UNIT 1 EXPORT-IMPORT TM.

DE
REGULATORY FRAMEWO
Structure
Ol?jectives
Introduction
An Ovel-viewof Legal Framework
1 2.1
1 2.2
1.2.3
1.2.4

1:orcign 'I'mde (Development and Regulation AcL 1992)

Ibrcign Exchange Management Act, 1999
'l'he Custo~nsAct, '1962
I'xporl (Quality Control and Inspection) Act, 1963

Oejectives of Expo~t-ImportPolicy
Registintion Formalities and Export Licensing
General Provisions Regarding Exports and Imports
1.5. l
1.5.2

13sports
Imports

Let Us Sun1 U p
Key Words
Answers to Check Your Progress
Terminal Questions

1.0 OBJECTIVES
After studying this unit, you should be able.to:
e describe the legal framework of foreign trade
e

explain the ob.jectives of India's Export-Import ~ o l i c y

e descrihe the procedures of registration formalities and export licensing

e

exp'lain the general provisibns regarding exports and Imports

a disci~ssthe major provisions OF exports

explai~ithe major provisions of imports.

-.In a developing country like India, trade policy is one of the many economic instrbrnents
whicli is used to suit the reipirenients of economic growth. The twin objectives of India's .
trade policy have been to promote exports and to restrict the level of iinports to the level of
foreign exchange available to the government. The basic problem of n country like lndia
happens to be non-availability or acute shortage of crucial inputs like industrial raw materisls.
capital goods and technology, The bottleneck can be removed only by irnports,,ln the.sIior-t
run import can be financtd through foreign aid, borrowings, etc.. but in the long run, impel-ts
lnust be finnnced by additiunal export earnings, The basic objective of the trade policy, ;
therefore, revolves round the instruments and tbchniclues of export promotion and import
'management: I l i this unit, you will learn the objectives ofexport-import policy, registration .
formalities, licensing procedureand major provisions regarding exports and imports.

1.2 AN OVERVIEW OF LEGAL FRAMEWORK

The foreign trade of a country consists of outward and inward movement of goods and
services giving rise to inflow and out-flow of foreigh exchange. While the foreign trade of
India is govert~edbyIhe Foreign Trade (Devedpprnent & Regulation) Act, 1992 and the-Rules

Export llnpurt

ant1 Policics

Dvcllmelltrtlnn

and Order issued thereunder, the payments for export and import trade transactions in terms
of foreign exchange are regulated under the Foreign Exchange Management Act, 1999. The
- . of eoods and
physical operation of the foreign trade transactions of exDo; and i m ~ o r tboth
, ,
"
services through various modes of transportation, is conducted and regulated under the
customs act, 1962. In order to project the image of the country as a producer and exporter of
quality goods and services, a detailed programme of quality control and pre-shipment
inspection is also in vogue under the Export (Quality Control and Inspection) Act, 1963.
Besides the above four major Acts governing the foreign trade operation of the country,
there are a number of other rules and regulations relating to exvort of commodities. modes of
transp~rtation,cargo insurance, international conventions, etc. which need to be strictly
observed while conducting the export and import business. In this unit, you will learn an
overview of important act related to foreignjrade and various process of Export Import Policy
of lnd ia.

orderly development ilnd maintenance of foreign exchange market in India. This act deals
with various regulations of foreign exchange like holding and trans~ctionsof foreign exchange, export of goods and services, realisation and repatriation of foreign exchange, etc.
The role of authorised person, the provisions of contravention and penalties and the procedures of adjudication and appeal and the power ofdirectoratc o y fo for cement are dealt at
great length in this act.

1.2.3 Tllc Customs Act, 1962

The consolidated and self-contained Custorns Act, 1962 came into operation on December
13, 1962. repeali~igthe earlier three Acts known as Sea Customs Act, 1878. Land Customs
Act, 1924 and the Aircraft Act. 1934, each one of which was related to a particular mode of
transportatioo. This comprehensive Act provides the legal framework, guidelines and
procedures related to all situations elneqing from the export and import trade t~ansnctions.

An overview of the four major Acts governing the foreign trade would help in better understanding of the Export-Import Policy of the country as also its operation requirements. Let us
now learn them.

