Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that exporting

requires; freight forwarders are specialists in this process. The following documents are commonly used in exporting; which of them are actually used in each case depends on the requirements of both our government and the government of the importing country. 1. Commercial invoice 2. Bill of lading 3. Consular invoice 4. Certificate of origin 5. Inspection certification 6. Dock receipt and warehouse receipt 7. Destination control statement 8. Insurance certificate 9. Export license 10. Export packing list STEP1: Enquiry :

The starting point for any Export Transaction is an enquiry. An enquiry for product should, inter alia, specify the following details or provide the following data Size details - Std. or oversize or undersize Drawing, if available Sample, if possible Quantity required Delivery schedule Is the price required on FOB or C& F or CIF basis Mode of Dispatch - Sea, air or Sea/air Mode of Packing Terms of Payment that would be acceptable to the Buyer - If the buyer proposes to open any Letter of Credit, any specific requirement to be complied with by the Exporter Is there any requirement of Pre-shipment inspection and if so, by which agency Any Certificate of Origin required - If so, from what agency.

STEP 2: - Proforma generation :

After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter - will provide a Proforma Invoice to the Buyer.

STEP 3: Order placement :

If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then place an order on the Exporter, giving as much data as possible in terms of specifications, Part No. Quantity etc. (No standard format is required for such a purchase order)

STEP 4: Order acceptance :

It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for the delivery committed.

STEP 5: Goods readiness & documentation :

Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of despatch), the Invoice is prepared by the Exporter. If the number of packages is more than one, a packing list is a must. Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as export goods are exempt from Central Excise, but the AR4 procedure is to be followed for claiming such an exemption. Similarly, no Sales Tax also is payable for export of goods.

STEP 6: Goods removal from works :

There are different procedures for removing Export consignments to the Port, following the AR4 procedure, but it would be advisable to get the consignment sealed by the Central Excise authorities at the factory premises itself, so that open inspection by Customs authorities at the Port can be avoided. If export consignments are removed from the factory of manufacture, following the AR4 procedure, claiming exemption of excise duty, there is an obligation cast on the exporter to provide proof of export to the Central Excise authorities

STEP 7: Documents for C & F agent :

The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents, who are entrusted with the task of shipping the consignments, either by air or by sea. Invoice Packing List Declaration in Form SDF (to meet the requirements as per FERA) in duplicate. AR4 - first and the second copy Any other declarations, as required by Customs On account of the introduction of Electronic Data Interchange (EDI)

system for processing shipping bills electronically at most of the locations - both for air or sea consignments - the C&F Agents are required to file with Customs the shipping documents, through a particular format, which will vary depending on the nature of the shipment. Broad categories of export shipments are: Under claim of Drawback of duty Without claim of Drawback Export by a 100% EOU Under DEPB Scheme

STEP 8: Customs Clearance :

After assessment of the shipping bill and examination of the cargo by Customs (where required), the export consignments are permitted by Customs for ultimate Export. This is what the concerned Customs officials call the LET EXPORT endorsement on the shipping bill.

STEP 9: Document Forwarding :

After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter the following documents: Customs signed Export Invoice & Packing List Duplicate of Form SDF Exchange control copy of the Shipping Bill, processed electronically AR4 (original duplicate) duly endorsed by Customs for having effected the Export Bill of Lading or Airway bill, as the case may be.

STEP 10: Bills negotiation :

With these authenticated shipping documents, the Exporter will have to negotiate the relevant export bill through authorized dealers of Reserve Bank, viz., Banks. Under the Generalized System of Preference, imports from developing countries enjoy certain duty concessions, for which the exporters in the developing countries are expected to furnish the GSP Certificate of Origin to the Bankers, along with other shipping documents. Broadly, payment terms can be: DP Terms DA Terms Letter of Credit, payable at sight or payable at... days.

Step11: Bank to bank documents forwarding :

The negotiating Bank will scrutinize the shipping documents and forward them to the Banker of the importer, to enable him clear the consignment. It is expected of such authorized dealers of Reserve Bank to ensure receipt of export proceeds, which factor has to be intimated to the Reserve Bank by means of periodical Returns.

EXPORT DOCUMENTATION AND PROCEDURES

STEP 12: Customs obligation discharge :

As indicated above, Exporters are also expected to provide proof of export to the Central Excise authorities, on the basis of the Customs endorsements made on the reverse of AR4s and get their obligation, on this score, discharged.

STEP 13: Receipt of Bank certificate :

Authorized dealers will issue Bank Certificates to the exporter, once the payment is received and only with the issuance of the Bank Certificate, the export transaction becomes complete. It is mandatory on the part of the Exporters to negotiate the shipping documents only through authorized dealers of Reserve Bank, as only through such a system Reserve Bank can ensure receipt of export proceeds for goods shipped out of this country.

http://agriexchange.apeda.gov.in/Ready%20Reckoner/EXPORT_DOCUMENTATION.aspx

Free export No information available Prohibited Illegal drugs Arms, explosives and ammunition Knives and deadly weapons All imported goods in their original or unprocessed form; Ferrous and non-ferrous metals and scraps thereof; Petroleum and petroleum products except naphtha and furnace oil;

 Oil seeds and edible oils except Kapok seeds; Jute seeds and sun-hemp seeds; Food-grains including rice products and flour products; Milk and milk products; Gur and Khandesi sugar; Live animals all sorts, skins of animals and wildlife covered by the Bangladesh Wildlife except the species detailed in the first schedule of the said order; Maps and charts including the following: Unclassified maps of scale smaller than inch or 1/250,000 scale; Education and scientific charts; And Guide maps and relief maps. Beef, mutton and animal fats; Green coconuts, coconuts and copra; Rare items of archaeological interest; Human skeletons; Pulses; Eggs and poultry; Prawns and shrimps except frozen and processed; Features films not certified by the Bangladesh Film Censorship Board as fit for Export; Onion; Rice bran except de-oiled rice bran. Shrimp of count 71/90 and sizes below for seawater and 61/70 and sizes below for fresh water excluding two varieties; Oil cake; Bamboo and cane in whole form and wood log; Frogs of all species (live or dead) and frogs leg Counterfeit money and goods Pornographic material Restricted Weapons Import of Pharmaceutical raw materials and packing materials is subject to approval by the Director of Drugs Administration, Government of Bangladesh. For import of food items, animal, poultry feed special documents are required. All pets being imported into the country will require an import permit and a general health certificate clearing the creatures of Rabies and other infectious diseases. Textiles: law for textile imports requires a certificate of cleanliness.

http://bangladesh.visahq.com/customs/

Export Performance of Bangladesh in Saarc Countries

Bangladesh emerged as an independent country in 1971. She entered into International Trade actively since 1972. In the early years of independence the gap between Import and Export was very wide. This gap started to decrease from 1980s when Bangladesh adopted liberal trade policy consistent with the emerging trend of the market economy. Extensive reform programs have been implemented in trade regimes during the last two decades. The prime objective of the trade policy of Bangladesh is to strengthen the economy. For achieving this objective Bangladesh has adopted export-based development strategy. As export sector is the main sources of hard-earned foreign currency of

Bangladesh, Government has taken all the initiatives for overall development of the sector.

Export:

"Foreign demand for goods produced by home country" In national accounts "exports" consist of transactions in goods and services (sales, barter, gifts or grants) from residents to non-residents. Export trade -- Goods or any articles of commerce sold and shipped to other countries; another name is outward trade. The exact definition of exports includes and excludes specific "borderline" cases. A general delimitation of exports in national accounts is given below: * An export of a good occurs when there is a change of ownership from a resident to a non-resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e.g. cross border financial leasing, cross border deliveries between affiliates of the same enterprise, goods crossing the border for significant processing to order or repair). Also smuggled goods must be included in the export measurement. * Export of services consists of all services rendered by residents to non-residents. In national accounts any direct purchases by non-residents in the economic territory of a country are recorded as exports of services; therefore all expenditure by foreign tourists in the economic territory of a country is considered as part of the exports of services of that country. Also international flows of illegal services must be included. National accountants often need to make adjustments to the basic trade data in order to comply with national accounts concepts; the concepts for basic trade statistics often differ in terms of definition and coverage from the requirements in the national accounts:

* Data on international trade in goods are mostly obtained through declarations to custom services. If a country applies the general trade system, all goods entering or leaving the country are recorded. If the special trade system (e.g. extra-EU trade statistics) is applied goods which are received into customs warehouses are not recorded in external trade statistics unless they subsequently go into free circulation in the country of receipt. * A special case is the intra-EU trade statistics. Since goods move freely between the member states of the EU without customs controls, statistics on trade in goods between the member states must be

obtained through surveys. To reduce the statistical burden on the respondents small scale traders are excluded from the reporting obligation. * Statistical recording of trade in services is based on declarations by banks to their central banks or by surveys of the main operators. In a globalized economy where services can be rendered via electronic means (e.g. internet) the related international flows of services are difficult to identify. * Basic statistics on international trade normally do not record smuggled goods or international flows of illegal services. A small fraction of the smuggled goods and illegal services may nevertheless be included in official trade statistics through dummy shipments or dummy declarations that serve to conceal the illegal nature of the activities.

Exportable product of Bangladesh: In the export basket of Bangladesh there are primary commodities and industrial goods. Frozen food, tea, agricultural product, raw jute, etc. are the primary product for export. On the other-hand, readymade garments (Oven garments and knitwear), leather, jute goods, fertilizer, and chemical products, footwear, ceramics product, engineering products, petroleum by-products and handicrafts are the major industrial export goods.

SAARC Countries :

SAARC groups Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and SriLanka. In recent years, there has been an increased interest in regional economic integration in South Asia. Regional integration in South Asia got the momentum in 1995 when the South Asian Preferential Trading Arrangements (Sapta) came into force. In early 2004, SAARC member countries agreed to form a South Asian Free Trade Area (Safta), which came into force from July 1, 2006. Bangladesh is negotiating with India, Pakistan, Nepal, and Sri Lanka for regional FTAs. In order to achieve rapid economic development through intensifying trade relation by gradually removing tariff, non-tariff and Para-tariff barriers amongst the member countries. An FTA among economies such as Bangladesh-SAARC would likely maximize the gains from trade.

Bangladesh-SAARC Countries: SAARC countries accounted for about 20 percent of Bangladesh's overall overseas annual trade.

Annisul Huq, president of SAARC Chamber of Commerce and Industry, said that the exports of Bangladesh to the SAARC countries were comparatively low as Nepal and Bhutan enjoy duty-free access to the Indian market, while Sri Lanka enjoys free trade facilities with India.

Bangladesh had an overall trade deficit of $4.7 billion with SAARC countries in the previous fiscal year of 2010-11, 47.1 percent higher than in fiscal 2009-10, the central bank said.

"India and Pakistan could be our major trade partners in the region, but both the countries are also our principal competitors in the overseas market," Huq told Reuters. Now the relation between Bangladesh and other SAARC countries are given below one by one

Bangladesh with India: India continues to remain one of Bangladeshs major trading partners, accounting for 8.7 Percent of Bangladeshs global trade in FY200809, a year when India was Bangladeshs fourth most important trading partner. However, with an import to export ratio of 10.3 to 1 and an increasing bilateral trade deficit, issues of barriers to trade with India and search for avenues to enhance Bangladeshs export opportunities in the growing Indian market, have assumed high significance and prominence in related discourse in Bangladesh in recent times. Underlying factors contributing to Indias strong presence in Bangladeshs import market are well known. As Bangladesh started to open up in the early 1990s, India, with its geographical proximity, familiarity with the Bangladesh market, lower transport cost and increasing competitive strength, was able to take advantage of the growing Bangladesh market, accounting for about 12.6 per cent for Bangladeshs total import in FY200809. Exports from Bangladesh to India were about $500 million in the last financial year (Bangladesh's financial year ends June 30). This fiscal, because (Indian Prime Minister) Manmohan Singh has given duty-free access to Bangladesh, our exports are shooting up. Garment export to India is doubling. We are expecting that exports from Bangladesh to India at the end of this fiscal will be $1 billion. Garment exports to India during this period will be $0.5 billion. In the last fiscal, textile exports from Bangladesh to India were nominal. A total of 46 Bangladeshi textile items have been given duty-free access to Indian markets since September 2011 after the Indian prime minister's two-day visit to Dhaka. According to Export Promotion Bureau (EPB) figures, Bangladesh exported the highest amount of goods to India among the SAARC countries in July-March period of the current fiscal amounting to US$ 257.41 million representing 74 percent of the total export to SAARC countries.

Exportable product from Bangladesh to India are* Chemical fertilizer * Raw jute * Frozen fish * Jute manufactures (including sacks and bags) * RMG * Naphtha * Betel nuts * Leather * Soap toilet * Jute yarn and twine * Furnace oil (refined) * Cement * Cut flower * Textile fabrics * Soybean oil * Copper wire

* Accumulator battery and parts * Glass sheet * Home textiles * Zinc waste * Plastic goods * Cane sugar * Pharmaceuticals

* Coriander seed But our export ratio is quiet poor against our import ratio. We import more than we export, so we need to accelerate our export.

Bangladesh with Pakistan: Trade liberalization seems to be the buzzword in the subcontinent right now. Latest in the series of talks for bilateral free trade agreements has been the one between Pakistan and Bangladesh in Dhaka. Pakistans delegation was led by Jafar Iqbal Qadir of its Commerce Ministry while the Bangladeshi side was led by Elias Ahmed. After the talks both sides agreed to sign a free trade agreement (FTA) and a draft deal will be finalized at talks to be held in Islamabad in January 2004 soon after the SAARC summit. Little trade takes place between Pakistan and Bangladesh and the balance tilts in favor of Pakistan. Bangladesh imported goods worth $68.68 million from Pakistan during the last fiscal year, while its export amounted to $31.5 million, leaving a deficit of $37.18 million in favor of Islamabad. In fiscal 20012002, Bangladesh imported goods worth $67 million while its export was to the tune of $28.6 million. Major Bangladeshi products that enter the Pakistani market include * raw jute * jute goods * tea * leather * agro-products * chemical * Shrimps, * Terry towel, * Plastic hanger, * Zipper, * P.V.C. Bags, * Dry food, * Bamboo Poles, * Toilet Soap,

* Leather, * iron chain, * Ball pen etc.

Bangladesh was offered a proposal to enter into a free trade agreement with Pakistan during the visit of Pakistani Commerce Minister in 2002. However, Pakistan became keener to notch up such a deal with Dhaka as soon as possible due to the fact that India was going to do the same within a year. Though Bangladesh responded positively to the Pakistani proposal of the FTA it showed a lot of reservations at the two-day negotiations. Bangladeshi negotiators raised the issue of special and differential treatment of the Bangladeshi goods on the ground of being a least developed nation. Bangladesh proposed free access to Pakistani products after 12 years of signing the FTA, while it wanted Islamabad to open its market one year after the deal. But, Pakistan did not agree to this. The major points in the negotiations related to relaxed rules of origin, reduction of direct tariffs, elimination of non-tariff barriers, longer phase-out period of tariff withdrawal and anti-dumping and countervailing measures. Bangladesh persisted with its "negative list approach" in the negotiations for the pact in a bid to avert a possible adverse impact on its local industries. This approach meant allowing duty-free movement of all products between the two countries save the items incorporated in the list.

Bangladesh with Sri Lanka: Bangladesh has become the most important trading partner for Sri Lanka in the SAARC and South Asia region. The two-way trade has been expanded substantially over the last 05 decades. The Trade Agreement between Sri Lanka and Bangladesh was signed on 08th February 1977. Trade Agreements and Concessions: a. General Trade Agreement between Government of the Democratic Socialist Republic of Sri Lanka and the Government of the Peoples Republic of Bangladesh. (GTASLBD) b. Indo-Sri Lanka Free Trade Agreement (ISFTA) c. Pakistan-Sri Lanka Free Trade Agreement (PSFTA) d. Asia Pacific Free Trade Agreement (APFTA) e. Agreement on SAARC Preferential Trading Agreement (SAPTA) f. Generalized System of Preferences (GSP)

g. EU Generalized System of Preferences (EUGSP) h. Global System of Trade Preferences (GSTP)

There are 48 exportable items from Bangladesh and 36 exportable items from Sri Lanka under this agreement. The balance of trade between Sri Lanka and Bangladesh is reported regularly in favor of Sri Lanka and amount is slightly increasing from USD Mn 15.5 to 22.7 during the year 2005 to 2007. The value of Imports to Sri Lanka from Bangladesh is also slightly increasing during the last 3 years. Year | Total value |

(USD Mi.) 2005 2006 2007

| 8.873 | | 8.063 | | 10.928 |

Major Bangladeshi product that enter in Sri Lanka market: 1. Iron and Steal 2. Cotton 3. Pharmaceuticals and other medicaments 4. Woven fabric 5. Textile 6. Electrical / Electronic Items 7. Jute and Jute products 8. Apparel and clothing accessories Bangladesh with Nepal: By maintain a neutral stance on the Indo-Pakistani War of 1971; then-Kingdom of Nepal became one of the first nations to recognize Bangladesh, on January 16, 1972; in retaliation, Pakistan broke-off relations with Nepal. With Bangladesh, Nepal saw an opportunity to obtain access to port facilities in the Bay of Bengal to bolster foreign trade - something it had sought when Bangladesh was part of Pakistan, to limited success. Bilateral relations improved considerably when the 1975 military coup in Bangladesh brought to power a government that was hostile to India, with both nations seeking to counter the influence of their largest neighbor. In April 1976, both nations signed bilateral agreements to develop

trade, transit and civil aviation. The transit agreement exempted all traffic-in-transit from duties and other charges. Six points of entry and exit for Nepalese traffic were set up. However, the Nepalese goods had to be unloaded at the border, due to the absence of an agreement allowing Nepalese trucks direct access to the ports. In 1986, Bangladesh demanded the participation of Nepal in talks with India over the distribution of water from the Ganges River.

