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Foreign Trade Policy 27 th August 2009 - 31 st March 2014 Government of India Ministry of Commerce and Industry Department of Commerce Website: http://dgft.gov.in
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  • Foreign Trade Policy27th August 2009 - 31st March 2014

    Government of IndiaMinistry of Commerce and Industry

    Department of Commerce

    Website: http://dgft.gov.in

  • ii

  • iii

    TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II, SECTION-3, SUB SECTION (ii)

    GOVERNMENT OF INDIA

    MINISTRY OF COMMERCE AND INDUSTRYDEPARTMENT OF COMMERCE

    NOTIFICATION No. 1/2009-2014

    NEW DELHI, THE 27th August,2009

    In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act,1992 (No.22 of 1992) read with paragraph 1.2 of the Foreign Trade Policy, 2009-2014, the Central Government hereby notifies the Foreign Trade Policy, 2009-2014 as contained in Annexure to this notification. The Policy shall come into force w.e.f. 27th August, 2009.

    This issues in Public interest.

    ( R. S. Gujral )Director General of Foreign Trade and

    Ex Officio Additional Secretary to the Government of India

    (Issued from F.No. 01/94/180/Foreign Trade Policy/AM10/PC-4)

  • iv

  • vFOREIGN TRADE POLICY 2009-14

    FOREWORD

    The UPA Government has assumed office at a challenging time when the entire world is facing an unprecedented economic slow-down. The year 2009 is witnessing one of the most severe global recessions in the post-war period. Countries across the world have been affected in varying degrees and all major economic indicators of industrial production, trade, capital flows, unemployment, per capita investment and consumption have taken a hit. The WTO estimates project a grim forecast that global trade is likely to decline by 9% in volume terms and the IMF estimates project a decline of over 11%. The recessionary trend has huge social implications. The World Bank estimate suggests that 53 million more people would fall into the poverty net this year and over a billion people would go chronically hungry.

    Though India has not been affected to the same extent as other economies of the world, yet our exports have suffered a decline in the last 10 months due to a contraction in demand in the traditional markets of our exports. The protectionist measures being adopted by some of these countries have aggravated the problem. After four clear quarters of recession there is some sign of a turnaround and the emergence of green shoots, though I would be hesitant to hazard a guess on the nature and extent of this recovery and the time the major economies will take to return to their pre-recession growth levels.

    Announcing a Foreign Trade Policy in this economic climate is indeed a daunting task. We cannot remain oblivious to declining demand in the developed world and we need to set in motion strategies and policy measures which will catalyse the growth of exports.

  • vi

    Before defining the objectives of the new policy it would be useful to take stock of our achievements in the foreign trade over the last 5 years. The foreign trade policy announced by the UPA Government in 2004 had set two objectives, namely, (i) to double our percentage share of global merchandize trade within 5 years and (ii) use trade expansion as an effective instrument of economic growth and employment generation. Looking back, we can say with satisfaction that the UPA Government has delivered on its promise.

    Agriculture and industry has shown remarkable resilience and dynamism in contributing to a healthy growth in exports.

    In the last five years 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 of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008. Indias total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.

    The short term objective of our policy is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world. We would like to set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, we expect to double Indias exports of goods and services. The long term policy objective for the Government is to double Indias share in global trade by 2020.

    In order to meet these objectives, the Government would follow a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, enhanced market access across the world and diversification of export markets. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and

  • vii

    levies, would be the three pillars, which will support us to achieve this target. Endeavour will be made to see that the Goods and Services Tax rebates all indirect taxes and levies on exports.

    At this juncture, it is our endeavour to provide adequate confidence to our exporters to maintain their market presence even in a period of stress. A Special thrust needs to be provided to employment intensive sectors which have witnessed job losses in the wake of this recession, especially in the fields of textile, leather, handicrafts, etc.

    We want to provide a stable policy environment conducive for foreign trade and we have decided to continue with the DEPB Scheme upto December 2010 and income tax benefits under Section 10(A) for IT industry and under Section 10(B) for 100% export oriented units for one additional year till 31st March 2011. Enhanced insurance coverage and exposure for exports through ECGC Schemes has been ensured till 31st March 2010. We have also taken a view to continue with the interest subvention scheme for this purpose.

    We need to encourage value addition in our manufactured exports and towards this end, have stipulated a minimum 15% value addition on imported inputs under advance authorization scheme.

    It is important to take an initiative to diversify our export markets and offset the inherent disadvantage for our exporters in emerging markets of Africa, Latin America, Oceania and CIS countries such as credit risks, higher trade costs etc., through appropriate policy instruments. We have endeavored to diversify products and markets through rationalization of incentive schemes including the enhancement of incentive rates which have been based on the perceived long term competitive advantage of India in a particular product group and market. New emerging markets have been given a special focus to enable competitive exports. This would of course be contingent upon availability of adequate exportable surplus for a particular product. Additional resources have been made available under the Market Development Assistance Scheme and Market Access Initiative Scheme. Incentive schemes are being rationalized to identify leading products which would catalyze the next phase of export growth.

  • viii

    As part of our policy of market expansion, we have signed a Comprehensive Economic Partnership Agreement with South Korea which will give enhanced market access to Indian exports. We have also signed a Trade in Goods Agreement with ASEAN which will come in force from January 01, 2010, and will give enhanced market access to several items of Indian exports. These trade agreements are in line with Indias Look East Policy. We have also concluded the Mercosur Preferential Trade Agreement. It shall be our endeavour to deepen our trade engagement with other major economic groupings in the world.

    The Government seeks to promote Brand India through six or more Made

    in India shows to be organized across the world every year.

    In the era of global competitiveness, there is an imperative need for Indian exporters to upgrade their technology and reduce their costs. Accordingly, an important element of the Foreign Trade Policy is to help exporters for technological upgradation. Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at zero percent duty.

    Under the present Foreign Trade Policy, Government recognizes exporters based on their export performance and they are called status holders. For technological upgradation of the export sector, these status holders will be permitted to import capital goods duty free (through Duty Credit Scrips equivalent to 1% of their FOB value of exports in the previous year), of specified product groups. This will help them to upgrade their technology and reduce cost of production.

    For upgradation of export sector infrastructure, Towns of Export Excellence and units located therein would be granted additional focused support and incentives.

    The policy is committed to support the growth of project exports. A high level coordination committee is being established in the Department of Commerce to facilitate the export of manufactured goods / project exports creating synergies in the line of credit extended through EXIM Bank for new and emerging markets. This committee would have representation from the

  • ix

    Ministry of External Affairs, Department of Economic Affairs, EXIM Bank and the Reserve Bank of India. We would like to encourage production and export of green products through measures such as phased manufacturing programme for green vehicles, zero duty EPCG scheme and incentives for exports.

    To enable support to Indian industry and exporters, especially the MSMEs, in availing their rights through trade remedy instruments under the WTO framework, we propose to set up a Directorate of Trade Remedy Measures.

    In order to reduce the transaction cost and institutional bottlenecks, the e-trade project would be implemented in a time bound manner to bring all stake holders on a common platform. Additional ports/locations would be enabled on the Electronic Data Interchange over the next few years. An Inter-Ministerial Committee has been established to serve as a single window mechanism for resolution of trade related grievances.

    These are difficult times and we have set an ambitious goal for ourselves. I am sure that the industry and the Government, working in tandem, will be able to ensure that the Indian exports become globally competitive and that we are able to achieve the target, which we have set for ourselves.

    (Anand Sharma)Minister of Commerce & Industry

    Government of IndiaNew DelhiAugust 27, 2009

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  • CONTENTS

    CHAPTER SUBJECT Page

    GLOSSARY 1 1A LEGAL FRAMEWORK 5 1B SPECIAL FOCUS INITIATIVES 7 1C BOARD OF TRADE 15 2 GENERAL PROVISIONS REGARDING 17 IMPORTS AND EXPORTS

    3 PROMOTIONAL MEASURES 29 4 DUTY EXEMPTION / REMISSION SCHEMES 45 5 EXPORT PROMOTION CAPITAL GOODS SCHEME 59 6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS 67 HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs) 7 SPECIAL ECONOMIC ZONES 85 7A FREE TRADE & WAREHOUSING ZONES 85 8 DEEMED EXPORTS 87 9 DEFINITIONS 93

  • GLOSSARY (ACRONYMS)

    Acronym Explanation

    ACU AsianClearingUnion

    AEZ AgriExportZone

    ANF AayaatNiryaatForm

    ARO AdvanceReleaseOrder

    ASIDE AssistancetoStatesforInfrastructureDevelopmentofExports

    BG BankGuarantee

    BIFR BoardofIndustrialandFinancialReconstruction

    BOA BoardofApproval

    BOT BoardofTrade

    BRC BankRealisationCertificate

    BTP BiotechnologyPark

    CBEC CentralBoardofExciseandCustoms

    CCP CustomsClearancePermit

    CEA CentralExciseAuthority

    CEC CharteredEngineerCertificate

    CIF Cost,Insurance&Freight

    CIS CommonwealthofIndependentStates

    CoD CashonDelivery

    CoO CertificateofOrigin

    CVD CountervailingDuty

    DA DocumentagainstAcceptance

    DoBT DepartmentofBioTechnology

    DC DevelopmentCommissioner

    DEPB DutyEntitlementPassbook

    DFIA DutyFreeImportAuthorisation

    DFRC DutyFreeReplenishmentCertificate

    DGCI&S DirectorGeneral,CommercialIntelligence&Statistics.

    DGFT DirectorGeneralofForeignTrade

    DIPP DepartmentofIndustrialPolicy&Promotion

  • DoC DepartmentofCommerce

    DoE DepartmentofElectronics

    DoIT DepartmentofInformationTechnology

    DoR DepartmentofRevenue

    DoT DepartmentofTourism

    DTA DomesticTariffArea

    EDI ElectronicDataInterchange

    EEFC ExchangeEarnersForeignCurrency

    EFC EximFacilitationCommittee

    EFT ElectronicFundTransfer

    EH ExportHouse

    EHTP ElectronicHardwareTechnologyPark

    EIC ExportInspectionCouncil

    EO ExportObligation

    EODC ExportObligationDischargeCertificate

    EOP ExportObligationPeriod

    EOU ExportOrientedUnit

    EPC ExportPromotionCouncil

    EPCG ExportPromotionCapitalGoods

    EPO EngineeringProcessOutsourcing

    FDI ForeignDirectInvestment

    FIEO FederationofIndianExportOrganisation

    FIRC ForeignExchangeInwardRemittanceCertificate

    FMS FocusMarketScheme

    FOB FreeOnBoard

    FPS FocusProductScheme

    FT(D&R)Act ForeignTrade(Development&Regulation)Act,99(of99)

    FTDO ForeignTradeDevelopmentOfficer

    FTP ForeignTradePolicy

    GATS GeneralAgreementonTradeinServices

    GRC GrievanceRedressalCommittee

    HACCP HazardAnalysisandCriticalControlProcess

    HBPv HandbookofProcedures(Vol.)

  • HBPv HandbookofProcedures(Vol.)

