing years of the 1990s. Thus while the opening of

the economy presented a range of opportunities and advantages to the

trade sector in India, the greater integration with the global economy has

posed several challenges as well.


Since the initiation of economic reforms, India’s outward

orientation has increased considerably. The destination pattern of Indian

exports has remarkably changed in the sense that the importance of

developing countries as an export market has increased considerably.

There are, however, concerns that the country the dramatic changes in

exports of East Asia. India’s experience has seemingly fallen short of

expectation. India’s share in global trade did not rise as impressively

and the commodity structure of India’s export remained almost

unchanged until the mid 1990s.

Moreover, unlike the East Asian countries where industry has

been the major driver of exports growth, the contribution of industrial

exports in India has been comparatively low. This could perhaps be

attributed to small scale industry reservations and inflexible labour laws

besides infrastructural bottlenecks. The labour cost in India however is

one of the lowest among the competitor countries. Given the export

structure on India, the potential for higher exports of manufactures,

especially to the developed countries is high.

On the imports side, despite some initial apprehensions,

liberalization has not adversely affected India’s balance of payments.

On the contrary, increased trade liberalization along with the prudent

management of capital account liberalization has imparted with

significant strength to the balance of payments since the mid 1990a.

With the increased competitiveness of Indian Industries imports of low

and medium technology intensive products have declined. At the same

time, imports of high technology intensive products and imports used for

export production have increased. There is growing evidence that


accessibility to imports has a positive impact on the growth performance

of the country.

In the 1990s, a liberalised trade regime was put in place, which

marked a significant turnaround from the earlier controlled regime. The

challenge of restoring the macro-economic balance initially was

combined with a long term new trade policy which formed a major

ingredient of the economic reforms programme. It was recognized that

trade policies should form a part of an integrated policy framework if the

aim was to improve the overall productivity and efficiency of the

economic system. Apart from devaluation of the exchange rate and a

switch over to a unified marked determined exchange system in 1993,

the new trade policy was characterized by a short negative list of imports

and exports, lowering of the level and dispersion of nominal tariffs,

withdrawal of quantitative restrictions on imports and phasing out of the

system of import licensing. The new trade policy reforms also

encompassed significant changes in the system of export incentives,

moving away from direct subsidies to indirect export promotional

measures.

The multi-pronged strategy undertaken in the beginning of the

1990s gradually had its desired effects on the economy and ushered in a

phase of a stable and high growth. The rising exports combined with

significant surge in capital flows provided opportunities for further

liberalization of essential imports from quantitative restrictions. The

stability in the exchange rate of the rupee maintained the

competitiveness of Indian exports and at the same time prevented the

upsurge of cheap imports. The loss of the East European markets since

the early 1990s was successfully countered by diversifying into newer


markets of developing countries of Asia and the Organization of the

petroleum Exporting Countries(OPEC).

The economic reform process introduced in the beginning of

the 1990s wit focus on liberalization had enabled increased integration

of the Indian Economy with the rest of the world. The growth rate of

India’s trade is increasingly dependent on exogenous factors such as

world trade growth, international price changes and developments in the

competitor countries. Cross currency exchange rates as well as solar-

rupee exchange rate movements also get reflected in the performance of

India’s trade. Although the level and dispersion of India’s tariff have

considerably come down since the early 1990s it remains among the

highest as compared to emerging market economies.

It is increasingly being realized that the desirable structure of

tariff rates should comply with the basic principles of simplicity,

transparency, stability and international practices. As noted in the tenth

plan document, the most effective means of encouraging outward

orientation is to lower tariffs on imports so that the anti-export bias

corrected. Further, it may be noted that as the duty rates fall, the need

for refunds will commensurately decline thereby bringing down the

transaction cost.

It has been observed that in contrast to the structural and

compositional shifts in world trade towards higher technology intensive

products, the commodity structure of India’s exports remained largely

unchanged until the mid 1990s. Although, of late India’s exports have

shown a steady trend towards higher technology content, India’s

specialization of in exports lies in manufacturing goods, especially to the


developed markets remains high. However, given the general trend of

movement of terms of trade towards higher technology intensive

products, it may be imperative for India to move up the technology

ladder.

At the same time, the policy of reservation for SSIs had

declined successful small scale units to expand and achieve economies

of scale and upgrade technology. This in turn has affected export

growth, manufacturing production and employment generation.

A noteworthy fact is that despite significant liberalization of

imports during the 1990s the overall balance of payments has been in

surplus for most of the years with the country foreign exchange reserves

crossing US$ 100 billion mark. Thus, in contrast to fears expressed at

the time if the opening up of the economy, import, and liberalization

policies have in fact strengthened the country’s external sector since

1990-91. The implication is that continued reduction in import tariffs will

help in inducing greater efficiency and competitiveness in the economy,

while reducing avoidable transaction costs in trade. For the future, the

prospects of sustained growth in exports of goods and services are

bright provided the Indian economy can face the challenge of enhancing

productivity and competitiveness in an increasingly integrated global

environment.

Import Substitution: Cornerstone of Trade Policy

India adopted an inward looking development strategy after

independence wherein import substitution constituted a major element of

both trade and industrial policies. The focus in the initial stages of


planned development was on stimulating home grown industrialization,

essentially based on the infant industry argument ,wherein production for

domestic market was shielded behind high tariff walls and high

effective protection .this policy not only underestimated the export

possibilities but also the import intensity of the import substitution

process itself.

Import substitution was the prime objective of India’s trade policy till

the mid 1970’s. This policy was largely based on the imports and exports

act of 1947. Liberal incentives were granted to firms if they were

undertaking production of an imported item that was not domestically

produced.

Protective quotas however remained more or less intact and

domestic industry continued to be shielded from import competition.

Production for exports cannot be isolated from production for the home

market and trade policy would have to be integrated with the policy for

domestic industrialization.

A three year export import policy was introduced in 1985 to provide a

definite focus to the trade sector. A major ingredient of this policy was

the provision of easy access to essential capital goods, raw materials

and component from abroad since these were viewed as a major

incentive for exporters in undertaking technological up gradation for

reducing cost and improving quality.

In short prior to mid 1991, foreign trade of India suffered from strict

bureaucratic and discretionary control. Foreign exchange transactions

were controlled by the government and the Reserve Bank of India.

Beginning mid1991 the government of India introduced a series of


reforms to liberalize and globalize the Indian economy. The process of

globalization is a reality which cannot be denied and also should not be

avoided .It needs to be managed so that we can derive the maximum

advantage from world markets.

Balance of payment crisis, 1991

The balance of payment situation became very difficult in 1991-

1992 despite of softening of oil price in the world market. Even with a

substantial import compression, the pressure on the balance of

payments persisted throughout the current financial year.

The government attempted to mobilize support for balance of

payments for multilateral financial institutions– the international monetary

fund, the World Bank and the Asian development bank.

Another important initiative taken by the government to meet the

urgent need for the balance of payments financing was the

announcement of two schemes designed to encourage the inflow of

capital funds from abroad .The India development bond scheme and the

immunity scheme for repatriation of funds held abroad were introduced

in October1991.

Foreign currency assets, which had declined to $1.1 billion at their

lowest point in june1991, had risen to $4.4 billion by February1992.

The build up of the reserves in the course of 1991-92 was

necessary to restore confidence in the system, but it also meant the

additional resources mobilized from the multilateral financial institutions

and the IDB and immunity schemes were primarily used for building up


reserves and not to liberalize imports, which remain severely constrained

in 1991-92.

Following adjustments were called for a broad based, rapid and

sustained growth of exports.

Reduction in the excess domestic demand-Domestic demand had

to be restrained and supply increased.

Enhanced Competiveness-This required two changes, a change in

the exchange rate of rupee and a reduction in a relative prices of

those products which were costly vis-à-vis competing goods

abroad. The first step was taken by means of a downward

adjustment of about 18 percent in the external value of the

rupee .The second step required a phasing down of import

restrictions and a reductions in the high levels of protection ,which

characterize Indian industries.

Deregulation-One of the obstacles to exports lied in the

cumbersome administrative procedures involved, arising from

controls over imports and exports, exchange control and also

procedures.

Measures which were taken for lowering the inflation rate in the

economy are:-

Reducing subsidies and external support to production enterprises

so as to make more responsive to price and demand changes.

Ensuring that buffer stock operations for food grains and

interventions in agricultural markets were counter cyclical.

Encouraging savings to be high not only as a proportion of GDP

but in relation to demand for investment funds in the economy.


Keeping entry barriers low in the industrial sector and improving

industry’s access to imported inputs at low tariffs.

India’s Share In World Trade

In 1950, India accounted for 1.8 percent (1.85 percent of exports

and 1.71 percent of imports) of world trade, gradually declining to 0.53

percent by 1991; it marginally improved to 0.61 percent in 1994. The

decline in India’s share in world trade has not only been arrested but

reversed. Below table shows trends in India’s share in the world trade

during the post-Independence period. It is discernible that of late India’s

share in world exports in on the increase. It s noteworthy that India

commands an important place in world trade in tea, precious, and semi-

precious stone, spices, iron ore, leather and coffee. The Foreign Trade

Policy, 2004 – 2009 has set an ambitious task of achieving 1.5 percent

share in the world trade by the year 2009.

Selected Years

(percent)

Year Exports Imports Trade

1950 1.85 1.71 1.78

1960 1.03 1.69 1.36

1970 0.64 0.65 0.65

1980 0.42 0.72 0.57


1990 0.52 0.66 0.59

1991 0.50 0.56 0.53

1992 0.53 0.61 0.57

1993 0.58 0.60 0.59

1994 0.60 0.63 0.61

1998 0.60 - -

2000 0.70 - -

2001 0.70 - -

2003 0.86 - -

Sources: Government of India, Economic Survey, 1996-1997, p.88, and

Economic Survey, 2005-2006 p. S-95

General Provisions Regarding Imports And Exports

Exports and Imports free unless regulated


2.1 Exports and Imports shall be free, except in cases where

they are regulated by the provisions of this Policy or any

other law for the time being in force. The item wise export

and import policy shall be, as specified in ITC(HS)

published and notified by Director General of Foreign

Trade, as amended from time to time.

Compliance with Laws

2.2 Every exporter or importer shall comply with the

provisions of the Foreign Trade (Development and

Regulation) Act, 1992, the Rules and Orders made there

under, the provisions of this Policy and the terms and

conditions of any license/certificate/permission granted to

him, as well as provisions of any other law for the time

being in force. All imported goods shall also be subject to

domestic Laws, Rules, Orders, Regulations, technical

specifications, environmental and safety norms as

applicable to domestically produced goods.

Interpretation of Policy

If any question or doubt arises in respect of the

interpretation of any provision contained in this Policy, or

regarding the classification of any item in the ITC(HS) or

Handbook (Vol.1) or Handbook (Vol.2), the said question

or doubt shall be referred to the Director General of

Foreign Trade whose decision thereon shall be final and

binding.


If any question or doubt arises whether a licence/

certificate/permission has been issued in accordance with

this Policy or if any question or doubt arises touching

upon the scope and content of such documents, the same

shall be referred to the Director General of Foreign Trade

whose decision thereon shall be final and binding.

Procedure

The Director General of Foreign Trade may, in any case

or class of cases, specify the procedure to be followed by

an exporter or importer or by any licensing or any other

competent authority for the purpose of implementing the

provisions of the Act, the Rules and the Orders made

there under and this Policy. Such procedures shall be

included in the Handbook (Vol.1), Handbook (Vol.2) and

in ITC(HS) and published by means of a Public Notice.

Such procedures may, in like manner, be amended from

time to time.

The Handbook (Vol.1) is a supplement to the EXIM Policy

and contains relevant procedures and other details. The

benefits available under various schemes of the Policy

are given in the Handbook (Vol.1).

Exemption from Policy / Procedure

Any request for relaxation of the provisions of this Policy

or of any procedure, on the ground that there is genuine


hardship to the applicant or that a strict application of the

Policy or the procedure is likely to have an adverse

impact on trade, may be made to the Director General of

Foreign Trade for such relief as may be necessary. The

Director General of Foreign Trade may pass such orders

or grant such relaxation or relief, as he may deem fit and

proper. The Director General of Foreign Trade may, in

public interest, exempt any person or class or category of

persons from any provision of this Policy or any procedure

and may, while granting such exemption, impose such

conditions as he may deem fit. Such request may be

considered only after consulting ALC if the request is in

respect of a provision of Chapter-4 (excluding any

provision relating to Gem & Jewellery sector) of the

Policy/ Procedure. However, any such request in respect

of a provision other than Chapter-4 as given above may

be considered only after consulting Policy Relaxation

Committee.