Nepal imports goods worth Rs. 491,210,924 from Bangladesh. Nepal imports 102 items from Bangladesh. The imported goods are: vegetable seeds, sugar, chocolate in blocks slab and bars, tapioca and substitute, sweet biscuit, bakers-ware, homogenized preparation of jams-fruits- jellies, orange juice and fruit and vegetable juices, animal food, cement, briquettes, lubricating oil, vitamins and their derivatives, toxins cultures of micro organisms, homeopathic medicaments, antibiotic medicaments, hormones medicaments, vitamins medicaments, adhesive dressings, gelatin sheets, hydraulic brake fluids, plastic plate, plastic boxes, lid caps and other closures, plastic apparels and gloves, plastic bangles and beads, plastic articles, wood wool and floor, toilet of facial tissues, letter card and plain cards, folding carton, binder and folder, newspapers and journals, unused postage stamp, transfers / decalcomanias, calendars, trade advertising materials, pictures and photograph, garneted stock, cotton stock, cotton waste, woven fabric of cotton, jute and other textile fibers, vegetable textile fibers, knitted and crocheted fabrics, readymade garments, cotton sacks and bags, jute sacks and bags, footwear and sandals, hats and headgear, ceramic sink and wash basin, tableware and kitchenware, non-wired glass, safety razor blades, machine for filtering water, dairy machinery, electric accumulators of lead acid, lead acid accumulators, accumulator parts, video recording deck etc.

Transit route In 1998, the Phulbari treaty between India and Bangladesh allowed Nepalese goods access to Bangladesh through a transit route in India. In 2010, a joint communique issued by the Prime Minister of India Dr. Manmohan Singh and the Bangladeshi Prime Minister Sheikh Hasina Wajed assured giving Nepal and Bhutan access to the Bangladeshi ports. The commerce secretaries of both countries were scheduled to meet and finalize details for an extensive transit agreement.Nepalese request for preferential tariff reduction/duty-free access of some agricultural and primary products like lentils, tea, large cardamom, pulses, vegetables and fruits to Bangladesh market, the Bangladesh delegation said there was significant progress on these issues. As there is no import duty now on rice and lentils/pulses, the delegation urged Nepal to avail of the opportunity of exporting the products.

Bangladesh with Bhutan: Bilateral relations between the Bangladesh and the Bhutan began when Bhutan became the first country in the world to recognize the independence of Bangladesh in 1971. Both nations are members

of the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC). Bhutan and Bangladesh signed a bilateral trade agreement in 1980, granting each other the "most favored nation" preferential status for development of trade. As of 20092010, Bangladesh's total exports to Bhutan accounted for USD 3 million. The agreement was renewed in 2008 during the official visit of Bangladeshi Prime Minister Sheikh Hasina Wajed. Bhutan has imposed a ban on import of a number of items, including agricultural products, from Bangladesh. Other items falling under the ban include -- motor vehicles, furniture, all types of juices and energy drinks, wine, bear and liquor, chips, noodles, cakes and wafers, according to a gazette notification of the Bhutanese government. But Bhutan has lifted the restriction it imposed about two months back on importing a number of products from Bangladesh, official sources said. Major Bangladeshi product that enter in Bhutan market: * Ready-made garments, * Pharmaceuticals, * Melamine, * Toilet soap, * Dry food, * Fruit juice, * Energy drinks and * Mineral water

Bangladesh with Afghanistan: Dhaka, October 28, 2004 - Transitional state of Afghanistan expressed interest in setting up direct business link with Bangladesh as the former found a huge business scope left unexplored for both the countries. "Afghanistan now would like to establish direct business relation to facilitate export and import with Bangladesh," Afghan Ambassador in Dhaka Akmal Ghani told reporters after a meeting with chief of Bangladesh's business apex body FBCCI, Abdul Awal Mintoo, on Thursday. Ambassador Ghani pointed out that said Bangladeshi have the opportunity to enter into the markets of CIS (Commonwealth of Independent States) countries through Afghanistan and underscored the need

for an intense business relation between the two counties.

Presently, direct trade volume between Bangladesh and Afghanistan is insignificant, but Bangladeshi goods like tea and jute products go to Afghan markets through Pakistani importers. Statistic available with the Bangladesh's Export Promotion Bureau show that in the just-ended 2003-04 fiscal year, Bangladesh exported products worth 4.19 million dollars, mostly tea, to Afghanistan. In the previous two fiscals, Bangladeshi exports to Afghanistan amounted to 3.09 million dollars and 7.3 million dollars respectively. Ambassador Ghani also mentioned that as Afghanistan is located in the central part of Asia, it is very easy for Bangladesh to transshipment and trade with Tajikistan, Turkmenistan, Uzbekistan and other central Asian countries through Afghanistan. The ambassador emphasized that direct contact between the apex chambers of the two countries while the FBCCI president agreed that business relation and people to people relation between Bangladesh and Afghanistan is very important for the trade interest of both sides.(ANI)

Bangladesh with Maldives:

Maldives has decided to allow duty-free access of all Bangladesh export products including medicines from the end of the current year and improve trade and investment between the two countries. Maldives Foreign Minister Ahmed Naseem conveyed his Government decision during bilateral talks with Bangladesh Foreign Minister DipuMoni here this afternoon. The two Foreign Ministers signed a Memorandum of Understanding to resolve various problems facing the Bangladeshi expatriate workers in the island state, including minimum wages and remitting money to Bangladesh. Presently, the Maldives authorities registered 12,000 out of 17,000 Bangladeshi workers and its Labour Ministry is working on documenting the remaining workers. Naseem told a joint press conference that his country would recruit skilled workforce from Bangladesh including doctors and nurses. Bangladesh is currently working to send 50 specialist doctors to Maldives. He said both sides agreed to expand cooperation in education, tourism and trade sectors. Present volume of bilateral trade is minimal at zero point USD seven million.

On environment, the Minister said both Bangladesh and Maldives are most vulnerable to the climate change and sought additional international funding to enhance their capability to the adaptation. On UN Security Council membership, MsMoni said both the sides agreed to support each other to become non-permanent members of the UN Security Council. Naseem also informed her about the preparation of the SAARC summit to be held in Male in November. FBCCI president AK Azad said Bangladesh appreciates the government of Maldives for allowing duty free access of all Bangladeshi export products including medicine from the end of the current year. He expressed gratitude to Maldives to hire a large number of qualified manpower from Bangladesh and for the registration of 12,000 out of 17,000 Bangladeshi workers. Both sides also have agreed to extend cooperation in education, tourism and agriculture sectors. Azad hoped these initiatives will further strengthen economic ties of the two countries. In July-May (2010-2011) Bangladesh export to Maldives was worth US$ 0.72 million and import US$ 1.46 million, which are quite insignificant. We have to enhance our bilateral trade. Talking to UNB at sideline of the meeting, AK Azad said Maldives delegation may sit the Shipping Ministry soon to introduce direct shipping link between Chittagong and Male.

Trade Imbalance:

Bangladeshs trade imbalance with the SAARC member countries, especially with India, is on the rise for the last couple of years because of the rising trend of imports than exports. The trade imbalance of Bangladesh with the SAARC countries was US$ 3194.75 million in the 2009-10 fiscal as export accounted for only $ 420.55 million compared to huge import of $ 3615.30 million, according to figures provided by the Export Promotion Bureau (EPB). Analyzing the EPB statistics for the last 12 fiscal years, it was found that Bangladesh failed to make its trade balance favorable with the SAARC countries as the country witnessed growing imports rather than boosting exports. In the 1998-99 fiscal, the trade imbalance of Bangladesh with the SAARC countries stood at $ 1237.76 million but came down to $ 825.58 million in the following fiscal (1999-2000). The trade imbalance in the 2000-01 fiscal, however, rose to $ 1198.75 million but again came down to $ 1016.95 million in fiscal 2001-02. The trade imbalance of Bangladesh with the SAARC countries reached $ 1321.89 million in the 2002-03 fiscal, jumped to $ 2077.66 million in fiscal 2003-04, dropped slightly to $ 1960.49 million in fiscal 2004-05. The figure was $ 1727.48 million in the 2005-06 fiscal but again rose to $ 2127.20 million in fiscal 2006-07.

Bangladeshs trade imbalance with the SAARC countries reached to an all-time high of $ 3245.56 million in the 2007-08 fiscal, but came down to US$ 2846.86 million in the next fiscal (2008-09). Talking to UNB correspondent GolamMoinUddin, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mir NasirHossain said that the trade imbalance of Bangladesh with the SAARC countries is increasing because of the rising trend of imports than exports. Our imports are increasing mainly with India that comprises various goods including raw materials, food items and machineries. At the same time, we could not boost our export to the neighboring country. He said that apart from having a small number of exportable items, the tariff and non-tariff barriers as well as infrastructural problems also impede Bangladeshs export to India. The former FBCCI president mentioned that Bangladesh once enjoyed favorable trade balance with Nepal, but now it went in favor of the Himalayan country. Besides, the trade balance with Bhutan is one way as the number of Bangladeshs exportable items to that country is small. He opined that Bangladesh could reduce the trade imbalance with the SAARC countries by boosting export of garment items, consumer goods, battery, ceramics and melamine. According to EPB statistics, Bangladeshs export to the SAARC countries totaled US$ 420.55 million in the 2009-10 fiscal, which is 2.60 per cent of the countrys total export earnings of US$ 16204.65 million. In the 2009-10 fiscal, Bangladeshs export to India amounted to US$ 304.63 million against huge import of $ 3213.70 million; countrys export to Pakistan fetched $ 77.67 million against import of $ 323.72 million. During the fiscal, Bangladesh exported goods worth $ 23.74 million to Sri Lanka against imports of $ 22.76 million, the export earnings reached $ 8.79 million to Nepal against imports of $ 43.14 million, exports to Bhutan accounted for $ 2.24 million against imports of $ 11.98 million. Bangladesh now only enjoys favorable trade balance with Afghanistan and the Maldives as it did not go for imports from these two countries in the last couple of years. In the 2009-10 fiscal, Bangladeshs export to Afghanistan totaled $ 2.74 million while to the Maldives $ 0.74 million. Bangladeshs major exports to the SAARC countries include fertilizer, raw jute, frozen fish, textile fabrics, leather, sacks and bags, betel nut, knitwear, home textile, woven garment, battery, machinery, pharmaceuticals, melamine and ceramic tableware. Its imports from the SAARC countries are yarn, cotton, fabrics, food items, live animal, vegetables, mineral products, chemical or allied products, plastic, textile and textile articles, wood pulp, vehicle and transport equipments.

Reference:

www.google.com

Thank You

Trade and Commerce is one of the prime driving forces of socio-economic development. Since last two decades, export has been playing a very important role in the socio-economic development of Bangladesh. These days, export of Bangladesh has been developing and expanding fast contributing in employment generation and reducing poverty significantly. The number of young and educated entrepreneurs in the export business is increasing day by day. It is important for them to know how to deal in the export business and the relevant laws, rules and policies. But unfortunately, it is not easy for them to have access as the export related laws, rules and policies are endorsed by different authorities and they are not compiled rather they are scattered and some times hardly available. Besides, it is very difficult to understand their texts as they are formulated in the respective texts, format and are throne with many difficult jargons. These situations call me for developing A Hand Book for Export from Bangladesh which is user-friendly and easy to understand. Fortunately, an opportunity came to develop such hand book when I was participating in Management at the Top-2 (MATT-2) training program starting from 27 February, 2011 at Savar, Dhaka. I belong to Batch-30, Group-E in that training course. As requirement of the training program An Individual Action Plan (IAP) has to be undertaken by each participant. I was pleased to undertake my IAP on developing the above mentioned hand book. With a view to develop the handbook I have been working as per action plan. I have to visit and consult with the concern officials. At first I sought and obtained permission from honorable Commerce Secretary who extended his sincere cooperation to develop the handbook. I am grateful to Mr. Monoj Kumar Roy, Joint Secretary (export) of Ministry of Commerce for his out supports throughout the development of the handbook. I also must remember the concerned officials of Export Promotion Bureau (EPB), Office of the Chief Controller of Import and Export (CCI&E), National Board of Revenue (NBR) for their help, support and cooperation.

Collecting all the export related laws, rules, circulars and orders from the respective authorities, I have compiled all of them into a booklet. Besides, for easy understanding and making it userfriendly I have prepared a summary on export from Bangladesh where I briefly have described the export rules, procedures, policies etc with annexure of relevant laws, rules and circulars. In addition, I have furnished some Frequently Asked Questions (FAQ) and Answers to make the answers of frequent queries available which I hope will help make the handbook more useful. The table of contents also has short description of all the materials included in this booklet which will further help the users//readers to search or understand the relevant contents. Finally, contact addresses of some foreign buyers and web addresses of Organizations facilitating export at the end of the handbook will definitely help the exporters in their endeavor for exports. The handbook is under process of publication and printing. At this moment a few copies are available.

http://www.mopa.gov.bd/index.php?option=com_content&task=view&id=755&Itemid=479

Professional opportunities for Chartered Accountants in International Trade and overview of the Annual supplement as updated on 11th April 2008 to the Foreign Trade Policy 2004-2009 CA. Rajkumar S. Adukia B.Com (Hons.), LL.B, AICWA, FCA 093230 61049 [email protected]

http://www.carajkumarradukia.com

INDEX

|Chapter No |1 |2 |3 |4 |5 |6 |7 |8 |9 |10 technology | |11 |12 |13 |14 |15

|Title |Significance of foreign trade including Key statistics |History of Foreign Trade Policy |Legal Framework of Foreign Trade Policy |Board of trade (BOT) |General provisions regarding imports and exports |Export Promotional measures |Duty exemption / remission schemes |Special focus initiatives |Export promotion capital goods scheme (EPCG)

| | | | | | | | | |

|Export oriented units (EOU), Electronics hardware technology parks (EHTP), Software | |parks (STP) and Bio-technology parks (BTP) |Agri Export Zones (AEZ) |Special economic zones (SEZ) |Free trade & warehousing zones (FT& WZ) |Deemed exports | | | | | |

|DEFINITIONS under CHAPTER-9 of the Foreign Trade Policy 2004-2009

|16 |Overview of Annual Supplement as updated on 11th April 2008 to the Foreign Trade Policy 2004-2009 | |17 | |18 |Professional opportunities for Chartered Accountants in International Trade

|Useful Websites

CHAPTER 1

SIGNIFICANCE OF FOREIGN TRADE

Interdependence is indispensable. No Country can claim to be self sufficient. What we have in abundance we need to export and for what we have a shortfall we need to import. What another country can produce in better quality at cheaper price, we need to import. This herein in the simplest of terms lays the impetus for Foreign Trade.

Ancient India had considerable trade links with the Middle East, Europe (Greece & Rome) and China. This trade was carried out over land, partly along what came to be known as the Silk Route (ancient trade route linking China and the Roman Empire) and partly through maritime trade.

WHY EXPORTS?

If we carefully go through the economic scenario of the last decade we can see a vast difference in the outlook of India as it stood in 1991 and as it stands today in 2008.

In 1991 our foreign exchange reserves had depleted to quite an extent. We then had enough reserves only to tide over the import requirements of the coming three weeks. Hence, a lot of restrictions were imposed on imports coming into India.

However, at the same time the whole world was rushing towards globalisation and integration. Had India not joined the race, the economic scenario could have worsened. The only solution left for India was to increase its exports to tide over the ever-increasing imports. The Government announced various export promotion measures and incentives. Laws were formed to streamline the process of export and import. The laws and facilitations announced by the Government were not only related to export and import of goods and services, but were also directed to upgradation of technology and integration of all the departments by using latest technologies available. As we can see, e-commerce plays a very significant role in todays trade.

The Export and Import Policy, 1992-97 was a significant landmark in Indias economic history. For the first time, conscious effort was made to dismantle various protectionist and regulatory policies and accelerate the countrys transition towards a globally oriented economy. This Policy coincided with the 8th Five Year Plan and has yielded impressive growth in exports. While Indias total exports during 1991-92 had been US$ 17.86 bn, in 2007-08 they have exceeded $ 155 billion. Indias share in the global trade has gone up and the share of exports as percentage of GDP has also increased substantially. Keeping these factors in view, the EXIM Policies announced thereafter sought to consolidate the gains of the previous Policy and to further carry forward the process of liberalization whereby It is expected that the total merchandise trade exports and imports together will be almost 400 billion US dollars in 2008 accounting for nearly 1.5% of world trade. If the trade in services is added to this, our commercial engagement with the world would be in the region of 525 billion US dollars.

Exports has become the new age buzz word. It is a very lucrative business in India today because of various incentives and benefits to exporters provided by the Government. As a step in this direction the Government had announced the new Foreign Trade Policy 2004-2009.

In the current Foreign Trade Policy, two major objectives are spoken of: i) To double our percentage share of global merchandise trade within the next five years; and ii) To act as an effective instrument of economic growth by giving a thrust to employment.

It is necessary for any developing country to expand exports continuously because export growth ultimately results in creation of jobs, building up of infrastructure, economies of scale and added foreign exchange earnings. Todays world is economic in nature and increased exports give credibility to the standing of the country in overseas market. Exports, therefore, are of importance and considered a national priority by Government of India.