    ICD InlandContainerDepot

    ICM IndianCommercialMission

    IEC ImporterExporterCode

    ISO InternationalStandardsOrganisation

    ITC(HS) IndianTradeClassification (HarmonisedSystem)Classification forExport&ImportItems

    ITPO IndiaTradePromotionOrganisation

    LoC LineofCredit

    LoI LetterofIntent

    LoP LetterofPermit

    LUT LegalUndertaking

    MAI MarketAccessInitiative

    MDA MarketDevelopmentAssistance

    MEA MinistryofExternalAffairs

    MoD MinistryofDefence

    MoF MinistryofFinance

    NC NormsCommittee

    NFE NetForeignExchange

    NOC NoObjectionCertificate

    PRC PolicyRelaxationCommittee

    PTH PremierTradingHouse

    PSU PublicSectorUndertaking

    R&D ResearchandDevelopment

    RA RegionalAuthority

    RBI ReserveBankofIndia

    REP Replenishment

    RCMC Registration-cum-MembershipCertificate

    RSCQC RegionalSub-CommitteeonQualityComplaints

    S/B ShippingBill

    SEH StarExportHouse

    SEICMM SoftwareEngineersInstitutesCapabilityMaturityModel

    SEZ SpecialEconomicZone

  • SFIS ServedfromIndiaScheme

    SIA SecretariatforIndustrialAssistance

    SION StandardInputOutputNorms

    SSI SmallScaleIndustry

    STE StateTradingEnterprise

    STH StarTradingHouse

    STP SoftwareTechnologyPark

    TEE TownsofExportExcellence

    TH TradingHouse

    TRA TelegraphicReleaseAdvice

    TRQ TariffRateQuota

    VA ValueAddition

    VKGUY VisheshKrishiandGramUdyogYojana

    WHOGMP WorldHealthOrganisationGoodManufacturingPractices

  • CHAPTER- 1 A

    LEGAL FRAMEWORK

    Foreword . TheForewordspellsoutthebroadframework

    Duration . TheForeignTradePolicy009-0(FTP),incorporatingprovisions relating to export and import of goods andservices, shall come into force with effect from 7thAugust,009andshallremaininforceuptostMarch,2014unlessotherwisespecified.Allexportsandimportsupto6thAugust009shallbeaccordinglygovernedbytheFTP00-009.

    Amendment . Central Government reserves right in public interestto make any amendments by notification to thisPolicy in exerciseofpowers conferredbySectionofFT(D&R)Act.

    Transitional . AuthorisationissuedbeforecommencementofFTPshallArrangements continue to be valid for the purpose and duration for

    which suchAuthorisationwas issued, unless otherwisestipulated

    . In case an export or import that is permitted freelyunder FTP is subsequently subjected to any restrictionor regulation, such export or import will ordinarily bepermittednotwithstandingsuchrestrictionorregulation,unless otherwise stipulated, provided that shipmentof export or import is made within original validitywith respect to available balance and time period ofan irrevocable commercial letter of credit, establishedbeforedateofimpositionofsuchrestriction.

    However for operationalizing such irrevocablecommercial letter of credit the applicant shall haveto register the Letter of Credit and contract with theconcernedRAwithin days of the issue of any suchrestrictionorregulation.

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  • 7CHAPTER- 1 B

    SPECIAL FOCUS INITIATIVES

    Special Focus B. With a view to continously increasing our percentageshare of global trade and expanding employmentopportunities, certain special focus initiatives havebeen identified/continued for Market Diversification,Technological Upgradation, Support to status holders,Agriculture,Handlooms,Handicraft,Gems&Jewellery,Leather, Marine, Electronics and IT Hardwaremanufacturing Industries, Green products, Exportsof products from North-East, Sports Goods and Toyssectors. Government of India shall make concertedefforts to promote exports in these sectors by specificsectoralstrategiesthatshallbenotifiedfromtimetotime.

    FurtherSectoral Initiatives inother sectorswillalsobe

    announcedfromtimetotime.

    (i) Market Diversification

    Weaker demand in developed economies,triggeredbyfallingassetpricesandincreasedeconomicuncertaintyhaspulleddownthegrowthofIndiasexportsto developed countries. There are no clear signals asto when the markets in developed countries wouldrevive. To insulate Indian exports from the decline indemand from developed countries, in this Policy focusisondiversificationof Indianexports toothermarkets,speciallythoselocatedinLatinAmerica,Africa,partsofAsia andOcenia. To achieve diversification of Indianexports,followinginitiativeshavebeentakenunderthisPolicy.

    (a) 6 new countries have been included within theambitofFocusMarketScheme.

    (b) TheincentivesprovidedunderFocusMarketSchemehavebeenincreasedfrom.%to%.

    (c) Therehasbeen a significant increase in theoutlayunder Market Linked Focus Product Schemeby inclusion of more markets and products. ThisensuressupportforexportstoallcountriesinAfrica

  • andLatinAmerica.

    (ii) Technological Upgradation

    Tousherinthenextphaseofexportgrowth,Indianeeds to move up in the value chain of export goods.Thisobjective issought tobeachievedbyencouragingtechnologicalupgradationofourexportsector.AnumberofinitiativeshavebeentakeninthisPolicytofocusontechnologicalupgradation;suchinitiativesinclude:

    (a) EPCGSchemeatzerodutyhasbeenintroducedforcertain engineering products, electronic products,basic chemicals and pharmaceuticals, apparel andtextiles, plastics, handicrafts, chemicals and alliedproductsandleatherandleatherproducts.

    (b) Theexisting%EPCGSchemehasbeenconsiderablysimplified,toeaseitsusagebytheexporters.

    (c) To encourage value added manufacture export, aminimum % value addition on imported inputsunder Advance Authorisation Scheme has beenstipulated.

    (d) A number of products including automobiles andother engineering products have been included forincentivesunderFocusProduct,andMarketLinkedFocusProductSchemes.

    (e) StepstoencourageProjectExportsshallbetaken.

    (iii) Support to status holders

    The Government recognized Status Holderscontribute approx. 60% of Indias goods exports. Toincentivise and encourage the status holders, as wellas to encourage Technological upgradation of exportproduction, additional duty credit scrip @ % ofthe FOB of past export shall be granted for specifiedproductgroupsincludingleather,specificsubsectorsinengineering,textiles,plastics,handicraftsandjute.Thisdutycreditscripcanbeusedforimportofcapitalgoodsbythesestatusholders.Theimportedcapitalgoodsshallbesubjecttoactualusercondition.

  • 9(iv) Agriculture and Village Industry

    (a) VisheshKrishiandGramUdyogYojana

    (b) CapitalgoodsimportedunderEPCGwillbepermittedtobeinstalledanywhereinAEZ.

    (c) Importofrestricteditems,suchaspanels,areallowedundervariousexportpromotionschemes.

    (d) Import of inputs such as pesticides are permittedunderAdvanceAuthorisationforagroexports.

    (e) New towns of export excellence with a thresholdlimitofRs150croreshallbenotified.

    (f) Certain specifiedflowers, fruits andvegetables areentitledtoaspecialdutycreditscrip,inadditiontothenormalbenefitunderVKGUY.

    (v) Handlooms

    (a) Specific funds are earmarked under MAI / MDASchemeforpromotinghandloomexports.

    (b) Dutyfreeimportentitlementofspecifiedtrimmingsandembellishmentsis%ofFOBvalueofexportsduringpreviousfinancialyear.

    c) Dutyfreeimportentitlementofhandknottedcarpetsamples is % of FOB value of exports duringpreviousfinancialyear.

    (d) Duty free import of old pieces of hand knottedcarpets on consignment basis for re-export afterrepairispermitted.

    (e) New towns of export excellence with a thresholdlimitofRs150croreshallbenotified.

    (f) Machinery and equipment for effluent treatmentplantsisexemptfromcustomsduty.

  • 0

    (vi) Handicrafts

    (a) Duty free import entitlement of tools, trimmingsandembellishments is%ofFOBvalueofexportsduringpreviousfinancialyear.Entitlementisbroadbanded,andshallextendalsotomerchantexporterstiedupwithsupportingmanufacturers.

    (b) HandicraftEPCisauthorized to import trimmings,embellishmentsandconsumablesonbehalfofthoseexporters forwhomdirectly importingmaynotbeviable.

    (c) Specific funds are earmarked underMAI&MDASchemesforpromotingHandicraftexports.

    (d) CVDisexemptedondutyfreeimportoftrimmings,embellishmentsandconsumables.

    (e) New towns of export excellence with a reducedthresholdlimitofRs150croreshallbenotified.

    (f) Machinery and equipment for effluent treatmentplantsareexemptfromcustomsduty.

    (g) All handicraft exports would be treated as specialFocusproductsandentitledtohigherincentives.

    (vii) Gems & Jewellery

    (a) Import of gold of k and above is allowed underreplenishment scheme subject to import beingaccompanied by an Assay Certificate specifyingpurity,weightandalloycontent.

    (b) Duty Free Import Entitlement (based on FOBvalueof exportsduringpreviousfinancialyear)ofConsumablesandTools,for:

    . Jewellerymadeoutof:

    (a) Precious metals (other than Gold &Platinum)%

    (b) GoldandPlatinum%(c)RhodiumfinishedSilver3%

  • . CutandPolishedDiamonds%

    (c) DutyfreeimportentitlementofcommercialsamplesshallbeRs.00,000.

    (d) Dutyfreere-importentitlementforrejectedjewelleryshallbe%ofFOBvalueofexports.

    (e) Import of Diamonds on consignment basis forCertification/Grading&re-exportbytheauthorizedoffices/agenciesofGemologicalInstituteofAmerica(GIA) in India or other approved agencieswill bepermitted.

    (f) PersonalcarriageofGems&Jewelleryproductsincaseofholding/participatinginoverseasexhibitionsincreasedtoUS$millionandtoUS$millionincaseofexportpromotiontours.

    (g) Extensioninnumberofdaysforre-importofunsolditemsincaseofparticipationinanexhibitioninUSAincreasedto90days.

    (h) In an endeavour to make India a diamondinternational tradinghub, it is planned to establishDiamondBourse(s).

    (viii) Leather and Footwear

    (a) Duty free import entitlementof specified items is% of FOB value of exports of leather garmentsduringprecedingfinancialyear.

    (b) Duty free entitlement for import of trimmings,embellishments and footwear components forfootwear(leatheraswellassynthetic),gloves,travelbagsandhandbagsis%ofFOBvalueofexportsofpreviousfinancialyear.Suchentitlementshallalsocover packing material, such as printed and non-printedshoeboxes,smallcartonsmadeofwood,tinorplasticmaterialsforpackingfootwear.

    (c) Machinery and equipment for Effluent TreatmentPlantsshallbeexemptfrombasiccustomsduty.

    (d) Re-export of unsuitable imported materials such

  • as raw hides & skins and wet blue leathers ispermitted.

    (e) CVDisexemptedonliningandinterliningmaterialnotified at S.No 168 of Customs Notification No/00dated0.0.00.

    (f) CVD is exempted on raw, tanned and dressed furskinsfallingunderChapterofITC(HS).

    (g) Re-exportofunsoldhides, skinsandsemifinishedleather shall be allowed from Public Bondedwarehouseat0%oftheapplicableexportduty.

    (ix) Marine Sector

    (a) ImportsfortechnologicalupgradationunderEPCGin fisheries sector (except fishing trawlers, ships,boats and other similar items) exempted frommaintainingaverageexportobligation.

    (b) Duty free import of specified specialised inputs /chemicalsandflavouringoilsisallowedtotheextentof 1% of FOB value of preceding financial yearsexport.

    (c) To allow import of monofilament longline systemfor tuna fishing at a concessional rate of duty andBaitFishfortunafishingatNilduty.