1.2.1 Foreign Trade (Development and Regulation) Act, 1992

The Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade (Regulation) Rules, 1993 and the Foreign Trade (Exemptions from Application of Rules in Certain
Cases) order, 1993 issued thereunder, replaced the earlier legal reginie consisting of the
Imports and Exports (Control) Act, 1947 and the Import (Control) Order, 1955 and the Export
(Control) Order, 1988 issued thereunder and amended from time to time. With the operation of
new legal regime, the era of foreign trade controls witnessed its demise.
The Primary objective of this Act is to provide for the development and regulation of foreign
trade by facilitating imports into and augmenting exports from lndia and for matters connected therewith or incidental thereto. The Export and Import Policy of India is issued under
this Act and any amendments to the Policy provisions are also made thereunder. The permission for export and import is also given under this Act by granting the Importer-Exporter
Code Number ([EC). This IEC number has also dispensed with the need ofthe Code Number
for Export (CNX). The maximum punishment for the commitment ofany offence, contravention of any law, harming country's trade relations or bringing disrepute to the credit or tlie
goods of the country while conducting the export-import trade transactions, js also operated
through the suspension and/or cancellation of the Importer-Exporter Code Number.

Tlie primary ob.jectives of this Act are to (a) regulate the genuine export and impon trade
transactions in keeping with the national economic policies and objectives, (b) check smuggling, (c) collect revenue, (d) undertake functions on behalfof other agencies, and (e) gather
trade statistics. Details about the rate and nature of customs duty leviable on any item, a s
decided by the Central government, are specified in the First and Second Schedule of tlie
Customs Tariff Act, 1975 with regard to imports and exports, respectively.

1.2.4 Export (Quality Control and Inspection) Act, 1963

The Export (Quality Control and lnspection) Act was enacted in the year 1963 with a view to
strengthening the export trade through quality control and preshiplnent inspection, Tlie Act
empowers tlie Government no! only to notify the commodities which may be subject to
co~npulsoryquality control andlor inspection prior to export but also specify the type of
quality control or inspection. The Act prohibiu the export of sub-standard goods as well as
the goods which do not fulfil the requirements as laid down under the Act.

For smootl~operation of tlie Export (Quality Control and Inspection) Act, 1963, the Government of India established the Export Inspection Council (EIC) on January 1, 1964, and the
Export lnspection Agencies (EIAs). While the EIC acts as an advisory body to the Gover~iment on niatters related to quality control and inspection, the ElAs are the actual agencies
which inspect the goods and issue the oxport-worthiness certificates.

All out encouragement is given to the trade and industry for the purpose of upgrading the
quality of products under the current Export-lmpert Policy so as to project the image of the
country as a producer and exporter of world-class quality products. The various categories
of export liouses recognized under the Export-lmgort Policy are exempt from the requirenients
of this Act.

The necessary provisions relating to Appeal, and Revision are also provided. This Act
provides the powers under the Code of Criminal Procedure, 1973 relating to searches and
seizures and Code of Civil Procedure, 1908 for making any adjudication or hearing any appeal
or exercising any powers of revision under this act.

1.2.2

Foreign Exchange Management Act, 1999

'The exchange control in lndia was introduced on September 3, 1939 as a war time meaalre in
the early period of Second World War under the powers conferred by the Defence of India
Rules. The emergency powers were subsequently replaced by the Foreign Exchange Regula
tions Act, 1947 which came into operation on March 25, 1947. This Act witnessed comprehensive revision in the wake of the changed needs of the economy during the post-independence period and was replaced by the Foreign Exchange Regulations Act, I973 known as
FERA. The onset of the era of liberalisation of the external sector of the economy and the
industrial licensing followed by Partial Convertibility of Rupee and full convertibility on
current account necessitated the need for further extensive amendments in the FERA which
were brought about by the Foreign Exchange Regulations (Amendment) Act, 1993. FERA
has been replaced by Foreign Exchange Management Act (FEMA), 1999.