Today, India is all set to become a major player in the world trade. Indias strategic location between Middle East and South East Asia gives it immense business opportunities. Its neighborhood countries like Pakistan, China, Nepal, Sri Lanka and Bangladesh give it a high labour advantage. India has extensive manpower both technical and scientific. Both skilled and unskilled labour is easy to find and wage rates are highly competitive compared to international levels. Language is not a barrier as English is one of the main languages here. The Government also provides a number of incentives to exporters. Indias rich resource and production base provides significant opportunities for investors.

Statistics on Exports A) Export of Principal Commodities Groups

Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Dated: 8/4/2008 Values in Rs. Crores (P) Provisional |Commodity | |A) PLANTATION |B) AGRI & ALLIED PRDTS |C) MARINE PRODUCTS |D) ORES & MINERALS |E) LEATHER & MNFRS |F) GEMS & JEWELLERY |G) SPORTS GOODS |H) CHEMICALS & RELATED PRODUCTS |13.79 | |I) ENGINEERING GOODS |J) ELECTRONIC GOODS |K) PROJECT GOODS |L) TEXTILES |M) HANDICRAFTS |N) CARPETS |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth |%Share

|3,062.83 |27,556.52 |5,681.99 |21,052.93 |10,138.50 |52,534.76 |452.39

|2,672.54 |34,847.63 |5,473.11 |22,711.04 |9,899.51 |58,464.02 |374.19 |61,075.45

|-12.74

|0.58

| | | | | |

|26.46 |-3.68 |7.88 |-2.36 |11.29 |-17.29

|7.61 |1.19 |4.96 |2.16 |12.76 |0.08 |3.44 |

|63,177.95

|86,887.22 |9,800.06 |530.94 |54,493.83 |1,532.95 |3,202.40

|93,206.36 |9,587.65 |324.40

|7.27 |-2.17 |-38.90 |-3.55

|20.35 |2.09 |0.07 | | | |

|52,559.09 |1,309.30 |2,612.64

|11.47

|-14.59 |-18.42

|0.29 |0.57 |

|O) COTTON RAW INCL WASTE | |P) PETROLEUM PRODUCTS | |Q) UNCLASSIFIED EXPORTS | |Total

|2,907.73

|3,861.52

|32.80

|0.84

|65,328.39

|79,484.08

|21.67

|17.35

|10,446.97

|17,511.13

|67.62

|3.82

|416,685.88

|458,076.13

|9.93

|100.00 |

|Data Source: DGCIS, Kolkata

|DOC-NIC

B) Export by Region

Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 8/4/2008 Values in Rs. Crores (P) Provisional |Region |1) Europe | | | 1.1 EU Countries (27) 1.2 Other WE Countries 1.3 East Europe |Apr-Dec 2006 |93,966.90 |87,724.42 |5,997.53 |244.95 |27,850.77 |9,511.51 |7,680.86 |681.06 |Apr-Dec 2007(P) |106,456.95 |98,607.88 |7,538.92 |310.15 |33,200.47 |9,783.48 |10,974.56 |760.95 |%Growth |13.29 |12.41 |25.70 |26.62 |19.21 |2.86 |42.88 |11.73 |0.07 |7.25 |2.14 |2.40 |0.17 | |%Share | | | |

|23.24

|21.53 |1.65 | | | |

|2) Africa | | | 2.1 Southern Africa 2.2 West Africa 2.3 Central Africa

2.4 East Africa

|9,977.33 |81,162.97 |67,332.86 |13,830.11 |208,094.72 |5,448.22 |43,155.87 |77,357.59 |60,676.43 |21,456.61 |4,871.45 |671.59 |4,199.86 |739.08 |416,685.88

|11,681.47 |80,767.31 |65,211.95 |15,555.37 |230,781.97 |3,980.33 |43,542.87 |89,058.20 |69,756.23 |24,444.34 |5,049.51 |707.99 |4,341.52 |1,819.94 |458,076.13

|17.08 |-0.49 |-3.15 |12.47 |10.90 |-26.94 |0.90 |15.13 |14.96 |13.92 |3.66 |5.42 |3.37 |146.24 |9.93

|2.55 |17.63

| | | | |

|3) America | | 3.1 North America 3.2 Latin America

|14.24 |3.40 |50.38 |0.87 |9.51 |19.44 |15.23 |5.34 |1.10 |0.15 |0.95 |0.40 | | | | | | | |

|4) Asia & ASEAN | | | | | 4.1 East Asia 4.2 ASEAN 4.3 WANA 4.4 NE Asia 4.5 South Asia

|5) CIS & Baltics | | 5.1 CARs Countries 5.2 Other CIS Countries

| |

|6) Unspecified Region |Total

|100.00

|Data Source: DGCIS, Kolkata

|DOC-NIC

C) Top 10 Commodities of Export

Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 8/4/2008 Values in Rs. Crores

(P) Provisional |Rank |Commodity |%Share | |1 |PETROLEUM (CRUDE & PRODUCTS) |17.35 | |2 |GEMS & JEWELLARY |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth

|65,328.39

|79,484.08

|21.67

|52,534.76

|58,464.02

|11.29

|12.76 |10.95

|3 |MACHINERY AND INSTRUMENTS |5.38 | |4 |RMG COTTON INCL ACCESSORIES |4.57 | |5 |DRUGS,PHRMCUTES & FINE CHEMLS |4.53 | |6 | |7 | |8 | |MANUFACTURES OF METALS

|22,226.92

|24,660.35

|22,388.25

|20,951.23

|-6.42

|19,504.18

|20,743.99

|6.36

|16,908.79

|19,565.47

|15.71

|4.27

|TRANSPORT EQUIPMENTS

|15,203.55

|19,025.60

|25.14

|4.15

|OTHER COMMODITIES

|10,430.86

|17,502.56

|67.80

|3.82

|9 |COTTON YARN,FABRICS,MADEUPSETC |2.98 | |10 | |IRON ORE |Total |11,717.30 |416,685.88

|14,103.89

|13,640.92

|-3.28

|13,168.88 |458,076.13

|12.39 |9.93

|2.87 |100.00 |

|Data Source: DGCIS, Kolkata

|DOC-NIC

D) Top 10 Countries of Export Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 8/4/2008 Values in Rs. Crores (P) Provisional |Rank | |1 |2 |3 |4 |5 |6 |7 |8 |9 |10 | |Country |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth |%Share

|U S A |U ARAB EMTS |CHINA P RP |SINGAPORE |U K |HONG KONG |GERMANY |NETHERLAND |BELGIUM |ITALY |Total

|63,573.95 |40,672.76 |25,493.95 |21,749.64 |18,671.86 |14,855.13 |12,818.93 |8,523.13 |11,075.08 |11,792.91 |416,685.88

|61,561.23 |46,140.06 |27,259.97 |20,743.64 |19,804.80 |17,936.52 |14,682.12 |14,439.51 |12,109.96 |11,235.26 |458,076.13

|-3.17 |13.44 |6.93 |-4.63 |6.07

|13.44

| | | | |

|10.07 |5.95 |4.53

|4.32 |20.74

|3.92 |3.21 |3.15 |2.64 |2.45 |100.00 | | | |

|14.53 |69.42 |9.34 |-4.73 |9.93

|Data Source: DGCIS, Kolkata

|DOC-NIC

WHY IMPORTS?

Due to tough competition, trade is possible only if quality of the product is best, the price most competitive and the buyers get delivery in time. In order to achieve these, one needs to have access to international standard quality materials and capital goods. We also need to have better technology as there is a sea change in the markets worldwide.

We have moved from letters to e-mails, telefaxes to video conferencing and manually operated phones to cellular phones via satellite. Today it is not possible to compete in the world without better technological product. It we cannot cope up with the standards of quality and services that others offer we are likely to be out-dated and out of market as well.

By accepting membership of World Trade Organisation (WTO), India has become a part of global village. New trade blocks are emerging and new world order is getting established. A number of joint ventures are being signed for export promotion as well as better quality production for domestic market. We have witnessed a major change in this area between the years 1992-2007 and if one scans through the newspapers, one will find that economic news has taken priority over political news.

The area in which the imports are almost essential are defence requirements, crude oil, fertilizers, capital goods, industrial inputs like raw materials, components, consumables, spares, etc., import of samples, import of technology, import of drawing and designs, import of services etc. There are many vital areas where there is a need to import new as well as second hand capital goods in order to upgrade our products and services.

Further, there is an increase in factor mobility. The various factors of production like, raw materials, labour, capital goods, spares, consumables, etc. have become mobile. It is easy to relocate any of these factors from one country to another depending on where they are needed. This gives rise to opportunities where various components of a value chain are completed in different countries. For example, a company in USA may buy fabric from China, source design from Italy, labour from Bangladesh and Sri Lanka and arrange to make a garment to be sold in Europe.

Likewise, in the case of contract manufacture, a firm makes a contract with another firm abroad whereby the contractee manufactures or assembles a product on behalf of the contractor. The contractor retains full control over marketing and distribution whilst the manufacturing is done by the local company. The advantages of such outsourcing are: - there is no need to invest in plant overseas - the risks of asset expropriation is minimized - risks associated with currency fluctuations, is better managed - control of marketing is retained by the contractor

- a product manufactured in the overseas market may be easier to sell, especially to government customers - lower transport costs and - Some times lower production costs can be obtained.

To summarise, we can see it is not possible to survive without imports when the world is moving so rapidly towards globalization and liberalization.

A) Import of Principal Commodities Groups Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 10/4/2008 Values in Rs. Crores (P) Provisional |Commodity | |A) BULK IMPORTS |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth |%Share

|288,329.96

|316,521.81 |26,944.86

|9.78 |28,826.60

|45.51

|B) PEARLS, PRECIOUS & SEMI-PRECIOUS STONES |4.14 | |C) MACHINERY |D) PROJECT GOODS |E) OTHERS |Total |71,983.97 |6,182.64 |220,081.78 |613,523.25

|6.98

|87,875.05 |4,802.91 |257,434.09

|22.08 |-22.32 |16.97 |13.36

|12.64 |0.69 |37.02 |

| |

|695,460.44

|100.00 |

|Data Source: DGCIS, Kolkata

|DOC-NIC

B) Import by Region Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 10/4/2008 Values in Rs. Crores (P) Provisional |Region |1) Europe | | | 1.1 EU Countries (27) 1.2 Other WE Countries 1.3 East Europe |Apr-Dec 2006 |123,349.78 |91,476.68 |31,709.85 |163.25 |40,738.52 |10,409.04 |29,563.92 |68.83 |696.74 |59,409.20 |39,834.79 |19,574.40 |374,866.52 |25,929.11 |60,688.42 |178,272.34 |104,775.86 |Apr-Dec 2007(P) |143,318.01 |103,704.19 |39,483.06 |130.75 |44,818.40 |14,919.94 |28,999.39 |132.99 |766.07 |63,843.45 |46,425.28 |17,418.17 |429,717.94 |25,731.43 |65,956.15 |200,375.09 |132,490.30 |%Growth |16.19 |13.37 |24.51 |-19.91 |10.01 |43.34 |-1.91 |93.22 |9.95 |7.46 |16.54 |-11.02 |14.63 |-0.76 |8.68 |12.40 |26.45 |0.02 |6.44 | | | | | | | | | |%Share | | | |

|20.61

|14.91 |5.68 |

|2) Africa | | | | 2.1 Southern Africa 2.2 West Africa 2.3 Central Africa 2.4 East Africa

|2.15 |4.17 |0.02

|0.11 |9.18

|3) America | | 3.1 North America 3.2 Latin America

|6.68 |2.50 |61.79 |3.70 |9.48 |28.81 |19.05 | |

|4) Asia & ASEAN | | | | 4.1 East Asia 4.2 ASEAN 4.3 WANA 4.4 NE Asia

| |

4.5 South Asia

|5,200.79 |12,232.69 |531.36 |11,701.33 |2,926.50 |613,523.25

|5,164.97 |11,489.78 |332.30 |11,157.49 |2,272.86 |695,460.44

|-0.69 |-6.07 |-37.46 |-4.65 |-22.33 |13.36

|0.74 |1.65 |0.05

| | | | | |

|5) CIS & Baltics | | 5.1 CARs Countries 5.2 Other CIS Countries

|1.60 |0.33

|6) Unspecified Region |Total

|100.00

|Data Source: DGCIS, Kolkata

|DOC-NIC

C) Import by Region x Countries

Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 10/4/2008 Values in Rs. Crores (P) Provisional |Region/Countries |%Share | |1) Europe | | | | | | 1.1 EU Countries (27) 1) GERMANY 2) BELGIUM 3) U K 4) ITALY 5) FRANCE |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth

|123,349.78 |91,476.68 |24,888.65 |14,542.87 |14,152.76 |8,738.86 |7,279.48

|143,318.01 |103,704.19 |27,326.65 |15,892.06 |15,440.79 |11,119.11 |8,071.82

|16.19

|20.61

| |

|13.37 |9.80 |9.28

|14.91 |3.93 | |

|2.29 |2.22 |1.60 |1.16 | | |

|9.10 |27.24 |10.88

| | | | | | | | | | | | | | | | | | | | | | | | |

6) SWEDEN 7) NETHERLAND 8) SPAIN 9) FINLAND 10) AUSTRIA 11) DENMARK 12) ROMANIA 13) CZECH REPUBLIC 14) IRELAND 15) POLAND 16) HUNGARY 17) BULGARIA 18) GREECE 19) SLOVENIA 20) SLOVAK REP 21) LUXEMBOURG 22) PORTUGAL 23) LATVIA 24) LITHUANIA 25) ESTONIA 26) CYPRUS 27) MALTA 1.2 Other WE Countries 1) SWITZERLAND 2) TURKEY

|6,743.70 |3,718.48 |2,029.11 |2,042.72 |1,406.33 |1,175.67 |838.70 |1,149.12 |1,024.38 |407.28 |185.98 |158.21 |217.43 |132.00 |69.84 |134.38 |95.63 |52.68 |84.14 |93.25 |54.30 |60.73

|6,232.83 |5,771.26 |2,775.93 |2,737.05 |1,619.83 |1,367.23 |1,255.06 |1,173.00 |770.25 |576.19 |328.95 |327.80 |189.34 |163.98 |143.06 |120.45 |112.50 |96.20 |31.21 |29.43 |24.71 |7.52

|-7.58 |55.20 |36.81 |33.99 |15.18 |16.29 |49.64 |2.08 |-24.81 |41.47 |76.87 |107.20 |-12.92 |24.22 |104.84

|0.90 |0.83 |

| |

|0.40 |0.39 |0.23

| | | | |

|0.20 |0.18 |0.17 |0.11 |0.08 |0.05 |0.05 |0.03 |0.02 |0.02 |0.02 | | | | | | | |

|-10.37 |17.63 |82.62 |-62.90 |-68.44 |-54.50 |-87.61

|0.02 |0.01 |0.00 |0.00 |0.00 |0.00 |24.51 |

| | | | |5.68 | |

|31,709.85 |28,886.93 |697.71

|39,483.06 |31,673.83

|9.65 |506.91

|4.55 |

|4,234.49

|0.61

| | | | | | | | | | |2) Africa | | | | | | | | | | | | | | |

3) NORWAY 4) LIECHTENSTEIN 5) ICELAND 1.3 East Europe 1) CROATIA 2) BOSNIA-HRZGOVIN

|2,109.39 |1.58 |14.24 |163.25 |153.22 |1.43

|3,551.75 |14.27 |8.72 |130.75 |73.53 |43.09 |7.29

|68.38 |802.97 |-38.72

|0.51 |0.00 |

| |

|0.00

|-19.91 |-52.01

|0.02 |0.01 |

|2,914.15 |0.01 |12.50 |71.48

| |0.00

3) UNION OF SERBIA & MONTENEGRO

4) MACEDONIA 5) ALBANIA

|1.15 |0.17 |40,738.52

|1.12 |0.51 |44,818.40 |14,919.94 |10,843.72 |3,508.60 |267.57 |100.37 |84.38 |63.84 |51.46 |0.00 |28,999.39 |22,955.14 |2,600.17 |689.16 |446.59 |398.01

|-2.74 |206.46 |10.01

|0.00 |0.00 |6.44 |

| | |

2.1 Southern Africa 1) SOUTH AFRICA 2) ANGOLA 3) ZAMBIA 4) SWAZILAND 5) NAMIBIA 6) ZIMBABWE 7) MOZAMBIQUE 8) BOTSWANA 2.2 West Africa 1) NIGERIA 2) GUINEA 3) COTE D' IVOIRE 4) SENEGAL 5) GHANA

|10,409.04 |8,831.81 |826.98 |341.62 |232.28 |13.11 |108.35 |54.77 |0.11 |29,563.92 |25,686.95 |1,007.88 |753.02 |211.99 |326.04

|43.34 |22.78 |324.27 |-21.68 |-56.79

|2.15 |1.56

|0.50 |0.04 |0.01 |0.01 |0.01 |0.01 |0.00 | | |

|543.81 |-41.08 |-6.05 |-97.77 |-1.91 |-10.63 |157.98 |-8.48 |110.67 |22.07

| |

|4.17 |3.30 |0.37 |0.10 |0.06 |0.06 |

| | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

6) EQUTL GUINEA 7) CONGO P REP 8) GUINEA BISSAU 9) BENIN 10) GABON 11) TOGO 12) LIBERIA 13) GAMBIA 14) BURKINA FASO 15) CAMEROON 16) MALI 17) SIERRA LEONE 18) MAURITANIA 19) NIGER 20) CAPE VERDE IS 21) ST HELENA 22) SAO TOME 2.3 Central Africa 1) UGANDA 2) CONGO D. REP. 3) MALAWI 4) BURUNDI 5) C AFRI REP 6) CHAD 7) RWANDA