Principles of Restriction

DGFT may, through a notification, adopt and enforce any

measure necessary for:-

Protection of public morals.

Protection of human, animal or plant life or health.

Protection of patents, trademarks and copyrights and

the prevention of deceptive practices.


Prevention of prison labour.

Protection of national treasures of artistic, historic or

archeological value.

Conservation of exhaustible natural resources.

Protection of trade of fissionable material or material

from which they are derived; and

Prevention of traffic in arms, ammunition and

implements of war.

Restricted Goods

Any goods, the export or import of which is restricted

under ITC(HS) may be exported or imported only in

accordance with a license/ certificate/ permission or a

public notice issued in this behalf.

Terms and Conditions of a License / Certificate / Permission

Every license/certificate/permission shall be valid for the

period of validity specified in the license/

certificate/permission and shall contain such terms and

conditions as may be specified by the licensing authority

which may include:

a. The quantity, description and value of the goods;

b. Actual User condition;

c. Export obligation;

d. The value addition to be achieved; and


e. The minimum export price.

Licence/ Certificate/ Permission not a Right

No person may claim a license/certificate/ permission as a

right and the Director General of Foreign Trade or the

licensing authority shall have the power to refuse to grant

or renew a license/certificate/permission in accordance

with the provisions of the Act and the Rules made there

under.

Penalty

If a license/certificate/permission holder violates any

condition of the license/certificate/ permission or fails to

fulfill the export obligation, he shall be liable for action in

accordance with the Act, the Rules and Orders made

there under, the Policy and any other law for the time

being in force.

State Trading

Any goods, the import or export of which is governed

through exclusive or special privileges granted to State

Trading Enterprise(s), may be imported or exported by the

State Trading Enterprise(s) as specified in the ITC(HS)

Book subject to the conditions specified therein. The

Director General of Foreign Trade may, however, grant a

license/certificate/permission to any other person to

import or export any of these goods.

In respect of goods the import or export of which is


governed through exclusive or special privileges granted

to State Trading Enterprise(s), the State Trading

Enterprise(s) shall make any such purchases or sales

involving imports or exports solely in accordance with

commercial considerations, including price, quality,

availability, marketability, transportation and other

conditions of purchase or sale. These enterprises shall

act in a non discriminatory manner and shall afford the

enterprises of other countries adequate opportunity, in

accordance with customary business practices, to

compete for participation in such purchases or sales.

Importer-Exporter Code Number

No export or import shall be made by any person without

an Importer-Exporter Code (IEC) number unless

specifically exempted. An Importer-Exporter Code (IEC)

number shall be granted on application by the competent

authority in accordance with the procedure specified in

the Handbook (Vol.1).

Trade with Neighbouring Countries

The Director General of Foreign Trade may issue, from

time to time, such instructions or frame such schemes as

may be required to promote trade and strengthen

economic ties with neighbouring countries.

Transit Facility

Transit of goods through India from or to countries

adjacent to India shall be regulated in accordance with the


bilateral treaties between India and those countries.

Trade with Russia under Debt- Repayment Agreement

In the case of trade with Russia under the Debt

Repayment Agreement, the Director General of Foreign

Trade may issue, from time to time, such instructions or

frame such schemes as may be required, and anything

contained in this Policy, in so far as it is inconsistent with

such instructions or schemes, shall not apply.

Actual User Condition

Capital goods, raw materials, intermediates, components,

consumables, spares, parts, accessories, instruments and

other goods, which are importable without any restriction,

may be imported by any person. However, if such imports

require a license/certificate/ permission, the actual user

alone may import such goods unless the actual user

condition is specifically dispensed with by the licensing

authority.

Second Hand Goods

All second hand goods shall be restricted for imports and

may be imported only in accordance with the provisions of

this Policy, ITC(HS), Handbook (Vol.1), Public Notice or a

licence/certificate/permission issued in this behalf.

Import of samples

Import of samples shall be governed by the provisions


given in Handbook (Vol.1).

Import of Gifts

Import of gifts shall be permitted where such goods are

otherwise freely importable under this Policy. In other

cases, a Customs Clearance Permit (CCP) shall be

required from the DGFT.

Passenger Baggage

Bonafide household goods and personal effects may be

imported as part of passenger baggage. Samples of such

items that are otherwise freely importable under this

Policy may also be imported as part of passenger

baggage without a licence/certificate/ permission.

Exporters coming from abroad are also allowed to import

drawings, patterns, labels, price tags, buttons, belts,

trimming and embellishments required for export, as part

of their passenger baggage without a licence/certificate/

permission.

Import on Export basis

New or second hand capital goods, equipments,

components, parts and accessories, containers meant for

packing of goods for exports may be imported for export

without a licence/certificate/permission on execution of

Legal Undertaking/ Bank Guarantee with the Customs

Authorities.

Re-import of goods repaired abroad


Capital goods, equipments, components, parts and

accessories, whether imported or indigenous, may be

sent abroad for repairs, testing, quality improvement or

upgradation or standardization of technology and re-

imported without a licence/certificate/permission.

Import of goods used in projects abroad

After completion of the projects abroad, project

contractors may import, without a

licence/certificate/permission, used goods including

capital goods provided they have been used for at least

one year.

Sale on High Seas

Sale of goods on high seas for import into India may be

made subject to this Policy or any other law for the time

being in force.

Import under Lease Financing

Permission of licensing authority is not required for import

of new capital goods under lease financing.

Clearance of Goods from Customs

The goods already imported/shipped/arrived, in advance,

but not cleared from Customs may also be cleared

against the licence/ certificate/ permission issued

subsequently.


Execution of BG/LUT

Wherever any duty free import is allowed or where

otherwise specifically stated, the importer shall execute a

Legal Undertaking (LUT)/Bank Guarantee (BG) with the

Customs Authority before clearance of goods through the

Customs, in the manner as may be prescribed. In case of

indigenous sourcing, the licence/certificate/ permission

holder shall furnish BG/LUT to the licensing authority

before sourcing the material from the indigenous

supplier/nominated agency.

Private/ Public Bonded Warehouses for Imports

Private/Public bonded warehouses may be set up in the

Domestic Tariff Area as per the terms and conditions of

notification issued by Department of Revenue. Any

person may import goods except prohibited items, arms

and ammunition, hazardous waste and chemicals and

warehouse them in such private/public bonded

warehouses. Such goods may be cleared for home

consumption in accordance with the provisions of this

Policy and against Licence/certificate/ permission,

wherever required. Customs duty as applicable shall be

paid at the time of clearance of such goods. If such goods

are not cleared for home consumption within a period of

one year or such extended period as the custom

authorities may permit, the importer of such goods shall

re-export the goods.


Free Exports

All goods may be exported without any restriction except

to the extent such exports are regulated by ITC(HS) or

any other provision of this Policy or any other law for the

time being in force. The Director General of Foreign Trade

may, however, specify through a public notice such terms

and conditions according to which any goods, not

included in the ITC(HS), may be exported without a

licence/ certificate/ permission.

Export of samples

Export of samples shall be governed by the provisions

given in Handbook (Vol.1)

Export of Passenger Baggage

Bonafide personal baggage may be exported either along

with the passenger or, if unaccompanied, within one year

before or after the passenger's departure from India.

However, items mentioned as Restricted in ITC(HS) shall

require a licence/certificate/permission, except in the case

of edible items.

Export of Gifts

Goods, including edible items, of value not exceeding

Rs.1,00,000/- in a licensing year, may be exported as a

gift. However, items mentioned as restricted for exports in

ITC(HS) shall not be exported as a gift, without a licence/


certificate/ permission, except in the case of edible items.

Export of Spares

Warranty spares, whether indigenous or imported, of

plant, equipment, machinery, automobiles or any other

goods may be exported upto 7.5% of the FOB value of

the exports of such goods along with the main equipment

or subsequently but within the contracted warranty period

of such goods.

Third Party Exports

Third party exports, as defined in paragraph 9.56 shall be

allowed under the Policy.

Export of Imported Goods

Goods imported, in accordance with this Policy, may be

exported in the same or substantially the same form

without a licence/certificate/ permission provided that the

item to be imported or exported is not mentioned as

restricted for import or export in the ITC(HS). Exports of

such goods imported against payment in freely

convertible currency would be permitted against payment

in freely convertible currency.

Goods, including those mentioned as restricted item for

import or export (except prohibited items) in ITC(HS), may

be imported under Customs Bond for export in freely

convertible currency without a licence/certificate/

permission.


Export of Replacement Goods

Goods or parts thereof on being exported and found

defective/damaged or otherwise unfit for use may be

replaced free of charge by the exporter and such goods

shall be allowed clearance by the customs authorities

provided that the replacement goods are not mentioned

as restricted items for exports in ITC(HS).

Export of Repaired Goods

Goods or parts thereof on being exported and found

defective, damaged or otherwise unfit for use may be

imported for repair and subsequent re-export. Such goods

shall be allowed clearance without a licence/certificate/

permission and in accordance with customs notification

issued in this behalf.

Private Bonded Warehouses for Exports

Private bonded warehouse exclusively for exports may be

set up in DTA as per the terms and conditions of the

notifications issued by Department of Revenue. Such

warehouse shall be entitled to procure the goods from

domestic manufacturers without payment of duty. The

supplies made by the domestic supplier to the notified

warehouses shall be treated as physical exports provided

the payments for the same are made in free foreign

exchange.

Denomination of Export Contracts


All export contracts and invoices shall be denominated in

freely convertible currency and export proceeds shall be

realised in freely convertible currency. Contracts for which

payments are received through the Asian Clearing Union

(ACU) shall be denominated in ACU Dollar. The Central

Government may relax the provisions of this paragraph in

appropriate cases. Export contracts and Invoices can be

denominated in Indian rupees against EXIM

Bank/Government of India line of credit.

Realisation of Export Proceeds

If an exporter fails to realise the export proceeds within

the time specified by the Reserve Bank of India, he shall,

without prejudice to any liability or penalty under any law

for the time being in force, be liable to action in

accordance with the provisions of the Act, the Rules and

Orders made there under and the provisions of this

Policy.

Free movement of export goods No seizure of Stock

2.42.

1

No seizure of stock shall be made by any agency so as to

disrupt the manufacturing activity and delivery schedule of

export goods. In exceptional cases, the concerned

agency may seize the stock on the basis of prima facie

evidence. However, such seizure should be lifted within 7

days.

Export Promotion Council

2.43 The basic objective of export promotion councils is to


promote and develop the exports of the country. Each

Council is responsible for the promotion of a particular

group of products, projects and services. The list of the

councils and their main functions are given in Handbook

(Vol.1).

Registration -cum-Membership Certificate

2.44 Any person, applying for (i) a licence/ certificate/

permission to import/ export, [except items listed as

restricted items in ITC(HS)] or (ii) any other benefit or

concession under this policy shall be required to furnish

Registration-cum-Membership Certificate (RCMC)

granted by the competent authority in accordance with the

procedure specified in the Handbook (Vol.1) unless

specifically exempted under the Policy.

JOURNEY OF EXIM POLICY

India`s foreign trade is regulated by the foreign trade

(Development and Regulation) Act, 1992 which replaced the import and

export (control) Act, 1947. The act of 1992 empowers the central

government to formulate and announce from time to time the export and

import policy and to amend it in like manner.

Prior to mid -1991, foreign trade of India suffered from strict

bureaucratic and discretionary controls. However, the new government


which took over at the centre in June 1991 soon realised that India’s

foreign trade policy must respond to the changes (liberalization and

openness) sweeping across the world. To reduce controls, simplify

procedures and to create a congenial environment for trade, the

government made a statement on trade policy in parliament on august

13, 1991, ushering a new era in the foreign trade policy of India. Instead

of controls and regulations, the focus shifted to promotion and

development of foreign trade.

Before 1985-86, the annual export-import policy was announced at

the beginning of the financial year. In 1985-86 , a three year export-

import policy was announced for the period April 1985 through march

1988, providing a reasonable degree of stability to the policy framework.