    (d) A self removal procedure for clearanceof seafoodwaste is applicable subject to prescribed wastagenorms.

    (e) Marine products are considered for VKGUYscheme.

    (x) Electronics and IT Hardware Manufacturing Industries

    (a) Expeditious clearance of approvals required fromDGFTshallbeensured.

    (b) Exporters/AssociationswouldbeentitledtoutilizeMAI&MDA Schemes for promoting ElectronicsandITHardwareManufacturingindustryexports.

  • (xi) Sports Goods and Toys

    (a) Duty free import of specified specialised inputsallowed to the extent of % of FOB value ofprecedingfinancialyearsexport.

    (b) SportsgoodsandtoysshallbetreatedasaPrioritysectorunderMDA/MAIScheme. Specific fundswouldbeearmarkedunderMAI/MDASchemeforpromotingexportsfromthissector.

    (c) ApplicationsrelatingtoSportsGoodsandToysshallbeconsideredforfasttrackclearancebyDGFT.

    (d) SportsGoodsandToysaretreatedasspecialfocusproductsandentitledtohigherincentives.

    (xii) Green products and technologies

    Indiaaimstobecomeahubforproductionandexportofgreenproductsandtechnologies.Toachievethisobjective,specialinitiativewillbetakentopromotedevelopmentandmanufactureofsuchproductsandtechnologiesforexports.Tobeginwith,focuswouldbe on items relating to transportation, solar andwind power generation and other products asmaybenotifiedwhichwillbeincentivizedunderRewardSchemesofChapterofFTP.

    (xiii) Incentives for Exports from the North Eastern Region

    Inordertogiveafilliptoexportsofproductsfromthenorth-easternStates,notifiedproductsofthisregionwould be incentivized under Reward Schemes ofChapterofFTP.

  • CHAPTER- 1 C

    Board of Trade

    Board of Trade C. BOThasaclearanddynamicroleinadvisinggovernment(BOT) onrelevantissuesconnectedwithForeignTrade.

    Terms of Reference C. BOThasfollowingtermsofreference:

    I To advise Government on Policy measures forpreparation and implementation of both short andlong term plans for increasing exports in the lightof emerging national and international economicscenarios;

    II To review export performance of various sectors,identify constraints and suggest industry specificmeasurestooptimizeexportearnings;

    III To examine existing institutional framework forimportsandexportsandsuggestpracticalmeasuresforfurtherstreamliningtoachievedesiredobjectives;

    IV To review policy instruments and procedures forimportsandexportsandsuggeststepstorationalizeandchannelizesuchschemesforoptimumuse;

    V ToexamineissueswhichareconsideredrelevantforpromotionofIndiasforeigntrade,andtostrengtheninternational competitiveness of Indian goods andservices;and

    VI To commission studies for furtherance of aboveobjectives.

    Composition C. Commerce&IndustryMinisterwillbetheChairmanoftheBoardofTrade(BOT).Governmentshallalsonominateuptopersons,ofwhomatleast0willbeexpertsintradepolicy.Inaddition,ChairmenofrecognizedEPCsandPresidentorSecretary-GeneralsofNationalChambersofCommercewillbeex-officiomembers.BOTwillmeetatleastonceeveryquarter.

  • 6

  • 7

    CHAPTER-2

    GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS

    Exports and Imports . ExportsandImportsshallbefree,exceptwhereregulatedfree unless regulated byFTPoranyotherlawinforce.Theitemwiseexportand

    importpolicyshallbe,asspecifiedinITC(HS)notifiedbyDGFT,asamendedfromtimetotime.

    Import of rough diamond from Cote dIvoire shall beprohibitedincompliancetoParagraph6ofUNSecurityCouncilResolution(UNSCR)6(00).

    Theimport/exportofroughdiamond(HSCode700,70or70)from/toVenezuelashallbeprohibitedin view of voluntary separation ofVenezuela from theKimberley Process Certification Scheme (KPCS). NoKimberleyProcessCertificateshallbeaccepted/endorsed/issuedforimportandexportofroughdiamondsfrom/toVenezuela.

    .. Import/exportofarmsandrelatedmaterialfrom/toIraqshallbeprohibited.

    .. Directorindirectexportandimportoffollowingitems,whether or not originating in Democratic PeoplesRepublic of Korea (DPRK), to / from, DPRK isprohibited:

    All items, materials equipment, goods and technologyincluding as set out in lists in documents S/006/,S/006/andS/006/(UnitedNationsSecurityCouncilDocuments)whichcouldcontributetoDPRKsnuclear-related,ballisticmissile-relatedorotherweaponsofmassdestruction-relatedprogrammes.

    .. Directorindirectexportandimportofallitems,materials,equipment,goodsandtechnologywhichcouldcontributetoIransenrichment-related,reprocessingorheavywaterrelatedactivities,or todevelopmentofnuclearweapondelivery systems, as mentioned below, whether or notoriginatinginIran,to/fromIranisprohibited:

    i) items, listed in INFCIRC//Rev/Part I in

  • document S/006/, in Sections B. to B.7 aswell asA.I andB.I except supply, sale or transferofequipmentcoveredbyB.Iwhensuchequipmentisforlightwaterreactorsandlow-enricheduraniumcoveredbyA..whenitisincorporatedinassemblednuclearfuelelementsforsuchreactors;

    ii) items listed in S/006/ except supply sale ortransferofitemscoveredby9.A.ofCategoryII.

    Above-mentioned UN Security Council documents areaccessiblefromDGFTwebsite.

    Compliance with Laws . Every exporter or importer shall comply with theprovisions of FT (D&R) Act, the Rules and Ordersmadethere-under,FTPandtermsandconditionsofanyAuthorisationgrantedtohim.AllimportedgoodsshallalsobesubjecttodomesticLaws,Rules,Orders,Regulations,technicalspecifications,environmentalandsafetynormsasapplicabletodomesticallyproducedgoods.Noimportor export of rough diamonds shall be permitted unlessaccompaniedbyKimberleyProcess (KP)Certificate asspecifiedbyGem&JewelleryEPC(GJEPC).

    Interpretation of Policy . Ifanyquestionordoubtarisesinrespectofinterpretationof any provision contained in FTP, or classification ofanyiteminITC(HS)orHBP-vorHBP-v,orScheduleofDEPBRates(includingcontent,scopeorissueofanauthorizationthereunder)saidquestionordoubtshallbereferred toDGFTwhosedecision thereonshallbefinalandbinding.

    Procedure . DGFT may, specify procedure to be followed for anexporter or importer or by any licensing or any othercompetent authority for purpose of implementingprovisionsofFT (D&R)Act, theRules and theOrdersmade there under and FTP. Such procedures shall bepublishedbymeansofaPublicNotice,andmay,inlikemanner,beamendedfromtimetotime.

    Exemption from Policy . DGFTmaypasssuchordersorgrantsuchrelaxationor/ Procedure relief, as he may deem fit and proper, on grounds of

    genuinehardshipandadverseimpactontrade.

    DGFTmay,inpublicinterest,exemptanypersonorclassor category of persons from any provision of FTP or

  • 9

    anyprocedureandmay,whilegrantingsuchexemption,imposesuchconditionsashemaydeemfit.Suchrequestmaybe consideredonly after consulting committees asunder:

    Sl.No.

    Description Committee

    (i) Fixation/modificationofproductnormsunderallschemes

    NormsCommittee

    (ii) NexuswithCapitalGoods(CG)andbenefitsunderEPCGSchemes

    EPCGCommittee

    (iii) Allotherissues PolicyRelaxationCommittee(PRC)

    Principles of Restriction 2.6 DGFTmay,throughanotification,adoptandenforceanymeasurenecessaryfor:-

    i Protectionofpublicmorals.ii Protectionofhuman,animalorplantlifeorhealth.iii Protectionofpatents,trademarksandcopyrightsand

    thepreventionofdeceptivepractices.iv Preventionofuseofprisonlabour.v Protectionofnationaltreasuresofartistic,historicor

    archaeologicalvalue.vi Conservationofexhaustiblenaturalresources.vii Protectionoftradeoffissionablematerialormaterial

    fromwhichtheyarederived;andviii Prevention of traffic in arms, ammunition and

    implementsofwar.

    Restricted Goods .7 Anygoods,exportorimportofwhichisrestrictedunderITC(HS)maybeexportedorimportedonlyinaccordancewithanAuthorisationorintermsofapublicnoticeissuedinthisregard.

    Terms and Conditions . EveryAuthorisationshallbevalidforprescribedperiodofof a licence / Certificate / validity and shall contain such terms and conditions asPermission / Authorisation maybespecifiedbyRAwhichmayinclude:

    (a) Quantity,descriptionandvalueofgoods;(b) ActualUsercondition;(c) Exportobligation;(d) Valueadditiontobeachieved;and(e) Minimumexport/importprice.

  • 0

    Authorisation / Licence .9 NopersonmayclaimanAuthorizationasarightandDGFT/ Certificate / Permission orRAshallhavepowertorefusetograntorrenewthesamenot a Right inaccordancewithprovisionsofFT(D&R)Act,Rules

    madethereunderandFTP.

    Penalty .0 IfanAuthorisationholderviolatesanyconditionofsuchAuthorisationorfailstofulfillexportobligation,heshallbeliableforactioninaccordancewithFT(D&R)Act,theRulesandOrdersmadethereunder,FTPandanyotherlawfortimebeinginforce.

    State Trading . Any goods, import or export of which is governedthroughexclusiveorspecialprivilegesgrantedtoSTE(s),maybeimportedorexportedbySTE(s)asperconditionsspecified in ITC (HS). DGFTmay, however, grant anAuthorisationtoanyotherpersontoimportorexportanyofthesegoods.

    Such STE(s) shall make any such purchases or salesinvolving imports or exports solely in accordancewithcommercial considerations, including price, quality,availability, marketability, transportation and otherconditions of purchase or sale in a non discriminatorymanner and shall afford enterprises of other countriesadequate opportunity, in accordance with customarybusiness practices, to compete for participation in suchpurchasesorsales.

    Importer-Exporter . NoexportorimportshallbemadebyanypersonwithoutanCode (IEC) Number IECnumberunlessspecificallyexempted.AnIECnumber

    shallbegrantedonapplicationbycompetentauthorityinaccordancewithprocedurespecifiedinHBPv1.

    Trade with . DGFTmayissueinstructionsorframeschemesasmaybeNeighbouring requiredtopromotetradeandstrengtheneconomictieswithCountries neighbouringcountries.

    Transit Facility . Transit of goods through India from / or to countriesadjacent to India shall be regulated in accordancewithbilateral treatiesbetween India and those countries andwillbesubjecttosuchrestrictionsasmaybespecifiedbyDGFTinaccordancewithInternationalConventions.

    Trade with Russia . In case of trade with Russia under Debt Repaymentunder Debt- Agreement, DGFT may issue instructions or frameRepayment Agreement schemesasmayberequired,andanythingcontainedin

  • FTP,insofarasitisinconsistentwithsuchinstructionsorschemes,shallnotapply.

    Actual User Condition .6 Capitalgoods,rawmaterials,intermediates,components,consumables,spares,parts,accessories,instrumentsandothergoods,whichareimportablewithoutanyrestriction,maybeimportedbyanyperson.

    However,ifsuchimportsrequireanAuthorisation,actualuser alone may import such goods unless actual userconditionisspecificallydispensedwithbyRA.