0
9'

FEMA has been brought to consolidate and amend the law relating to foreign exchange. The
basic objective of this act is to facilitate external trade and payments and to promote the

1.3

OBJECTIVES OF EXPORT-IMPORT POLICY

Government control ilnport of non-essential i t e m through an import policy. At the same time,
all-out efforts are lnade to promote exports. Thus, there are two aspccts of trade policy; the
iniport policy which is concerned with regulation and management of imports and the export
policy wl~icliis concerned with exports not only promotion but also regulation. The main
objective of the Government policy is to promote exports to the maximum extent. Exports
should be promoted in such a manner that the economy of the country is not effected by
lnregulated exports of items specially needed within the c o u n t ~ yExport
.
control is, therefore,
exercised in respect of a limited number of items whose supply position demands that their
exports should be regulated in the larger interests of the country. In other words, the policy
aims at:
i)

promoting exports and augmenting foreign exchange earnings; and

grant of IEC nu~llbershall be made by the RegisteredlHead office of the applicant to the
Regional Import-Export Licensing Authorify alongwith the following documents:

W o r t llllp(at U ~ ~ l l m ~ n t n t ii)
i~n
regulating exports wherever it is necessary for the purposes of either avoiding
: ~ o dI'olicifs

competition among the lndian exporters or ensuring domestic availability of essential

items of mass consumption at reasonable prices.

The government of 1ndk announced sweeping changes in.the trade policy during the year
1991. As a result, the new Export-Import policy came into force froln April 1, 1992. This was
an important step towards the economic reforms of India. In order to bring stability and
continuity, the policy was made for the duration of 5 years. In this policy imponwas
liberalised and export promotion measures were strengthened. The steps were also taken to
boost the domestic industrial production. The major aspects of the export-import policy
(1992-97) include: introduction of the duty-free Export Promotibn Capital Goods (EPCG)
scheme, strengthening of the Advance Licensing System, waiving of the condition on export
proceeds realisation, rationalisation of schemes related to Export Oriented Units and units in
the Export Processing Zones. The thrust area ofthis policy was to liberalise imports and
boost exports.

iii)

To provide consumers with good quality products at reasonable prices.

The objectives will'be achieved through the coordinated efforts of all the departments of the
government in general and the Ministry ofcommerce and the Directorate General of Foreign
Trade and its network of Regional Offices in particular. Further it will be achieved with a
shared vision an8commitment and in the best spirit of facilitation in the interest of export.

1.4

REGISTRATION FORMALITIES AND EXPORT

LlCENSING

In order to export the goods from the country, you are required to get IEC No. and RCMC. Let
us discuss them briefly:
Importer-Exportei Code Number: No export or import shall be made by any persoh without
an Jmporter-Exporter Code (IEC) number unless specifically exempted. An application for

iii)

Certificate froin the banker of the applicant

iv)

Two copies of the passport size photograph of the applicant duly attested by banker

V)

If there is any non resident interest in the applicant firm and NIR investment is with

Declaration on applicant's letterhead about applicant's non-association with a

caution listed fil-~n.

Registration C u m Membership Certificate: Any person, applying for a licence to inlpolf or

export or for any other benefit or concession under this policy shall be required to furnish
Registration-cum-Membership Certificate (RCMC). RCMC may be obtained from any one of
the Export promotion CouncilsICom~nodityBoards (except Central Silk Board), FIEO, APEDA,
MPEDA, Administrative authorities of EHTPISTP units. Export of the registered exporters
having valid RCMC will only qualify for the benefits prdvided in the EXlM policy.
Export .Licensing
As YOU knbw that all goods may be exported without any restriction except to the extent
such exports are regulated by the Negative List of exports. The Negative Lists consist of
goods. the import or export of which is prohibited, restricted through licensing or otherwise
or ca~lalised.Tlle Negative list of exports is divided into three parts which are as follows:

The principal objectiveaof Export Import Policy 1994-2002 are:

To enhance the technological strength and efficiency of lndian agriculture, industry

and services, thereby improving their competitive strength while generating new
employment opportunities. It encourages the attainment of internationally accepted
standards of quality.

Bank receipt in duplicate1DD for Rs. ZOO0 as'fee

The Liceosing Auihurity shall issue an IEC no in the prescribed format, There is no expiry
date on IEC No, hence, this number once allotted shall be valid till it is revoked. IEC No is to
be filled in the Bill of entry (for import), Shipping Bill (for export) or in any documents prescribed by the rules.

ii)

ii)

vi)

The new EXlM Policy 1997-2002aims at consolidating the gains made so far, ~.estructuring
the schemes to achieve further liberalisation and increased transparency in the changed
trading environment. It focusses on the strengthening the domestic industrial growth and
exports and enabling higher level of employment with due recognition of the key role played
by the SSI sector. It recognises the fact that there is no substitute for growth which creates
jobs and generates income. Such trade activities also help in stimulating expansion and
diversification of progluction in the country. The policy has focussed on the need to let
exportc;s concentrate on the manufacturing and marketing of their products globally and
operate in a hassle free environment. Th'e effort has been made to si~nplifyand streamline the
procedure.