On its expiry, the new policy for three years 1988-91 was announced in

March 1988 which laid even greater emphasis on promotion of exports.

EXIM POLICY, 1992-97

On March 31, 1992, the government announced the export and

import policy for a period of five years (April 1, 1992 to march 31, 1997),

coinciding with the period of eighth five year plan. The chief controller of

imports and exports was re-designated as director general of foreign

trade. EXIM Policy, 1992-97 made a conscious effort to dismantle

various protectionist and regulatory policies and accelerate India`s

transition towards a globally oriented economy. The export-import policy

was further liberalized by the government on March 31, 1993.

Substantial concessions were announced to boost agricultural exports.


The government also announced a centrally sponsored scheme to set

up industrial parks in different states.

EXIM POLICY, 1997-2002

The export and import policy, 1997- 2002 (coinciding with the period

of ninth five year plan) sought to consolidate the gains of the previous

policy and further carry forward the process of liberalization by

deregulating and simplifying procedures and removing quantitative

restrictions in a phased manner. It set an ambitious target of attaining an

export level of US$ 90-100 billion by the year 2002 and achieving 1 per

cent share in world trade.

Objectives:

The principal objectives of the policy were the following:

1. To accelerate the country`s transition to a globally – oriented vibrant

economy to derive maximum benefits from expanding global market

opportunities.

2. To stimulate sustained economic growth by providing access to

essential raw materials, intermediates, Components, consumables and

capital goods required for augmenting production.

3. To enhance the technological strength and efficiency of Indian

agriculture, industry and services, thereby improving their competitive

strength while generating new employment opportunities, and encourage

the attainment of internationally accepted standards of quality.


4. To provide consumers with good quality products at reasonable

prices.

Salient Features:

Following were the salient features of the policy:

1. Exports and imports shall be free, except to the extent they are

regulated by the provisions of this policy.

2. The Central Government may in public, interest, regulate the import

or exports of goods by means of a negative list of imports or a negative

list of exports, as the case may be.

3. The negative list may consist of goods, the import or export of which

is prohibited, restricted through licensing, or canalised.

4. Prohibited items in the Negative list of Imports shall not be imported

and prohibited items in the Negative list of exports shall not be exported.

5. Any goods, the export or import of which is restricted through

licensing , may be exported or imported only in accordance with a

license issued in this behalf.

6. Any goods, the import or export of which is canalised, may be

imported or exported by canalising agency specified in the negative list.

7. No export or import shall be made by any person without an importer

– exporter code (IEC) number unless specifically exempted.


MODIFIED EXIM POLICY, APRIL 1998

The new government at the centre, which assumed office in March

1998, announced its exports and import policy for the year 1998-99 on

April 13, 1998. As part of the annual export-import policy modification,

the government freed from import restrictions a large number of

consumer goods and liberalized all major export promotion schemes.

This new dose of liberalization of the trade regime by the new

government was necessitated by the commitments made by India at the

World Trade Organization (WTO). The timing of the import policy

liberalization coincided with the scheduled review of India`s trade policy

by WTO on April 16 and 17, 1998. Apart from the general global

pressure on India to remove restrictions on imports, the US had filed a

complaint with the WTO against India`s import regime. The following

were the main provisions of the modified Export-import policy unveiled

by the Commerce Minister on April 13, 1998.

1. 340 more items were shifted from restricted list to open general

licence (OGL). Thus out of the total number of 10, 202 items covered

under the export-import policy, only 2200 remained on the restricted

list.

2. The revised policy set an export growth target of 20 percent for the

year 1998-99 which in other words required total exports of the order

of US$ 41.4 billion during 1998-99.

3. Zero –duty export promotion capital goods (EPCG) scheme was

extended to all the software exporters by lowering the threshold limit

of importable capital goods from Rs 20 crore to Rs 10 lakhs. The


lowering of the threshold limit was expected to help the software

companies to proliferate throughout the length and breadth of the

country. In other words they could import any capital goods without

paying any import duty and in return sign an export obligation of 5

times the value of capital goods on net foreign exchange earning

basis for a period of six years. In the case of garments, agriculture,

food processing, gems and jewellery, electronics leather, sport goods

and toys the minimum limit was lowered to Rs 1 crore.

4. In a bid to prevent cheap imports being dumped at unreasonable

prices, the government set up an anti-dumping cell called Directorate

General (DG) of Anti-Dumping and Allied Duties. The DG would be

responsible for investigation into alleged cases of dumping as well as

subsidised cases. DG would be recommended Anti –Dumping duties

where it is found that dumped imports are causing harm to the

domestic industry. Where harm is caused to the domestic industry by

subsidising exports of the exporting countries then the DG would have

the jurisdiction to investigate all such cases and recommend possible

imposition of countervailing duties. The DG would also advice the

industry groups and consumer for on how to go about collecting

information and procedures involved in making out a case for anti-

dumping duties.

5. Other provisions include:

Delegation of powers to regional licensing offices, Doing away with

the minimum value addition of 33 percent under advance licensing

scheme, Simplified procedures for clubbing of advance license

scheme and Private bonded warehouses to be set up to import, stock

and sell even negative list items.


EXIM POLICY 1999-2000

In its effort to further dismantle the import control regime and hasten

the integration of the Indian economy with the world economy, the

government announced a revised export-import policy on March 31,

1999 which came into force on April1, 1999.

The new export –import policy freed import of 894 items of consumer

goods, agricultural products and textile from licensing requirements. In

other words a number of

Consumer items could now be imported license-free subject only to the

payment of import duty. Physical controls on imports were removed and

the only control over imports was fiscal in nature, i.e. adjusting import

duty to regulate imports. These adjustments were to be made within the

upper limit prescribed by WTO.

Moreover, another 414items were removed from the restricted list,

allowing these to be imported against special import licenses. India`s

international commitments require it to remove licensing curbs on

imports by the year 2003.

EXIM POLICY 2000-2001

The union commerce and industry minister announced on march 31,

2000 the new export-import policy of the government of India for the year

2000-2001. The export –import policy envisaging a 20 percent export

growth in dollar terms in 2000-2001, brought about a major


rationalisation in export promotion schemes and launched a series of

sector specific initiatives.

Export Promotion: In a major initiative to boost exports, the

Government announced the following measures:

Special Economic Zones (SEZ): in the pattern of Chinese models the

government announced the setting up of two SEZs at Positra in Gujarat

and Nangunery in Tamil Nadu ]. Industrial units located in SEZs will be

exempted from rules and regulations governing exports and imports. The

entire production will have to be exported from these zones. Sales from

Domestic Tariff Area (DTA) can be done only on full payment of custom

duty. Several Export Processing Zones (EPZs)will shortly be converted

into SEZs. The EPZs located in Kandla, Vizag and Kochi will be

converted into SEZs immediately. It was further announced that 100

percent foreign direct investment (FDI) would be allowed in all products

in SEZs.

SEZs would be treated as if they are outside the customs

territory of the country. The units would be able to import capital goods

and raw material duty free. The movement of goods to and from SEZs

would be unrestricted.

It is noteworthy that SEZs have played a crucial role in

boosting China`s exports and presently the country derives 40 percent of

its exports from such zones. However, Chinese SEZs are based on

contract labour system (hire and fire policy). The commerce minister

while announcing the EXIM policy categorically ruled out any changes in

labour laws. Moreover, there is no systems of reservation of items for


small scale industries in China. It is unclear if the Government of India

would allow the production of reserved item for small industries in the

SEZs. Still further there are various infrastructural bottlenecks like power

shortage, lack of transport facility and of course procedural delays.

Hence the success of SEZs in India is a moot question

Sector-Specific Packages: the Export-import policy 2000-2001

announced sector-specific packages for sever core areas to boost

export, viz. Gems and jewellery, pharmaceuticals, agrochemicals,

biotechnology, silk, leather and garments.

For the gems and jewellery exporters, the government announced

a diamond-dollar account (DDA) scheme export proceeds can be

retained in a dollar account and the exporters can use funds in this

account for import of rough diamonds.

For agrochemicals, biotechnology and pharma units (considered

as knowledge-intensive), the government has allowed duty free imports

of laboratory equipment, chemicals and reagents upto 1% of the FOB

value of exports. Similarly the government increased duty free import of

trimmings, embellishments and other items from 2 to 3% of the total

export value

Involvement of State Governments in Export Promotions : Since the

stages forgo taxes (mainly sales tax) on exports, they have little

incentive to promote exports. [1] the 2000-2001 export -import policy

announced financial incentives to states based on their export

performance. An incentives scheme with an initial outlay of Rs. 250

crores to secure states involvement in the national export drive was


unveiled. The states can use the funds for export promotions activities

such as infrastructure development. The commerce and industry

minister said that he would request the state to treat all units exporting

more than 50 percent of their turnover as public utility services. This

would enable them to keep their international commitment on delivery

schedule.

Furthermore, the minister observed that the recent spectacular growth of

software exports was, apart from India’s knowledge in high-tech, due to

hands off policy of government towards this sector .A similar approach

to hardware electronics is called for.

Import liberalisation: The export import policy 2000 to 2001 lifted

quantitative restrictions on 714 commonly used items (agricultural

products and consumer durables ) which can now be freely imported.

Thus, commodities like meat, milk powder, coffee, tea, fish, pickles,

cigars , cigarettes, television , radio , tape recorders , foot wares &

umbrellas can be imported freely from April 1, 2000. However most of

these items will attracts peak rates of basic import duty.

The lifting of licensing and quota restrictions on 714 import items was in

line with India’s WTO obligations. The government promised to abolish

licensing and quota curbs on the remaining 715 items (such liquor, cars

etc) in April 2001.

Many critics of new policy fear that that removal of licensing and quota

restriction will lead to surge in imports of these items, hurting the

domestic industry. However, it is noteworthy that import restrictionare

being phased out since 1966 but no extraordinary growth has occurred

in the import of freed items. The commerce minister maintain that anti-


dumping and anti-subsidy tariffs and other safeguards would be used if

there is sudden search in imports, causing serious injuries to the

domestic industry.

EXIM Policy, 2001-2002

The union commerce And industry minister unveiled on march 31, 2001,

the export –import policy for the year 2001-2002.

Removal of Quantitative restrictions: The process of removal of import

restrictions , which began in 1991, was completed in a phased manner

bye the Export-Import Policy 2001-2002 with the removal of restriction

on the remaining of 715 items. This was in tune with the commitments

made to the WTO. Out of these 715 items 342 were textile products, 147

were agricultural products and 226 were other manufactured products.

However, import of agricultural products like wheat, rice, maze, copra

and coconut oil was placed in the category safe trading . the nominated

state trading enterprise will conduct the import of this commodity solely

as per commercial consideration . similarly, import of petroleum products

including petrol , diesel & ATF was placed in the category of state

trading in all 27 out of 715 items taken of the quantitative restrictions list

were put under the state trading category.

The minister was confident that the Indian market will not swamped by

imported brands of commonly used articles. To prevent dumping,

government will take recourse to anti-dumping duties and other non-tariff

barriers. Arrangements have been made to track, collate and analyse

data on 300 sensitive items which mainly comprise farm goods and

items produced by small scale sectors.


Agricultural Export Zones: With a view to boost agricultural exports and

provide remunerative returns to the farming community, the Export-

Import policy proposed the setting up of agricultural export zones. Three

such zones are proposed to be set up in himanchal Pradesh , jammu

Kashmir (to promote export of apples) and Maharashtra. Government

will make efforts to provide improved access to the produce/products of

the agriculture and allied sectors in the international market. State

governments have been asking to identify product specific agricultural

export zones for development for export of specific products from a

geographically contiguous area.

EXIM Policy , 2002-2007

The EXIM Policy 2002-07 was unveiled on march 31, 2002. The policy

entailed several institutional, infrastructural and fiscal measures intended

to promote exports which are conductive to the economic development

of the country. The following were the salient features of the policy.

Special Economic zones (SEZs): Offshore banking units (OBUs) were

permitted in SEZs . Units in SEZ were permitted to undertake hedging of

commodity price risks, provided such transactions are undertaken by the

units on stand-alone basis. This will impart security to the returns of the

unit.

It has also been decided to permit external commercial borrowings

(ECBs) for tenure of less than three years in SEZs. The detailed

guidelines will be worked out by RBI. This will provide opportunities for

accessing working capital loan for these units internationally competitive

rates.