    Second Hand Goods .7 Allsecondhandgoods,exceptsecondhandcapitalgoods,shallberestrictedforimportsandmaybeimportedonlyinaccordancewithprovisionsofFTP,ITC(HS),HBPv,PublicNoticeoranAuthorisationissuedinthisregard.

    Import of second hand capital goods, includingrefurbished/re-conditionedsparesshallbeallowedfreely.However, second hand personal computers / laptops,photocopiermachines,airconditioners,dieselgeneratingsetswillonlybeallowedagainstalicence.

    Importof re-manufacturedgoodsshallbeallowedonlyagainstalicence.

    Scrap/Waste in SEZ .7A Any waste or scrap or remnant including any form ofmetallicwaste&scrapgeneratedduringmanufacturingorprocessingactivitiesofanSEZUnit/Developer/Co-developershallbeallowedtobedisposedinDTAfreelysubjecttopaymentofapplicableCustomsDuty.

    Import of samples . ImportofsamplesshallbegovernedbyHBPv.

    Import of Gifts .9 ImportofgiftsshallbepermittedwheresuchgoodsareotherwisefreelyimportableunderFTP.Inothercases,aCustomsClearancePermit(CCP)shallberequiredfromDGFT.

    Passenger Baggage 2.20 Bonafide household goods and personal effects maybe importedaspartofpassengerbaggageasper limits,termsandconditions thereof inBaggageRulesnotifiedbyMinistryofFinance.

    Samplesofsuchitemsthatareotherwisefreelyimportableunder FTPmay also be imported as part of passenger

  • baggagewithoutanAuthorisation.

    Exporterscomingfromabroadarealsoallowedtoimportdrawings, patterns, labels, price tags, buttons, belts,trimmingandembellishmentsrequiredforexport,aspartoftheirpassengerbaggagewithoutanAuthorisation.

    Import on Export . Freely exportable new or second hand capital goods,basis equipments,components,partsandaccessories,containers

    meant for packing of goods for exports, jigs, fixtures,diesandmouldsmaybeimportedforexportwithoutanAuthorisationonexecutionofLUT/BGwithCustomsAuthorities.

    Re-import of goods . Capital goods, equipments, components, parts andrepaired abroad accessories, whether imported or indigenous, except

    thoserestrictedunderITC(HS)maybesentabroadforrepairs, testing, quality improvement or upgradation orstandardizationoftechnologyandre-importedwithoutanAuthorisation.

    Import of goods used . Aftercompletionofprojectsabroad,projectcontractorsin projects abroad may import, without an Authorisation used goods

    includingcapitalgoodsprovidedtheyhavebeenusedforatleastoneyear.

    Sale on High Seas . SaleofgoodsonhighseasforimportintoIndiamaybemadesubjecttoFTPoranyotherlawinforce.

    Import under Lease . PermissionofRAisnotrequiredforimportofcapitalgoodsFinancing underleasefinancing.

    Clearance of Goods .6 Goodsalreadyimported/shipped/arrived,inadvance,butfrom Customs notclearedfromCustomsmayalsobeclearedagainstan

    Authorisationissuedsubsequently.

    Execution of BG / LUT .7 Wherever any duty free import is allowed or whereotherwise specifically stated, importer shall executeprescribed LUT / BG / Bond with CustomsAuthoritybeforeclearanceofgoods.Incaseofindigenoussourcing,Authorisationholder shall furnishLUT /BG /Bond toRAconcernedbeforesourcingmaterialfromindigenoussupplier/nominatedagencyasprescribedinHBPv.

    Private / Public Bonded . Private/PublicbondedwarehousesmaybesetupinDTAWarehouses for Imports as per terms and conditions of notification issued by

  • DoR.

    Anypersonmay importgoodsexceptprohibited items,arms and ammunition, hazardous waste and chemicalsandwarehousetheminsuchbondedwarehouses.

    Such goods may be cleared for home consumptionin accordance with provisions of FTP and againstAuthorisation, wherever required. Customs duty asapplicableshallbepaidatthetimeofclearanceofsuchgoods.

    If such goods are not cleared for home consumptionwithinaperiodofoneyearorsuchextendedperiodasthecustomauthoritiesmaypermit, importer of suchgoodsshallre-exportthegoods.

    Free Exports .9 AllgoodsmaybeexportedwithoutanyrestrictionexcepttoextentsuchexportsareregulatedbyITC(HS)oranyotherprovisionofFTPoranyotherlawfortimebeinginforce.

    DGFT may, however, specify through a public noticesuchtermsandconditionsaccordingtowhichanygoods,not included in ITC (HS),maybe exportedwithout anAuthorisation.

    Export of Samples .0 Export of samples and Free of charge goods shall begovernedbyprovisionsgiveninHBPv.

    Export of Passenger 2.31 BonafidepersonalbaggagemaybeexportedeitheralongBaggage with passenger or, if unaccompanied, within one year

    beforeorafterpassengersdeparturefromIndia.However,itemsmentionedasrestrictedinITC(HS)shallrequireanAuthorisation.GovernmentofIndiaofficialsproceedingabroadonofficialpostingsshall,however,bepermittedto carry alongwith their personal baggage, food items(free, restrictedorprohibited) strictly for theirpersonalconsumption.

    Export of Gifts . Goods, including edible items, of value not exceedingRs.,00,000/-inalicensingyear,maybeexportedasagift.

    However, items mentioned as restricted for exportsin ITC(HS)shallnotbeexportedasagift,withoutan

  • Authorisation.

    Export of Spares . Warranty spares (whether indigenous or imported) ofplant, equipment,machinery, automobiles or any othergoods,(exceptthoserestrictedunderITC(HS))maybeexportedalongwithmainequipmentorsubsequentlybutwithincontractedwarrantyperiodofsuchgoodssubjecttoapprovalofRBI.

    Third Party Exports 2.34 Third party exports, as defined in Chapter 9 shall beallowedunderFTP.

    Export of Imported . Goodsimported,inaccordancewithFTP,maybeexportedGoods insameorsubstantiallysameformwithoutanAuthorisation

    provided that item to be imported or exported is notrestrictedforimportorexportinITC(HS).

    Exportsofsuchgoodsimportedagainstpaymentinfreelyconvertiblecurrencywouldbepermittedagainstpaymentinfreelyconvertiblecurrency.

    .6 Goods, including those mentioned as restricted forimport(exceptprohibiteditems)maybeimportedunderCustomsBondforexportinfreelyconvertiblecurrencywithout an Authorisation provided that item is freelyexportable without any conditionality / requirement ofLicence/permissionasmayberequiredunderITC(HS)ScheduleII.

    2.36A Hides,SkinsandsemifinishedleathermaybeimportedinthePublicBondedwarehouseforthepurposeofDTAsaleandtheunsolditemsthereofcanbere-exportedfromsuchbondedwarehousesat0%oftheapplicableexportduty. However, this facility shall not be allowed forimportunderPrivateBondedwarehouse.

    Export of Replacement .7 Goods or parts thereof on being exported and foundGoods defective / damaged or otherwise unfit for usemay be

    replacedfreeofchargeby theexporterandsuchgoodsshall be allowed clearance by Customs authorities,provided that replacement goods are not mentioned asrestricteditemsforexportsinITC(HS).

    Export of Repaired . Goodsorparts,exceptrestrictedunderITC(HS)thereof,Goods on being exported and found defective, damaged or

  • otherwiseunfit for usemaybe imported for repair andsubsequentre-export.

    Such goods shall be allowed clearance withoutan Authorisation and in accordance with customsnotification.

    Private Bonded .9 PrivatebondedwarehousesexclusivelyforexportsmayWarehouses for Exports be set up in DTA as per terms and conditions of

    notificationsissuedbyDoR.

    Such warehouses shall be entitled to procure goodsfromdomesticmanufacturerswithout paymentof duty.Suppliesmade by a domestic supplier to such notifiedwarehousesshallbetreatedasphysicalexportsprovidedpaymentsaremadeinfreeforeignexchange.

    Denomination of Export .0 All export contracts and invoices shall bedenominatedContracts eitherinfreelyconvertiblecurrencyorIndianrupeesbut

    export proceeds shall be realised in freely convertiblecurrency.

    However, export proceeds against specific exportsmayalsoberealizedinrupees,provideditisthroughafreelyconvertibleVostroaccountofanonresidentbanksituatedinanycountryotherthanamembercountryofACUorNepal or Bhutan.Additionally, rupee payment throughVostroaccountmustbeagainstpaymentinfreeforeigncurrencybybuyerinhisnon-residentbankaccount.Freeforeign exchange remittedbybuyer tohisnon-residentbank(afterdeductingthebankservicecharges)onaccountof this transactionwouldbe takenas export realizationunderexportpromotionschemesofFTP.

    Contracts [for which payments are received throughAsianClearingUnion (ACU)] shall be denominated inACUDollar.CentralGovernmentmayrelaxprovisionsof thisparagraph inappropriatecases.ExportcontractsandInvoicescanbedenominatedinIndianrupeesagainstEXIMBank/GovernmentofIndialineofcredit.

    Realisation of Export . IfanexporterfailstorealiseexportproceedswithintimeProceeds specified by RBI, he shall, without prejudice to any

    liabilityor penaltyunder any law in force, be liable toactioninaccordancewithprovisionsofFT(D&R)Act,RulesandOrdersmadethereunderandFTP.

  • 6

    Free movement of . Consignments of items meant for exports shall not beexport goods withheld / delayed for any reason by any agency of

    Central / State Government. In case of any doubt,authorities concernedmayask for anundertaking fromexporter.

    No seizure of Stock .. Noseizureofstockshallbemadebyanyagencysoastodisruptmanufacturingactivity anddelivery scheduleofexports.Inexceptionalcases,concernedagencymayseizethestockonbasisofprimafacieevidence.However,suchseizureshouldbeliftedwithin7days.

    Export Promotion . BasicobjectiveofExportPromotionCouncils(EPCs)isCouncils (EPC) to promote and develop Indian exports. Each Council

    is responsible for promotion of a particular group ofproducts,projectsandservicesasgiveninHBP-v.

    Registration -cum- . Anyperson,applyingfor:Membership Certificate(RCMC) (i) anAuthorisation to import / export, [except items

    listedasrestricteditemsinITC(HS)]or

    (ii) anyotherbenefitorconcessionunderFTP

    shallberequiredtofurnishRCMCgrantedbycompetentauthorityinaccordancewithprocedurespecifiedinHBP-v1unlessspecificallyexemptedunderFTP.

    CertificateofRegistrationasExporterofSpices(CRES)issuedbySpicesBoardshallbetreatedasRegistration-Cum-MembershipCertificate (RCMC) for thepurposesunderthisPolicy.

    Trade Facilitation . It is endeavor of Government towork towards greaterthrough EDI Initiatives simplification, standardization and harmonization of

    trade documents using international best practices. Asa step in this direction, DGFT shall move towards anautomatedenvironmentforelectronicfiling,retrievalandauthentication of documents based on agreed protocolsand message exchange with other community partnersincludingCustomsandBanks.

    DGCI&S Commercial .. ToenableuserstomakecommercialdecisionsinamoreTrade Data professionalmanner,DGCI&Stradedatashallbemade

    available with a minimum time lag in a query basedstructuredformatonacommercialcriteria.