To accelerate the country's transition to a globally oriented vibrant economy with n

view to derive maximum benefits from expanding global market opportunities.

Profile of exporter/importer

full repatriation benefits, provide full particulars and enclose photocopy of RBI
approval for such investment.

The need for further liberalisation of imports and promotion of exports was felt pnd the
Government of India announced the new Export-Import Policy (1 997-2002). This policy has
further simplified thkpro&dures and reduced the interface between exporters and the
Director General of Foreign Trade (DGFT) by reducing the number of docunlents required for
export by half. Import has been further liberalised and efforts have been made to promote
exports.

i)

i)

Part-1 :.Prohibited Items: These items can not be exported or imported. These items
include: Wild life, exotic birds, wild flora, beef, human skeletons, tallow, fat and oils of any
animal origi~iexcludingfish oil, wood and wood products in the form of logs, timber, stumps,
roots, barks, chips, powder, flakes, dust, pulp and charcoal.
Part-Il: Restricted Items: Any goods, the export or import of which is restricted through
licensing, may be exported or imported only in accordance with a licence issued in this
behalf.
Part-Ill: Canalised Items: Any goods, the impo~for export of which is canalised, may be
imported or exported by the canaliring agency specified in the Negative Lists. The Director
General of Foreign Trade may, however, grant a licence to any other person to import or

export any canalised goods.

Hence, barring a few items which are totally prohibited for exports, other items in the Negative lists can be exported under a licence or through a designated agency or under specified
conditions.
Procedure to Obtain Export Licence

An application fqr grant of export licence may be made in the prescribed form to the Director
General of Foreign Trade or its Regional Licensing Authority. The application shall be
accompanied by the doculnents prescribed therein. There is no application fee on export
Iicenceslper~nits.
For restricted i t e m an application is to be made in duplicate in the appropriate forms. There
are two different export licence applicatjon forms:'

Export-Import Trade
Rcgulntory Prsmcwork

ErmrtI m ~ D~ ot c ~ ~ e ~ t aQt l ~ Application

~
for export of restricted items except special chemical and special
and Pollclcs

materials, equipments and technologies. This form is sent to the Director General of
Foreign Trade, New Delhi.

iii)

C'i~nalisingitenls may be imported or exported by the canalising agency.

iv)

The primary objective of the Foreign Trade (Development and Regulation) Act,
1992 is to provide for the development and regulation of foreign trade by restricting imports into and augmenting exports from India.

v)

FEMA has been brought to consolidate and amend the law relating to foreign
exchange.

Application for grant of export licence for export of special chemicals, etc.
Applications are to be sent to the DGFT. An inter-ministerial group under the
chairmanship of DGFT shall consider applications for the export of these items.

ii)

Fw canalised items, applications are made to the DGFT in the prescribed form. For samples/

'

exhibits export exceeding ceiling limits an application may be made to the DGFT. For gifts1
sparedreplacement goods in excess of ceilings, an application is to be made to the DGFT in
the prescribed form.

1.5

Check Your Progress A

Exporblmport 'I'rrde
Regulrtory Frr mcwork

GENERAL PROVISIONS REGARDING EXPORTS

AND IMPORTS

The new policy has further liberalised various provisions of imports and exports. Let us learn
them in detail.

1. What is the primary objective of Foreign Trade (Development and Regulations) Act,
1992 ?

Exports and imports free unlcss regulated: Exports and Imparts shall be h e except to the
extent they are regulated by the provisions of this policy or any other law for the time being
in force. The itemwise export and import policy shall be specified in ITC (HC) published by
Director General of Foreign Trade.
Compliance with law: Every exporter or importer shall comply with the provisions of the
Foreign Trade (Development and Regulation) Act, 1992 and the rules and orders made
thereunder. Thcy are also required to comply with the provisions of this policy, terms and
conditions of any licence granted and provisions of any other law for the time being in force.