Employment Generation: In an effort to generate additional

employment , the following announcements were made pertaining to

agricultural and small industry sectors.

Exports restrictions like registration and packaging requirement were

removed forthwith on butter, wheat & wheat products, coarse grains

groundnuts oil and cashew to Russia . Quantitative and packaging

restrictions on wheat and its products, butter, pulses, grains and flour of

barley, maize, bajra, ragi and jowar had already been removed on march

5, 2002.

Restrictions on export of all cultivated varieties of seed, except jute

and onion, were removed.

To promote export of agriculture and agriculture-based products, 20

agriculture export zones were notified.

In order to promote diversification of agriculture, transport subsidy

shall be available for export of fruits, vegetables, floriculture, poultry

and dairy products.

3 percent special DEPB rate was announced for primary and

processed foods exported in retail packaging of 1 kg or less

An amount of Rs 5 crore under Market Access Initiative (MAI)

Was earmarked for promoting cottage sector exports coming under te

KVIC.

The units in the handicrafts sector can also access funds from MAI

scheme for development of website for visual exhibition of their

product.


Under the export of Promotion Capitals Goods (EPCG) scheme, these

units will not be required to maintain average level of exports, while

calculating the export obligation.

These units shall be entitled to the benefit of Export House Status on

achieving lower average export performance of Rs 5 crore as against

Rs 15 crore for others.

The units in handicraft sector will be entitled to duty free imports of an

enlarged list of items as embellishments up to 3 percent of FOB value

of their exports.

With a view to encouraging further development of centers of

economics and export excellence such as Tirupur for hosiery, wollen

blanket in Panipat, wollen knitwear in Ludhiana, following benefits

shall be available to small scale sector:

1. Common service providers in these areas shall be entitled for facility

of EPCG scheme.

2. The recognized associations of units in these areas will be able to

access the funds under the Market Access initiative scheme for

creating focused technological services and marketing abroad.

3. Such areas will receive priority for assistance for identified critical

infrastructure gaps from the scheme on Central Assistance to States.

4. Entitlement for Export House Status at Rs 15 crore for others.

Technology Upgradation: Electronic Hardware Technology

Park(EHTP) scheme was modified to enable the sector to face the


zero duty regime under ITA(Information Technology Agreement)-1.The

units shall be entitled to following facility.

Net Foreign Exchange as a Percentage of Exports (NFEP) positive in

5 years.

No other export obligation for units in EHTP.

Supplies of ITA-1 items having zero duty in the domestic market to be

eligible for counting of export obligation.

Growth-oriented: The status holders shall be eligible for the following

new/special facilities.

License/Certificate/Permissions and customs clearance for both

exports imports on self-declaration basis.

Fixation of input-output norms on priority.

Priority finance for medium and long-term capital requirement as per

conditions notified by rbi.

Exemption from compulsory negotiation of documents through banks.

The remittances, however, would continue to be received through

banking channels.

100 percent retention of foreign exchange in Exchange Earners

Foreign Currency (EEFC) account.

Enhancement in normal repatriation period from 180 days to 360

days.

EXIM Policy, 2003-2004


It had the following provisions:

The policy provided a massive thrust to export of services by

introducing duty free export facility for the service sector units having a

minimum foreign exchange earning of Rs 10 lakh.

Encouragement of corporate sector with proven credential to sponsor

Agri-Export Zones for boosting farm exports.

EPCG scheme made more flexible and attractive so that even the

small scale sector could set up and expand its manufacturing base for

exports.

Fixing of input-output norms for status holders on priority basis within

a period of 60 days and permission to status holders in Software

Technology Parks India(STPI) for free movement of professional

equipments.

Simplification and codification of rules, regulations and procedures

application on SEZ and EOU units by putting all these rules and

regulations in one place, thus greatly facilitating both potential

investors and existing units.

To increase the overall competitiveness of export clusters, a scheme

for upgradation of infrastructure in existing clusters/industrial locations

would be implemented.

Extension of Duty Free Replenishment Certificate(DFRC)scheme to

deemed exports and reduction in its value addition norms from 33

percent to 25 percent.


Mini EXIM policy, Jan 2004

Preceding the dissolution of the 13th Lok Sabha on Feb. 6, 2004 the

government of India announced mini EXIM policy on Jan 28, 2004. It

included facilitation and simplification measure to sustain the momentum

of export growth. Specifically it was aimed at providing boost to exports

of gems and jewellery, encouraging tourism and making energy

generation cheaper. Highlights of new policy were.

Free import of gold and silver for export purpose permitted. In other

words, gold and silver can now be imported without paying any

commission to channelling agents. (in 10997, the government

authorized three canalizing agencies viz MMTC, STC and HHEC, and

eight banks to import gold and silver for sales in the domestic

market ). Likewise, import of rough, uncut and semi polished

diamonds will not be valued for export obligations. Quantitative

restriction on gold and silver imports has also been lifted. Government

also announced the introduction of a gold card for creditworthy

exporters to make available cheaper foreign currency debt on easier

terms.

Duty free import facility available to star hotels extended the heritage,

one and two star hotels and stand alone restaurants. All these hotels

have been allowed duty free import equivalent to 5% of their export

earnings in three preceding years.

Restriction on import of electrical energy lifted

Online license electronic fund transfer facility for exporters. These

measures are expected to reduce transaction cost for exporters and

make export administration transparent


FOREIGN TRADE POLICY, 2004-2009

In radical move the government of India announced on August 31

2004 a new forign trade policy for the period 2004-09, replacing the

hitherto nomenclature of EXIM policy by foreign Trade policy. A vigorous

export led growth strategy of doubling India’s share in global

merchandise trade in the next 5 years , with a focus on the sector having

prospectus for export expansion and potential for employment

generation, constitute the mail plank of the policy. These measures are

expected to enhance international competiveness and aid in further

increasing the acceptability on Indian exports.

Objective and strategy

The new FTP takes an integrated view of the overall development

of India’s foreign trade and essentially provides a roadmap for the

development of this sector. It is built around two major objectives of

doubling India’s share of global merchandise trade by 2009 and using

trade policy as an effective instrument of economic growth with a thrust

on employment generation. Key strategies to achieve these objectives,

inter alia, include: unshackling of controls and creating an atmosphere of

trust and transparency; incidence of all levies on input used in export

products; facilitating development of India as a global hub of

manufacturing, trading and services; identifying and nurturing special

focus area to generate additional employment opportunities, particularly

in semi urban and rural areas; facilitating technological and

infrastructural up gradation of the Indian economy, epically and ensuring

that domestic sector are not disadvantage in trading agreements

upgrading the infrastructural network related to the entire foreign trade


chain to international standards revitalizing the board of trade by

redefining its role and inducting into it experts on trade policy and

activating Indian embassies as key players in export strategies.

Special focus initiatives

The FTP 2004 has indentified certain thrust sector having

prospects for export expansion and potential for employment generation.

These thrust sector include agriculture, handlooms and handicraft, gems

and jewellery and leather footwear sector. Sector specific policy

initiatives for the thrust sector include for agriculture sector introduction

of new scheme called vishesh krishi upaj yojana to boost export exports

of fruit, vegetables, flowers minor forest produce and their value added

products. Under the scheme exports of these products qualify for duty

free credit entitlement for importing inputs and other goods under EPCG

scheme permitting the installation of capital goods imported under EPCG

for agriculture anywhere ASIDE scheme for development of AEZ’s,

liberalization of import of seeds bulbs tuberts and planting material and

liberalization of the exports of plant portion, derivatives and extract to

promote export of medicinal plants and herbal produce

The special focus initiatives for handlooms and handicraft sector

include extension of facilitating like enhancing duty free imports of

trimming and embellishment for handlooms and handicrafts exemption of

samples from CVD authorizing handicraft export promotion council to

import trimmings embellishment and samples for small manufacturing

and establishment of a new handicraft special economic zone.


New Export Promotion scheme

A new scheme to accelerate growth of export called the target plus

has been introduced. Under the scheme exporters achieving a quantum

growth in exports are entitled to duty free credit based on incremental

exports substantially higher than the general actual export target fixed.

Rewards are granted based on a tired approach. For incremental growth

of over 20%, 25% and 100%, the duty free credit are 5%, 10%, and 15%

of f.o.b value of incremental exports. Another new scheme called

vishesh kishi upaj yojana has been introduced to boost exports of fruits,

vegetables and flower. Exports of these products qualify for duty free

credit entitlement equivalent to 5% of f.o.b value of exports. The

entitlement is freely transferable and can be used for import of a variety

of input and goods. To accelerate growth in export of service so as to

create a powerful and unique served from India brand instantly

recognized and respected the world over the earlier duty free export

credit scheme for service has been revamped and re –cast into the

served from India scheme. Individual service providers who earn foreign

exchange of at least 5 lakh, and other service providers who earn foreign

exchange of at least Rs. 10 lakh are eligible for a duty-credit entitlement

of 10% of total foreign exchange earned by them. In the case of hotels it

is 5%. Hotels and restaurants can use their duty credit entitlement for

import of good items and alcoholic beverages. To make India into global

trading hub a new scheme to establish Free trading and warehousing

zones has been introduced to create trade related infra to facilitate the

import and export of goods and service with freedom to carry out trade

transaction in convertible currency. Besides permitting FDI up to 100% in

the development outlay of Rs 100 cr and five lakh sq. mts built up area.


Units in the FTWZ qualify for all other benefits as applicable for SEZ

units.

Simplification, rationalization and modification of ongoing

schemes:

EPCG scheme has been further improved upon by providing

additional flexibility for fulfilment of export obligation, facilitating and

providing incentives for technological up gradation, permitting transfer of

capital goods to group companies and managed hotels, doing away with

the requirement of certificate from central excise and improving the

viability of specified projects by calculating their exports obligating based

on concessional duty permitted to them. Import of second hand capital

goods without any restriction on age has been permitted and the

minimum depreciated value for plant and machinery to be re located into

India has been reduced from Rs 50 cr to Rs 25 cr. The new policy has

been allowed transfer of the import entitlement under duty free

replenishment certificate scheme in respect of fuel to the marketing

agencies authorized by the ministry of petroleum and natural gas to

facilitate sourcing of such import by individual exporters.

The Duty Entitlement passbook scheme will continue until replaced

by a new scheme to be drawn up in consultation with exports. Additional

benefits have been provided to EOU , including exemption from service

tax in proportion to their goods and service, permission to retain 100% of

exports earnings in export earners foreign currency accounts, extension


of income tax benefits on plant and machinery to DTA unit which convert

to EOU, EHTP, STP, BTP units allowing imports of capital goods on self

certification basis and permission to dispose of leftover material and

fabrics up to 2% of c.i.f value or quantity of import on imports on

payment of duty on transaction value only. Minimum investment criterion

has been waived for handicraft, agriculture, floriculture. The FTP

propose setting up to BTP’s by granting all facilitates of 100% EOUs.

The FTP 2004 has introduced a new rationalization scheme of

categorization of status holders as star export houses with

benchmarking for exports performance varying from Rs15 cr to Rs

5000cr.

Simplification of rules and procedure and institutional

measures:

Policy measures announced to further rationalize/simplify the rule

and procedure include exemption for exporters with minimum turnover of

Rs 5cr and good track record from furnishing bank guarantee in any of

the scheme service tax exemption for exporters of all goods and service

uniformly to 24 months reduction in number of return of returns and

forms to be filled delegation of more power to zonal and regional offices

and time bound introduction of electronic data interface. Institutional

measures proposed in the FTP 2004 include revamping and revitalizing

the board of trade setting up of council to map opportunities for key

service in key markets and setting up of common facility centres for use

of professional home based service providers in state and district level

towns.


Annual supplement 2005-06 to the foreign trade policy 2004-05

The union commerce and industry minister announcement on april 8

2005, the 2005-06 supplement to the five year foreign trade policy,

giving a big boost to exports from agriculture and manufacturing sector.

Auto components pharmaceutical’s gems and jewellery and seafood

exports firms stood to gain the most. Highlights of the annual

supplement were as follows

Push to exports of farm, marine, manufacture and pharma

products

Exports cess on farm commodities abolished

Infra imitative to reduce port congestion

Imports by hotels, other service industry made duty free

Setting up of interstate trade council mooted

Procedure simplified cut transaction costs aayat niryat introduced

HIGHLIGHTS OF EXIM POLICY & ITS IMPACT

SPECIAL ECONOMIC ZONE (SEZ)

Special economic zone is a particular area inside a state which acts as

foreign territory for tariff and trade operations. Govt. provides tax

exemption (IT, Excise, customs, sales etc.), subsidised water and

electricity etc.