  • 7

    Fiscal Incentives .. WithaviewtopromoteuseofInformationTechnology,to promote EDI DGFTwillprovidefiscalincentivestousercommunity.Initiatives adoption Deductions inApplicationFeewouldbeadmissible for

    applications signeddigitallyor / andwhere applicationfeeispaidelectronicallythroughEFT(ElectronicFundTransfer).DetailsareenumeratedinHBPv.

    Regularization of EO 2.46 With aview toproviding assistance tofirmswhohavedefault and settlement of defaultedunderFTPforreasonsbeyondtheircontrolascustoms duty and interest alsofacilitatingmerger,acquisitionandrehabilitationofthrough Settlement sick units, it has been decided to empower SettlementCommission Commission in Central Board of Excise and

    Customs to decide such cases also with effect from0.0.00.

    Easing of 2.47 PendingfinalisationofSingleCommonDocument(SCD)Documentation forinternationaltrade,GovernmentDepartmentsdealingRequirement withexportsandimportswillhonourAuthorisationissued

    byotherGovernmentdepartmentsbasedonverificationofexportdocumentsLikeshippingbill,bankrealizationcertificate, Packing list, bill of lading etc. andwill notinsistuponfreshsubmissionofthesedocuments.

    Exemption / . ForallgoodsandserviceswhichareexportedfromunitsRemission of Service inDTAandunitsinEOU/EHTP/STP/BTPexemption/Tax in DTA remission of service tax levied and related to exports,

    shallbeallowed,asperprescribedprocedureinChapterofHBPv.

    Exemption from .. UnitsinSEZshallbeexemptedfromservicetax.Service Tax in SEZ

    Exemption from .. ForallgoodsandservicesexportedfromIndia,servicesService Tax on Services received/renderedabroad,whereeverpossible,shallbereceived abroad exemptedfromservicetax. GRIEVANCE REDRESSAL

    DGFT as a facilitator of .9 DGFThasacommitment to functionasa facilitatorofexports / imports exportsandimports.Focusisongoodgovernance,which

    dependson clean, transparent and accountabledeliverysystems.

    Citizens Charter .9. DGFT has in place a Citizens Charter, giving timeschedulesforprovidingservicestoclients,anddetailsofgrievancecommitteesatdifferentlevels.

  • Grievance Redressal .9. In order to facilitate speedy redressal of grievances ofCommittee (GRC) tradeandindustry,anewgrievanceredressalmechanism

    hasbeenputinplaceintheformofGRCbyaGovernmentResolution.

    TheGovernmentiscommittedtoresolvingalloutstandingproblemsanddisputespertaining topastpolicyperiodsthroughGRCsetupon7.0.00,forcondoningdelays,regularizing breaches by exporters in bonafide cases,resolvingdisputesoverentitlements,grantingextensionsforutilizationofAuthorisations.

    Export of perishable .0 Toreducetransactionandhandlingcosts,asinglewindowagricultural products system to facilitate export of perishable agricultural

    producehasbeen introduced. The systemwill involvecreation of multi-functional nodal agencies to beaccreditedbyAgriculturalandProcessedFoodProductsExport Development Authority (APEDA), NewDelhi. The detailed procedures have been notified atAppendix0ofHBPv.

  • 9

    CHAPTER 3

    PROMOTIONAL MEASURES

    PROMOTIONAL MEASURES IN DEPARTMENT OF COMMERCE

    Assistance to States . Scheme forAssistance toStates forDevelopingExportfor Developing Export InfrastructureandAlliedActivities(ASIDE)isformulatedInfrastructure and to involve the States in the export effort by providingAllied Activities (ASIDE) assistance to the States Governments for creating

    appropriateinfrastructureforthedevelopmentandgrowthofexports.TheSchemeisadministeredbyDepartmentofCommerce(DoC).

    The objective of scheme is to establish a mechanismfor involving the State Governments to participate infundingofinfrastructurecriticalforgrowthofexportsbyprovidingexportperformancelinkedfinancialassistancetothem.

    Theactivitiesaimedatdevelopmentofinfrastructureforexports can be funded from the scheme provided suchactivities have overwhelming export content and theirlinkage with exports is full established. The specificpurposesforwhichfundsallocatedundertheSchemecanbesanctionedandutilizedareasfollows:

    CreationofnewExportPromotionIndustrialParks/Zones(SEZs/AgriBusinessZones)andaugmentingfacilitiesintheexistingones.

    Setting up of electronics and other relatedinfrastructureinexportconclave.

    Equity participation in infrastructure projectsincludingthesettingupofSEZs.

    Meeting requirements of capital outlay of EPIPs/EPZs/SEZs.

    Developmentofcomplementaryinfrastructuresuchas,roadsconnectingtheproductioncentreswiththeports, setting up of Inland Container Depots andContainerFreightStations.

    Stabilizing power supply through additionaltransformers and islanding of export productioncentreetc.

  • 0

    Development of minor ports and jetties to serveexportpurpose.

    AssistanceforsettingupCommonEffluentTreatmentfacilitiesand

    AnyotheractivityasmaybenotifiedbyDoC.

    DetailsofASIDESchemeareavailableat: http://www.commerce.nic.in or http://www.commerce.

    gov.in.

    Market Access Initiative . Under MAI scheme, Financial assistance is provided(MAI) for export promotion activities on focus country, focus

    product basis. Financial assistance is available forExportPromotionCouncils (EPCs), IndustryandTradeAssociations (ITAs), Agencies of State Government,Indian CommercialMissions (ICMs) abroad and othernational level institutions/eligible entities as may benotified.

    Awhole range of activities can be funded underMAIscheme.Theseinclude,amongstothers,i. Marketstudies/surveys,ii. Settingupofshowroom/warehouse,iii. Participationininternationaltradefairs,iv. DisplaysinInternationaldepartmentalstores,v. Publicitycampaigns,vi. Brandpromotion,vii. Reimbursement of registration charges for

    pharmaceuticalsandexpensesforcarryingoutclinicaltrialsetc.,infulfillmentofstatutoryrequirementsinthebuyercountry,

    viii.Testingchargesforengineeringproductsabroad,ix. Assistance for contestingAntiDumping litigations

    etc.

    Each of these export promotion activities can receivefinancial assistance from Government ranging from%to00%oftotalcostdependinguponactivityandimplementingagency.Fulltextofguidelinesisavailableathttp://commerce.nic.in.

    Market Development 3.3 Under MDA Scheme, financial assistance is providedAssistance (MDA) for a rangeof export promotion activities implemented

    by EPCs and Trade Promotion Organizations on thebasis of approved annual action plans. The scheme isadministered by DOC. Assistance includes, amongst

  • others,participationin:

    i. Trade Fairs and Buyer Seller meets abroad or inIndia,and

    ii. Exportpromotionsseminars.iii. Financial assistance with travel grant is available

    to exporters traveling to focus areas, viz., LatinAmerica, Africa, CIS region, ASEAN countries,AustraliaandNewZealand.Inotherareas,financialassistancewithouttravelgrantisavailable.

    MDAassistanceisavailableforexportshavinganannual

    export turnover as prescribed inMDA guidelines. Fulltextofguidelinesisavailableathttp://commerce.nic.in.

    Meeting expenses for . DOC provides for reimbursement of charges/expensesstatutory compliances in forfulfillingstatutoryrequirementsinthebuyercountry,buyer country for Trade including registration charges for product registrationRelated Matters forpharmaceuticals,bio-technologyandagro-chemicals

    productsonrecommendationofEPCs.Financialassistanceisalsoprovidedforcontestinglitigation(s)intheforeigncountryconcerningrestrictions/antidumpingdutiesetc.on particular product(s) of Indian origin, as providedunder the Market Access Initiative (MAI) Scheme ofDOC.

    Towns of Export . AnumberoftownshaveemergedasdynamicindustrialExcellence (TEE) clusterscontributinghandsomelytoIndiasexports.Itis

    necessarytograntrecognitiontotheseindustrialclusterswithaview tomaximizing theirpotentialandenablingthem to move higher in the value chain and tap newmarkets.

    SelectedtownsproducinggoodsofRs.70CroreormorewillbenotifiedasTEEbasedonpotentialforgrowthinexports. However for TEE in Handloom, Handicraft,AgricultureandFisheriessector,thresholdlimitwouldbeRs0Crores.

    (i) Recognized associations of units will be providedfinancialassistanceunderMAIscheme,onprioritybasis, forexportpromotionprojects formarketing,capacitybuildingandtechnologicalservices.

    (ii) CommonServiceProviders in these areas shall beentitledforEPCGscheme.

    (iii) TheprojectsreceivedfromTEEsshallbeaccorded

  • priority by SLEPC for financial assistance underASIDE.

    Notified Towns (TEEs) are listed in Appendix 7 ofHBPv.

    Brand Promotion and .6 IBEF (originally called India Brand Equity Fund andQuality laterrenamedasIndiaBrandEquityFoundation)wasset

    upbytheMinistryofCommerceonthJuly,996,withtheprimaryobjectivetopromoteandcreateinternationalawareness of the Made in India label in marketsoverseas. IBEF aims to promote India as a businessopportunity by creating positive economic perceptionsofIndiagloballyaswellaseffectivelypresenttheIndiabusinessperspectiveand leveragebusinesspartnershipsinaglobalisedmarket-place.

    DOCprovidesfundsforcapacitybuildingforup-gradationof quality to national level Institutions and EPCs toorganizetrainingprogrammesfortheskillimprovementof the exporters for quality up-gradation, reduction inrejection, product improvement etc. as provided undertheMarketAccessInitiative(MAI)SchemeofDOC.

    Test Houses .7 Central Government will assist in modernization andupgradationoftesthousesandlaboratoriestobringthematparwithinternationalstandards.

    PROMOTIONAL MEASURES IN DGFT

    Quality Complaints / . Regional Sub-Committee on Quality ComplaintsDisputes (RSCQC)setupatRegionalOfficesof thisDirectorate

    shallinvestigatequalitycomplaintsreceivedfromforeignbuyers.Guidelinesforsettlementofqualitycomplaints,inparticular,andsuchothercomplaints, ingeneral,aregiveninAppendix-6ofHBPv.

    Trade Disputes affecting .9 IfitcomestoDGFTsnoticeorhehasreasontobelieveTrade Relations thatanexportorimporthasbeenmadeinamannerthat

    (i) isgravelyprejudicialtotraderelationsofIndiawithanyothercountry;and/or

    (ii) is gravely prejudicial to interest of other personsengagedinexportsorimports;and/or

    (iii) hasbroughtdisreputetothecountry;

  • DGFTmaytakeactionagainstsuchexporterorimporterinaccordancewithFT(D&R)Act,RulesandOrdersmadethere-underandFTP.

    3.10 EXPORT AND TRADING HOUSES

    Eligibility for Export .0. Merchant as well as Manufacturer Exporters, Serviceand Trading Houses Providers, Export Oriented Units (EOUs) and UnitsStatus locatedinSpecialEconomicZones(SEZs),AgriExport

    Zones (AEZs), Electronic Hardware Technology Parks(EHTPs), Software Technology Parks (STPs) and Bio-TechnologyParks(BTPs)shallbeeligibleforstatus.

    Status Category .0. ApplicantshallbecategorizeddependingonhistotalFOB(FOR-fordeemedexports)exportperformanceduringcurrent plus previous three years (taken together) uponexceeding limit below. For Export House (EH) Status,exportperformanceisnecessaryinatleasttwooutoffouryears(i.e.,currentpluspreviousthreeyears).