............................................................................................................
2 Write two objectives of EXIM Policy 1997-2002.

Interpretation of Policy: if any question or doubt arises in respect of the interpretation of

any provision of the. EXlM policy, it shall be referred to the Director General of Foreign Trade
whose decision shall be final and binding.

Exemption lrom Policy/Procedure: Any request for relaxation of the provisions of this policy
or procedure on the ground of hardships or an adverse impact on trade, may be made to the
Director General of Foreign Trade.

3. What is lEC No ?

............................................................................................................
............................................................................................................
............................................................................................................

Trade with Ncigl~bouringCountries: The Director geneml of Foreign Trade may issue from
time to time, such instructions or frame such schemes as may be required to promote trade
and strengtl~eneconomic ties with neighbouring countries.
Trade with Russia under Debt Repayment Agreement: In the case oftrade with Russia under
the debt repayment agreement, the Director General of Foreign Trade may issue from time to
time such instructions.
Transit Facility: Transit of goods through India from or to countries adjacent to lndia shall
be regulated in accordance with the treaty barween India and those countrics.

4. W hzt is RCMC '?

Executiorl of Bank Gur rant&Legal Undertaking: Wherever any d u y f ~ impon

e
is ailowed
or where otherwise specifically stated, the importer shall execute a legal undenaking or bank
guarantee with the Customs Authority before clearance of goods through the customs.

...............................................................................................................
..
r
"..."...................................................................................................;.
i

5. state whether the following statements are True or False.

i)

No export or import shall be made by any person without an IEC No unless

specifically exempted.

ii)

Exports of the registered exporters without RCMC shall also qualify for the
benefits provided in the policy.

.I

Free Movement of Export Goods: Consignments of items allowed for exports shall not be
withheld or delayed for any reason by any agency. In case of any doubt, the authorities
concerned may ask for an undertaking from the exporter.

Import/Erport of Samples: ilnport and Export of samples shall be

sions of EXIM Policy.

by the provi-

Third Party Exports: A licence holder may export directly or through third parties.

Clearance of Goods from Customs: ~ h e ' ~ o oalready

di
imponedlshipped/anived in hdvancc
bur not cleared from customs may also be cleared against the licencs i s s n ~ ds~bseq;;t.fixl~.

Export Import l l o c ~ m c n t ~ t l ~Green

n
Card:
end Pulielus

All status holders and manufacturer exporter exporting more than 50% of their
production subject to a minimum turnover of Rs. 1 crore in preceding year, shall be issued a
green card by Directorate General of Foreign Trade. This card will also be issued to the
service providers rendering services in free foreign exchange for more than 50% of their
services turnover, subject to a minimum value of Rs.35 lakhs in free foreign exchange in the
preceding year. This card provides automatic licensing, automatic custom clearance and
other facilities mentioned in the EXIM policy.

D w m ~ dExport#: Deemed Exports rof~rto thasa trm~aotlon~

in whioh the goods @uppllcddo
net lanve the country, The fallowing 08tepsrlos of supply of ~ e e by
d ~fhs rnslt~lsula-aentraotors rhall be regarded RB deemed *ports under tho policy, pravldod the goods an rnsnuhctured in India.

Electronic Data Interchange: In an attempt to speed up transactions and to bring about

transparency in various activities related to exports, electronic data interchange would be
encouraged. Applications received electronically shall be cleared within 24 hours.

1.5.1 Exports

..

You have learnt the general provisions regarding exports and imports. Let us now learn the
provisions of exports in detail.
Free Exports: All goods may be exported without any restriction except to the extent such
exports are regulated by ITC (HS) or any other provision of this policy or any other law for
the time being in force.