SEZ can be sector specific or multi product SEZ. It helps in the

development of infrastructure of the area around the SEZ, provides


employment to people, makes the exports more viable. All this will helps

the country's products to become more competitive vis-a-vis providing all

round development of region.

It should be noted that if 100 acres are allotted for SEZ, then only 30-

35% of area is used for setting up plants. rest of the area is used to

provide housing facilities, malls, multiplexes etc.

Also Tax exemption is for specific period say for 10 yrs or so

Units in SEZ would be permitted to It has also been decided to permit

Special Economic Zones (SEZs)

Offshore Banking Units (OBUs) shall be permitted in SEZs. Detailed

guidelines are being worked out by RBI. This should help some of our

cities emerge as financial nerve centres of Asia & undertake hedging of

commodity price risks, provided such transactions are undertaken by the

units External Commercial Borrowings (ECBs) for a tenure of less than

three years in SEZs. The detailed guidelines will be worked out by RBI.

This will provide opportunities for accessing working capital loan for

these units at internationally competitive rates.

The SEZ scheme has undergone few changes:

FDI permitted under automatic route for all manufacturing sectors,

except a small negative list.

No licence required to set up units for items reserved under SSI.

Units in SEZs can bring back their proceeds in 365 days and retain

100 per cent of proceeds in EEFC account.


No CR waiver is required for sending sample goods for participation

in exhibitions.

SEZ developers will be given infrastructure status under the Income-

Tax Act, as provided in the Finance Bill, 2001, and will be entitled to

concessional duty for procuring goods for setting up SEZs.

All the necessary steps were initiated to give permission to set up SEZs

to the States, the private sector and the joint sector.

Special Economic Zones Scheme

Sales from Domestic Tariff Area (DTA) to SEZs to be treated as

export. This would now entitle domestic suppliers to Drawback/

DEPB benefits, CST exemption and Service Tax exemption.

Agriculture/Horticulture processing SEZ units will now be allowed

to provide inputs and equipments to contract farmers in DTA to

promote production of goods as per the requirement of importing

countries. This is expected to integrate the production and

processing and help in promoting SEZs specialising in agro

exports.

Foreign bound passengers will now be allowed to take goods from

SEZs to promote trade, tourism and exports.

Domestic sales by SEZ units will now be exempt from SAD.

Restriction of one year period for remittance of export proceeds

removed for SEZ units.

Netting of export permitted for SEZ unit provided it is between

same exporter and importer over a period of 12 months.


SEZ units permitted to take job work abroad and exports goods

from there only.

SEZ units can capitalise import payables.

Wastage for subcontracting/exchange by gem and jewellery units

in transactions between SEZ and DTA will now be allowed.

Export/import of all products through post parcel/courier by SEZ

units will now be allowed.

The value of capital goods imported by SEZ units will now be

amortised uniformly over 10 years.

SEZ units will now be allowed to sell all products including gems

and jewellery through exhibitions and duty free shops or shops set

up abroad

Goods required for operation and maintenance of SEZ units will

now be allowed duty free.

According to the Exim Policy (1997-2002), SEZs may be set up for

manufacture of goods and rendering of services, production, processing,

assembling, trading, repair, remaking, reconditioning, re-engineering,

including of making of gold/silver/platinum jewellery and articles.

An SEZ is a specially delineated `duty free' enclave and shall be

deemed to be foreign territory for trade operations, duties and tariffs.

Thus, there should be necessary `check posts' and Customs duty

vigilance as in the case of airport and ports. However, there are many

advantages, and of course, one or two disadvantages.


In a major step towards achieving sustained, quantum growth in exports,

Special Economic Zones (SEZs) will soon be established in different

parts of the country, as in China. Announcing the annual Export & Import

(Exim) Policy for 2000-2001 at a press conference here today, Shri

Murasoli Maran, Union Minister of Commerce and Industry, said that

India's first two Special Economic Zones would come up in the States of

Gujarat and Tamil Nadu. The SEZs would come into operation very

soon, with the basic idea being to establish the Zones as areas where

export production could take place free from all rules and regulations

governing imports and exports and to give them full operational flexibility.

The movement of goods to and from the SEZs would be unrestricted and

without any hindrance and any State government or corporate entity or

individual may furnish proposals for setting up such Zones in the

country. Land for the first two SEZs in Gujarat and Tamil Nadu has

already been earmarked, the Minister said. Observing that India, by not

following vigorous policies, was ceding billions of dollars in FDI to its

East Asian neighbours each year (investment flows that otherwise would

have come to India), Shri Maran expressed the hope that with the

establishment of the SEZs, procedural constraints and delays would be

taken care of and foreign direct investment in the export sector would

become attractive. The units in the SEZs would be able to import capital

goods and raw materials duty-free and would also be able to access the

same from the Domestic Tariff Area (DTA) without payment of terminal

excise duty. The entire production of the units in these SEZs would be

exported and DTA sales would be permitted on payment of full

applicable customs duty. The minimum size of the SEZs would be 400 to

500 hectares or more. Shri Maran also announced that immediately, the

existing Export Process Zones at Santa Cruz, Kandla, Vizag and Cochin


would be converted into SEZs, although the area of these existing Zones

were limited due to historical reasons

Major advantages

SEZs may export goods and services, including agro-products, partly

processed jewellery, sub-assemblies and components. It may also

export by-products, rejects, waste from the production process.

SEZs may import all types of goods without payment of duty. This

includes capital goods, but not prohibited items for imports.

Even SEZ units can lease capital goods from a domestic/foreign

leasing company.

But, both the SEZ unit and domestic foreign lease company shall

jointly file the documents to enable import/procurement of the capital

goods.

SEZs may procure goods required by it without payment of Duty from

bonded warehouses in the DTA set up under the policy.

SEZ units may import goods for creating a central facility for use by

software development units, without payment of duty.

SEZs may also import gold/silver/platinum and specified goods from

DTA through the nominated agencies for setting up units without

duty, but subject to government conditions.

SEZ gem and jewellery units, with the Development Commissioner's

permission, shall be entitled to personal carriage of


gold/silver/platinum jewellery, precious, semi-precious stones and

articles.

They can export jewellery, including branded jewellery, which is also

permitted for display/sale in the permitted shops set up abroad.

SEZs may bring back sold goods for repair and replacement.

Goods may be transferred to DTA for replacement/repair/testing or

calibration, quality testing and R&D purposes under intimation to the

Customs authorities.

SEZ units, with the maintained records and prior intimation to

Customs authority, may supply or sell samples in the DTA for

display/market promotion on payment of applicable duties.

Remove samples on furnishing a suitable undertaking to customs

authorities for bringing the goods back within a stipulated time

without payment of duty.

No duty shall be payable if the goods are destroyed with the

permission of Customs authorities.

SEZs may subcontract a part of their production or production

process through units in the DTA.

Major disadvantages

The SEZ shall execute a legal undertaking with the Development

Commissioner that if it fails to achieve positive foreign exchange


earnings, it will be liable to penalty in terms of the legal undertaking,

or under any other law for the time being in force.

SEZ units may be debonded with the approval of the Development

Commission. Debonding shall be subjected to payment of applicable

Customs and excise duties and the imported and indigenous capital

goods, raw materials, finished goods in stock, and so on.

DUTY FREE REPLENISHMENT CERTIFICATE (DFRC) SCHEME

DFRC Scheme announced in 2002-07 EXIM Policy has been continued

in 2003-04 Policy. Henceforth supplies made under Deemed Export

Scheme in terms of Para 8.2 of the EXIM Policy would also be entitled

for benefit of DFRC Scheme. Import of inputs against DFRC License

(issued against supplies made under Deemed Export Scheme) shall also

be permitted from sea-ports, airports, ICDs and CFSs specified in the

DFRC Notification as usual. For this purpose, DFRC licence issued

under Deemed Export Scheme shall inter-alia contain details of excise

certified invoice number and date with value of supplies in Indian rupees.

All other conditions of the DFRC Scheme remain unchanged.

In order to monitor revenue outflow under DFRC scheme, the concerned

Custom Houses shall send a monthly report containing details of CIF

value of goods imported and amount of duty foregone under the Scheme

on the 10th of the succeeding month to JS(DBK). The first such report

shall be sent by 10th May, 2003.

Duty Free Replenishment Certificate is issued to a merchant-exporter or

manufacturer-exporter for the import of inputs used in the manufacture of


goods without payment of basic customs duty, and special additional

duty. However, such inputs shall be subject to the payment of additional

customs duty equal to the excise duty at the time of import.

Duty Free Replenishment Certificate shall be issued only in respect of

export products covered under the SIONs as notified by DGFT.

However, DFRC shall not be issued in respect of SIONs which are

subject to "actual user" condition or where the input is allowed with prior

import condition or where the norms allow import of acetic anhydride,

ephedrine and pseudo ephedrine in the Handbook (Vol-II).

Duty Free Replenishment Certificate shall be issued for import of inputs,

as per SION, having same quality, technical characteristics and

specifications as those used in the end product and as indicated in the

shipping bills. The validity of such licences shall be 18 months. DFRC

and or the material(s) imported against it shall be freely transferable

Validity of DFRC to be extended from 12 months to 18 months.

Dispensing with the need of technical characteristics for inputs

except for items in the sensitive list.

Automatic calculation of CIF value under DFRC scheme without

reference to international price of individual inputs.

Provision incorporated for claim of DFRC against advance

payment.

Coverage of additional ports under DFRC

Split up facility extended to DFRC scheme to give operational

flexibility to the holder of DFRC.


The Duty Free Replenishment Certificate shall be subject to a minimum

value addition of 33%.

The export products, which are eligible for modified VAT, shall be eligible

for CENVAT credit. However, non excisable, non dutiable or non

centrally vatable products, shall be eligible for drawback at the time of

exports in lieu of additional customs duty to be paid at the time of

imports under the scheme.

The exporter shall be entitled for drawback benefits in respect of any of

the duty paid materials, whether imported or indigenous, used in the

export product as per the drawback rate fixed by Directorate of

Drawback (Ministry of Finance). The drawback shall however be

restricted to the duty paid materials not covered under SION.

DUTY ENTITLEMENT PASS BOOK (DEPB) SCHEME

DEPB Scheme announced in 2002-07 EXIM Policy has been continued.

In this regard earlier Customs Notification No.45/2002-Cus. dated

22.4.2002 and DOR Circular No.24/2002-Cus. dated 6.5.2002 refers.

Henceforth, supplies made by DTA units to units in SEZ would be

entitled for DEPB benefits. The area of the Special Economic Zone shall

be a Customs Station and all the functions relating to the enforcement of

the Customs Act shall be controlled by the Commissioner of Customs

with the assistance of proper officers of Customs. The goods entered

into the SEZ from the DTA shall be under the cover of a Bill of Export.

This Bill shall be registered in the SEZ Customs formation and assigned


a running serial number. Thereafter the goods shall be examined by the

Customs Officers posted in the SEZ like a normal export consignment.

These goods shall be eligible for DEPB benefit & the DEPB scrips shall

be issued by the licensing authority to the SEZ Unit receiving supplies

from DTA Unit on the basis of a disclaimer certificate given by the DTA

Unit in favour of SEZ Unit. This is because it has now been decided to

treat supplies made by DTA Unit to a unit in SEZ as exports for the

purpose of granting DEPB benefit.

For the purpose of allowing DEPB benefit against DEPB licenses issued

for supplies to SEZ units, verification of the DEPB license shall be done

in the same manner as specified in earlier DOR Circular No.14/99-Cus.

dated 15.3.99 excepting that in case of supplies made to SEZ units, the

Bill of Export and other related documents shall be verified. Since the

port of registration in respect of such DEPB license would be the place

where the receiver SEZ unit is located, import against such DEPB scrips

shall be permitted either from the same Custom House or from any other

place notified in DEPB Custom Notification No.45/2002 against TRA in

terms of para 6 of DOR Circular No.85/99-Cus. dated 23.12.99 and also

in terms of DOR Circular No.66/2001-Cus. dated 19.11.2001 when the

Custom House of receiver SEZ unit is a non-notified place. For this

purpose, both Commissioner Incharge of Customs House (who issues

TRA) and the Custom House receiving the TRA shall follow the

procedure as specified in DOR Circular No.66/2001.