    StatusCategory ExportPerformanceFOB/FORValue(RupeesinCrores)

    ExportHouse(EH) 0StarExportHouse(SEH) 00TradingHouse(TH) 00StarTradingHouse(STH) 00PremierTradingHouse(PTH) 700

    Double Weightage and .0. (i) Exporters in Small Scale Industry (SSI) / Tinyother Conditions for Sector/CottageSector,UnitsregisteredwithKVICs/Grant of Status KVIBs,UnitslocatedinNorthEasternStates,Sikkim

    andJammu&Kashmir,Unitsexportinghandloom/handicrafts/handknottedorsilkcarpets,exportersexportingtocountriesinLatinAmerica/CIS/sub-SaharanAfricaaslistedinAppendix-9,UnitshavingISO9000(series)/ISO000(series)/WHOGMP/HACCP/SEICMMlevel-IIandabovestatusgrantedbyagencieslistedinAppendix-6ofHBPv,exportsof services and exports of agro products shall beentitled for doubleweightageon exportsmade forgrantofstatus.DoubleWeightageshallbeadmissibleto Merchant as well as Manufacturer Exporters.However,ashipmentcangetdoubleweightageonlyonceinanyoneofabovecategories.

  • (ii) Transferofexportperformancefromonetoanotherisnotpermitted.Thereforedisclaimersystemshallnotbeallowedforcountingofexportturnover.

    (iii) Exportsmadeonre-exportbasisshallnotbecountedforrecognition.

    (iv) Exportsmade by subsidiary of a limited companyshall be counted towards export performance oflimited company for recognition only if limitedcompanyhasamajorityshareholdinginsubsidiarycompany.

    Privileges of Export and .0. AStatusHoldershallbeeligibleforprivilegesasunder:Trading House StatusHolders (i) Authorization and Customs Clearances for both

    importsandexportsonself-declarationbasis;

    (ii) FixationofInput-Outputnormsonprioritywithin60days;

    (iii) Exemption from compulsory negotiation ofdocuments through banks. Remittance / Receipts,however, would be received through bankingchannels;

    (iv) 00% retention of foreign exchange in EEFCaccount;

    (v) ExemptionfromfurnishingofBGinSchemesunderFTP;

    (vi) SEHs and above shall be permitted to establishExportWarehouses,asperDoRguidelines.

    (vii)Forstatusholders,adecisiononconferringofACPStatusshallbecommunicatedbyCustomswithin0daysfromreceiptofapplicationwithCustoms.

    (viii)Asanoption,forPremierTradingHouse(PTH),theaveragelevelofexportsunderEPCGSchemeshallbethearithmeticmeanofexportperformanceinlastyears,insteadofyears.

    (ix) StatusHoldersofspecifiedsectorsshallbeeligibleforStatusHolderIncentiveScripunderPara.6ofFTP.

  • (x) StatusHoldersofAgri.Sector(Chapterto)shallbe eligible forAgri. Infrastructure Incentive ScripunderVKGUY-Para..ofFTP.

    3.11 SERVICES EXPORTS

    Services Exports .. Servicesincludeall6tradableservicescoveredunderGeneralAgreementonTradeinServices(GATS)wherepayment for such services is received in free foreignexchange.A listofservices isgiven inAppendix0ofHBPv.

    AllprovisionsofthisPolicyshallapplymutatismutandistoexportofservicesastheyapplytogoods.

    Registration cum .. Software exporters shall register themselves withMembership Certificate ElectronicsandSoftwareEPC.Exportersof15specific(RCMC) for Service services listed in Sl. No. ofAppendix of HBPvProviders are required to register themselveswith Services EPC.

    Other service exporters shall register themselves withFederationofIndianExportOrganisations(FIEO).

    Common Facility Centres .. Government shall promote establishment of CommonFacilityCentresforusebyhome-basedserviceproviders,particularly in areas like Engineering & ArchitecturalDesign, Multi-media operations, Software developersetc., inStateandDistrict level towns, todrawinavastmultitude of home-based professionals into servicesexportarena.

    REWARD / INCENTIVE SCHEMES IN DGFT

    3.12 SERVED FROM INDIA SCHEME (SFIS)

    Objective .. ObjectiveistoaccelerategrowthinexportofservicessoastocreateapowerfulanduniqueServedFromIndiabrand,instantlyrecognizedandrespectedworldover.

    Eligibility .. All Indian Service Providers, of services listed inAppendix0ofHBPv,whohavefreeforeignexchangeearning of at leastRs. 10Lakhs in preceding financialyear/currentfinancialyearshallqualifyforDutyCreditScrip.

  • 6

    For Individual IndianServiceProviders,minimum freeforeignexchangeearningswouldbeRsLakhs.

    Ineligible Services and .. ServicesandServiceProvidersaslistedinPara.6.ofService Providers HBPv1shallnotbeentitledforbenefitsundertheSFIS

    scheme.

    Entitlement .. All Service Providers shall be entitled to Duty CreditScripequivalentto0%offreeforeignexchangeearnedduringcurrentfinancialyear.

    Eligible Remittances .. Free foreign exchange earned through InternationalCreditCardsandotherinstrumentsaspermittedbyRBIforrenderingofserviceshallalsobetakenintoaccountforcomputationofDutyCreditScrip.

    Imports Allowed ..6 DutyCreditscripmaybeusedforimportofanycapitalgoodsincludingspares,officeequipmentandprofessionalequipment, office furniture and consumables; that areotherwisefreelyimportableand/orrestrictedunderITC(HS).Importsshallrelatetoanyservicesectorbusinessofapplicant.

    Utilization of Duty Credit scrip earned shall not bepermitted for payment of duty in case of import ofvehicles,evenifsuchvehiclesarefreelyimportableunderITC(HS).

    In case of hotels, clubs having residential facilityof minimum 0 rooms, golf resorts and stand-alonerestaurants having catering facilities,DutyCredit scripmay also be used for import of consumables includingfooditemsandalcoholicbeverages.

    Non Transferability ..7 Entitlement / goods (imported / procured) shall be nontransferable(exceptwithingroupcompanyandmanagedhotels)andbesubjecttoActualUsercondition.

    Procurement from .. Utilization of Duty Credit Scrip shall be permitted forDomestic Sources paymentofexcisedutyintermsofDoRnotificationissued

    in this behalf for procurement from domestic sources,of itemspermitted for imports underSFISDutyCreditScrip.

  • 7

    3.13 VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) (SPECIAL AGRICULTURE AND VILLAGE INDUSTRY SCHEME)

    Objective .. ObjectiveofVKGUYistopromoteexportsof:

    (i) Agricultural Produce and their value addedproducts;

    (ii)Minor Forest Produce and their value addedvariants;

    (iii)GramUdyogProducts;(iv)ForestBasedProducts;and(v) OtherProducts,asnotifiedfromtimetotime.

    Such products shall be listed in Appendix 7A ofHBPv.

    Entitlement 3.13.2 Duty Credit Scrip benefits are granted with an aim tocompensate high transport costs, and to offset otherdisadvantages.

    Exporters, of products notified in Appendix 37A ofHBPv,shallbeentitledforDutyCreditScripequivalentto%ofFOBvalueofexports(infreeforeignexchange)forexportsmadefrom7..009onwards.

    However,forexportsmadew.e.f7..009,someFlowers,Fruits,Vegetablesandotherproducts,aslistedinTableofAppendix7Ashallbeentitledtoanadditionaldutycredit scrip equivalent to%ofFOBvalueof exports;over and above the % or % VKGUY reduced rateentitlementavailableasperPara..below.

    Applicability of 3.13.3 DutyCreditScripbenefitsunderVKGUYschemeshallReduced Rate be grantedonly at a reduced rate of %ofFOBvalue

    ofexportsinsuchcaseswhereexporterhasalsoavailedbenefitsof:

    (i) Drawbackatrateshigherthan%;and/or

    (ii) Specific DEPB rate (i.e. other thanMiscellaneousCategorySr.Nos.C&DofProductGroup90);and/or

  • (iii)Advance Authorization or Duty Free ImportAuthorizationImportofinputs(otherthancatalysts,consumablesandpackingmaterials)fortheexportedproductforwhichDutyCreditScripunderVKGUYisbeingclaimed.

    Agri. Infrastructure .. For exports made during a particular year, all StatusIncentive Scrip Holders (havingstatus recognition for thecurrentyear)

    exporting products covered under ITC HS Chapters to,shallbe incentivizedwithdutycreditscripequalto0%ofFOBvalueofagriculturalexports(includingVKGUY benefits entitled under Policy Para 3.13.2)providedthatthetotalbenefitsforallstatusholdersputtogetherdoesnotexceedRs00Cr(i.e.Rs0Crforeachhalf year) and the conditions specified inPara 3.7.2 ofHBPv1aresatisfied.

    Zonal Office, CLA, New Delhi shall be the licensingofficeforgrantofthebenefittoallstatusholders.

    The following capital goods / equipments shall bepermittedforimport:

    (i) Coldstorageunits(includingControlledAtmosphere(CA)andModifiedAtmosphere(MA)Stores);Pre-coolingUnitsandMotherStorageUnitsforOnions,etc.;

    (ii) Pack Houses (including facilities for handling,grading,sortingandpackagingetc.);

    (iii)ReeferVan/Containers;and

    (iv) OtherCapitalGoods/EquipmentsasmaybenotifiedinAppendix7F.

    Imported capital goods/equipment shall be utilized forstorage,packingetc.(asin(ii)above)andtransportationof agricultural products (including agro-processedperishableproducts).

    This additional benefit shall be subject to actual userconditionandhencenon-transferable.

    However, for import of Cold Chain Equipment thisIncentiveScripshallbefreelytransferableamongstStatus

  • 9

    Holders.

    3.14 FOCUS MARKET SCHEME (FMS)

    Objective .. Objective is to offset high freight cost and otherexternalities toselect internationalmarketswithaviewto enhance Indias export competitiveness in thesecountries.

    Entitlement 3.14.2 Exporters of all products to notified countries (as inAppendix 7C of HBPv) shall be entitled for DutyCreditScripequivalentto%ofFOBvalueofexports(infreeforeignexchange)forexportsmadefrom7..009onwards.

    Ineligible Exports .. Thefollowingcategoriesofexportproducts/sectorsshallCategories / Sectors for beineligibleforDutyCreditScrip,underFMSscheme:FMS

    a) SuppliesmadetoSEZunits;b) ServiceExports;c) Diamondsandotherprecious,semipreciousstones;d) Gold,silver,platinumandotherpreciousmetals in

    anyform,includingplainandstuddedJewellery;e) OresandConcentrates,ofalltypesandinallforms;f) Cereals,ofalltypes;g) Sugar,ofalltypesandinallforms;h) Crude /PetroleumOil&Crude /Petroleumbased

    ProductscoveredunderITCHScodes709to7,ofalltypesandinallforms;and

    i) Export of Milk and Milk Products covered underITCHSCodes00to006,9000,9000,0&0.

    3.15 FOCUS PRODUCT SCHEME (FPS)

    Objective .. Objectiveistoincentiviseexportofsuchproductswhichhavehighexportintensity/employmentpotential,soastooffsetinfrastructureinefficienciesandotherassociatedcostsinvolvedinmarketingoftheseproducts.

    Entitlement 3.15.2 Exports of notified products (as in Appendix 37D ofHBPv) to all countries (includingSEZunits) shall beentitledforDutyCreditscripequivalent to%ofFOBvalue of exports (in free foreign exchange) for exportsmadefrom7..009onwards.