Denomination of Export Contracts: All export contracts and invoices shall be denominated in
freely convertible currency and export proceeds shall be realised in freely conve~tiblecurrency, Contracts for which payments are received through the Asian Clearing Union (ACU)
shall be denominated in ACU dollar.
Realisation of Export Proceeds: If an exporter fails to realise the export proceeds within the
time specified by the Reserve Bank oflndia, he shall be liable to action in accordance with
the provisions of the Act and the policy.
~ x ~ oofr~ ti f t s : ' ~ o o including
ds
edible items of value not exceeding rupees one lakh in a
licensing year may be exported as a gift. Those items mentioned as restricted for exports in
ITC(HS) shall not be exported as gift without a licence except edible items.

i)

Supply of goods against advance IicencelDFRC under the duty exemptionlremission

scheme.

ii)

Supply of goods to units located in EOU/EPZ/SEZ/STP/EHTP.

iii)

Supply of capital goods to holders of licences under EPCG scheme.

iv)

Supply of goods to projects financed by multilateral or bilateral agencieslfunds as

notified by tlie Ministry of Finance.

v)

Supply of capital goods which are used for installation purposes till the stage o f
commercial production and spares to the extent of 10% of the FOR value to fertiliser
plants.

vi)

Supply of goods to any project or purpose in respect of which the Ministry o f .

Finance permits the import of such goods at zero customs duty coupled with the
extension of benefits under this chapter to domestic supplies.

vii)

Supply of goods to the power and refineries and coal hydrocarbons, rail, road, port,
civil aviation, bridges other infrastructure projects provided minimum specific
investment is Rs. 100 crores or more.

viii) Supply of marine freight containers by lr)O% EOU (domestic freight containers
manuf~cturers)provided the said containers are exported out of lndia within 6
months or such further period as permitted by the customs, supply to projects
funded by UN agencies,

'
Export of Spares: Warranty spares, whether indigenous or imported, of plant, equipment,
machinery, automobiles or any other goods nlay be exported upto 7.5% of the FOB value o f
the exports of such goods alongwith the main eqsipment or subsequently. This shall be done
within the contracted warranty period of such goods.

Deemed exports shall be eligible for the following benefits.

Export of Passenger Baggage: Bonafide personal baggage may be exported either alongwith
the passenger or if unaccompanied, within one year before or after the passenger's departure
from India. Those items mentioned as Restricted in ITC(HS) sl~allrequire a licence except in
case of edible items.

i)

Advance licence for intermediate supply/deemed export

ii)

Deemed exports drawback

iii)

Refund of terminal excise duty

Export of Services: Services include all the 161 tradable services covered under the General
Agreement on Trade in services where payment for such services'is received in free foreign
exclimge. Tlie service providers shall be eligible for the facility of EPCG scheme, They shall
be eligible for the facility of EOUIEPZISEZISTP sckeme of the EXIM policy. Service providers shall also be eligible for recognition as Service Export I-louse, ~nternationalService Export
House, International Star Service Export House, International Super Star Service Export:
H o ~ ~on
s e achieving the performance level as prescribed in the policy.

Export of Imported Goods: Goods imported in accordance with this policy, may be exported in
the same or substantially the same forms without a licence. This can be done provided that
the item to be imported or exported is not mentioned as restricted for import or export in this
ITC (FIS), except items imported under Special Import Licence.
Export of Replacement Goods: Goods or parts thereof on being exported and found defective/damaged or otherwise unfit for use may be replaced free of charge by the exporter. Such
goods shall be allowed clearance by the customs authorities provided that the replacement
goods are not mentioned as restricted items for exports in ITC (HS).

1.5.2
I

Export of Rephired Goods: Goods or parts thereof on being exported and found defective,
damaged or otherwise unfit for use may be imported for repair and subsequent re-export.
Such goods shall be allowed clearance without a licence and in accordance with customs
notification issued in this behalf.

Export-Import Trade
Frrmcwork

Private Bonded Warehouse: Private bonded warehouse exclusively for exports may br: set up
in Do~hesticTariff Area as per the norms and conditions o f the notifications issued by
Department of Revenue. such warehouse shall be entitled to procure the goods from damestic manufacturers without payment of duty, The supplies wade by the domestic supplier to
the notified warehouses shall be treated as pllysical exports pravidcd the payments for the
same are made in froe foreign exchnngo.

Imports

You liave learnt the provisions of export in detail. Let us now discuss the ~'rovisionsof
Import.
Actual User Condition: Capital goods, raw materials, intermediates, component$,
consu~nables,spares, parts, accessories, instruments and other goods, which are importable
without any restriction, lnay be imported by any person. If such imports require a licence, the
Acti~alUser alone !nay impoa-such goods unless exempted.