|0.47 |193.68 |181.77 |326.00 |425.72 |239.71 |53.87 |76.61 |19.82 |18.80 |5.94 |6.97 |2.90 |24.06 |0.93 |0.78 | |68.83 |9.62 |39.00 |14.71 | |1.26 |0.69 |3.55

|299.73 |273.21 |254.24 |253.21 |249.61 |193.80 |178.63 |59.35 |59.10 |57.64 |15.89 |12.75 |1.80 |1.36 |0.01 |0.00 |0.00 |132.99 |52.45 |33.87 |30.25 |6.91 |3.62 |3.60 |2.30 | |

|63,402.25 |0.04 |41.06 |39.87 |-22.33 |-41.37 |-19.15 |231.57 |-22.53 |0.04 |0.04 | | | | | |

|0.04 |0.04 |0.03 |0.03 |0.01

|198.22 |206.55 |167.49

|0.01 |0.01 | | |

| |

|0.00

|83.00 |-38.14 |-94.33 |-98.85 |-99.40

|0.00 |0.00 |

|0.00 |0.00 |0.00 |

| |

|0.00 |93.22 |444.99 |-13.14 |105.64 |0.00

|0.02 |0.01 |0.00 |0.00 | | | | |

| |

|187.78 |422.09 |-35.32

|0.00 |0.00 |0.00

| | | | | | | | | | |

2.4 East Africa 1) TANZANIA REP 2) KENYA 3) MADAGASCAR 4) ETHIOPIA 5) REUNION 6) MAURITIUS 7) SOMALIA 8) DJIBOUTI 9) COMOROS 10) SEYCHELLES

|696.74 |268.34 |187.67 |50.07 |34.47 |19.54 |46.75 |67.38 |6.94 |13.59 |1.98 |59,409.20 |39,834.79 |35,126.73 |4,708.06 |19,574.40 |6,355.34 |2,283.00 |3,479.50 |3,329.10 |2,121.93 |149.85 |445.47 |110.84 |143.07

|766.07 |295.41 |263.75 |62.69 |42.44 |34.15 |29.67 |18.16 |10.00 |7.10 |2.71 |63,843.45 |46,425.28

|9.95 |10.09 |40.54 |25.20 |23.12 |74.74 |-36.53 |-73.05 |44.13 |-47.79 |36.79 |7.46

|0.11

| |

|0.04 |

|0.04

|0.01 | | | | | | |

|0.01 |0.00 |0.00 |0.00 |0.00 |0.00 |0.00 |9.18

|3) America | | | | | | | | | | | | | 3.1 North America 1) U S A 2) CANADA 3.2 Latin America 1) CHILE 2) MEXICO 3) BRAZIL 4) ARGENTINA 5) VENEZUELA 6) ECUADOR 7) PERU 8) TRINIDAD 9) COSTA RICA

| |

|16.54 |15.68 |23.02 |5.84

|6.68 | |

|40,633.37 |5,791.91 |17,418.17 |5,467.82 |3,160.95 |2,836.42 |2,512.66 |970.52 |749.12 |399.58 |352.22 |306.34

|0.83 |2.50 |

|-11.02 |-13.96 |38.46 |-18.48

|0.79 |0.45 |0.41

| | | | |

|-24.52 |-54.26 |399.91 |-10.30 |217.78 |114.12

|0.36 |0.14 |0.11 | | |

|0.06 |0.05

|0.04

| | | | | | | | | | | | | | | | | | | | | | | | |

10) COLOMBIA 11) JAMAICA 12) PANAMA REPUBLIC 13) GUYANA 14) URUGUAY 15) EL SALVADOR 16) ST LUCIA 17) BOLIVIA 18) GUATEMALA 19) DOMINIC REP 20) HAITI 21) VIRGIN IS US 22) HONDURAS 23) FR GUIANA 24) NETHERLANDANTIL 25) CUBA 26) DOMINICA 27) SURINAME 28) PARAGUAY 29) BERMUDA 30) BR VIRGN IS 31) BELIZE 32) GUADELOUPE 33) BAHAMAS 34) NICARAGUA

|247.06 |2.01

|296.45 |92.02

|19.99

|0.04 |

|4,468.93 |0.01 |81.34 |-86.36 |3.94 |84.74 |124.43 |0.01 |0.01 |0.00

|596.10 |45.31 |22.27 |8.26 |0.02 |8.72 |5.57 |7.09 |1.69 |0.40 |5.46 |0.72 |3.89 |4.73 |1.45 |4.29 |9.06 |2.50 |85.94 |25.62 |0.63 |54.86 |0.32 |3.56 |2.74 |2.05 |1.69 |0.67 |0.62 |0.62

|0.01 | | | | | | |

|47.10 |41.14 |18.53 |15.41 |10.65 |9.22 |8.57 |6.07 |5.90 |5.87 |5.51 |4.18

|96,030.06 |0.00 |22.09 |65.54 |20.95 |258.55 |0.00 |0.00 |0.00 |

|0.00

|1,359.24 |0.00 |7.66 |661.42 |7.54 |-24.66 |88.63 |-52.30 |-81.35 |-73.14 |-99.28 |-97.60 |0.00 |0.00 |0.00 |0.00 |0.00 |0.00 |0.00 | |0.00 |0.00

| | | |

|0.00 | | | | | |

|0.53 |0.44 |0.42

|-16.85 |-99.20 |29.23

|0.00 |0.00 |0.00 | |

| | | | | | | | |

35) MONTSERRAT 36) ST KITT N A 37) ANTIGUA 38) CAYMAN IS 39) BARBADOS 40) GRENADA 41) FALKLAND IS 42) MARTINIQUE 43) ST VINCENT

|0.21 |0.02 |0.41 |0.39 |0.28 |0.30 |0.04 |0.00 |10.66 |374,866.52 |25,929.11 |23,911.86 |905.86 |970.50 |8.83 |3.42 |38.89 |83.92 | |4.94 |0.17 |0.72 |60,688.42 |19,050.07 |18,306.97 | |0.91 |0.48

|0.42 |0.36 |0.25 |0.10 |0.09 |0.02 |0.01 | |

|100.11

|0.00 | | | | | |

|1,621.37 |0.00 |-38.36 |-73.35 |-68.98 |-93.31 |-78.74 | | | | |0.00 |0.00 |0.00 |0.00 |0.00 | |

|4) Asia & ASEAN | | | | | | | | | | | | | | | 4.1 East Asia 1) AUSTRALIA 2) NEW ZEALAND 3) PAPUA N GNA 4) SOLOMON IS 5) NAURU RP 6) VANUATU REP 7) FIJI IS 8) TUVALU 9) SAMOA 10) KIRIBATI REP 11) TONGA 4.2 ASEAN 1) SINGAPORE 2) MALAYSIA

|429,717.94 |25,731.43 |24,159.25 |1,005.93 |536.37 |25.71 |1.43 |1.33

|14.63 |-0.76 |1.03 |11.05 |-44.73 |191.24

|61.79 | | | | | | |

|3.70 |3.47 |0.14 |0.08 |0.00 |0.00 |0.00 | | | |

|-58.28 |-96.58 |-98.91 |

|0.00 |0.00

|0.02 |0.01 | |65,956.15

|-99.58 |-96.60 | |8.68

|0.00 |0.00 |

|9.48 |3.27 |2.59

| | |

|22,708.93 |18,023.62

|19.21 |-1.55

| | | | | | | | | | | | | | | | | | | | | | | | |

3) INDONESIA 4) THAILAND 5) MYANMAR 6) BRUNEI 7) PHILIPPINES 8) VIETNAM SOC REP 9) CAMBODIA 10) LAO PD RP 4.3 WANA 1) SAUDI ARAB 2) U ARAB EMTS 3) IRAN 4) KUWAIT 5) IRAQ 6) QATAR 7) EGYPT A RP 8) YEMEN REPUBLC 9) ISRAEL 10) LIBYA 11) ALGERIA 12) OMAN 13) JORDAN 14) BAHARAIN IS 15) MOROCCO 16) SUDAN

|12,785.37 |5,685.44 |2,612.25 |1,022.34 |616.90 |602.42 |5.10 |1.55 |178,272.34 |46,807.39 |29,637.00 |26,007.95 |20,084.83 |20,318.98 |7,770.68 |6,241.00 |7,287.73 |3,733.45 |307.44 |2,390.86 |1,595.56 |1,558.77 |1,533.75 |1,736.17 |381.15

|14,078.81 |6,947.42 |2,409.20 |696.49 |589.61 |498.66 |3.11 |0.31 |200,375.09 |54,582.76 |39,143.71

|10.12 |22.20 |-7.77 |-31.87 |-4.42

|2.02 |1.00 |0.35 |0.10 |0.08 | | |

|-17.22 |-39.07 |-80.15 |0.00 |0.00

|0.07 | | |28.81 |7.85 |5.63 | | | | |

|12.40 |16.61 |32.08 |12.70 |-1.75 |-12.55 |-10.95 |-1.21

| | |

|29,311.08 |19,734.08 |17,768.88 |6,919.55 |6,165.34 |4,806.14

|4.21 |2.84 |2.55 |0.99 |0.89

|-34.05 |22.00 |0.65

|0.69 | | | | | | | |

|4,554.74 |4,343.61 |3,795.83 |2,316.07 |1,987.38 |1,733.30 |1,606.45 |976.33

|1,312.82 |0.62 |58.76 |45.16 |27.50 |13.01 |-7.47 |156.15 |0.55 |0.33 |0.29

|0.25 |0.23 |0.14

| | | | | | | | | | | | | | | | | | | |

17) TUNISIA 18) SYRIA 19) LEBANON 4.4 NE Asia 1) CHINA P RP 2) JAPAN 3) KOREA RP 4) HONG KONG 5) TAIWAN 6) KOREA DP RP 7) MONGOLIA 8) MACAO 4.5 South Asia 1) SRI LANKA DSR 2) NEPAL 3) PAKISTAN IR 4) BANGLADESH PR 5) BHUTAN 6) AFGHANISTAN TIS 7) MALDIVES

|512.36 |337.39 |29.88 |104,775.86 |57,649.57 |14,989.16 |16,292.32 |8,403.93 |5,520.35 |1,912.65 |7.56 |0.33 |5,200.79 |1,611.58 |1,046.54 |1,130.21 |841.38 |419.76 |141.07 |10.24 |12,232.69 |531.36 |323.26 |36.42 |47.99

|549.78 |58.62 |21.42 |132,490.30 |80,206.52 |18,370.27 |17,288.89 |8,878.62 |7,292.06 |445.54 |7.08 |1.32 |5,164.97 |1,335.54 |1,260.46 |856.05 |780.06 |622.34 |299.31 |11.20 |11,489.78 |332.30 |248.56 |28.55 |27.11

|7.30 |-82.62 |-28.30

|0.08 |0.01 |0.00 |

| | |

|26.45 |39.13 |22.56 |6.12 |5.65 |32.09 |-76.71 |-6.41 |298.02 |-0.69 |-17.13 |20.44 |-24.26 |-7.29 |48.26

|19.05 |11.53 |2.64 |2.49 |1.28 |1.05 |0.06 | | | | | |

|0.00 |0.00

|0.74 |0.19 |

|0.18 |0.12

| |

|0.11 |0.09 |

|112.17 |9.38 |-6.07 |-37.46 |-23.11 |-21.60 |0.00

|0.04 | | | |

|5) CIS & Baltics | | | | 5.1 CARs Countries 1) KAZAKHSTAN 2) TAJIKISTAN 3) TURKMENISTAN

|1.65 |0.05 |0.04 |

|0.00

|-43.51

|0.00

| | | | | | | | | |

4) UZBEKISTAN 5) KYRGHYZSTAN 5.2 Other CIS Countries 1) RUSSIA 2) UKRAINE 3) BELARUS 4) AZERBAIJAN 5) GEORGIA 6) ARMENIA 7) MOLDOVA

|120.22 |3.48 |11,701.33 |6,910.10 |3,473.33 |339.19 |303.35 |331.26 |342.03 |2.06 |2,926.50 |2,381.76 |73.58 |21.49 |379.97 |1.00 | |0.28 |0.80 | |0.06 |

|23.88 |4.20

|-80.14 |20.69

|0.00 |0.00

| | |1.60 | | | | | | | |

|11,157.49 |8.80

|-4.65 |1.08

|7,518.04 |2,926.41 |357.57 |309.31 |34.91 |10.63 |0.60 |2,272.86 |2,212.35 |22.82 |20.58 |4.41 |3.87 |2.59 |1.58 |1.13 |0.73 |0.71 |0.49 |0.35 |0.21 |0.20 |

|-15.75 |5.42 |1.97 |-89.46 |-96.89 |-70.66

|0.42 |0.05 |0.04 |0.01 |0.00 |0.00

|6) Unspecified Region | | | | | | | | | | | | | | 1) UNSPECIFIED 2) NEW CALEDONIA 3) PUERTO RICO 4) AMERI SAMOA 5) ERITREA 6) CHRISTMAS IS. 7) TURKS C IS 8) MONACO 9) NORFOLK IS 10) FAROE IS.

|-22.33 |-7.11 |-68.99 |-4.24 |-98.84

|0.33 |0.32 |0.00 | | | |

|0.00 |0.00 | | | |

|285.40 | |463.27 |42.22

|0.00 |0.00 |0.00 |0.00 |

|0.00

|1,163.93 |0.00 | |491.17 |-54.36 |271.34 |0.00 |0.00 |0.00 |0.00

| |

11) Trade to Unspecified Countries 12) COOK IS 13) TOKELAU IS 14) GIBRALTAR |0.06 |0.46 |0.05

| | |

| | | | | | | | | | | | | | |Total

15) NIUE IS 16) TIMOR LESTE 17) PANAMA C Z 18) ST PIERRE 19) FR POLYNESIA 20) COCOS IS 21) GUAM 22) WALLIS F IS 23) ANDORRA 24) GREENLAND 25) MARSHALL ISLAND 26) N. MARIANA IS. 27) PITCAIRN IS. 28) MICRONESIA

|1.06 |2.67 | |6.94 |0.12 | |0.85 |0.02 |0.08 |0.14

|0.16 |0.15 |0.14 |0.11 |0.09 |0.06 |0.05 |0.05 |0.04 |0.00 |0.00 |0.00 | | |695,460.44

|-84.89

|0.00

| |

|-94.32 | |-98.44 |-26.10 | |0.00 |-93.85 |153.79 |-46.64 |-99.58

|0.00 | |

|0.00 |0.00

|0.00 | | |

|0.00 |0.00 |0.00 |0.00

| | |

|54.99 | |0.02 |0.10 |613,523.25

|-100.00 | | | | | |13.36 |0.00 | |

|0.00 |

|100.00 |

|Data Source: DGCIS, Kolkata

|DOC-NIC

D) Top 10 Commodities of Import

Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 10/4/2008 Values in Rs. Crores

(P) Provisional |Rank |Commodity |%Share | |1 |PETROLEUM, CRUDE & PRODUCTS |31.61 | |2 |3 |ELECTRONIC GOODS |GOLD |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth

|200,090.31

|219,815.02

|9.86

|54,126.81 |48,313.27

|61,190.98 |11.45

|13.05 |7.74

|8.80 |

|53,844.52 |45,161.48

|4 |MACHRY EXCPT ELEC & ELECTRONIC |7.64 | |5 | |6 |PERLS PRCUS SEMIPRCS STONES

|53,105.02

|17.59

|26,944.86

|28,826.60

|6.98

|4.14

|IRON & STEEL

|19,294.17

|24,864.24 |27,633.28

|28.87 |23,420.35

|3.58 |-15.25

|7 |METALIFERS ORES & METAL SCRAP |3.37 | |8 | |9 | |10 | | |OTHER COMMODITIES

|15,035.25

|21,521.95

|43.14

|3.09

|ORGANIC CHEMICALS

|18,546.69

|21,426.47

|15.53

|3.08

|TRANSPORT EQUIPMENTS

|15,380.81

|20,388.86

|32.56

|2.93

|Total

|613,523.25

|695,460.44

|13.36

|100.00 |

|Data Source: DGCIS, Kolkata

|DOC-NIC

E) Top 10 Countries of Import

Department of Commerce System on Foreign Trade Performance Analysis (FTPA)

Dated: 10/4/2008 Values in Rs. Crores (P) Provisional |Rank | |1 |2 |3 |4 |5 |6 |7 |8 |9 |10 | |Country |Apr-Dec 2006 |Apr-Dec 2007(P) |%Growth |%Share

|CHINA P RP |SAUDI ARAB |U S A |U ARAB EMTS |SWITZERLAND |IRAN |GERMANY |AUSTRALIA |NIGERIA |SINGAPORE |Total

|57,649.57 |46,807.39 |35,126.73 |29,637.00 |28,886.93 |26,007.95 |24,888.65 |23,911.86 |25,686.95 |19,050.07 |613,523.25

|80,206.52 |54,582.76 |40,633.37 |39,143.71 |31,673.83 |29,311.08 |27,326.65 |24,159.25 |22,955.14 |22,708.93 |695,460.44

|39.13 |16.61 |15.68 |32.08 |9.65 |12.70 |9.80 |1.03 |-10.63 |19.21 |13.36

|11.53 |7.85 |5.84 |5.63 |4.55 |4.21 |3.93 |3.47 |3.30 |3.27 |100.00 | | |

| |

| |

| | | |

|Data Source: DGCIS, Kolkata

|DOC-NIC

Top

CHAPTER 2

HISTORY OF FOREIGN TRADE POLICY

Historically, India ran a trade surplus for centuries together through export of spices, handicrafts, textiles etc. No restrictions on imports or exports were officially maintained. But, the position was changed after the British took over power. Before India got Independence, import of goods from Great Britain received official encouragement through Imperial preferences. There was a corresponding disincentive for import of goods from other countries.

