Aureus Law Partners' update on Foreign Trade Policy 2015-16

Copyright © 2015 Aureus Law Partners. All rights reserved.


FOREIGN TRADE POLICY 2015-20SALIENT FEATURES & KEY CHANGES


4

The Government has introduced Foreign Trade Policy 2015-20 (“FTP”) on April 1, 2015. The key changes in

FTP are summarized as under:

• Merchant Export of India Scheme (“MEIS”) and Service Export from India Scheme (“SEIS”) notified

• MEIS subsumes

• Focus Product Scheme

• Market Linked Focus Product Scheme

• Focus Market Scheme

• Agriculture Infrastructure Incentive Scrip

• VKGUY

• SEIS replaces and expands upon Served From India Scheme (“SFIS”) – applies to service providers located

in India as opposed to Indian service providers

Introduction and Overview of Foreign Trade Policy 2015-20


5

Category Type Countries Example

Countries in group A Traditional markets 30 Europian Union, USA,

Canada

Countries in group B Emerging markets & Focus

markets

139 Africa, Latin America and

Mexico, Turkey and West

Asian countries

Countries in group C Other Markets 70 Australia, New Zealand,

Antarctica etc.

For the purpose of MEIS three country groups have been formulated



6

• SEZ units will be entitled to the benefits of MEIS and SEIS

• Higher level of rewards under MEIS export with high domestic content and value addition

• Introduction of digital and online filing of documents/applications and paperless trade in 24x7

environment.

• Export obligation period for goods related to Defence and Aerospace has been extended from eighteen

months to twenty four months

• e-Commerce Exports: Benefits of foreign trade policy on export of good, notified under Appendix 3-C

having FOB value upto INR 25,000 per consignment.



7

• New initiatives for EOUs, EHTPs and STPs:

• They can share infrastructure facilities

• Inter-unit transfer of goods has been allowed

• EOU’s have been allowed to set up warehouse near port of export

• Duty free import of goods and equipments required for training purposes

• In an endeavour to resolve quality complaints and trade disputes, chapter on Quality Complaints and

Trade Disputes has been incorporated

• For speedy resolution of disputes, a committee on Quality Complaints and Trade Disputes is being

constituted

• Eligibility criteria for “Status Holder” revised. Other privileges granted are:

• Authorization and Customs clearances on self declaration basis

• Exemption from furnishing of bank guarantee for schemes under FTP

• Exemption from compulsory negotiation of documents through banks

• Preferential treatment and priority in handling of their consignments



8

• Duty Credit Scrips shall be granted as rewards under MEIS and SEIS.

• The Duty Credit Scrips and goods imported/domestically procured against them shall be freely

transferable

• Duty Credit Scrips can be used for the payment of Customs duty, Excise duty and Service tax

• In the MEIS scheme incentives in form of duty credit Scrips will be given as a percent of realized FOB

value of exports

• In SEIS incentive will be based on net foreign exchange earned. The list of services and the rates of

rewards would be reviewed after September 30, 2015

Rewards Under MEIS & SEIS


9

Product Countries in group A Countries in group B Countries in group C

Inorganic Chemicals, Organic or Inorganic

Compounds

2-3 2-3 0

Polymers 2-3 2-3 0

petrol 2 2 0

Pharmaceutical 3 3 0

Textiles 0-5 0-5 (in certain cases advantage has

been extended only to Japan)

0-5

Edible oil 5 5 5

Iron and steel 0 2 0

Articles of iron and steel 2-3 2-3 0

Services Percentage rate

Business services 3 and 5

Communication services 5

Construction and related Engineering services 5

Educational services 5

Environmental services 5

Health-related and social services 5

Tourism and travel-related services 3 and 5

Recreational, cultural and sporting services (other than audiovisual

services)

5

Transport services 5

Percentage Rate specified under MEIS (Illustrative)

Percentage Rate specified under SEIS (Illustrative)

Rates specified under the MEIS and SEIS Schemes


10

• The FTP has bifurcated the categories of supply eligible for the benefit of deemed exports, into:

• Manufacturers

• Main/sub contractors

• Benefit of deemed exports has been extended to United Nations, International Organizations and

Government of India approved International Organizations for their official and for the projects funded by

them

• Supply of goods to nuclear power projects where tender has been invited through NCB or ICB

• Input services will also be eligible for availing refund of deemed export drawback

• FTP also provides for imposition of an interest at the rate of 15 percent in case of defaults or violation of

the provisions of FTDR Act.

Deemed Exports


11

• In case of indigenous procurement of capital goods the specific export obligation shall be 25 percent less

than the stipulated export obligation.

• The FTP has done away with the 3 percent concessional EPCG Scheme.

• The reduced export obligation incentive has been extended to the state of Jammu and Kashmir.

• Import under EPCG Authorization Scheme shall not be eligible for exemption from payment of anti-

dumping duty, safeguard duty and transitional product specific safeguard duty.

• The FTP has provided a uniform time limit of six years for fulfillment of export obligation under the

scheme

Export Promotion Capital Goods Scheme (EPCG)


12

Advance Authorization and Duty Free Import Authorization

• The validity period for import of Advance Authorizations will be twelve months

• The scheme provides that the particulars of the input used (or to be used) in the Advance Authorization

must match exactly with the particulars endorsed in the shipping bill.

• The scheme provides a period of eighteen months for fulfilling the export obligation. In case of a turnkey

project in India (Only deemed export category) or abroad period shall be as specified under the contract

or eighteen months, whichever is higher

• Period of export obligation shall be twenty four months or the period specified in the contract (whichever

is higher) for items falling under defence, military store, aerospace and nuclear energy categories

Duty Free Import Authorization

• Imports under DFIA shall be exempted only from the payment of Basic Customs Duty. Additional customs

duty, being not exempt, shall be adjusted as CENVAT credit

• No DFIA shall be granted for cases where an “Actual User Condition” has been specified under the SION


Thank you

[email protected]

Aureus Law Partners' update on Foreign Trade Policy 2015-16

Law

trade disputes

aureus law partners

paperless trade

meis seis

meis export

benefits of meis

form of duty credit

group bcountries