Regulatory

,,

....%
; ...-,
.
>'.f
,

.. .' ., c : f , ' ;

'lr?r..r-.r*.-:~finp

Scc*rl Yw!,Gwdr: Ali second har~dgoodsshall be restricted for imports and may be
i m - ? ~ r : ~c.'t[y
d is accntulance with the provisions of EXIM Policy.
Import of Gifts: Import of gifts shall be permitted where such goods are otherwise fieely
importable under this policy.

Jmpat on Export Basis: New or second hand jigs, fixmm, dies, moulds, patterns, press tools
and lasts, construction machinery, containerdpackages meant for packing of goods for

export and other equipments, may be imported for export without a licence on execution of
legal undertakinghank guarantee with the customs authority.

Re-import of Goads Abroad: Capital gmdg aircraft including their components, spare parts
and accessories, whether imported or indigenous may be sent abroad for repairs, testing,
quality improvement or upgradation of technology and re-imported without a licence.
Import of Machinery and Equipment used in Project Abroad: ARer completion of the
projects abroad, project contractors may import used construction equipment, machinery,
related spares upto 20% of the CIF value of such machinery, tools and accessories without a
licence.
Sale on High Seas: Sale of goods on high seas for import into India may be made subject to
this policy or any other law for the time being in force.

Import under Lease Financing: Permission of licensing authority is not required for import of
new capital goods under lease financing.

Export Promotion Capitsf Goads Scheme: New Capital goods including computer software
systems. may bc imported under the Export Promotion Capital Goods (EPCG)scheme. Under
thi: provis~on.capita)goods including jigs, fixtures. dies, moulds and spares upto 20% of the
CiF value of the capital goods may be imported at 5% customs duty. This import is subject t o
an cuwn ~'nlipationequivalent to 5 times CIF value of capital goods on FOB basis or 4 times
till: CJC vaiuc of capital goods on NFE basis to be fulfilled over a period of 8 years. This
pe-lc-G ~ ~ c k c n from
e d the date of issuance of licence. Import of capital goods shall bc
,-,.i'.
.<-.ILc.to Actgal Lser ccndition till the export obligation is compIeted.

2.

Ah-

iluty Free Rcplcnishmcnt Certificate (DFRC): Duty free replenishment certificate is issued
to a merchant-espottcl-or manuficturc: exporter fir the import of inputs used in the manufnclure of goods witl~outpayment of' basic customs duty, surcharge and special additional duty.
Such inputs shall be subject to the payment of additional customs duty equal to the excise
duty at the time of import.
Duty Entitlement Passbook Scheme: For exporters not desirous of going through the
licensing route, an optional facility i s given under duty entitlement passbook scheme. The
ob-jectiveof DEPB scheme is to neutralise the incidence of customs duty on the import
content of the export product. The neutralisation shall be provided by way of grant of duty
credit against tlie export product. Under this scheme, an exporter may apply for,credit as
specified percentage of FOB value of exports, made in freely convertible currency. The credit
shall be available against sue! export products and at such rates as may be specified by
Director General of Foreign Trade. The DEPB shall be valid for a period of 12 months from the
date of issue. The DEPB and/or the items imported against it are freely transferable. The
exports under tlle DEPB scheme shall not be entitled for drawback. The holder of DEPB shall
have tlie option to pay additional customs duty in cash as well.
Importability of Gods by EOU/EPZ/EHTP/STPUnit: Export Oriented Units (EOU), units in
Export Processing Zones (EPZs), Special Economic Zones (SEZs), Electronics Hardware
Technology Parks (EHTPs) and Software Technology Parks (STPs) unit may import all types
of goods without payment o f duty. This includes capital goods as defined in the policy,
required by it for manufacture, services, trading or in connection therewith. These goods
should not be prohibited items.
Check Your Progress B

I. 'What is green card ?

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2 What do you mean by deemed exports ?

Duty Exemption Scheme: Under duty exemption scheme, an advance licence is

issued to allow import of inputs which are physicalIy incorporated in the export
product. Advance licence i s issued for duty free import of inputs as defined in the
policy subject to actual user condition. Such licences are exempted from payment of
basic customs duty, surcharge, additional customs duty, anti-dumping duty and
safeguard duty, if any. Advance licence can be issued for (i) physical exports
(i i) intermediate supplies and (iii) deemed exports.