Most of the importers were British. Most of the European powers were at loggerheads. The British traders naturally preferred to import from Britain or whenever convenient, from the British colonies. The bias for imports from Britain was inherent in the given situation. Under British regime the import of goods from Great Britain was encouraged and the export of goods from India and the import of goods from other developed countries were discouraged by imposition of higher customs duties. The statutory mechanism for controlling foreign trade was the Sea Customs Act, 1878. The goods originating from other countries could be simply charged to higher import duties than the goods originating from Britain or territories favoured by Britain. There was, however, no separate statutory mechanism or enactment to prohibit or restrict import of goods, except under the Sea Customs Act, 1878. In other words, goods could be freely imported provided the import duties were paid. Under the Sea Customs Act, 1878, only a few goods were subjected to import duties and the duty rates were also not too high. The Imperial Govt. preferred Land Revenue as the principal means to raise revenues. The Import duties did not constitute a significant share of the revenues. Regarding imports and exports, the Government of India Act, 1935 granted an exclusive power to the Centre to legislate on the subject. But no specific enactment was passed by the Central Legislature. During the Second World War, under the compulsive necessity created by the scarce foreign exchange resources and the acute shortage of shipping space in the Indian ports, a notification under the Defence of India Rules was issued in 1939, bringing under control the import of 68 commodities. Steadily other notifications were issued bringing more items under control. In July, 1943 a consolidated notification was issued covering a wide range of controlled items. With the end of the Second World War, the Defence of India Rules lapsed but the provisions regarding import control instructions were continued by virtue of the Emergency Provisions (Continuance) Ordinance, 1946 which was replaced, in so far as the imports and exports control is concerned, by the Imports and Exports (Control) Act, 1947. In 1947, the need was felt to replace the emergency provisions through a permanent enactment and that is how a specific statute, the Imports & Exports (Control) Act, 1947 came into effect on 25th March 1947. It came into force for a period of three years but was extended from time to time. In 1971 it became a permanent statute. By the Imports and Exports (Control)(Amendment) Ordinance, 1975, changes of farreaching character were made in the Imports and Exports (Control) Act, 1947. The Ordinance was replaced by the Imports and Exports (Control) (Amendment) Act, 1976. In spite of changes made by the Act of 1976 the Imports and Exports (Control) Act, 1947 continued to suffer from deficiencies. The legal regime set up under the Act, 1947 became outdated and hindered the growth and development of Indias foreign trade. In 1991, the Central Govt. ushered in economic reforms in the country. One of the

pillars of the reforms process was to progressively integrate the Indian economy with the rest of the world. The process called for progressive liberalization of controls and elimination of discretionary licensing for imports and exports. The legal framework had also to be amended so as to reflect the new realities.

Consequently on 19th June, 1992, the President of India promulgated the Foreign Trade (Development and Regulation) Ordinance repealing the Imports and Exports (Control) Act, 1947. To replace the Foreign Trade (Development and Regulation) Ordinance, 1992 the Foreign Trade (Development and Regulation) Bill, 1992 was introduced in the Lok Sabha.

The Government introduced in Parliament, the Foreign Trade (Development & Regulation) Bill, 1992 to provide for the development and regulation of foreign trade by facilitating imports into India and augmenting exports from India. As the Parliament was not in session, the President, promulgated the Foreign Trade (Development & Regulation) Ordinance no. 11 of 1992, on 19th June 1992.

The Foreign Trade (Development & Regulation) Act, 1992 replaced the Ordinance on 7th August 1992. The provisions of the Act were deemed to have come into force from 19th June 1992, except sections 11 to 14, which came into effect from 7th August 1992.

The Central Govt. used to notify the Import and Export Policy every year. The Policy book was known as the Red Book. In 1985, the Government started the practice of notifying three year Policy. The 1988-91 Policy, however, was prematurely terminated and replaced by the 1990-93 Policy. This Policy, in turn, died a premature death and gave way to a five year 1992-97 Policy and in 1997, the next five year Policy for the period 1997-2002 was notified. The Five year Policy for the period 2002-07 as modified was incorporated into the new five year Foreign Trade Policy for the period 2004-09.

The Policies prior to 1992 contained an Open General License under which specific goods could be imported by specific categories of importers subject to fulfillment of certain conditions. Similar Open General License was there for exports. In 1992, the Policy was amended to do away with Open General License and allow imports and exports of all goods without a license, except those specifically mentioned in a small negative list.

In 1995, the World Trade Organisation was established and India became a member of the WTO. As per the Agreements signed, India could maintain quantitative restrictions i.e. import licensing only for

certain items on the grounds of public health, safety, security etc. India, however, continued to maintain quantitative restrictions on the grounds of Balance of Payments difficulties. The quantitative restrictions were dismantled in April 2001 when the Balance of Payments difficulties had eased. The restrictions now in place are compatible with the terms of agreement signed with the WTO.

Indias trade policy can be said to consist of three levels: (i) Its multilateral negotiating position at the international level; (ii) The framing and operation of import-export policy at home (traditional trade agenda), and (iii) sectoral policy affected by trade agreements (new trade agenda). The first level deals mainly with trade agreements, WTO, Free Trade Agreements (FTAs), etc. The second one focuses on changes in the tariff level, duty drawback, subsidies, incentives for exporters and the concession for importers, etc, and in a sense is a support mechanism for its exporters to deal with uncertainties of the exposure to globalisation. The last level deals with emerging sectoral trade agreements such as General Agreements on Trade in Services (GATS).

The events described above finally tipped opinions in favour of reform, and the policy environment became more amenable to change. Internal trade became freer as the license/or permit system loosened its control of economic activity and increasing emphasis was placed on the need for a more competitive export sector. Slowly but surely, the two biggest events in Indian economic history the emergence of a market-based reform project and an incremental re-introduction to the global economy began to take shape. But even in these circumstances, the policy for reform was not led by trade strategy. Rather, the effort was to liberalise licensing, reduce restrictions on production and investment, and open up financial markets, and correct fiscal, monetary and currency rate policies. Trade policy reform was slower in coming, and emerged more from restructuring of tariffs and import duties rather than from a clearly articulated vision. This was due to the focus on getting the financials of the country right in the first instance. India prided itself on never having been an external debt defaulter, and policy makers were concerned about keeping up this image. Trade policy, was thus, at best, only a secondary issue. The Trade policy was always the prerogative of the Government in power but its importance was not realised in the colonial India. The initial stage of Indian policy and planning ignored and gave a secondary treatment to foreign trade and period of 1947 to 1952 the import policy continued to be restrictive towards imports .There was a positive movement towards trade facilitation in the coming years and the importance of Foreign Trade grew with each passing year. Trade Policy has come a long way from the years of Licence raj and quota restrictions. Policy has paved the way to diversification and promotion of Indias foreign Trade and has broken the shackles of the era of restrictive import licensing. Indian economy has been able to achieve a lot with the continuation of trade policy which is favourable to

trade. India has been able to achieve a healthy a positive foreign exchange reserves. Foreign Trade Policy has also been helpful in Indias movement towards fulfilment of its GATT commitments. The focus of the Foreign Trade Policy 2004-2009 was not just on earning foreign exchange but stimulation of greater economic activity. The Policy penetrates into the developmental requirements of Indias Foreign Trade. This is the crux of the new Foreign Trade Policy.

Keeping this in mind, the Foreign Trade Policy 2004-2009, announced by Honorable Minister for Commerce and Industry on 31st August, 2004 had two main objectives: i. To double Indias percentage share of global merchandise trade within the next five years; and ii. To act as an effective instrument of economic growth by giving a thrust to employment generation. The Government also brings out an Annual Supplement to the Policy every year. The Government brought out the Annual Supplement to the Foreign Trade Policy and Procedures updated as on 11th April 2008.

Highlights of the Annual Supplement to the Foreign Trade Policy announced on 11th April 2008. The export promotion measures announced include i) To promote modernization of our manufacturing and services exports, the import duty under the EPCG scheme is being reduced from 5% to 3%. ii) Refund of tax on a large number of services relating to exports was already announced by the Government and it was announced that a few remaining issues regarding refund of service tax on exports would also be resolved soon. iii) Income tax benefit to 100% EOUs available under Section 10B of Income Tax Act is being extended for one more year, beyond 2009. iv) Export of Toys & Sports Goods will be given additional duty credit scrip @ 5 % (in addition to the existing benefits under Focus Product scheme). Separate funds for market promotion activities will also be given for promoting these exports under ongoing MDA Scheme and MAI Scheme v) Additional duty credit scrip of 2.5% over and above the normal benefit available under VKGUY, for export of certain flowers, vegetables and fruits. vi) Interest relief already granted for sectors affected adversely by the appreciation of the rupee is being extended for one more year.

vii) The DEPB scheme is being continued till May 2009

Top

CHAPTER 3

LEGAL FRAMEWORK OF FOREIGN TRADE PLOLICY

Central Government notifies the Foreign Trade Policy in exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992). The Foreign Trade Policy is announced for a period of five years incorporating therein the features of the previous year Policy. Central Government also announces an annual supplement of the policy every year in the month of April. The Foreign Trade Policy which is currently is in effect is for the period 2004-2009. This Policy shall come into force with effect from 1st September, 2004 and shall remain in force upto 31st March, 2009, unless as otherwise specified .An annual supplement for Foreign Trade Policy 2004-2009 was announced on 11th April, 2008 vide Notification No. 1(RE-2008)/ 2004-2009. Section 5 of Chapter II of The Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to make orders and announce export and import policy Accordingly, The central government may, from time to time, formulate and announce by notification in the official gazette, the export and import policy and may also, in the like manner, amend that policy.

INDIAS EXPORTS AND IMPORTS ARE GOVERNED BY THE FOLLOWING:

1) Foreign Trade (Development & Regulation) Act, 1992 2) Foreign Trade (Regulation) Rules 1993 3) Foreign Trade (Exemption From Application Of Rules In Certain Cases) Order 1993 4) Export and Import Policy - now called Foreign Trade Policy 5) Handbook of Procedures Volume I 6) Standard Input Output Norms or SION

7) ITC (HS) Classification of Import and Export Items

1) Foreign Trade (Development & Regulation) Act, 1992 In India, the Foreign Trade (Development and Regulation) Act, 1992 is the principal Law with regard to Foreign Trade.

The Act provides for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto.

As per the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government:(i)may make provisions for facilitating and controlling foreign trade; (ii)may prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions; (iii) is authorised to formulate and announce an export and import policy and also amend the same from time to time, by notification in the Official Gazette; (iv) is also authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act, including for formulation and implementation of the export-import policy. (v) may make Rules for carrying out the provisions of the above Act.

The Salient features of this Act are as follows:

1) Objective: Development and regulation of foreign trade by facilitating imports and augmenting exports. (The objective of the repealed Act was to prohibit and control imports and exports)

2) Section 3 : Enables the Central Govt. to make development and regulation of foreign trade and for prohibiting, restricting or otherwise regulating import and export of goods

3) Section 5 : Enables the Govt. to formulate and announce the Export and Import Policy and also amend the Policy

4) Section 6: Provides for appointment of Director General of Foreign Trade to advise the Central Govt. in the formulation of the Export and Import Policy and be responsible for implementation of the same.

5) Section 7 : Provides that any import/export can be made only by a person holding an Importer Exporter Code Number

6) Sections 8 and 9 : Provide for issue, renewal, refusal or cancellation of Importer Exporter Code Number or license to export or import

7) Sections 10 to 14 : Provide for search and seizure, fiscal penalty/confiscation in the event of contravention, adjudication and reasonable opportunity to the owner of goods

8) Section 15 to 17 : Provide for Appeal, Revision and powers of adjudicating and other authorities

9) Section 18 to 20 : Protect actions taken in good faith, Central Govt.s powers to make Rules, Repeal and Savings

2) Foreign Trade (Regulation) Rules, 1993

These Rules are made under the Rule making powers vested with Central Govt. under Section 19 of the Foreign Trade (Development and Regulation) Act, 1992. These Rules, inter alia provide for grant of licence, application, fee, conditions of licence, refusal of licence, amendment/ suspension/ cancellation of licence, declaration as to value and quality of import goods, declaration as to Importer-Exporter Code No., utilization of imported goods, prohibitions, power of entry of premises, inspection/ search/ seizure, and conveyance, settlement and confiscation and redemption.

The salient features are:

1) Rule 3: Enables the Director General of Foreign Trade to issue Special Licenses to persons whose Importer Exporter Code Numbers have been suspended or cancelled. 2) Rule 5 : Specifies the scale of fees to be paid towards applications for licenses and categories which are exempt from payment of fees 3) Rule 6 : Details the general conditions applicable to licenses and Import Certificates issued under the Indo-US Memorandum of Understanding 4) Rule 7 : Specifies the circumstances under which a license can be refused 5) Rule 8 : Enables the licensing authority to amend a license 6) Rule 9 : Deals with suspension of licenses 7) Rule 10 : Deals with cancellation of licenses 8) Rule 13 : Indicates the manner of utilization of goods allotted by STC etc. and of the goods imported against a license 9) Rule 15: Provides for search, seizure etc. 10) Rule 16 : Provides for settlement 11) Rule 17 & 18 : Provide for confiscation and redemption of goods and conveyances

3) Foreign Trade (Exemption from application of Rules) Order, 1993

The main feature of this Order is that it details the categories of imports and exports, which are exempt from the application of the Foreign Trade (Regulation) Rules, 1993. Important exemptions are as under :

A. Imports

A.

1) Imports for defence purposes 2) Import by Central/State Government or Public Sector Undertaking through the India Supply Mission at Washington and London 3) Imports for transit to other countries 4) Imports under Baggage Rules 5) Personal Imports 6) Imports by Diplomatic Personnel 7) UN officials 8) Temporary Imports for fairs, Exhibitions etc.

B. Exports

1) By or under the authority of Central Govt. 2) Ship Stores 3) Baggage 4) Trans-shipment 5) Goods imported without a valid license and ordered to be re-exported 6) Goods manufactured by 100% Export Oriented Units or Units in Export Processing Zones.

4) Foreign Trade Policy (Export and Import Policy)

The Exim Policy 1992-97 was notified under the repealed Imports & Exports (Control) Act, 1947. The Policy was saved through Section 20 of the Foreign Trade (Development & Regulation) Act, 1992.

Subsequent amendments to the 1992-97 Policy and the 1997-2002 Policy were notified by the Central Government under powers vested through Section 5 of the Foreign Trade (Development and Regulation) Act, 1992.

In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992), the Central Government notified the Foreign Trade Policy for the period 2004-2009 incorporating the Export and Import Policy for the period 2002-2007, as modified. This Policy shall came into force with effect from 1st September, 2004 and shall remain in force upto 31st March, 2009, unless as otherwise specified

Birds eye view of Foreign Trade Policy 2004-09

|Chapter | |1A | |1B | |1C | |2 | |3 | |4 | |5 | |6 | | | |7 & 7A | | |

|Subject

|Legal framework

|Special Focus Initiatives

|Board of Trade

|General provisions regarding imports and exports

|Promotional measures

|Duty exemption/remission schemes

|Export promotion capital goods scheme

|Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTPs),

|Software Technology Parks (STPs) And Bio-Technology Parks (BTPs)

|Special Economic Zones (SEZ) and

|Free Trade and Warehousing Zones (FTW&Z) (deleted)

|8 | |9 |

|Deemed Exports

|Definitions

5) Handbook of Procedures Vol. 1 (HBP v1)

The HBP v1 consists of 9 Chapters and these are organized in the same manner as the Foreign Trade Policy, except Chapter 9 which deals with Miscellaneous Matters

The HBP v1 includes Appendices that specify various forms to be used, instructions for applying for licenses, information regarding licensing authorities, export promotion councils etc. However they are published separately and are available at http://dgft.gov.in

6) Standard Input Output Norms or SION in short is standard norms which define the amount of input/inputs required to manufacture a unit of output for export purpose. Input output norms are applicable for the products such as electronics, engineering, chemical, food products including fish and marine products, handicraft, plastic and leather products etc. The Directorate General of Foreign Trade (DGFT) from time to time issue notifications for fixation or addition of SION for different export products. Fixation of Standard Input Output Norms facilitates issues of Advance License to the exporters of the items without any need for referring the same to the Headquarter office of DGFT on repeat basis

7) ITC (HS) Classification of Import and Export Items Following the international Classification System of traded goods, known as Harmonized Commodity Description and Coding System evolved by the World Customs Organisation, India is following an extended version of the above system of classification called the Indian Trade Classification based on Harmonized Commodity Description and Coding System (ITC-HS code). The ITC-HS Code is a tariff nomenclature for classifying traded products. It is used for import-export operations. Indian custom uses an eight digit ITC-HS Codes to suit the national trade requirements. ITC-HS Codes Schedules ITC-HS codes are divided into two schedules. Schedule I describe the rules and guidelines related to import policies where as Schedule II describe the rules and regulation related to export policies.