Objectives


The objective of DEPB is to neutralise the incidence of Customs duty

on the import content of the export product. The neutralisation shall be

provided by way of grant of duty credit against the export product.

Under the DEPB, an exporter may apply for credit, as a specified

percentage of FOB value of exports, made in freely convertible

currency. The credit shall be available against such export products

and at such rates as may be specified by the Director General of

Foreign Trade by way of public notice issued in this behalf, for import of

raw materials, intermediates, components, parts, packaging material

etc.

The holder of DEPB shall have the option to pay additional customs

duty, if any, in cash as well.

Validity

The DEPB shall be valid for a period of 12 months from the date of

issue.

Transferability

The DEPB and/or the items imported against it are freely transferable.

The transfer of DEPB shall however be for import at the port specified

in the DEPB, which shall be the port from where exports have been

made. Imports from a port other than the port of export shall be allowed

under TRA facility as per the terms and conditions of the notification

issued by Department of Revenue.

Applicability of Drawback


Normally, the exports made under the DEPB Scheme shall not be

entitled for drawback. However, the additional customs duty/excise duty

paid in cash on inputs under DEPB shall be adjusted as CENVAT

Credit or Duty Drawback as per rules framed by the Department of

Revenue. In cases, where the additional customs duty is adjusted from

DEPB, no benefit of CENVAT/ Drawback shall be admissible.

In another major initiative to boost agri and allied products exports, Shri

Jaitley said that fixation of DEPB rates for selected agro products would

factor in the cost of inputs such as fertilisers, pesticides and seeds. This

would help the farmers to use the required inputs in a scientific manner

to boost productivity and quality

QUANTITATIVE RESTRICTIONS (QR)

Quantitative Restrictions are explicit limits usually by volume on the

amount of a specified commodity that may be imported into a country

sometimes also indicating the amounts that may be imported from each

supplying country. Compared to tariffs the protection afforded by QR’s

tend to be more predictable being less affected by changes in

competitive factors. Quotas have been used at times to favour preferred

sources of supply.

Quantitative Restrictions were being maintained ever since 1947 on

balance of payments grounds under the GATT to which we were a

signatory. We participated in the Uruguay Round negotiations and

became a founder-member of WTO and subscribed to all the


Agreements but we continued to maintain QRs on the same balance of

payments grounds.

However, with the improvement in the balance of payments position,

certain members of the WTO had disputed our need or justification to

continue Quantitative Restrictions for BOP reasons. India could

negotiate with most of the trading partners, with the exception of USA, to

arrive at a mutually agreeable solution for phasing out these Quantitative

Restrictions.

The USA filed a dispute and the Dispute Settlement Panel constituted in

November 1997 ruled against India. India filed an appeal before the

Appellate Body of WTO against the findings of the Panel but the

Appellate Body also upheld the findings of the Panel challenged by

India. Consequently, we are now obliged to withdraw Quantitative

Restrictions.

An agreement was signed between India and USA for determining the

reasonable period of time, under which the Quantitative Restrictions on

the remaining 1429 tariff lines were to be removed by April 1, 2001, of

which 714 before April 1, 2000.

The tariff line-wise import policy was first announced on March 31,1996

and at that time itself 6161 tariff lines were made free. Since then 1905

tariff lines have been made free till now. In this connection, I would like

to point out that the QRs in respect of these 1429 tariff lines were

withdrawn preferentially for imports from SAARC countries with effect

from August 1, 1998 itself.


It is to be noted that tariff protection will continue to be available. Further

in the event of unfair trade practices like dumping or subsidisation of

exports by other countries causing injury to the Indian industry, adequate

protection under anti-dumping or anti-subsidy mechanisms or if there is

a sudden surge in imports causing serious injury to the industry,

protection under safeguard provisions will always be available. The

industry can always approach either the Anti-dumping Directorate or the

Safeguard Directorate for appropriate relief.

Removal of QR

The process of removal of import restrictions, which began in 1991, has

been completed in a phased manner with removal of restrictions on 715

items. Out of these 715, 342 are textile products, 147 are agricultural

products including alcoholic beverages and 226 are other manufactured

products including automobiles.

Import of agricultural products like wheat, rice, maize, other coarse

cereals, copra and coconut oil has been placed in the category of State

Trading. The nominated State Trading Enterprise will conduct the

imports of these commodities solely as per commercial considerations.

Similarly, import of petroleum products including petrol, diesel and ATF

has also been placed in the category of State Trading. Import of urea will

also be done through the mechanism of State Trading.

Care has been taken to ensure a level playing field to domestic

producers vis-à-vis imports. In conformity with the "National Treatment

Principle" of GATT, imports have also been made subject to the

following domestic regulations:


(i) Import of all food products will be subject to compliance of all the

provisions of Food Adulteration Act and Rules there under;

(ii) Import of meat and poultry products will be subject to compliance of

all the provisions of Meat Food Product Order;

(iii) Import Tea Waste will be subject to compliance of Tea Waste

(Control Order);

(iv) No import of textile material using the prohibited dyes like azo dye

shall be allowed. For this purpose, a pre-shipment inspection certificate

has been made mandatory.

In view of road safety and environment considerations, imports of

second hand automobiles have been allowed subject to the following

conditions:

(i) Import of automobiles older than three years is not allowed;

(ii) Imported vehicles need to conform to Central Motor Vehicle Rules;

(iii) Import of left hand drive vehicles not allowed;

(iv) For ensuring the requirements, pre shipment as well as post

shipment certification made mandatory;

(v) Imported automobiles to have a minimum residual life of five years

and the importer to ensure supply of spares and service during this

period; and

(vi) Such imports allowed only through customs port at Mumbai.


Similarly, import of new automobiles allowed subject to following

conditions:

(i) Import allowed only from the country of manufacture;

(ii) Import of left hand drive vehicles not allowed;

(iii) Imported vehicles to conform to the provisions of Motor Vehicles Act,

1988;

(iv) Prototype of vehicle to be approved by notified agencies in India;

and

To ensure that import of agricultural products do not lead to unwanted

infiltration of exotic diseases and pests in the country, it has been

decided to subject import of primary products of plant and animal origin

to 'Bio Security & Sanitary and Phyto-Sanitary Permit' to be issued by

Deptt. of Agriculture and Cooperation. This permit will be based on

Import Risk Analysis of the product to be conducted on scientific

principles, in accordance with the WTO agreement on Application of

Sanitary and Phyto-Sanitary Measures.

Impact of removal of QRs on imports

The Government has been unilaterally liberalizing imports since 1991 by

removing Quantitative Restrictions(QRs) on imports (Box6.3). The EXIM

Policy 2001 has completed this process by dismantling QRs on BOP

grounds on the remaining 715 items from April 1, 2001.Apprehensions

have, therefore, been expressed


that such removal of QRs may result in a surge and dumping of imports

in the country, thus affecting adversely the domestic industry. However,

the apprehensions are not borne out by actual import growth over this

period. Import data for the full financial year 2000-01 on 714 items,

restrictions on which were removed with

effect from 31.3.2000, do not reveal any surge in their imports following

removal of such restrictions. Out of 714 items, no imports were made for

151 items either before or after removal of QRs. Only 92 items recorded

imports worth more than Rs 5 crore. Diamonds and semiprecious stones

constituted 35 per cent of these imports and another 14 per cent was

contributed by imports of telephonic/telegraphic equipment,

industrial vacuum cleaners and cathode ray picture tubes, items

necessary for domestic industrial activity. Although some growth was

seen in the import of prepared foodstuff, beverages and tobacco, plastic

and rubber, leather products, glassware, ceramic products and products

like footwear and umbrellas, instruments and apparatus, the absolute

quantum of imports was not significant in relation to the

aggregate domestic production of these items. Further, the monitoring

reports on imports of 300 sensitive items, for the current financial year so

far also do not indicate any unusual surge in imports of these items. The

total imports of these

sensitive items (in Dollar terms) during the first nine months of the

current financial year have increased by only 2.1 per cent due mainly to

higher imports of edible oils, cotton & silk, spices , rubber and marble &

granite.


AGRICULTURAL EXPORT ZONES (AEZ)

In a fast changing international trade environment and with a view to

providing remunerative returns to the farming community in a sustained

manner the concept of the agri export zones (AEZ) was floated. These

zones have been set up for end to end development for export of

specific products from a geographically contiguous area.

AEZ are to be identified by the State Government, who would evolve a

comprehensive package of services provided by all State Government

agencies, State agriculture universities and all institutions and agencies

of the Union Government for intensive delivery in these zones.

Corporate sector with proven credentials would be encouraged to

sponsor new agri export zone or take over already notified agri export

zone or part of such zones for boosting agri exports from the zones.

Services which would be managed and co-ordinated by State

Government/corporate sector and 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.

Units in AEZ would be entitled for all the facilities available for exports

of goods in terms of provisions of the respective schemes.


Agri Export

Unless we ensure that the rural sector and Indian farmers receive

visible benefits from economic reforms and the process of globalization,

it may not be possible to accelerate economic growth. You would

recollect that we had introduced the Scheme of Agro Export Processing

Zones (AEZ) in the 2002-2007 Policy for end to end development of

export of specific products from a geographically contiguous area. We

are gratified that there has been an enthusiastic response to the scheme

from the States and the rural community. As many as 45 AEZs have

been notified so far in different parts of the country. We want to further

accelerate this process. Agriculture and allied products is our core

competence. Not only is it diversified with a large variety of crops, fruits,

vegetables and flourishing dairy sector, but we are among the world

leaders in output of many products.

One of the limiting factors in the increase in agricultural productivity and

quality and for protecting it from the vagaries of monsoon is the lack of or

inadequate investment in this sector for bringing to the farmer the latest

technology and knowledge and for setting up critical infrastructure in the

form of water harvesting and soil management, better quality of seeds

and optimal use of inputs, adoption of scientific pre and post harvest

treatment and storage and establishment of linkage with international

marketing. In spite of the enthusiasm shown by many of the State

Governments, availability of investible resources in creation of such

critical infrastructure even in the AEZs has been a constraint. In view of

this, we propose to also facilitate and promote association of corporate

with proven credentials in the implementation of AEZs in order to give a

boost to productivity and quality of specified agro products leading to


accelerated exports. For this purpose, we are having consultations with

Ministry of Finance who are receptive to the idea, to provide appropriate

incentives to enable investments by these corporates to infrastructure,

agricultural extension, processing, packing, storage, R&D and other

facilities relating to exports in the approved AEZs.

Another major initiative to boost agri and allied products exports will be

the modification of norms for fixing DEPB rates for export of agriculture,

horticulture and allied products. In fixing DEPB rates for such products,

we shall take into account inputs such as fertilizers, pesticides, certified

seeds etc. used by the farmers prior to processing of the products for

exports. This would also ensure that the Indian farmer uses the required

inputs in a scientific manner to boost productivity and quality. To begin

with, this facility will be extended only to selected products on the basis

of the recommendation of an Inter-Ministerial Committee.

STATUS HOLDERS

"Status holder" means an exporter recognised as "Export House/Trading House/Star trading House/ Super Star Trading House" or service provider recognised as "Service Export House, International Service Export House, International Star Service Export House International Super Star Service Export House" by the Director General of Foreign Trade.

Over the last few decades certain areas of strength have emerged in the export sector. Definite export surpluses have emerged in sectors like food grains, sugar, yarn, garments, steel, cement, aluminium & petroleum products and pharmaceuticals. Certain Small & Medium Enterprises (SMEs) and other units in DTA have been exporting more than 75% of their production. Similarly export oriented units and units in export processing zones have been contributing significantly to exports.


Certain industrial clusters have evolved on their own without any significant official assistance, each of them collectively producing goods and services worth more than Rs.1,000 crore per year and exporting a substantial part thereof. Status certificates have been issued to units on the basis of their export performance.

Keeping the above in mind, the status holders shall be eligible for the following new/ special facilities:

Licence/Certificate/Permissions and Customs clearances for both imports and exports on self-declaration basis.

