Overview of Foreign Trade Policy

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Overview of Foreign Trade Policy
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World merchandise trade

• Exports in 2007
• World - 12,083 billion
• Germany - 1327 billion 9.5 (1st place)
• China - 1218 billion 8.8 (2nd place)
• USA 1163 billion
• 8.4 (3rd place)
• India 145 billion
• 1 (26th place)

• Imports in 2007
• World - 12,413 billion
• USA - 2017 billion 14.2 (1st place)
• Germany - 1059 billion 7.5 (2nd place)
• China 956 billion
• 6.7 (3rd place)
• India 217 billion
• 1.5 (18th place)

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World trade in commercial services

• Exports in 2007
• World - 3260 billion
• USA - 454 billion 13.9 (1st place)
• UK - 263 billion 8.1 (2nd place)
• Germany 197 billion
• 6.1 (3rd place)
• India 86 billion
• 2.7 (11th place)

• Imports in 2007
• World - 3060 billion
• USA - 336 billion
• 11 (1st place)
• Germany - 245 billion 8 (2nd place)
• UK 193 billion
• 6.3 (3rd place)
• India 78 billion
• (13th place)

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Understanding Foreign Trade Policy

• Drafted by the DGFT under the Foreign Trade
  Development Regulation Act 1992 and rules
  framed thereunder
• Implemented with the help of various other Depts
  mainly Customs, Excise and RBI
• In order to understand the co-relation, one must
  get familiar with the various laws and functions
  of various depts

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Study the following Acts, Laws Regulations

• Customs Act 1962
• Customs Tariff Act 1975
• FEMA 1999
• Central Excise Act 1944
• Central Excise Tariff Act 1985

• Industrial Policy Resolution 1956
• Industries Development and Regulation Act 1951
• Laws of Weights and Measures

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Ministry of FinanceDept of Revenue

• Customs-Coverage
• Validity of imports and exports
• Assessment and valuation
• Determination of import/export duty applicable
• Collection of duty
• Inspection and supervision of cargo
• Examining co-relation and compliance with other
  laws

• Excise-Coverage
• Export
• Under bond clearance of excisable goods for
  export under bond
• Rebate of excise duty post exports where exports
  have been effected after payment of excise duty
• Monitoring factory stuffed containers in certain
  cases
• Import
• Monitoring CENVAT

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Understanding Foreign Trade Policy

• Export or import involves movement of goods as
  well as receipt/remittance of foreign exchange
• Though foreign exchange regulations are relaxed,
  monitoring of forex operations is still being
  carried out by RBI

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• Understanding Policy provisions

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Promotional Measures (Chapter 3)

• Assistance to States for Infrastructure
  Development of Exports ASIDE
• Market Access Initiative MAI
• Marketing Development Assistance MDA
• Towns of Export Excellence TEE
• Export and Trading Houses Status certificate
• Served from India Scheme SFIS
• Vishesh Krishi and Gram Udyog Yojana VKGUY
• Focus Market Scheme FMS
• Focus Products Scheme FPS
• High-Tech Products Export Promotion Schemes

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Duty Exemption / Remission Scheme Chapter 4

• I. Duty Exemption Scheme
• Advance Authorisation
• Advance Authorisation for Annual Requirement
• Duty Free import Assistance DFIA
• II. Duty Remission Scheme
• Duty Entitlement Passbook Scheme DEPB
• Duty Drawback

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EPCG Scheme (Chapter 5)

• Import of capital goods and spares at
• concessional rate of duty _at_3 of Customs Duty
  coupled with export obligation equivalent to 8
  times the duty saved amount to be completed in 8
  years. as per Annual Supplement to FTP 2008-09

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EOU / EHTP/ STP/ BTP Scheme (Chapter 6)

• Units undertaking to export their entire
  production of goods and services except
  permissible sales in Domestic Tariff Area (DTA)
  are known as Export Oriented Units (EOUs).
• Permits import of capital goods and inputs
  without payment of duty

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Deemed Exports (Chapter 8)

• Goods supplied do not leave country and payment
  is received in Indian Rupees or in Free Foreign
  Exchange.

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Vishesh Krishi and Gram Udyog YojanaVKGUY

• 5 Duty credit entitlement to promote export of
• (i) Agricultural Produce and their value added
  products
• (ii) Minor Forest Produce and their value added
  variants
• for exports w.e.f 1.4.2004
• (iii) Gram Udyog Products, for exports w.e.f
  01.04.2006
• (iv) Forest Based Products, for exports w.e.f
  01.04.2007
• and
• (v) Other products, as notified from time to
  time.
• List of eligible products is given in App 37A of
  HBP V1.

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Focus Market Scheme FMS

• Export of all products to the notified countries.
• Entitlement 2.5 of the FOB value of exports
• w.e.f. 1.04.2006.
• List of Countries eligible for benefit under this
  scheme is given in Appendix 37C of HBPv1.
• Exports made by EOUs/EHTPs/BTPs who do not avail
  direct tax benefits/exemptions, will be eligible
  to get benefits under this scheme.

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Focus Product Scheme (FPS)

• Eligibility Exports of notified products to all
  countries (including SEZ units). List of notified
  products is given in Appendix 37D of HBPv1.
• Entitlement
• Duty Credit scrip equivalent to 1.25 of FOB
  value of exports for each licensing year
  commencing from 1st April, 2006.

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• Duty Exemption/Remission Scheme

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Duty Exemption/Remission Scheme

• Exemption from payment of duty on inputs-prior or
  after to Exports/ Deemed Exports
• Adv. Autho./DFIA for
• 1) Phy. Exports
• 2) Deemed Exports
• Annual Adv. Autho.
• 1) Phy. Exports
• 2) Deemed Exports

• Remission of duty on inputs-
• Post-Exports by way of Duty Credit Entitlement
• DEPB Scheme
• Duty Drawback

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• Export Promotion Capital Goods EPCG Scheme

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Export Promotion Capital Goods Scheme EPCG

• This scheme allows import of capital goods and
  spares
• at concessional rate of duty _at_3 of Customs
  Duty
• coupled with export obligation equivalent to 8
  times the
• duty saved amount to be completed in 8 years.
• In case CVD is paid in cash on imports under
  EPCG,
• incidence of CVD would not be taken for
  computation of
• net duty saved provided the same is not
  Cenvated.

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• Export Oriented Units EOUs

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Export Oriented Units EOUs

• Units undertaking to export their entire
  production of goods and services except
  permissible sales in Domestic Tariff Area (DTA)
  are known as Export Oriented Units (EOUs).
• Electronic Hardware Technology Parks (EHTPs),
  Software Technology Parks (STPs) or
  Bio-Technology Parks (BTPs) are also covered
  under EOU scheme. These are product specific
  units availing the same benefits as EOUs.
• EOUs/EHTPs/STPs/BTPs are allowed to manufacture
  goods including repair, re-making,
  reconditioning, reengineering, and rendering of
  services wherever applicable.

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• Deemed Exports

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Deemed Exports

• This is a special facility provided for supplies
  of indigenous products which can be consumed
  ultimately in the production of goods to be
  exported. The conditions are that supplied goods
  as it is do not leave the country but get
  consumed in the process of manufacture, payment
  for which is received in Indian Rupees or in
  foreign exchange.

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Deemed Exports

• Supplies to Authorisation Holder Adv.
  Autho./AAA/DFIA/EPCG
• Supplies to EOUS/EHTPs/STPs/BTPs
• Supplies to Projects
• Supplies to Fertilizer Plant
• Marine Freight Containers by 100 EOUs (Domestic
  Freight Containers Manufacturers)

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• Thank you