Schedule I of the ITC-HS code is divided into 21 sections and each section is further divided into chapters. The total number of chapters in the schedule I is 98. The chapters are further divided into subheading under which different HS codes are mentioned. Schedule II of the ITC-HS code contain 97 chapters giving all the details about the guidelines related to the export policies. Governing Body of ITC (HS) Code: Any changes or formulation or addition of new codes in ITC-HS Codes are carried out by DGFT (Directorate General of Foreign Trade). Commodity description, weeding out of defunct codes, addition of new codes, change of product description etc., are taken up periodically as a part of the ongoing process towards perfection.

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CHAPTER 4

BOARD OF TRADE (BOT)

The Foreign Trade Policy has provided for the power and functions of the Board of Trade in Chapter 1C of the Policy.

The Foreign trade Policy 2004-09 has revitalized the Board of Trade by redefining its role, giving it due recognition and inducting experts on Trade Policy. Government has been empowered to nominate an eminent person or expert on trade policy to be Chairman of Board of Trade. Government shall also nominate 25 persons, of whom at least 10 will be experts in trade policy. In addition, Chairmen of recognized Export Promotion Councils (EPCs) and President or Secretary-Generals of National Chambers of Commerce will be ex-officio members. Board of Trade is scheduled to meet at least once every quarter.

Terms of Reference BOT has the following terms of reference:

1. To advise Government on Policy measures for preparation and implementation of both short and long term plans for increasing exports in the light of emerging national and international economic scenarios;

2. To review export performance of various sectors, identify constraints and suggest industry specific measures to optimize export earnings; 3. To examine existing institutional framework for imports and exports and suggest practical measures for further streamlining to achieve desired objectives; 4. To review policy instruments and procedures for imports and exports and suggest steps to rationalize and channelise such schemes for optimum use; 5. To examine issues which are considered relevant for promotion of Indias foreign trade, and to strengthen international competitiveness of Indian goods and services; and 6. To commission studies for furtherance of above objectives.

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CHAPTER 5

GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS

The General Provisions Regarding Imports and Exports under the Foreign Trade Policy 2004-2009 are given under Chapter 2 of the Policy. Some important provisions relating to imports and exports are reproduced here. 1. Exports and Imports shall be free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. 2. The item wise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time. 3. Every exporter or importer shall comply with the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Rules and Orders made thereunder, the provisions of this Policy and the

terms and conditions of any license / certificate /permission granted to him, as well as provisions of any other law for the time being in force. 4. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. 5. Any goods, the export or import of which is restricted under ITC(HS) may be exported or imported only in accordance with a licence/ certificate/ permission or a public notice issued in this behalf 6. Every licence/certificate/permission shall be valid for the period of validity specified in the licence/ certificate/ permission and shall contain such terms and conditions as may be specified by the licensing authority which may include: a. The quantity, description and value of the goods; b. Actual User condition; c. Export obligation; d. The value addition to be achieved; and e. The minimum export price 7. No export or import shall be made by any person without an Importer-Exporter Code (IEC) number unless specifically exempted. An Importer-Exporter Code (IEC) number shall be granted on application by the competent authority in accordance with the procedure specified in the Handbook (Vol.1). 8. Transit of goods through India from or to countries adjacent to India shall be regulated in accordance with the bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with International Conventions. 9. Any goods, the import or export of which is governed through exclusive or special privileges granted to State Trading Enterprise(s), may be imported or exported by the State Trading Enterprise(s) as specified in the ITC (HS) Book subject to the conditions specified therein. 10. All second hand goods, excepting second hand capital goods, shall be restricted for imports and may be imported only in accordance with the provisions of this Policy, ITC (HS), Handbook (Vol.1), Public Notice or an authorization issued in this regard.

Import of second hand capital goods, including refurbished / reconditioned spares shall be allowed freely. However, second hand personal computers / laptops, photocopier machines, air conditioners, diesel generating sets will only be allowed against a licence. Import of re-manufactured goods shall be allowed only against a licence.

11. Import of samples shall be governed by HBP v1. Export of samples and Free of charge goods shall be governed by provisions given in HBP v1. 12. Import of gifts shall be permitted where such goods are otherwise freely importable under FTP. In other cases, a Customs Clearance Permit (CCP) shall be required from DGFT. Goods, including edible items, of value not exceeding Rs.5,00,000/- in a licensing year, may be exported as a gift. However, items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift, without an Authorisation. 13. Freely exportable new or second hand capital goods, equipments, components, parts and accessories, containers meant for packing of goods for exports, jigs, fixtures, dies and moulds may be imported for export without an Authorisation on execution of LUT / BG with Customs Authorities. 14. Capital goods, equipments, components, parts and accessories, whether imported or indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without an Authorisation. 15. Import / export of arms and related material from / to Iraq shall be prohibited. 16. Direct or indirect export and import of following items, whether or not originating in Democratic Peoples Republic of Korea (DPRK), to / from, DPRK is prohibited: All items, materials equipment, goods and technology including as set out in lists in documents S/2006/814,S/2006/815 and S/2006/853(United Nations Security Council Documents) which could contribute to DPRKs nuclear-related, ballistic missile-related or other weapons of mass destructionrelated programmes 13. Direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute to Irans enrichment-related, reprocessing or heavy water related activities, or to development of nuclear weapon delivery systems, as mentioned below whether or not originating in Iran, to / from Iran is prohibited:

i) items, listed in INFCIRC/254/Rev8/Part I in document S/2006/814, in Sections B.2 to B.7 as well as A.I and B.I except supply, sale or transfer of equipment covered by B.I when such equipment is for light water reactors and lowenriched uranium covered by A.1.2 when it is incorporated in assembled nuclear fuel elements for such reactors; ii) items listed in S/2006/815 except supply sale or transfer of items covered by 19.A.3 of Category II.

Exemption from Policy / Procedure

DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under:

|Sl. No. |(i) | | |(ii) | | |(iii) | |

|Description |Fixation / modification of |product norms under all |schemes |Nexus with Capital Goods |(CG) and benefits under |EPCG Schemes |All other issues | | |

|Committee |Norms |Committee | |EPCG |Committee | |Policy Relaxation |Committee |(PRC) | | |

| | |

| |

IEC CODE NUMBER Importer Exporter Code (IEC) Number is essential for any exporter or importer. Certain persons including those importing for private use and travellers are exempted from obtaining IEC Number. IEC is number is allotted by the licensing authority who has jurisdiction over the importer or exporter, depending on where his Head Office or Registered Office is located. The importer has to give in his application, details of all the branches/divisions/factories in India or abroad and also the details of all the directors/partners/proprietor. Only one IEC number is allotted to one legal entity. Since 1999, the IEC number is based on Permanent Account Number allotted by the Income Tax Department. The IEC number is computerised and the Customs verify the number through computer before allowing imports or exports. Invariably, the importer or exporter has to mention his IEC number in his application. Every year, the IEC holder has to furnish returns of imports/exports made by him in the previous year before 31s tOctober.

EPC REGISTRATION

The Export Promotion Councils [EPC] are non-profit organizations registered under the Companies Act, 1956 or the Societies Registration Act, 1870. They are supported by financial assistance from the Central Govt. They are autonomous and regulate their own affairs. The main roles of the EPCs are: (1)To project Indias image abroad as a reliable supplier of quality goods and services. (2)Encourage and monitor the observance of international standards and specifications by the exporters. (3)To keep abreast of the trends and opportunities in the international markets for goods and services and assist their members in taking advantage of such opportunities in order to expand and diversify exports.

The major functions of the EPCs are: (1)To provide commercially useful information and assistance to their members in developing and increasing their exports (2)To offer professional advice to their members in the areas such as technology up gradation, quality and design improvement, standards and specifications, product development, innovation etc. (3)To organize visits of delegations of its members abroad to explore overseas market opportunities (4)To organize participation in various trade fairs, exhibitions and buyer seller meets in India and abroad. (5) To promote interaction between exporters and Govt. officials both at the Centre and at the State levels. (6)To build a statistical base and provide data on exports and imports of the country, exports and imports of their members, as well as other relevant international trade data.

Any exporter who wants any benefits under the Exim Policy has to be registered with an EPC. He may register with the EPC that deals with his main line of business. If he exports a number of products, he need not separately register with all the EPCs concerned with his products. Software exporters have to register with Electronics and Software Export Promotion Council. Other service providers have to register with Federation of Indian Exporters Organisation. Pharmaceutical products exporters can export

with the newly constituted EPC for Pharmaceutical products. There is a separate EPC for Export Oriented Units and units in Special Economic Zones. If the export product is not covered by any EPC, the exporter may register with Federation of Indian Exporters Organisation. Each EPC has its own procedure and fee structure for registration. An exporter may register as a manufacturer or as merchant. A Registration Cum Membership certificate issued to an exporter shall be valid from the 1st April of the year in which it is issued. It shall be valid for 5 years. Its validity shall be deemed to be from the 1st April of the year in which it is issued and the 31st March of the year in which it expires. EPCs also carry out several functions like administration of quotas, ceilings, issuing certificates of origin, taking up grievances, looking into the complaints from foreign buyers etc. Whenever there is a change in the constitution, name or address of an exporter, he should intimate the EPC and get the amendments made in his EPC. The registration may be cancelled, if the exporter violates any conditions of registration, after giving him due hearing. An exporter can appeal against an order for de-registration.

IDENTITY CARD Any exporter wishing to collect his documents/licenses in person from the licensing authorities can obtain an identity card. Each exporter can obtain three ID cards for his employees. In case of limited companies, RA may approve allotment of more than three identity cards per company. Multiple ID Cards can be issued to employees of companies that have many group companies. Application has to be made in Appendix 20A of HBPv1 and ID card will be issued in Appendix 20B of HBPv1. ID card is valid for 3 years

ITC(HS) CODE

Following the international Classification System known as Harmonized Commodity Description and Coding System evolved by the World Customs Organisation, India is following an extended version of the above system of classification called the Indian Trade Classification based on Harmonized Commodity Description and Coding System (ITC-HS code).

ITC-HS codes was adopted in India for import-export operations. Indian custom uses an eight digit ITCHS Codes to suit the national trade requirements.

Following the changes in the international classification norms, classification of traded commodities has undergone many changes.

ITC-HS codes are divided into two schedules. Schedule I describe the rules and guidelines related to import policies. Schedule I of the ITC-HS code is divided into 21 sections and each section is further divided into chapters. The total number of chapters in Schedule I is 98. Schedule II describe the rules and regulation related to export policies. The chapters are further divided into sub-headings under which different HS codes are mentioned. Schedule II of the ITC-HS code contain 97 chapters giving all the details about the guidelines related to the export policies.

Any changes or formulation or addition of new codes in ITC-HS Codes are carried out by DGFT (Directorate General of Foreign Trade). Perfecting commodity description, weeding out of defunct codes, addition of new codes, change of product description etc., are taken up periodically as a part of the ongoing process towards perfection. Amendments to the ITC (HS) Code at 8-digit level are carried out by DGCIS (Directorate General of Commercial Intelligence and Statistics), Kolkata.

IMPORT POLICY UNDER ITC (HS) CODE The liberalization of Indian economy started with the external sector. The Rupee was devalued in two stages in July 1991. This was immediately followed by abolition of direct export subsidies. Import licensing was abolished for many items, including capital goods. A new type of import license called Exim Scrip was introduced. Exim Scrip was available against export of goods and it could be sold freely for a consideration. The license was valid for import of a broad range of goods. So, importers wanted Exim Scrips and only exporters could earn them. The premium on sale of the Exim Scrip was an incentive for the exporters. In February 1992, the Union Budget introduced a dual exchange rate mechanism. Under the Liberalised Exchange Rate Mechanism (LERMS), Reserve Bank of India sold foreign exchange for essential purposes at official exchange rates. Other importers had to buy foreign exchange at market determined rates, where as the exporters could sell foreign exchange at a composite rate i.e.60% at market rates and 40% at official exchange rates. Exim Scrips were abolished when dual exchange rate mechanism was introduced.

The liberalization process called for abolition of controls. The 1992-97 Export and Import Policy (Exim Policy) heralded historic changes. It was the first five-year Policy. It was co-terminus with the Eighth Five Year Plan. The Policy recognized that trade can flourish only in a regime of substantial freedom. It reinforced the direction set by the trade policy reforms initiated in July 1991. The Policy complemented the changes in industrial and fiscal policies. The fundamental feature of the new Policy was to substantially eliminate licensing, quantitative restrictions and other regulatory and discretionary controls. Earlier, all goods were restricted for imports unless specifically permitted for imports. The new Policy ordained that all goods could be freely imported unless specifically restricted, through a Negative List of Imports. The Negative List was kept as small as possible and the Policy of the Govt. was to prune the list from time to time as the economy gained in strength. The restrictions were on the grounds of public policy. The restrictions were considered necessary for economic reasons as well as on the grounds of safety, security, environment, employment and the like. In the 1992-97 Policy, the List of Restricted Items consisted of 11 categories as under: (a)Consumer Goods (11 entries) (b)Precious, Semi-precious and other stones (5 entries) (c)Safety, Security and related items (6 entries) (d)Seeds, Plants and Animals (4 entries) (e)Insecticides and Pesticides (2 entries) (f)Electronic Items (9 entries) (g)Drugs and Pharmaceuticals (9 entries) (h)Chemicals and Allied Items (2 entries)

(i)Items Relating to Small Scale Sector (16 entries) (j)Miscellaneous Items (15 entries) (k)Special Categories (2 entries)

Also, eight categories of items like Fertilizers, Petroleum Products, Edible Oils etc. imported only by Designated Canalising Agencies like STC, MMTC, IOC etc. but the Govt. could grant licenses to others to import these goods.

The Policy, however, did not allow import of second hand goods, except machinery for select sectors. The machinery had to be not more than 7 years old and have a residual life of at least five years. Some other sundry restrictions and relaxations of no significant impact were also maintained. The Policy announced that certain categories of exports and exporters would be eligible to receive Special Import Licenses (SIL). These included deemed exports, Export Houses, Star Trading Houses and manufacturers who acquire ISO 9000 (series) or BIS 14000 (series) certification of quality. The Special Import Licenses were valid for import of specified items in the Negative List of Imports i.e. items that could not be imported freely. These licenses were freely transferable. So, the exporters who earned these licenses could earn a premium by selling the licenses to those who wanted to import the items that could not be otherwise imported without a license. The 1992-97 Exim Policy aimed at simplicity and transparency. It was supplemented by a Handbook of Procedures that was notified a month later i.e. on 30th April 1992. In line with the liberalized approach, the Handbook attempted to prescribe simple and transparent procedures that were easy to comply with and administer. It sought to rationalize various forms and make them computer compatible. The Exim Policy abolished Actual User condition for freely importable goods. Such a condition was applicable only for goods imported under a license or when notified so through a Public Notice. Imports by travellers were governed by Baggage Rules, notified by the Customs. Although the Policy was intended to remain stable for a period of five years, changes were required in the direction of liberalization and in response to any adverse situation. So, the Govt. used to amend the Policy as and when necessary through Public Notices and the Policy was also reviewed every year. Such reviews, sometimes, brought about significant changes. Clarifications were also issued from time to time regarding the correct interpretation of the Policy through IPC Circulars and instructions to the operating staff at the licensing offices and the Customs. The Handbook of Procedures 1992-97 specified that the import licenses would indicate the value in Rupees as well as foreign currency terms and that in case of depreciation of the Rupee, the value need not be got enhanced so long as the foreign currency value of the license covered the value of imports in foreign currency. This position continues till today. The Policy for imports has remained rather steady through the years. The idea has been to move items from the restricted list to the free list through the Special Import License route. Over a period, the Policy became quite pronounced that the restricted items would progressively move to SIL list and items from the SIL list would move to the free list. This Policy has remained consistent till the Special Import Licenses were abolished, in April 2001, when all the items, except a few, were moved to the Free List. In 1996, the Govt. introduced the Indian Trade Control (Harmonised System) of Classification called ITC (HS) Classification. Under the system all the goods were classified in eight or ten digits. This system continues till today, which has also been adopted by Customs and Excise.

The document ITC (HS) covers 21 Sections 99 Chapters (2-digit level). Each Chapter has Headings, Subheadings and Sub-sub-headings. The first two digits indicate the Chapter, the next two the Heading, the next two sub-heading and the last two sub-sub-heading. These entries total to 10700. There are about 1575 entries at the ten-digit level. The ITC (HS) is based on international system of classification of goods. Each Section has Section Notes and each Chapter has Chapter Notes. Each Chapter has Import Licensing Notes. The Interpretative Notes also are applicable, in case of any doubt. The ITC (HS) was developed by the DGCIS (Director General of Commercial Intelligence and Statistics). The Import Policy is assigned at the eight-digit level, the operative part of ITC (HS). Six digit subheadings which is not split further is converted into eight digit by adding two zeros at the end. In the case of textiles (Chapters 50-63), the ITC sub-headings have been used. Where the product description in the Exim Policy does not cover the eight-digit code description, the entry is broken into sub-groups at the ten-digit level. Under ITC (HS), against each entry, it is indicated as to whether the item is Freely importable or importable under a license or SIL or in accordance with any Public Notice. Any conditions for import are also indicated against the particular entry. Under this system, the importer has to locate his item in the ITC (HS) and find out whether an item is freely importable or subject to licensing or some conditions. This system continues till the present day.