Fixation of Input-Output norms on priority; Priority Finance for medium and long term capital requirement as

per conditions notified by RBI;

Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;

100% retention of foreign exchange in EEFC account; Enhancement in normal repatriation period from 180 days to 360

days. Status holders with a minimum export turnover of Rs 250 mn

entitled to duty-free import of capital goods, spares, office equipments and consumables, upto 10% of the incremental growth in exports subject to their achieving more than 25% growth in value of exports.

Status holders to be given Annual Advance Licence facility to enable them to plan for their imports of raw material and components on an annual basis and take advantage of bulk purchases.

EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG)

The Export Promotion Capital Goods Scheme (EPCG) has been for

several years now instrumental in promoting exports. The high growth

rate of East Asian countries was facilitated by the transformation of their


exports from producing cheap-labour intensive to high technology

intensive manufacturing goods.

The Exim Policy has announced a series of steps to make the EPCG

scheme more flexible and attractive, so that even the small-scale sector

can set up and expand its manufacturing base for exports. This is

considered essential, as manufactured goods account for more than 77

per cent of India's total exports in the last five years.

Thus, allowing the import of up to 10-year-old capital goods for pre- and

post-production, removal of use conditions, and allowing import of

spares to facilitate the upgradation of existing plant and machinery will

make export sectors, such as textile, more competitive.

Further, the rationalisation of export obligation and dispensing with the

existing condition of imposing an additional export obligation of 50 per

cent for products in the higher value chain will provide flexibility.

Moreover, the relatively low value exports obligation will be a boon to

investment in the domestic economy. Therefore, the EPCG scheme

along with the reduction of transaction cost through the EDI will give a

boost to the manufacturing sector and over all export growth.

The scheme shall now allow import of capital goods for pre-

production and post-production facilities also.

The Export Obligation under the scheme shall now be linked to the

duty saved and shall be 8 times the duty saved.

To facilitate upgradation of existing plant and machinery, import of

spares shall also be allowed under the scheme.


To promote higher value addition in exports, the existing condition

of imposing an additional Export Obligation of 50% for products in

the higher product chain to be done away with.

Greater flexibility for fulfilment of export obligation under the

scheme by allowing export of any other product manufactured by

the exporter. This shall take care of the dynamics of international

market.

Capital goods upto 10 years old shall also be allowed under the

scheme.

To facilitate diversification into the software sector, existing

manufacturer exporters will be allowed to fulfil export obligation

arising out of import of capital goods under the scheme for setting

up of software units through export of manufactured goods of the

same company.

Royalty payments received from abroad and testing charges

received in free foreign exchange to be counted for discharge of

export obligation under EPCG scheme.

The scheme allows import of capital goods for pre production, production

and post production (including CKD/SKD thereof as well as computer

software systems) at 5% Customs duty subject to an export obligation

equivalent to 8 times of duty saved on capital goods imported under

EPCG scheme to be fulfilled over a period of 8 years reckoned from the

date of issuance of licence. Capital goods would be allowed at 0% duty

for exports of agricultural products and their value added variants.


However, in respect of EPCG licences with a duty saved of Rs.100 crore

or more, the same export obligation shall be required to be fulfilled over

a period of 12 years.

In case CVD is paid in cash on imports under EPCG, the incidence of

CVD would not be taken for computation of net duty saved provided the

same is not Cenvated.

The capital goods shall include spares (including refurbished/

reconditioned spares), tools, jigs, fixtures, dies and moulds. EPCG

licence may also be issued for import of components of such capital

goods required for assembly or manufacturer of capital goods by the

licence holder.

Second hand capital goods without any restriction on age may also be

imported under the EPCG scheme.

Spares (including refurbished/ reconditioned spares), tools, refractory’s,

catalyst and consumable for the existing and new plant and machinery

may also be imported under the EPCG scheme .

However, import of motor cars, sports utility vehicles/ all purpose

vehicles shall be allowed only to hotels, travel agents, tour operators or

tour transport operators whose total foreign exchange earning in current

and preceding three licensing years is Rs 1.5 crores. However, the parts

of motor cars, sports utility vehicles/ all purpose vehicles such as chassis

etc cannot be imported under the EPCG Scheme

Spares (including refurbished/ reconditioned spares), tools, spare

refractory’s, catalyst & consumable for the existing plant and machinery

may also be imported under the EPCG Scheme subject to an export


obligation equivalent to 8 times of duty saved to be fulfilled over a period

of 8 years reckoned from the date of issuance of license

The export obligation for such EPCG licences would be eight times the

duty saved. The duty saved would be the difference between the

effective duty under the aforesaid Customs Notification and the

concessional duty under the EPCG Scheme.

The scheme covers manufacturer exporters with or without supporting

manufacturer(s)/ vendor(s), merchant exporters tied to supporting

manufacturer(s) and service providers. The following conditions shall

apply to the fulfilment of the export obligation:-

The export obligation shall be fulfilled by the export of goods capable of

being manufactured or produced by the use of the capital goods

imported under the scheme.

The export obligation may also be fulfilled by the export of same goods,

for which EPCG licence has been obtained, manufactured or produced

in different manufacturing units of the licence holder/specified supporting

manufacturer (s).

When Capital Goods are imported for pre/ post- production or license is

taken for import of spares, the license holder shall fulfil the export

obligation by export of products manufactured from the plant / project to

which the pre/ post- production capital goods/ spares are related.

The import of capital goods for creating storage and distribution facilities

for products manufactured or services rendered by the EPCG licence

holder would be permitted under the EPCG Scheme.


The export obligation under the scheme shall be, over and above, the

average level of exports achieved by him in the preceding three licensing

years for same and similar products except for categories mentioned in

Handbook

Alternatively, export obligation may also be fulfilled by exports of other

good(s) manufactured or service(s) provided by the same firm/company

or group company/ managed hotel which has the EPCG licence.

However, in such cases, the additional export obligation imposed under

EPCG scheme shall be over and above the average exports achieved by

the unit/company/group company/ managed hotel in preceding three

years for the original and the substitute product(s) /service (s) even in

cases where the average is exempt for the substitute product (s)/ service

(s).

The incremental exports to be fulfilled by the licence holder for fulfilling

the remaining export obligation can include any combination of exports

of the original product/ service and the substitute product (s)/ service (s).

The exporter of goods can opt to get the export obligation re-fixed for the

export of services and vice versa.

The licence can also opt for the re-fixation of the balance export

obligation based on 8 times of the duty saved amount for the CIF value

in proportion to the balance Export obligation under the scheme

The aforesaid facilities shall only be available to manufacturer exporters/

service provider on all the licences where export obligation period

including extended export obligation period is valid on the date of

application. In this regard, exports made only on or after submission of


application for alternate item and/ or re-fixation of the export obligation

based on duty saved amount will be taken into account for fulfilment of

export obligation.

The export obligation under the scheme shall be, in addition to any other

export obligation undertaken by the importer, except the export

obligation for the same product under Advance Licence, DFRC, DEPB or

Drawback scheme.

The export obligation can also be fulfilled by the supply of ITA-1 items to

the DTA provided the realization is in free foreign exchange.

Royalty payments received in freely convertible currency and foreign

exchange received for R& D services shall also be counted for discharge

under the EPCG scheme. Payment received in rupee terms for the port

handling services, in terms of Chapter 9 of the Foreign Trade Policy shall

also be counted for export obligation discharge under the Scheme.

DEEMED EXPORTS

Deemed Exports" refers to those transactions in which the goods

supplied do not leave the country.

The following categories of supply of goods by the main/ sub-contractors

shall be regarded as "Deemed Exports" under this Policy, provided the

goods are manufactured in India:


Supply of goods against Advance Licence/DFRC under the Duty

Exemption /Remission Scheme;

Supply of goods to Export Oriented Units (EOUs) or units located in

Export Processing Zones (EPZs) or Special Economic Zone (SEZs)

or Software Technology Parks (STPs) or to Electronic Hardware

Technology Parks (EHTPs);

Supply of capital goods to holders of licences under the Export

Promotion Capital Goods (EPCG) scheme;

supply of goods to projects financed by multilateral or bilateral

agencies/funds as notified by the Department of Economic Affairs,

Ministry of Finance under International Competitive Bidding in

accordance with the procedures of those agencies/ funds, where

the legal agreements provide for tender evaluation without

including the customs duty;

supply of capital goods, including in unassembled/ disassembled

condition as well as plants, machinery, accessories, tools, dies and

such goods which are used for installation purposes till the stage of

commercial production and spares to the extent of 10% of the FOR

value to fertilizer plants.

supply of goods to any project or purpose in respect of which the

Ministry of Finance, by a notification, permits the import of such

goods at zero customs duty coupled with the extension of benefits

under this chapter to domestic supplies;

Supply of goods to the power and refineries not covered in (f)

above.


Supply of marine freight containers by 100% EOU (Domestic freight

containers-manufacturers) provided the said containers are

exported out of India within 6 months or such further period as

permitted by the Customs; and

Supply to projects funded by UN agencies.

Benefits for Deemed Exports

Deemed exports shall be eligible for the following benefits in

respect of manufacture and supply of goods qualifying as deemed

exports

Advance Licence for intermediate supply/ deemed export.

Deemed Exports Drawback.

Refund of Terminal Excise duty.

ADVANCE LICENSE SCHEME

An advance licence is granted for the import of inputs without payment of

basic customs duty. Such licences shall be issued in accordance with

the policy and procedure in force on the date of issue of the licence and

shall be subject to the fulfillment of a time-bound export obligation, and

value addition as maybe specified. Advance licences maybe either value

based or quantity based.

As per the latest amendments to the EXIM Policy, the facility of Back to

Back Inland Letter of Credit has been introduced, to enable an Advance

Licence holder to source his inputs from domestic suppliers.


Value based advance license

Under a value based advance licence, any of the inputs specified in the

licence maybe imported within the total CIF value indicated for those

inputs, except inputs specified as sensitive items.

Under a value based advance licence, both the quantity and the FOB

value of the exports to be achieved shall be specified. It shall be

obligatory on the part of the licence holder to achieve both the quantity

and FOB value of the exports specified in the licence.

Amendments to the Advance License Scheme

The Advance License Scheme has been expanded and liberalized with

the amendments made to the EXIM Policy, announced on 31st March

1995.

Modvat credit can be taken on inputs which go into the

manufacture of export products, under the Advance License

Scheme.

Expansion of the concept of Advance Intermediate License, which

hitherto was only quantity based to value based.

Advance licenses can now be transferred after the export

obligation has been fulfilled, and the bank guarantee or

Drawbacks are permitted in respect of duty paid materials, which

are imported or indigenous.

Import of mandatory spares upto 5% of the CIF value of the

license is now allowed.


The list of sensitive items has been pruned. Flexibility has also

been granted to the exporter for using the unutilized CIF value of

sensitive items for importing non-sensitive items.

On the 1st of March, 1995, the Engineering Products Export

(Replenishment of Iron and Steel Intermediates) scheme was

announced as an alternative to the International Price Reimbursement

Scheme, which was withdrawn in April 1994. Under the new scheme,

primary steel producers would be able to import intermediates like coal

and fuel, using advance licences, and then provide steel to engineering

exporters at international prices.

EXIM BANK

Exim Bank is managed by a Board of Directors, which has

representatives from the Government, Reserve Bank of India, Export

Credit Guarantee Corporation (ECGC) of India, a financial institution,

public sector banks, and the business community.

Functions

Exim Bank plays four-pronged role with regard to India's foreign trade:

those of a coordinator, a source of finance, consultant and promoter.


Exim Bank is the Coordinator of the Working Group Mechanism for

clearance of Project and Services Exports and Deferred Payment

Exports (for amounts above a certain value currently US$ 100 million).

The Working Group comprises Exim Bank, Government of India

representatives (Ministries of Finance, Commerce, External Affairs),

Reserve Bank of India, Export Credit Guarantee Corporation of India Ltd.

and commercial banks who are authorised foreign exchange dealers.

Exim Bank plays a pivotal role in promoting and financing project

exports. Promoting Trade and Investment Promotion Agencies. Exim

Bank offers Rediscounting Facility to commercial banks, enabling them

to rediscount export bills of their SSI customers.

We also offer Refinance of Supplier's Credit, enabling commercial banks

to offer credit to Indian exporters of eligible goods, who in turn extend

them credit over 180 days to importers overseas.

