The foreign trade policy announced by the UPA government in 2004 had set two objectives, viz: i) to double our percentage share of global merchandise trade within 5 years and ii) use trade expansion as an effective instrument of economic growth and employment generation. The same has been achieved as our exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US $ 63 billion in 2003-04. Our share o global merchandise trade was 0.83% in2003 which rose to 1.45% in 2008 as per WTO estimates. On the employment front, nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.
The policy objective is annual export target of US$ 200 billion by March 2011. By 2014, we expect to double India’s exports of goods and services. The long term policy objective for the Government is to double India’s share in global trade by 2020.
Duty Exemption and Remission schemes.
Advance Authorisation:-
- An advance authorization is issued to allow duty free import of inputs, which are physically incorporated in export product. In addition, fuel, oil, energy, catalysts which are consumed or utilized may also be allowed.
- exempted from payment of BCD, addl customs duty, ed cess, anti dumping duty and safeguard duty, if any.
- materials imported thereunder will be with actual user condition. It will not be transferable even after completion of export obligation.
- advance authorizations are issued for inputs and export items given in SION (Standard Input Output Norms). These can also be issued on the basis of Adhoc norms or Self declared norms as per para 4.7 of HBP (Hand Book of Procedures) vol.I
- it can be issued either to a manufacturer exporter or merchant exporter.
- An advance authorization shall specify a) names and description of items to be imported and exported/supplied, b) quantity, value of each item to be imported, c) aggregate CIF value of imports and d) FOB value and quantity of exports/supplies.
- Export obligation shall be fulfilled within 36 months except in cases of EO extension.
DFIA scheme (Duty Free Import Authorization)
- it is issued to allow duty free import of inputs, fuel, oil, catalyst etc required for the production of export product.
- it consists of both pre export and post-export authorizations.
- Pre-export cases shall be issued with actual user condition and shall be exempted from payments of duties.
- in case of post-export DFIA, a merchant exporter shall be required to mention name and address of the manufacturer.
- DFIA shall be issued only for products for which SION have been notified.
- Objective of DEPB is to neutralize incidence of customs duty on import content of export product. Neutralisation shall be provided by way of grant of duty credit against export product.
- credit shall be available against such export products and at such rates as may be specified by DGFT by way of public notice.
- credit may be utilized for payment of customs duty. DEPB scripts can also be used for payment of duty against imports under EPCG scheme.
- Duty credit under the scheme shall be calculated by taking into account deemed import content of said export product as per SION.
- value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the scheme.
- the rates are fixed by Export Promotion Committees (EPC) which shall verify the Fob value of exports as well as international price of inputs covered under SION.
- the scheme allows import of capital goods at zero or concessional rate of duty, subject to an export obligation equivalent to 6 times of duty saved or 8 times of duty saved to be fulfilled with a period of 6 years or 8 years respectively.
- Import of motor cars, sport utility vehicles etc shall be allowed only to hotels, travel agents, tour operators subject to the condition that total foreign exchange earning in current and preceding three years is Rs 1.5 crore and duty saved amount shall not exceed 50% of average foreign exchange earnings in preceding three licensing years and vehicles shall be registered for tourist purpose only.
- export obligation shall be subject to actual user condition and shall be fulfilled by export of goods manufactured/services rendered by the licencee.
- in case, EPCG holder fails to fulfill prescribed export obligation, he shall pay duties of customs plus interest .
- in case of fulfillment of EO, RLA (Regional Licensing Authority) concerned shall issue a certificate of discharge to the licencee and send a copy to customs authorities with whom BG has been executed.
Export Oriented Units (EOUs)
- Units undertaking to export their entire production of goods and services (except permissible sales in DTA) may be set up under the EOU scheme.
- An EOU may export all kinds of goods and services except items hat are prohibited .
- An EOU may import or procure from DTA or bonded warehouses in DTA without payment of duty, all types of goods, including capital goods.
- goods imported by a unit shall be with actual user condition and shall be utilized for export production.
- EOU unit shall be a positive net foreign exchange earner. NFE earnings shall be calculated cumulatively in blocks of five years, starting from commencement of production.
- Once unit commences production, LOP (Letter of Permission) shall be valid for a period of 5 years . This may be extended further by DC (Development Commissioner who is the monitoring authority for a period of 5 years at a time.
- Unit shall execute an LUT (Letter of Undertaking) with DC. Failure to ensure positive NFE shall render the unit liable to penal action.
- Unit may sell goods upto 50% of FOB value of exports, subject to fulfillment of positive NFE, on payment of concessional duties in DTA within entitlement.
- In addition, EOUs are entitled to
- reimbursement of Central Sales Tax (CST) on goods manufactured in India,
- exemption from payment of Central Excise duty on goods procured from DTA on goods manufactured in India
- CENVAT credit on sevice tax paid
- Exemption from Income Tax as per Section 10A and 10B of Income Tax.