  • 0

    However, Special Focus Product(s) /sector(s), coveredunder Table and Table ofAppendix 7D, shall begrantedDutyCreditScripequivalentto%ofFOBvalueof exports (in free foreign exchange) for exportsmadefrom7..009onwards.

    .. Market Linked Focus Products Scrip (MLFPS):

    Export of Products/Sectors of high export intensity/employment potential (which are not covered underpresentFPSList)wouldbe incentivizedat%ofFOBvalue of exports (in free foreign exchange) under FPSwhenexportedtotheLinkedMarkets(countries),whichare not covered in the present FMS list, as notifiedin Appendix 7D of HBPv, for exports made from7..009onwards.

    3.16 Status Holders Incentive Scrip

    .6. WithanobjectivetopromoteinvestmentinupgradationoftechnologyofsomespecifiedsectorsaslistedinPara.6.below,StatusHoldersshallbeentitledtoincentivescrip@%ofFOBvalueofexportsmadeduring009-10andduring2010-11,ofthesespecifiedsectors,intheformofdutycredit.Thisshallbeoverandaboveanydutycreditscripclaimed/availedunderthischapter.

    .6. Status Holders availing Technology Upgradation FundScheme (TUFS) benefits (under Ministry of Textiles)during a particular year shall not be eligible for StatusHoldersIncentiveScripforexportsofthatyear.

    .6. TheStatusHoldersIncentiveScripshallbewithActualUserConditionandshallbeusedfor importsofcapitalgoods(asdefinedinFTP)relatingtothesectorsspecifiedinPara.6.below.

    .6. The Status Holders of the following Sectors shall beeligibleforthisStatusHoldersIncentiveScrip:1. LeatherSector(excludingfinishedleather);. TextilesandJuteSector;. Handicrafts;. Engineering Sector (excluding Iron& Steel, Non-

    ferrous Metals in primary or intermediate forms,Automobiles & two wheelers, nuclear reactors &

  • partsandShips,BoatsandFloatingStructures;. Plastics;and6. BasicChemicals(excludingPharmaProducts).

    3.17 Common Provisions of Duty Credit Scrips, except where specifically provided for Special Provisions

    .7. Government reserves the right in public interest, tospecify export products or services or exports to suchcountries,whichshallnotbeeligibleforcomputationofentitlement.

    FurtherGovernmentreservestherighttoimpose/changetherate/ceilingonDutyCreditScripunderthischapter.

    Similarly, Government may also notify goods (inAppendix7BofHBPv),whichshallnotbeallowedforimportunderDutyCreditScrips.

    Ineligible Exports .7. ForVKGUY,FMS,FPS(includingMLFPS)andStatusCategories /Sectors HoldersIncentiveScrip,thefollowingexportscategories

    /sectors shall be ineligible for Duty Credit Scripentitlement:

    (i) EOUs/EHTPs /BTPswhoareavailingdirect taxbenefits/exemption;

    (ii) Exportof importedgoodscoveredunderPara.ofFTP;

    (iii) Exportsthroughtransshipment,meaningtherebythatexportsoriginatinginthirdcountrybuttransshippedthroughIndia;

    (iv) DeemedExports;

    (v) ExportsmadebySEZunitsorSEZproductsexportedthroughDTAunits;and

    (vi) Items,whicharerestrictedorprohibitedforexportunderSchedule-ofExportPolicyinITC(HS).

  • Counting of Commission 3.17.3 For computation of Duty Credit Scrip Benefits, FOBin FOB value of Exports ValueofExports(infreeforeignexchange)shallinclude(in free foreign exchange) upto.%ForeignAgencyCommission.

    Free Transferability .7. DutyCreditScripanditemsimportedagainstitwouldbefreelytransferable.

    However,DutyCreditScripunderSFIS(Para.)andunderStatusHoldersIncentiveScrip(Para.6)shallnotbefreelytransferable.

    Imports Allowed .7. DutyCreditScripmaybeused for import of inputs orgoods including capital goods, provided same is freelyimportableand/orrestrictedunderITC(HS).However,importofitemslistedinAppendix7BofHBPvshallnotbepermittedtobedebited.

    DutyCreditScripsunderChapterofFTPcanalsobeutilizedforpaymentofdutyagainstimportsunderEPCGschemeprovidedtheitemisimportableagainstthescrip.

    CENVAT / Drawback .7.6 Additional customs duty/excise duty paid in cash orthroughdebitunderDutyCreditscripshallbeadjustedasCENVATCreditorDutyDrawbackasperDoRrules,exceptunderSFIS.

    TRA Facility .7.7 UtilizationofDutyCreditScripforimportsfromaportother than port of registration shall be allowed underTelegraphicReleaseAdvice (TRA) facility as perDoRnotification.

    Exclusivity of Entitlement 3.17.8 For a shipment, Duty Credit Scrip benefit under anyoneoftheschemescoveredinthisChaptercanalonebeclaimed,atexportersoption.

    Import under Lease .7.9 Utilization of Duty Credit Scrip shall be permitted forfinancing paymentofdutyincaseofimportofcapitalgoodsunder

    leasefinancingintermsofprovisioninPara2.25ofFTP.

    Transfer of Export .7.0 Transfer of export performance from one to anotherPerformance shallnotbepermitted.Thus,ashipmentbillcontaining

    name of applicant shall be counted in exportperformance / turnover of applicant only if exportproceedsfromoverseasarerealized inapplicantsbankaccountandthisshallbeevidencedfromBRC/FIRC.

  • However, for VKGUY, FMS and FPS (includingMLFPS),benefitscanbeclaimedeitherbythesupportingmanufacturer(alongwithdisclaimerfromthecompany/firmwhohasrealizedtheforeignexchangedirectlyfromoverseas)orbythecompany/firmwhohasrealizedtheforeignexchangedirectlyfromoverseas.

    Facility of Payment of .7. Duty Credit Scrips can also be used / debited towardsCustoms Duties in case paymentofCustomsDutiesincaseofEOdefaultsunderof EO defaults Authorizations issued under Chapters and of this

    Policy.However,penalty/interestshallberequiredtobepaidincash.

  • CHAPTER-4

    DUTY EXEMPTION & REMISSION SCHEMES

    Duty Exemption and . DutyexemptionschemesenabledutyfreeimportofinputsRemission Schemes required for export production. Duty Exemption

    Schemesconsistof(a)AdvanceAuthorisationschemeand (b) Duty Free Import Authorisation (DFIA)scheme.ADutyRemissionSchemeenablespostexportreplenishment / remission of duty on inputs used inexport product. Duty Remission Schemes consist of(a) Duty Entitlement Passbook (DEPB) Scheme and(b)DutyDrawback(DBK)Scheme.

    Re-import of exported .. Goods exportedunderAdvanceAuthorisation /DFIA /goods under Duty DEPBmaybere-importedinsameorsubstantiallysameExemption / Remission formsubjecttoDoRspecifiedconditions.Scheme

    Value Addition .. Value addition (VA) for the purpose of this Chapter(ExceptforGemsandJewellerySector)shallbe:-

    A-BVA = -----------x00,where BA =FOBvalueofexportrealised/FORvalueofsupply

    received.B =CIFvalueofinputscoveredbyauthorisation,plus

    anyotherimportedmaterialsusedonwhichbenefitofDBKisclaimed.

    ADVANCE AUTHORISATION SCHEME

    Advance Authorisation .. AnAdvanceAuthorisation is issued to allow duty freeimport of inputs, which are physically incorporated inexportproduct(makingnormalallowanceforwastage).Inaddition,fuel,oil,energy,catalystswhichareconsumed/utilisedtoobtainexportproduct,mayalsobeallowed.DGFT, by means of Public Notice, may exclude anyproduct(s)frompurviewofAdvanceAuthorisation.

    Dutyfreeimportofmandatorysparesupto0%ofCIFvalueofAuthorisationwhicharerequiredtobeexported/supplied with resultant product are allowed underAdvance Authorisation. Advance Authorisations are

  • 6

    issued for inputs and export items given under SION.ThesecanalsobeissuedonthebasisofAdhocnormsorselfdeclarednormsasperpara.7ofHBPv.

    Advance Authorisation can be issued either to amanufacturer exporter or merchant exporter tied tosupportingmanufacturer(s)for:

    i) Physicalexports(includingexportstoSEZ);and/orii) Intermediatesupplies;and/oriii) Supply of goods to the categories mentioned in

    paragraph.(b),(c),(d),(e),(f),(g),(i)and(j)ofFTP;

    iv) supplyofstoresonboardofforeigngoingvessel/aircraft subject to condition that there is specificSIONinrespectofitem(s)supplied.

    In addition, in respect of supply of goods to specifiedprojectsmentionedinparagraph.(d),(e),(f),(g)and(j)ofFTP,anAdvanceAuthorisationcanalsobeavailedbysub-contractortosuchprojectprovidednameofsub-contractor(s)appearsinmaincontract.

    SuchAuthorisationcanalsobeissuedforsuppliesmadetoUnitedNationsOrganisationsorunderAidProgrammeoftheUnitedNationsorothermultilateralagenciesandwhicharepaidforinfreeforeignexchange.

    However,AdvanceAuthorizationforimportofrawsugar,canbeissuedeithertoamanufacturerexporterormerchantexportertiedtosupportingmanufacturer(s).Exportscanalso bemade by procurement ofwhite sugar fromanyotherfactory(ies).Thisprovisionshallbeapplicableforexportsfrom7..009.

    .. AdvanceAuthorisationsareexemptedfrompaymentofbasic customs duty, additional customs duty, educationcess, anti- dumping duty and safeguard duty, if any.However,importsforsuppliescoveredunderparagraph. (h) & (i) will not be exempted from payment ofapplicableanti-dumpingandsafeguardduty,ifany.

    .. Advance Authorisation and / or materials importedthereunderwillbewithactualusercondition.Itwillnotbetransferableevenaftercompletionofexportobligation.However,Authorisationholderwillhaveoptiontodispose

  • 7

    offproductmanufacturedoutof duty free inputsonceexportobligationiscompleted.IncasewhereCENVATcreditfacilityoninputshavebeenavailedfortheexportedgoods, even after completion of export obligation, thegoods importedagainstAdvanceAuthorisation shallbeutilizedonlyinthemanufactureofdutiablegoodswhetherwithin the same factory or outside (by a supportingmanufacturer), forwhich the authorisation holder shallproduceacertificatefromeitherthejurisdictionalCentralExciseSupdt.orCharteredAccountant,attheoptionoftheexporter,atthetimeoffilingapplicationforEODCtoRAconcerned.However,theactualuserconditionshallnotbeapplicableincaseofrawsugartobeimportedfrom7..009,till0.09.009underAdvanceAuthorizationScheme.

    Further the manufacturing wastes/scrap, as allowed,canbedisposedoffwiththepaymentofapplicabledutybeforefulfilmentofexportobligation.

    ..6 Advance Authorisations necessitate exports with aminimumvalueadditionof%,exceptforitemsinGems&Jewellerysector,forwhichvalueadditionwouldbeasperparagraphA..ofHBPv..ExportstoSEZUnits/supplies toDevelopers /Co-Developers, irrespectiveofcurrencyofrealization,wouldalsobecovered.

    Forphysicalexportsforwhichpaymentsarenotreceivedin freely convertible currency, same shall be subject tovalueadditionasspecifiedinAppendix-11ofHBPv1.