Term loans for export production: Exim Bank provides term

loans/deferred payment guarantees to 100% export oriented units, units

in free trade zones and computer software exporters. In collaboration

with International Finance Corporation, Washington, Exim Bank provides

loans to enable small and medium enterprises upgrade export

production capability. Facilities for deeded exports; Deemed exports are

eligible for funded and non- funded facilities from Exim Bank.

Overseas Investment finance: Indian companies establishing joint

ventures overseas are provided finance towards their equity contribution

in the joint venture.


Finance for export marketing: This programme, which is a component of

a World Bank loan, helps exporters implement their export market

development plans.

Guaranteeing of Obligations: Exim Bank participates with commercial

banks in India in the issue of guarantees required by Indian companies

for the export contracts and for execution of overseas construction and

turnkey projects.

Advantages of EXIM

Over the last four decades India has recorded remarkable expansion

and diversification in practically all areas of industrial development.

India's vast resources-human, agricultural, mineral and industrial- have

been fully exploited for this purpose. The New Industrial Policy has

helped in catalyzing foreign investment into India. The total amount of

foreign direct investment approval which was Rs 5,341 million in 1991,

swelled to Rs 141,871.9 million in 1994. Of the total FDI approvals, 80%

are in the priority sectors such as power, oil refineries, electronics and

electrical equipment, chemicals, telecommunications, food processing

etc.

Policy Resolution of 1956 and the Statement on Industrial Policy of 1991

provide the basic framework for the overall industrial policy of the

Government in regard to the manufacturing industries. In the initial


stages of the country's development, growth of industry was regulated

through the granting of industrial licenses and other industrial approvals.

The Industries (Development and Regulation) Act, 1951 was the

principal legislation providing the legal basis for industrial licensing. The

industrial policy announced on 24th July, 1991 substantially dispensed

with industrial licensing, announced measures facilitating foreign

investment and technology transfers, and threw open the areas hitherto

reserved for the public sector.

The private sector can now operate in all areas except those of strategic

concern such as defense, railway transport and atomic energy. The list

of industries reserved for the public sector now stands reduced to 6.

Private participation is permitted in some specific areas in this list as

well, such as mining; oil exploration, refining and marketing; and parts of

the railway transport sectors.

The requirement of obtaining an industrial license for manufacturing

activity is limited to:

1. Industries reserved for the pubic sector.

2. 16 industries of strategic, social or environmental concern.

3. Industries reserved for the small scale sector.

All other industries are exempt from licensing, and only subject to the

location restrictions of metropolitan areas.

Exports-Imports Free Unless Regulated: Exports and imports shall be

free, unless regulated by FTI or any other law enforced. The item wise


export and import policy shall be specified in ITC notified by DGFT as

amended from time to time OLD: exports and imports shall be free,

except in cases where they are regulated by the provision of this policy

or any other law from the time being enforced.

Restricted Goods: Any goods, export or import of which is restricted

under ITC may be exported or imported only in accordance with an

authorisation or in terms of a public notice issued in this regard OLD. any

goods, export or import of which is restricted under ITC may be exported

or imported only in accordance with license/ certificate/ permission or in

terms of a public notice issued in this behalf

Employment Generation: The second objective of the FTP was providing

thrust to employment generation particularly in semi-urban and rural

areas. The FTP announced special focus initiatives in the employment

intensive areas of agriculture, handicrafts, handlooms, gems & jewellery

and leather & footwear sectors. The employment generation has been

encouraging not only in these sectors, but in other sectors across the

board. A study commissioned by the Ministry reveals that exports

generated an incremental direct employment of 10 lakh jobs in the year

2004-05, over the previous year. The total employment generated during

the year corresponding to export activity valued at 78 billion was 1 crore

jobs - 86 lakhs of direct employment, and 14 lakhs of indirect

employment in the logistics, transport and related sectors. The study

further reveals that if we achieve our target of 150 dollars over the next

four years, we shall be adding a further 1 crore jobs: 85% of it direct

employment, and 15% indirectly associated jobs.


Sector Wise Performance: Sectors registering positive growth during

1998-99 include cereal and gems and jewellery. Commodities showing

positive growth include tea, rice leather, footwear, gems and jewellery,

manufacture of metals, readymade garments, etc. During the current

year, so far (April-May’99) a number of items such as leather, footwear,

gem & jewellery, textiles, handicrafts and carpets have shown positive

growth. Among the importable, edible oil, precious and semi-precious

stones, electrical machinery, project goods, gold and silver have

registered significant growth during 1998-99. Imports for April-July’99

show a rise of only 1.01 per cent in dollar terms, while imports in July’99

show a decline of 5.84 per cent in dollar terms. Engineering goods and

chemicals are the main items showing a fall in imports which is a cause

for concern. Gold and silver imports have also fallen.

Issues

Infrastructure : In the Custom Notification No. 138/91 dated 20.10.90 as

amended from time to time, allows import of duty free capital goods for

creating central facility to Software Technology Parks of India (STPI) and

do not include other service providers in the private sector. With the

advancement of technologies in electronics and computer software, the

cost to create such infrastructure required for export is becoming

exorbitant. Therefore, it is necessary that private and public

organisations interested in providing infrastructure/common facilities

should also be included for duty exemption to import capital goods, etc.

The Service Provider in view of capital imported would undertake the


export obligations as provided for capital goods in the STP Scheme. The

scheme was discussed in the DGFT/CBEC which need to be

implemented immediately.

Anti- Dumping: Where any article is exported from any country or

territory to India at less than its normal value then upon the importation

of such article to India the central Govt. may be notification in the official

gazette impose an anti dumping duty not exceeding the margin of

dumping in relation to such article. For purpose of identification,

assessment and collection of Anti Dumping Duty on dumped articles and

for determination of injury, the Govt. has appointed Additional Secretary

to the Govt. of India Ministry of Commerce as designated Authority for

purpose of above rules.

It is to be understood that imposition of Anti Dumping Duty is based on

Commodity to Commodity, country to country and suppliers in Exporting

countries

Others: THE first Export-Import (Exim) policy of the new millennium

coinciding with the Tenth Plan has evoked enthusiastic response from

the exporting community and some policy analysts for its perceived new

initiatives to drive export growth.

It is essential that the modalities of granting transport subsidy be

finalised without delay. Together with a depreciating rupee, transport

assistance can provide that little extra push necessary in case of

commodities facing a marginal price disparity. However, an Exim policy

for a five-year period, which merely liberalises exports and removes

procedural irritants, is unlikely to provide any significant boost to export


earnings of farm goods. A coordinated effort by various ministries at the

Centre including finance, food and agriculture is necessary.

There are instances of export efforts thwarted by customs authorities. In

their drive to increase revenue, some customs houses pressurise

exporters not to use DEPB licence, but pay up customs duty on raw

material import.

A strong input delivery system, advise on agronomic practices and

market intelligence is key to success. AEZs must make use of

information technology to deliver benefits to primary producers in the

area.

In sum, intentions of the new Exim policy are laudable. But how far these

intentions will be translated into action remains to be seen. Having

removed the cobwebs that hitherto restrained farm exports, the

Government must now proceed to invest export products with

competitive edge in terms of cost and quality.

Exim Bank signed pact with IFC

Exim Bank of India has signed an agreement with International Finance

Corporation (IFC), Washington, a member of the World Bank group,

under the Global Trade Finance Programme (GTFP) of IFC. This

arrangement will enable Exim Bank to confirm letters of credit,

guarantees and other trade instruments issued by approved banks in

more than forty countries of Central Asia, Central and Eastern Europe,

Latin America and the Caribbean, West Asia and North Africa as also

other regions of Asia and Africa. The Exim Bank Chief General Manager,


Prabhakar, and the IFC Associate Director, Mamta H. Shah, signed the

agreement on December 14, 2007.

EXPORTS, IMPORTS & TRADE BALANCE

Year Exports Imports Trade Exports Imports Exports Imports

($

mln.) ($

mln.) Balances(%

change)(%

change) (% to GDP)

(% to GDP)

($ mln.) 1990-

91 18148 23464 -5316 9.25 10.59 5.72 7.391991-

92 17998 19551 -1553 -0.83 -16.68 6.73 7.311992-

93 17437 20583 -3146 -3.12 5.28 7.13 8.421993-

94 22213 23305 -1092 27.39 13.22 8.06 8.451994-

95 26337 28662 -2325 18.57 22.99 8.14 8.861995-

96 31842 36730 -4888 20.9 28.15 8.92 10.291996-

97 33498 39165 -5667 5.2 6.63 8.62 10.081997-

98 35049 41535 -6486 4.63 6.05 8.52 10.11998-

99 33211 42379 -9168 -5.24 2.03 7.98 10.18


1999-00 36760 49799 -13039 10.68 17.51 8.15 11.04

2000-01 44147 50056 -5909 20.1 0.52 9.58 10.86

2001-02 43958 51567 -7609 -0.43 3.02 9.16 10.75

2002-03 52823 61533 -8710 20.17 19.33 10.38 12.09

2003-04 63886 78203 -14316 20.94 27.09 10.61 12.99

2004-05 83502 111472 -27970 30.7 42.54 12 16.03

2005-06 103075 149144 -46068 23.44 33.8 12.79 18.51

2006-07 126246 190438 -64192 22.48 27.69 13.86 20.9

INDIA V/S WORLD: ANNUAL EXPORT GROWTH RATE


FUTURE OF EXIM

The new five-year Exim policy is expected to bring about a positive

growth in exports in the days to come. The policy was the result of a

paradigm shift from narrow issues of mere procedural formalities to

much larger aspects of exports which would work as the ``true engine of

growth''. The policy was clear and required involvement of the state


government to make it successful. Adequate measures have been taken

to curtail transaction costs. the concept of using special economic zone

(SEZ) and agriculture export zones to boost exports of goods, services

and agricultural products is a positive step. Processed foods such as

marine products, coconuts, cashews, areca nuts and fruits like mangoes

need to be encouraged. In order to catch up with the changing world

scenario in the export trade, he felt that there was a requirement of a

mindset change in government officials as well as in the industry. The

participants concentrate on policy-related matters and understand the

subject thoroughly and make use of seminars and workshops to update

them with the latest changes and techniques. referring to the SEZ for

Goa. It is required to have a proper study by international consultants,

and the involvement of competent persons to push the proposal further

Goa has a natural advantage and it can have a unique SEZ in the

service sector.

Prospects For Indian Export: For the period April-July’99, exports

registered a growth of 4.04 per cent in dollar terms and 8.45 per cent in

rupee terms over April- June’98. The world merchandise exports

declined by 2 per cent during 1998, the strongest decrease since 1982.

In fact, if we see the export performance of all the south Asian and south

east Asian countries, it was negative for most of them including China.

Only in the case of Philippines, the export performance was good due to

its electronics sector and the FTZs. The export growth has been picking

up in the current fiscal. However, the demand situation per se has not

improved since the east Asian crisis and the fall in commodity prices

worldwide is still far from over. An improvement in these factors will help

increase exports from India


Future Lies In Service Sectors: This is a very important sector for the

future. We have already included the 161 services under EXIM POLICY.

They will be able to avail of facilities under schemes like EPCG, Star and

Super Star Houses, EPZs, etc. Unlike the goods sector, there is no

possibility of any of these schemes to be considered as WTO

inconsistent in the services sector as the general commitments in

services sector till now are only extension of MFN. With services

emerging as the major sector in our GDP

and India showing proven competitiveness in many services, the Future

growth depends on how we use the opportunities thrown open by a more

open services commitments by some of our trading partners and

negotiating for the removal of barriers in this sector.

One Percent Share In World Exports: The demand situation in the

world for India’s exports have not been favourable in the last two years.

The government is trying to increase the supply situation by laying

emphasis on improving infrastructure, credit to exporters and policy

implification. Government also working towards creating an environment

for second generation reforms. If we include services sector and informal

trade which crosses our borders, the share of India in world exports

would definitely be higher.

BIBLIOGRAPHY

Book on Foreign Trade of India: 1947-2007 (Chapter 2 & 3)


Centre for Monitoring Indian Economy – Foreign Trade & Balance of Payments (August 2007)

www.economictimes.com (25th July 2006)

www.exim.indiamart.com

www.eximbank.com

www.commerce.nic.in

www.thehindubusinessline.com

www.rediff.com

http://www.rediff.com/

http://www.thehindubusinessline.com/

http://www.commerce.nic.in/

http://www.eximbank.com/

http://www.exim.indiamart.com/

http://www.economictimes.com/

exim policy project

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