The above paragraph discusses the provision of advance licence for physical
exports. Under the scheme of advance licence for intermediate supply, advance
licence may be issued for intermediate supply to a manufacturer-exporter. This is
done for the import of inputs required in thc manufacture of goods to be supplied to
tho ultimate exporter/deemcd exporter holding another advance licence.

Duty Exemption/RernisrrionSeheme: 'The duty exemption scheme enables import of inputs

required for export production. The duty remission scheme enables post export replenishmcnt/remission of duty on inputs used in the export product. Let us now discuss about them,
1.

Under the scheme of advance licence for deemed export, advance licence can be
irsued fu- deemed export to the main contractor. This is done for the import of inputs
t.cquircd in thc manufacture of goods to be supplied to the categories mentioned in
t i c policy.

Duty Remisslirn Seheme: This scheme consists of duty free replenishment

certificate anc;duty entitlement passbook scheme. Let us learn them.

3. What is EPCG scheme?

4. What is duty entitlement passbook scheme ?

Merchant Exporter: A person engaged in trading activity and exporting or intending to

export goods.

Export Import Documc~~trtion

nnd Policies

Third Party Exports: Exports made by an exporter or manufacturer on behalf of third party.

5. State whether the following statomcnts are True or False.

i)

Exports and imparts shall he. free sxcept to the extant they are regulated by the

li)
ili)

An export licence hold~rom nat axport through tllird pwrty,

1.8 ANSWERS TO CHECK YOUR PROGRESS

provisions of the BXIM pulicy or any other Ihw for tha thns being in forcc,

Deemcd exports refer to thosle transactions in which goods suppllcd leave tlsa

A5

i) True ii) False

iii) True

iv) False V) True

B5

i) True ii) False

iii) False

iv) True v) False

country.
iv)

Co~nputersoftware systems may be imported under EPCG scheme.

1.9 TERMINAL QUESTIONS

v)

Permission of licensing authority is required for import of new capital goods

under lease financing.

Describe the major acts related to the foreign trade in India.

Explain the procedures of registration formalities and export licensing.

Describe the general provisions for exports and imports.

Explain the ma.jor provisions of exports.

Describe the riiajor provisions of imports.

Write short notes on:

11.6 LET US SUM UP

Government Policy for exports aim at promoting exports to the maximum extent to earn foreign
C
exchange. At the same time, control is exerc~sed
on expqrts of such commodities and services which are vital to the economy. The thrust area of new export-import policy has been
to boost exports and liberalise imports. The new EXIM policy 1997-2002 has given major
thrust to acceieration of India's exports through restructuring and revamping of various
export promotion schemes. The procedures have been simplified and streamlined. The
policy aims at continuing the process of trade liberalisation. It encourages the industry to
enhance its competitiveness in the global market.
Exports and imports are made free, except to the extent they are regulated by the provisions
of the policy or any other law for the time being in force. Various provisions of exports like
free exports, denomination of export contracts, realisation of exports proceeds, exports of
gifts, spares, passenger baggages, imported goods, replacement goods, repaired goods, .
private bonded warehouse and provisions of deemed exports have been included. The major
provisionstegarding i r n p o ~ ~include:
s
a c t u ~user
l condition, import of second hand goods,
gifts, import on export basis, re-import of goods repaired abroad, import of machinery and
equipment used in projects abroad, sale on high seas, import under lease financing, Exports
promotion capital goods scheme and Duty exemption scheme/remission scheme.

KEY WORDS

1.7

Canalisation of Exports and Imports: Exports and !mports only through the agencies
designated by the Central Government.
Competent Authority: An authority competent to exercise any power or discharge any duty
or function under the act.
Capital Goods: Any plant, machinery, equipment or accessories required for manufacture or
production of goods or for rendering services.
.

Drawback: The rebate of duty chargeable on any imported material or excisable material
used in the manufacture of such goods in India.

c ken sin^ Year:

The period beginning on the 1st April of a year and ending on the 3 1"
March of the following year.
Manufacturer Exporter: A person who exports goods manufactured by him or intends to
export such goods.

i)

Deemed exports

ii)

~ o r e i ~ ~ ; ~( ~r d~vde el o ~ m e and
n t Regulation) Act, 1992

iii)

Duty Exemption Scheme '

iv)

Duty Re~nissionScheme.

Export-Import 't'rnd
Regulatory Pramcwor c
l