Each Chapter has a licensing note at the end. For example in Chapter 74 Note no. 2 says Import of following types of copper scrap is permitted without a license to units registered with Ministry of Environment and Forests, Government of India. DGFTs Policy circulars also clarify the scope of certain entries in ITC (HS). For example, in Chapter 75 Imconnel Plates (of Nickel Alloys) when containing Nickel as a predominant part, it is classifiable under Exim Code No. 75062000 of ITC (HS) Policy Circular no. 49/(Re-99)/99-02 dated 20.01.2000.

When the Policy is given as State Trading Enterprise, only the nominated enterprise can import the item unless any other importer has been specifically licensed to import the item.

The ITC (HS) has certain General Notes at the beginning. These Notes cover, imports that do not involve any foreign exchange, import of free gifts and imports of beef, edible oils and processed food products, packaged products, goods subject to quality standards, meat and poultry products, primary agricultural products, textile and textile articles etc. Imports of these items are subject to certain additional conditions.

It is very important to understand the General Notes fully. These are the non-tariff barriers for imports. Here are some examples of the non-tariff barriers.

a) 155 items (dairy products, steel, electrical goods etc.) listed in App. III to ITC (HS) can be imported only if they comply with the BIS standards and the exporter is registered with Bureau of Indian Standards. b) Packaged goods ready for retail sale should bear maximum retail price, expiry date, contents etc. c) Import of primary agriculture products will be available only against import permits issued by Ministry of Agriculture d) All food products must comply with the provisions of Prevention of Food Adulteration Act, 1954

As a matter of Policy, all imported goods shall also be subject to domestic laws, rules, orders, regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods.

The ITC (HS) Schedule 1 has the following Appendices: |Appendix I | |Appendix II Convention of | | |Appendix - III of | | | |Appendix - IV | | |Appendix - V Act | |Hazardous Chemicals and Hazardous Waste | |

|[stands deleted vide Notification No. 35 (RE-2003)/2002-07 dated 16.02.2004 ] |Imports of Chemicals included in Schedule 2 to the Chemicals Weapons

|the United Nations

|List of items that can be imported only from exporters registered with Bureau

|Indian Standards and subject to meeting Indian Standards Ref. General Note no.6

|List of Parties categorized as operating under Article 5 paragraph 1 of the

|Montreal Protocol.

|List of import of narcotic drugs and psychotropic substances under the NDPS

|and NDPS Rules

India gives preference to imports from neighbouring countries and certain developing and least developed countries. The preference is by way of reduced import duties. For example, imports of a large number of item from Sri Lanka are totally free of duties.

Whenever an item is restricted for imports, any person who wants to import that item has to apply for an import license to the DGFT in the form given in Aayaat Niryaat Form of HB-1.

For every application of import license, a fee has to be paid. The schedule of fees is given in Appendix 21B of HB-1. The usual fee is. Rs.2 per thousand (i.e.0.2% of the license value) subject to a minimum of Rs.200 and maximum of Rs.1.50 lacs. During April 2006, submitting of application under Advance Licence, DEPB and EPCG were made compulsorily through EDI. To facilitate this 25% of reduction in application fees was allowed. If the application is filed under EDI under digital signature mode and fees transferred through electronically, only half the normal fee has to be paid, subject to a minimum of Rs.200 and maximum of Rs.75000. The license fee can be paid by way of a Demand Draft favouring the concerned licensing authority or by way of a treasury challan to be paid at specified branches of Central Bank of India, specified in Appendix 21B of HB-1. . The format of the challan is given in Appendix 21A of HB-1. There is also a provision to maintain a running deposit account with the licensing authorities. Procedure of electronic fund transfer is as per Appendix 21C of HB-1 Fees once paid can not be refunded once an application is filed. There are specific situations detailed in Appendix 21B, when the fee can be refunded. The procedure for claiming refund is detailed also as per Appendix 21B of HB-1.

Sometimes, the original import licenses are lost and a duplicate is required to be obtained. In such cases, the licensee should file an FIR with the nearest police station and an affidavit as give in Appendix 24 of HB-1. The licensing authority may issue a duplicate based on FIR, affidavit and a fee of Rs.200./-. Normally, the licenses are subject to Actual User condition i.e. the goods imported under the license can not be transferred, loaned or sold. But, some licenses are transferable. Such licenses or the goods imported under such licenses can be transferred. Usually, duplicates for such licenses cannot be issued, except for two categories known as DEPB and DFRC. For getting duplicates of such transferable DFRC (now DFIA) or DEPB licenses, the licensee, besides FIR and affidavit has to get a certificate of utilisation

from the Customs and an indemnity to the Government along with fee for 10% of the duplicate license value. Usually, used (second hand) goods cannot be imported without a license. However there are certain exceptions such as: a. Capital goods without any age restriction. b. Capital goods, moulds, fixtures, dies to be re-exported after use in India for a limited period c. Goods used by Indian exporters abroad for execution of a project d. Metallic scrap, waste, seconds or defectives e. Computers donated to educational institutions f. Woollen/Synthetic rags g. PET bottle/waste h. Ships for breaking

High seas sales refer to transfer of ownership when the goods are on high seas i.e. after the goods have been shipped but before their arrival in Indian shores. This is done to avoid sales tax. The high seas buyer has to file the bill of entry, pay the duties and clear the goods. The Policy allows such transactions. During the year 2006, word licence was replaced by Authorisation. This was done with a view to eliminate licence raj as per Commerce Ministers Speech. Both words Licence and Authorisation is being used to connote the Licence very frequently by the trade. The validity of various types of import licence from the date of issue of licence will be as follows: |1 |Advance Licence, DFRC, DFIA (including Advance Authorisation |24 months | |for annual requirement and replenishment licence for Gem & | | |Jewellery as per Chapter 4 of the Policy |2 |EPCG Licence (other than spares) | |36 months | | | |

|3 |EPCG Licence for spares, refractories, catalysts and | |consumables |EPCG license

|Co-terminus with the EO period of the| | |24 months |

|4 |Others including CCP, and DEPB unless other specified |5 |Advance authorisation(licence) / DFIA for deemed

|24 months or coterminous with the |

| |exports(including Advance authorisation for annual | |requirement |6 |Export Licence /Authorisation

|contracted duration of execution of | | |

|the project whichever is later |12 months

However, in case of import of spares, the validity of the EPCG Licence is coterminous with the validity of the export obligation period. Where date of expiry of licence fails before last day of the month, it is deemed to be valid until the last day of the month e.g. a license expiring on 2nd Dec. is automatically valid till 31st Dec. This proviso is applicable even for a revalidated licence/certificate /permission.

The validity of an import licence is decided with the reference to the date of shipment / despatch of goods from the supplying country and not the date arrival of goods at an Indian Port. The provisions to decide date of shipment/dispatch for the purposes of import through different mode of transportation are given in Chapter 9 of Handbook. In case of DEPB it must be valid on the date of clearance of goods as it is in the nature of duty credit entitlement, relaxation as to validity at time of shipment/despatch of goods from supplying country is not applicable in this case. . Similarly, where the date of expiry or either original or extended export obligation period falls before the last day of the month, such export obligation period will be deemed to be valid until the last day of the month. The licences, except those which are freely transferable, may be revalidated for a period of six months at a time but not beyond a period of 24 months reckoned from the date of expiry of validity period. An application for revalidation of licence is to be made to licensing authority concerned in the prescribed form alongwith fee of Rs. 200/-. However, in cases where revalidation of licence is to be considered by DGFT, the original application alongwith Treasury Receipt (TR) / Demand Draft is to be submitted to the regional licensing authority concerned and the self attested copy of the document is to be submitted to DGFT.

EXPORT POLICY UNDER ITC(HS) CODE

1992-97 Exim Policy brought in significant changes in the Policy for imports. Changes in the Export Policy were similar, on paper, but in terms of substance the changes were not too dramatic. The Policy changes since then have also not been too drastic. Essentially, the Govt. Policy has been to allow the export of manufactured products quite freely but restrict the goods of plant origin, animal origin and mineral origin. The restrictions are essential in public interest. For example, free exports of agricultural produce might create scarcity within the country something no Govt. wants. There are other restrictions due to international commitments under multilateral and bilateral treaties, which are also to be respected. For example, exports of textiles to developed countries are restricted through quotas. Exports of ozone depleting substances are restricted through Montreal Convention. Exports of hazardous substances are subject to Basel Convention. Just like the Policy for imports, the 1992-97 Exim Policy, freely permitted exports of all goods, except those covered by Negative List of Exports. The Negative List of Exports covered by Chapter XVI of the Policy consisted of six Parts as under: |Para |No. |158 | | |159 | | | | | |160 | | |161 | | |IV | | | | | |III | | |II |Part No.|Title | |I | | | | |Types of Goods Illustrative |Entries | | |No. of |

|Prohibited Goods

|Wild life, exotic birds, wild flora, beef, human|6 | |

|skeletons, tallow, fat, oils of animal origin | |etc., wood and wood products etc., |Exports Permitted |

|Cattle, Camel, Coconut and copra, chloroquin |51 |

|subject to licensing |phosphate, fur of domestic animals, hides and | | | | | |skins, industrial leathers, uranium, plutonium | |etc., radium ores etc., milk, pulses, rice bran,| |raw silk, military stores etc., seeds, vegetable| |oils, sea weeds, silk worms etc. |Exports permitted | | | | |

|Natural rubber, handicrafts made of peacock tail|11 |

|subject to quantitative|feathers, iodised salt, wheat straw, brown sea | |ceilings |weeds, sunflower seeds etc. | | |10

|Exports permitted

|Petroleum Products, Mineral ores and

| | |162 | |

| | |V | |

|through Canalising |Agencies

|concentrates, mica waste, niger seeds, onions, | | |

|powder milk etc.

|Items which may be |exported without a

|Arms and ammunition, Basmati rice, De-oiled

|46 |

|groundnut cake, grains and flour of wheat, rice | | |

|license but subject |etc., handicrafts

|to terms and conditions specified in |made of sandalwood, raw cotton, sesame seeds, textiles subject | |the Handbook of Procedures |to quotas, acetic anhydride, cotton waste, slk goods etc. |

The Policy has generally been to respond to the domestic requirements. For example, sugar was restricted for export when there was a shortage in the country but freely allowed for export when there was a surplus. Similarly, ceilings are released in times of surplus but not released in times of shortage. In 1996, the Export Policy was also covered under Schedule II to ITC (HS) classification of Import and Export Items, but it works for exports in quite a different way than for imports. Schedule II has two Parts Table A and Table B. Essentially, Part A lists the items covered by more than one Chapter of ITC (HS) e.g. samples - and Part B covers specific entries in the ITC (HS). Each entry consists of description of the item, nature of restriction and conditions, if any. Items not mentioned in Table A or Table B can be freely exported i.e. without a license. Here is how Table A (goods falling in more than one Chapters of ITC (HS) classification) specifies the restrictions (illustrative) : |Code |0001 | |0002 | | | | |Item Description |Policy |Nature of Restriction |Prohibited |exported | |

|All forms of wild animals including their |parts and products |

|Not permitted to be | |Subject to conditions

|Exports of certain textile products of cotton,|Free |wool and man-made fibres and blends, which are| |subject to MOUs /Agreement between India or | |Canada or EEC or Norway or USA as the case may| |be | | |

|notified by the Government| |from time to time | | |

|0005 | | |0008 |

|Special Chemicals, Organisms, Materials,

|Prohibited/

|Exports governed as per |

|Equipments and Technologies as specified in |Restricted /Free |the conditions indicated | |Schedule-2 to Appendix 3 of this book | |in Appendix - 3 |

|Any other item whose exports are regulated by |Restricted |a Public Notice issued by the DGFT | |license

|Exports permitted under a | |

Here is how Table B (Goods falling within specific Chapters of ITC (HS) Classification) specifies the restrictions |Code |0102 |0301 | | |Item Description |Policy |Camel |Restricted |Free |Nature of Restriction |Exports permitted under a license | |

|Marine Products |

|Subject to pre-shipment quality inspection as may be | |

|specified by the Government

|through a notification |27091 | |2302 | |9904 | | | |Crude Oil |State Trading |Enterprises |Rice Bran, raw and |boiled |Condoms | | |Free |

| |Exports through MMTC Ltd. | |Exports permitted under license | |No Objection Certificate from Ministry of | |Health and Family Welfare | | |

|Restricted |

The Schedule II has five Appendices as under : |Appendix No. |Title |1 | |2 |List of items list | |

|Exports permitted against the terms and |conditions mentioned |

|Military Stores specified items |

|Wild plants/herbs in the prohibited list but |Plants and plant portions, derivatives |

| | |3 | | |4 | |5 | |

|permitted on fulfillment of certain |conditions |etc.

|and their extracts, herbal formulations | |

|Special Chemicals, Organisms, Equipment and |Chemicals included in Schedule 1 to the | |Technologies (SCOMET) permitted only against |Chemical Weapons Convention, Nuclear |a license |materials etc. | |CFCl3 (CFC-11), CF3Cl (CFC-13), CCl4, | |CHCl3 etc. | | | | |

|Export of Chemicals covered by Montreal |Protocol - ozone depleting substances

|List of SSP and DAP manufacturers who can |DAP/SSP |export fertilizers subject to fulfilment of | |certain conditions |

The Exim Policy specified that all exports contracts shall be denominated in foreign currency. Contracts for which payments are received through Asian Clearing Union may be denominated in the currency of the exporter, importer or in any freely convertible currency and all such payments shall be deemed to have been received in convertible currency. In respect of exports to Rupee Payment Areas (RPA) countries/former RPA countries, the payments could be made under the terms of the Trade Agreement/Protocol signed with such countries. The Director General of Foreign Trade was also empowered to notify such procedures as he deemed fit in respect of payments to be received through escrow accounts

Top

CHAPTER 6

EXPORT PROMOTION MEASURES

There are various promotional measures under Foreign Trade Policy and these are summarized as follows

1. Assistance to States for Infrastructure Development of Exports (ASIDE) 2. Marketing Development Assistance (MDA) 3. Market Access Initiative (MAI) 4. Towns of Export Excellence (TEE) 5. Star Export Houses 6. Served from India Scheme (SFIS) 7. Vishesh Krishi and Gram Udyog Yojana (VKGUY) (Special Agriculture and Village Industry Scheme) 8. Focus Market Scheme (FMS) 9. Focus Product Scheme (FPS) 10. High-Tech Products Export Promotion Scheme 11. Gems and Jewellery Sector

1. Assistance to States for Infrastructure Development of Exports (ASIDE)

Scheme for Assistance to States for Infrastructure Development of Exports (ASIDE) is formulated to encourage State Governments to participate in promoting exports, and is administered by Department of Commerce.

Objectives of ASIDE include: (i) Developing infrastructure such as roads connecting production centers with ports, (ii) Setting up of Inland Container Depots (ICD) and Container Freight Stations (CFS), (iii) Creation of new State level export promotion industrial parks / zones, (iv)Augmenting common facilities in existing zones, (v) Equity participation in infrastructure projects, (vi)Development of minor ports and jetties,

(vii) Assistance in setting up of common effluent treatment facilities, (viii) Stabilizing power supply, and (ix) Any other activity as may be notified by Department of Commerce.

While the responsibility for promotion of exports and creating the necessary specialised infrastructure is largely undertaken by the Central Government, the States too have to play an equally important role in this endeavour. The role of the State Governments is critical from the point of view of boosting production of exportable surplus, providing the infrastructural facilities such as land, power, water, roads, connectivity, pollution control measures and a conducive regulatory environment for production of goods and services.

The ASIDE scheme aims at encouraging the active involvement of State Governments for development of export infrastructure through assistance linked to export performance. The scheme provides an outlay for development of export infrastructure which is distributed among the States, inter-alia, on the basis of the States export performance in the previous year.

The following Schemes which were implemented to help create infrastructure for exports in specific locations and to meet specific objectives, were merged with the ASIDE Scheme: i. Export Promotion Industrial Parks Scheme (EPIP) ii. Export Promotion Zones scheme (EPZ) iii. Critical Infrastructure Balancing Scheme (CIB) iv. Export Development Fund (EDF) Scheme for the North East and Sikkim (implemented since 20002001)

The on-going projects under these schemes are also being funded by the States from the resources provided under the ASIDE scheme.

The activities aimed at development of infrastructure for exports can be funded from the scheme provided such activities have an overwhelming export content and their linkage with exports is fully established. The specific purposes for which the funds allocated under the Scheme can be sanctioned and utilised are as follows: -

a) Creation of new Export Promotion Industrial Parks/Zones (including Special Economic Zones (SEZs)/Agri-Business Zones) and augmenting facilities in the existing Zones. b) Setting up of electronic and other related infrastructure in export conclaves. c) Equity participation in infrastructure projects, including the setting up of SEZs. d) Meeting the requirements of capital outlay of EPIPs/EPZs/SEZs. e) Development of complementary infrastructure such as roads connecting the production centres with ports, setting up of Inland Container Depots and Container Freight Stations. f) Stabilizing power supply through additional transformers and islanding of export production centres, etc. g) Development of minor ports and jetties of a particular specification to serve exports. h) Assistance for setting up Common Effluent Treatment Plants. i) Projects of national and regional importance. j) Activities permitted as per the Export Development Fund in relation to the North East and Sikkim.