    IncaseofAuthorisationforimportofTea,minimumvalueadditionunderAdvanceAuthorisationshallbe0%.

    Similarly, in case of spices {covered by Chapter 9 ofITC(HS)},dutyfreeimportofspicesshallbepermittedonlyforvalueadditionpurposeslikecrushing/grinding/sterilizationorformanufactureofoilsandoleoresinsandnotforsimplecleaning,grading,re-packingetc.

    ..7 AdvanceAuthorisationshallbeissuedinaccordancewithPolicy and procedure in force on Authorisation issuedate.

    ValidityperiodofAdvanceAuthorisationforimportshallbeasprescribedinHBPv.

  • Free of Cost Supply by .. FacilityofAdvanceAuthorisationshallalsobeavailableForeign Buyer where some or all inputs are supplied free of cost to

    exporterbyforeignbuyer.

    Insuchcases,forcalculationofvalueaddition,notionalvalueoffreeofcostinputsalongwithvalueofotherduty-free inputs shall be taken into consideration.However,ifallinputsaresuppliedfreeofcost,exportershallalsohaveoptiontofollowprovisionprescribedbyDoR.

    Export Obligation 4.1.9 PeriodforfulfillmentofexportobligationunderAdvanceAuthorisationshallbeasprescribedinHBPv.

    Provision for BIFR 4.1.9A Anyfirm / company registeredwithBIFRor anyfirm/units companyacquiringaunit,whichisunderBIFRshallbe

    allowed Export Obligation Period (EOP) extension asperrehabilitationpackageprepared,subject toapprovalofBIFRor5yearsifnotspecified,withoutpaymentofcompositionfee.

    Above provisions apply also to SSI units as perrehabilitationschemeofconcernedStategovernment.

    Advance Authorisation ..0 Advance Authorisation can also be issued for annualfor Annual Requirement requirement.

    Status Certificate holder and all other categories ofexportershavingpastexportperformance(inprecedingtwoyears)shallbeentitledforAdvanceAuthorisationforAnnualRequirement.

    EntitlementintermsofCIFvalueofimportsshallbeupto00%oftheFOBvalueofphysicalexportand/orFORvalue of deemed export in preceding licensing year orRscrore,whicheverishigher.

    Advance Release Orders .. Holder of Advance Authorisation, Advance(ARO) and Invalidation Authorisation forAnnual Requirement andDuty FreeLetter Import Authorisation intending to source inputs from

    indigenous sources / State Trading Enterprises, in lieuofdirectimport,hasoptiontosourcethemeitheragainstAdvance Release Order (ARO) or Invalidation letterdenominated in free foreign exchange / Indian rupees.However,suppliesmaybeobtainedagainstAuthorisationfrom EOU / EHTP / BTP / STP / SEZ units, withoutconversionintoAROorInvalidationletter.

  • 9

    Transferee of DFIA shall also be eligible forARO /invalidationletterfacility.

    ValidityperiodofAROshallbeasprescribedinHBPv.

    Back-to-Back Inland .. HolderofAdvanceAuthorisation,AdvanceAuthorisationLetter of Credit for Annual Requirement and DFIA may, instead of

    applying for an ARO or Invalidation letter, avail ofthe facility of Back-to-Back Inland Letter of Credit inaccordancewithprocedurespecifiedinHBPv1.

    Prohibited Items .. ProhibiteditemsofimportsmentionedinITC(HS)shallnot be imported underAdvanceAuthorisation / DFIA.Further items reserved for imports by STEs cannot beimportedagainstAdvanceAuthorisation/DFIA.HoweverthoseitemscanbeprocuredfromSTEsagainstAROorInvalidationletter.

    STEs are also allowed to sell goods onHigh Sea SalebasistoholdersofAdvanceAuthorisation/DFIAholder.

    Inaddition,STEsarepermitted to issueNoObjectionCertificate(NOC)forimportbyadvanceAuthorisation/DFIA holder. Authorisation Holder would be requiredto file Quarterly Returns of imports effected againstsuch NOC to concerned STE and STEwould submithalf-yearly importfiguresofsuch imports toconcernedadministrative Department for monitoring with a copyendorsedtoDGFT.

    Similarly prohibited items of exports mentionedin ITC(HS) shall not be exported under AdvanceAuthorisation/DFIAscheme.ExportofrestricteditemsshallbesubjecttoallconditionalitiesorrequirementsofExportAuthorisationorpermission,asmayberequired,underScheduleIIofITC(HS).

    Admissibility of .. IncaseofanAdvanceAuthorisation,drawbackshallbeDrawback available for any duty paidmaterial,whether imported

    orindigenous,usedingoodsexported,asperdrawbackrate fixed byDoR,Ministry of Finance (Directorate ofDrawback). Drawback allowed shall be mentioned inAuthorisation.

  • 0

    DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME

    Scheme .. DFIAisissuedtoallowdutyfreeimportofinputs,fuel,oil, energy sources, catalyst which are required forproductionofexportproduct.DGFT,bymeansofPublicNotice, may exclude any product(s) from purview ofDFIA.ThisschemeisinforcefromstMay,006.

    Entitlement .. Provisionsofparagraph..shallbeapplicableincaseofDFIA.However,theseAuthorisationsshallbeissuedonly forproducts forwhichStandard Input andOutputNorms(SION)havebeennotified.

    IncaseofpostexportDFIA,amerchantexporter shallbe required to mention only name(s) and address(s)of manufacturer(s) of the export product(s). Applicantis required to file application to concernedRA beforeeffectingexportsunderDFIA.

    Pre-exportAuthorisationshallbeissuedwithactualuserconditionandshallbeexemptedfrompaymentofbasiccustoms duty, additional customs duty / excise duty,educationcess,anti-dumpingdutyandsafeguardduty,ifany.

    IncaseofactualuserDFIAandwhereCENVATcreditfacility on inputs have been availed for the exportedgoods, even after completion of export obligation, thegoodsimportedagainstsuchDFIAshallbeutilizedinthemanufactureofdutiablegoodswhetherwithinthesamefactoryoroutside(byasupportingmanufacturer).

    Import items .. Provisionsofparagraphs..,..,..and..ofFTPshallbeapplicableforDFIAholder.

    Value Addition .. A minimum 0% value addition shall be required forissuanceofsuchauthorisation,exceptforitemsingemsandjewellerysector,forwhichvalueadditionwouldbeasperparagraphA..ofHBPv.ItemsforwhichhighervalueadditionisprescribedunderAdvanceAuthorisationScheme,shallbeapplicable.

    Export Obligation 4.2.5 ProcedureandtimeperiodrelatedtofulfillmentofExportObligationhavebeenlaiddowninChapterofHBPv.

  • Transferability 4.2.6 Once export obligation has been fulfilled, request fortransferabilityofAuthorisationorinputsimportedagainstitmaybemadebeforeconcernedRA.Once,transferabilityisendorsed,AuthorisationholdermaytransferDFIAordutyfreeinputs,exceptfuelandanyotheritem(s)notifiedbyDGFT.However,forfuel,importentitlementmaybetransferredonly tocompanieswhichhavebeengrantedauthorisationtomarketfuelbyMinistryofPetroleumandNaturalGas.

    Once transferability is endorsed, imports / domesticprocurementagainstauthorisationortransferofimportedinputs/domesticallyprocuredinputsshallbesubjecttopaymentof applicable additional customsduty / exciseduty.Whileendorsingtransferability,authorisationwouldbear a note as to liability of such additional customsduty / excise duty. However, in casewhere CENVATfacilityhasnotbeenavailed,exemptionfromadditionalcustomsduty/excisedutywouldbeavailableevenafterendorsementoftransferabilityonDFIA.

    Wherever SIONs prescribe actual user condition andin case of Acetic Anhydride, Ephedrine and Pseudo-Ephedrine,DFIAshallbeissuedwithactualuserconditionfortheseinputsandnotransferabilityshallbeallowedfortheseinputsevenafterfulfillmentofexportobligation.

    However, for authorizations issued prior to ..007,exemptionfromAdditionalCustomsDuty/ExciseDutyshallcontinuetobeavailableevenafterendorsementoftransferabilityasprovidedinFTP(RE-006).

    CENVAT Facility ..7 CENVATcreditfacilityshallbeavailableforinputseitherimportedorprocuredindigenously.

    DUTY ENTITLEMENT PASSBOOK (DEPB) SCHEME

    Duty Entitlement . ObjectiveofDEPBistoneutraliseincidenceofcustomsPassbook (DEPB) duty on import content of export product. ComponentScheme ofcustomsdutyonfuel(appearingasconsumableinthe

    SION)shallalsobefactoredintheDEPBrate.ComponentofSpecialAdditionalDuty shall alsobeallowedunderDEPB(asbrandrate)incaseofnon-availmentofCENVATcredit.Neutralisationshallbeprovidedbywayofgrantofdutycreditagainstexportproduct.

  • 4.3.1 Anexportermayapplyforcredit,atspecifiedpercentageof FOB value of exports, made in freely convertiblecurrency.IncaseofsupplybyaDTAunittoaSEZunit/SEZ Developer/Co-Developer, an exporter may applyforcreditforexportsmadeinfreelyconvertiblecurrencyorpaymentmadefromforeigncurrencyaccountofSEZUnit/SEZ Developer/Co-Developer. In addition, theexportershallalsobeentitledforDEPBbenefit incasepayment ismade in IndianRupees bySEZDeveloper/Co-Developerforsuppliesreceivedw.e.f0..006.

    Credit shall be available against such export productsandatsuchratesasmaybespecifiedbyDGFTbywayofpublicnotice.CreditmaybeutilizedforpaymentofCustomsDutyonfreelyimportableitemsand/orrestricteditems.DEPBScripscanalsobeutilizedforpaymentofdutyagainstimportsunderEPCGScheme.Further,DEPBScrips can also be used / debited towards payment ofCustomsDutyincaseofEOdefaultsforAuthorizationsissuedunderChaptersandof thisPolicy.However,penalty/interestshallberequiredtobepaidincash.

    ProhibiteditemsofexportsmentionedinITC(HS)Book(as amended from time to time) shall not be entitledfor DEPB credit except for the exports effected undertransitional facility, wherever allowed, in terms ofparagraph.ofFTP.

    .. DEPBholdershallhaveoptiontopayadditionalcustomsdutyincashaswell.

    Validity .. ValidityperiodofDEPBforimportshallbeasprescribedinHBPv.

    Transferability .. DEPB and / or items imported against it are freelytransferable. Transfer of DEPB shall however be forimport at specified port, which shall be the port fromwhereexportshavebeenmade.ImportsfromaportotherthantheportofexportshallbeallowedunderTRAfacilityaspertermsandconditionsofDoRnotification.

    Applicability of .. Additional customs duty / Excise Duty and SpecialDrawback Additional Duty paid in cash or through debit under

    DEPBmayalsobeadjustedasCENVATCreditorDutyDrawbackasperDoRrules.

  • GEMS AND JEWELLERY

    Scheme for Gems A Exporters of gems and Jewellery can import / procureand Jewellery dutyfreeinputsformanufacturing.

    Replenishment A. Exporters may obtain Replenishment (REP)Authorisation Authorisations fromRA in accordancewith procedure

    specifiedinHBPv1.

    A.. Replenishment authorisation may also be issued forconsumables&toolsasperparagraphA.ofHBPv.

    Import of Diamonds for 4A.2 Theauthorizedoffices/agenciesinIndiaofGemologi