2. Marketing Development Assistance (MDA)

MDA Scheme is intended to provide financial assistance for a range of export promotion activities implemented by Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs) on a regular basis every year. The scheme is administered by Department of Commerce. The scheme has been formulated to stimulate and diversify the countrys exports with the following objectives: 1. Assist individual exporters for export promotion activities abroad 2. Assist Export Promotion Councils (EPCs) to undertake export promotion activities for their product(s) and commodities 3. Assist approved organisations/trade bodies in undertaking limited exclusive non-recurring innovative activities connected with export promotion efforts for their members 4. Assist EPCs to contest countervailing duty/anti dumping cases initiated abroad 5. Assist Focus Area export promotion programmes in specific regions abroad like Focus LAC, Focus Africa, Focus CIS and Focus ASEAN+ 2 programmes

6. Promote residual essential activities connected with marketing promotion efforts abroad

Financial assistance with travel grant is available to exporters traveling to Latin America, Africa, CIS region, ASEAN countries, Australia and New Zealand. In other areas, financial assistance without travel grant is available. MDA assistance is available for exporters with annual export turnover upto Rs 15 Crores

3. Market Access Initiative (MAI) Scheme

MAI scheme is intended to provide financial assistance for medium term export promotion efforts with sharp focus on a country / product, and is administered by the Department of Commerce. Under the scheme, assistance is extended to the Departments of Central Government and Organizations of Central/State Governments, Export Promotion Councils, Registered Trade Promotion organizations, Commodity Boards, Recognized Apex Trade Bodies, Recognized Industrial Clusters, Individual Exporters and other eligible entities as may be notified. A whole range of activities can be funded under MAI scheme.These include, amongst others, (i) Market studies, (ii) Setting up of showroom / warehouse, (iii) Sales promotion campaigns, (iv) International departmental stores, (v) Publicity campaigns, (vi) Participation in international trade fairs, (vii) Brand promotion, (viii) Registration charges for pharmaceuticals, and (ix) Testing charges for engineering products.

Each of these export promotion activities can receive financial assistance from Government ranging from 25% to 100% of total cost depending upon activity and implementing agency.

4. Towns of Export Excellence (TEE)

A number of towns in various regions have emerged as dynamic industrial areas contributing handsomely to Indias exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets.

Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns for Export Excellence based on potential for growth in exports. However for Towns for Export Excellence in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs 250crores. Recognized associations of units will be able to access funds under MAI scheme for creating focused technological services. Common service providers in these areas shall be entitled for EPCG scheme. Further, such areas will receive priority for assistance under ASIDE scheme.

The Notified Towns of Export Excellence are listed in Appendix 7 of Handbook of Procedures Vol.1 as detailed below: |S.No |1 |2 |3 |4 |5 |6 |7 | |8 |9 |10 |Town of Export Excellence |Tirupur |Ludhiana |Panipat |Kanoor |Karur |Madurai |State |Product Category |Hosiery |Woollen Knitwear |Woollen Blanket |Handlooms |Handlooms |Handlooms |Seafood | |Handicraft |Handlooms |Pharmaceuticals | | | | | | | | | | |

|Tamil Nadu |Punjab |Haryana |Kerala |Tamil Nadu |Tamil Nadu

|AEKK (Aroor, Ezhupunna, Kodanthuruthu|Kerala |& Kuthiathodu) |Jodhpur |Kekhra |Dewas | |Rajasthan |Uttar Pradesh |Madhya Pradesh |

|11 |12

|Alleppey |Kollam (Quilon)

|Kerala |Kerala

|Coir Products |Cashew Products

| |

5. Star Export Houses

Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zone (AEZs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs) shall be eligible for applying for status as Star Export Houses. The applicant shall be categorized depending on his total FOB/FOR export performance during the current plus the previous three years. For Export House Status(EH), export performance is necessary in atleast 2 out of 4 years (i.e current plus previous three years):

| |Category |Export House(EH) |Star Export House(SEH) |Trading House(TH) |Star Trading House(STH) |Premier Trading House(PTH)

| |Performance (in rupees) |20 crore |100 crore |500 crore |2500 crore |

| | | | | | 10000 crore |

Note:

1. Exporters in Small Scale Industry (SSI) / Tiny Sector /Cottage Sector, Units registered with KVICs / KVIBs,Units located in North Eastern States, Sikkim and Jammu & Kashmir, Units exporting handloom /handicrafts / hand knotted or silk carpets, exporters exporting to countries in Latin America / CIS / subSaharan Africa as listed in Appendix-9, Units having ISO 9000 (series) / ISO 14000 (series) / WHOGMP / HACCP / SEI CMM level-II and above status granted by agencies listed in Appendix-6 of HBP v1, exports

of services and exports of agro products shall be entitled for double weightage on exports made for grant of star export house status. Double Weightage shall be admissible to Merchant as well as Manufacturer Exporters. However, a shipment can get double weightage only once in any one of above categories. 1(a) Transfer of export performance from one to another is not permitted. Therefore disclaimer system shall not be allowed for counting of export turnover. 2. Exports made on re-export basis shall not be counted for recognition. 3. Exports made by subsidiary of a limited company shall be counted towards export performance of limited company for recognition only if limited company has a majority share holding in subsidiary company. Privileges available to Star Export Houses A Star Export House shall be eligible for the following facilities: i. Licence/certificate/permissions and Customs clearances for both imports and exports on selfdeclaration basis. ii. Fixation of Input-Output norms on priority within 60 days; iii. Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels; iv. 100% retention of foreign exchange in EEFC account; v. Enhancement in normal repatriation period from 180 days to 360 days. vi. Exemption from furnishing of Bank Guarantee in Schemes under this Policy. SEHs and above shall be permitted to establish Export Warehouses, as per Department of Revenue guidelines vii. For status holders, a decision on conferring of ACP Status shall be communicated by Customs within 30 days from receipt of application with Customs. viii. As an option, for Premier Trading House (PTH), the average level of exports under EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of 3 years.

6. Served form India Scheme [SFIS]

The objective is to accelerate growth in export of services so as to create a powerful and unique Served from India brand, instantly recognized and respected world over. Entitlement: All Service Providers, of services listed in Appendix 10 of HBP v1, who have a total free foreign exchange earning of at least Rs. 10 Lakhs in preceding financial year shall qualify for Duty Credit scrip. For Individual Service Providers, minimum would be Rs 5 Lakhs. All Service Providers (except Hotels, Restaurants and other Service Providers in Tourism Sector) shall be entitled to Duty Credit scrip equivalent to 10% of free foreign exchange earned during preceding financial year. However services and service providers as listed in Paragraph 3.18.1 of HBP v1 shall not be entitled. Remittance: Free foreign exchange earned through International Credit Cards and other instruments as permitted by RBI for rendering of service shall also be taken into account for Duty Credit scrip. Hotels etc.: Hotels of one-star and above (including managed hotels) and heritage hotels approved by Department of Tourism (DoT) and other Service providers in tourism sector registered with DoT shall be entitled to duty credit scrip equivalent to 5% of free foreign exchange earned during preceding financial year. Stand-alone restaurants will be entitled to duty credit equivalent to 10% of foreign exchange earned by them in preceding financial year. Imports Allowed: Duty Credit scrip may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables; that are otherwise freely importable under ITC (HS). Imports shall relate to any service sector business of applicant. Utilization of Duty Credit scrip earned shall not be permitted for payment of duty in case of import of vehicles, even if such vehicles are freely importable under ITC (HS). In case of hotels, golf resorts and stand-alone restaurants having catering facilities, Duty Credit scrip may also be used for import of consumables including food items and alcoholic beverages.

Non Transferability of Entitlement: Entitlement / goods (imported / procured) shall be non transferable (except within group company and managed hotels) and be subject to Actual User condition.

Procurement from Domestic Sources Utilization of Duty Credit Scrip shall be permitted for payment of excise duty in terms of DoR notification issued for procurement from domestic sources, of capital goods including spares, office equipment and professional equipment, office furniture and consumables.

7. Vishesh Krishi and Gram Udyog Yojana (Special Agriculture and village industry)

The objective of VKGUY is to promote exports 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; and (iv) Forest Based Products, for exports w.e.f 01.04.2007 and (v) Other products, as notified from time to time. Such products shall be listed in Appendix 37A of HBP v1. Entitlement: Duty Credit scrip benefits are granted with an aim to compensate high transport costs. Exporters, of products notified in Appendix 37A of HBP v1, shall be entitled for Duty Credit scrip equivalent to 5% of FOB value of exports (realized in free foreign exchange). However, Duty Credit scrip benefits shall be granted only at a reduced rate of 3.5% of FOB value of exports (realized in free foreign exchange) in such cases where exporter has availed benefits under Chapter 4 of Foreign Trade Policy for import of Agriculture Inputs (other than catalysts, consumables and packing materials) relating to export item under this scheme. However, for exports made w.e.f. 1.4.2008, Flowers, Fruits and Vegetables, as listed in Table 13 of Appendix 37A, shall be entitled to an additional duty credit scrip equivalent to 2.5% of FOB value of exports; over and above the 5% / 3.5% VKGUY entitlement. Period of exports for which entitlement is granted is given in Appendix 37A of HBP v1. However, new additional products notified / clarified in Appendix 37A of HBP v1 shall be entitled for Duty Credit Scrip on exports, w.e.f 1.4.2008, unless otherwise specified. 3.8.2.1 Exports made by EOUs / BTPs who do not avail direct tax benefits/ exemption shall be eligible, provided the same is not covered as given below

Following exports shall not be taken into account for Duty Credit scrip entitlement: (i) Export of imported goods covered under Para 2.35 of Foreign Trade Policy; [i.e. Goods imported, in accordance with FTP, may be exported in same or substantially same form without an Authorization provided that item to be imported or exported is not restricted for import or export in ITC (HS).] (ii) Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India; (b) Deemed Exports; (c) Exports made by SEZ units; and (d) Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).

For exports during 2008-09, all Status Holders (having status recognition w.e.f 1.4.2008) exporting products covered under ITC HS Chapters 1 to 24, shall be incentivized with duty credit scrip equal to 10% of FOB value of agricultural exports (including benefits entitled under paragraph 3.8.2) provided that the total benefits for all status holders put together does not exceed Rs 100 Cr (i.e. Rs 50 Cr for each half year) and the conditions specified in Para 3.19.10 of HBP v1 (RE2008) are satisfied. Zonal Office CLA, New Delhi shall be the licensing office for grant of the benefit to all status holders. The following capital goods / equipments shall be permitted for import:(i) Cold storage units including Controlled Atmosphere (CA) and Modified Atmosphere (MA) Stores, precooling Units and mother storage for onions etc.; (ii) Pack Houses (including facilities for handling, grading, sorting and packaging etc.); (iii) Reefer Van / Containers; and (iv) Other Capital Goods / Equipments as may be notified in Appendix 37F. Assessment of applicants proposal would be done with respect to past export performance and on a first come first served basis

8. Focus Market Scheme

a) The objective is to offset the high freight cost and other disabilities to select international markets with a view to enhance our export competitiveness to these countries.

b) Exports of all products to the notified countries shall be entitled for duty credit scrip equivalent to 2.5% of the FOB value of exports for each licensing year commencing from 1st April, 2006. The scrip and the items imported against it would be freely transferable. c) New additional Markets notified in Appendix 37C of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2008. d) W.e.f 01.4.2008 Coverage of FMS has been increased and additional 10 countries have been included. These are Mongolia, Bosnia-Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia. e) FMS/FPS would also be calibrated, so that products of general high export intensity, presently not covered under FPS, but which have low penetration in countries, not covered under FMS, would be considered for export incentives as a focus product for that particular country w.e.f 01.04.2008

Under the Scheme, export to all countries as given in Appendix-37- C of Handbook of Procedures (Vol. I) shall qualify for export benefits as above. Items which are restricted or prohibited for export under Schedule-2 of the Export Policy in the ITC (HS) Classification of Export and Import items shall not be eligible for any benefits.

The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the scheme: a. Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment.

[Goods imported, in accordance with FTP, may be exported in same or substantially same form without an Authorization provided that item to be imported or exported is not restricted for import or export in ITC (HS).]

b. Export turnover of units operating under SEZ/EOU/EHTP/STPI/ BTP Schemes or supplies made to such units or products manufactured by them and exported through DTA units. c. Deemed Exports. d. Service Exports. e. Diamonds and other precious, semi precious stones.

f. Gold, silver, platinum and other precious metals in any form, including plain and studded Jewellery. g. Ores and Concentrates, of all types and in all forms. h. Cereals, of all types. i. Sugar, of all types and in all forms. j. Crude / Petroleum Oil & Crude / Petroleum based Products covered under ITC HS codes 2709 to 2715, of all types and in all forms. k. Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).

APPENDIX 37C

LIST OF NOTIFIED MARKETS UNDER FOCUS MARKET SCHEME (FMS)

|Sr. No.

|Focus Market Code

|Country Code

|Country |

|Countries in Latin American Block |1 |2 |3 |4 |5 |6 |7 |8 |L 001 |L 002 |L 003 |L 004 |L 005 |L 006 |L 007 |L 008 |015 |039 |073 |109 |317 |319 |427 |433 |ARGENTINA |BOLIVIA |CHILE |ECUADOR |PARAGUAY |PERU |URUGUAY |VENEZUELA | |011 |035 |041 |ANGOLA |BENIN |BOTSWANA | | | | | | | | | |

|Countries in African Block |9 |10 |11 |A 001 |A 002 |A 003

|12 |13 |14 |15 |16 |17 |18 |19 |20 |21 |22 |23 |24 |25 |26 |27 |28 |29 |30 |31 |32 |33 |34 |35 |36

|A 004 |A 005 |A 006 |A 007 |A 008 |A 009 |A 010 |A 011 |A 012 |A 013 |A 014 |A 015 |A 016 |A 017 |A 018 |A 019 |A 020 |A 021 |A 022 |A 023 |A 024 |A 025 |A 026 |A 027 |A 028

|050 |053 |057 |061 |063 |067 |069 |085 |087 |115 |116 |117 |135 |141 |143 |167 |169 |199 |227 |229 |231 |241 |243 |249 |255

|BURKINA FASO |BURUNDI |CAMEROON |CANARY IS |CAPE VERDE IS |C AFRI REP |CHAD |COMOROS |CONGO P REP |ETHIOPIA |ERITREA |EQUTL GUINEA |FR S ANT TR |GABON |GAMBIA |GUINEA |GUINEA BISSAU |COTE D' IVOIRE |LESOTHO |LIBERIA |LIBYA |MADAGASCAR |MALAWI |MALI |MAURITANIA | | | | | | | | | | | | | | | |

| |

|37 |38 |39 |40 |41 |42 |43 |44 |45 |46 |47 |48 |49 |50 |51 |52 |53 |54 |55 |56 |57

|A 029 |A 030 |A 031 |A 032 |A 033 |A 034 |A 035 |A 036 |A 037 |A 038 |A 039 |A 040 |A 041 |A 042 |A 043 |A 044 |A 045 |A 046 |A 047 |A 048 |A 049

|257 |265 |267 |269 |289 |339 |345 |347 |349 |353 |355 |357 |363 |371 |385 |399 |407 |417 |459 |461 |463

|MAURITIUS |MOROCCO |MOZAMBIQUE |NAMIBIA |NIGER |REUNION |RWANDA |SAHARWI A.DM RP |SAO TOME |SENEGAL |SEYCHELLES |SIERRA LEONE |SOMALIA |ST HELENA |SWAZILAND |TOGO |TUNISIA |UGANDA |CONGO D. REP. |ZAMBIA |ZIMBABWE | | | | | | |

| | |

| | | |

| |

| |

| |

|ADDITIONAL FOCUS MARKETS |Note: |

|Additional Focus Markets are eligible for benefits on exports w.e.f 1.4.2007.

|Sr. No.

|Focus Market Code

|Country Code

|Country |

|Countries in CIS Block |1 |2 |3 |4 |5 |6 |7 |8 |9 |10 | |11 |12 |13 |14 |15 | |16 |W001 | |L009 |L010 |L011 |L012 |L013 | | | | | |DOMINICAN REPUBLIC |EL SALVADOR |GUATEMALA |JAMAICA |TRINIDAD AND TOBAGO | |SERBIA AND MONTENEGRO B |C001 |C002 |C003 |C004 |C005 |C006 |C007 |C008 |C009 |C010 | | | | | | | | | | |ARMENIA |AZERBAIJAN |BELARUS |GEORGIA |MOLDOVA |KAZAKHSTAN |KYRGYZ REPUBLIC |TAJIKISTAN |TURKMENISTAN |UZBEKISTAN |

| | | | | | | | | |

| | | | |

|New ADDITIONAL FOCUS MARKETS |Note: |

|New Additional Focus Markets are eligible for benefits on exports w.e.f 1.4.2008. | |Sl. No. |Focus Market Code |Country Code |Country |

|1 |2 |3 |4 |5 |6 |7 |8 |9 |10

|AS1 |A50 |A51 |A52 |L14 |L15 |EE1 |EE2 |EE3 |EE4

|MONGOLIA |DJIBOUTI |SUDAN |GHANA |COLOMBIA |HONDURAS |ALBANIA |MACEDONIA |BOSNIAHRZGOVIN |CROATIA | | | | |

| |

| |

9. Focus Product Scheme a) The objective is to incentivise export of such products, which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products.

b) Exports of notified products (as in Appendix 37D of HBP v1) through EDI enabled ports to all countries shall be entitled for Duty Credit scrip equivalent to 1.25% of FOB value of exports for each licensing year commencing from 1st April, 2006. However, additional products notified / clarified in Appendix 37D of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2007. c) for exports made w.e.f. 1.4.2008, Toys and Sports Goods as detailed in Table 2 of Appendix 37D shall be entitled to duty credit scrip equivalent to 6.25% of FOB value of exports. Further, for exports made w.e.f. 1.4.2008, High Value Added Manufactured goods, as notified in Table 9 of Appendix 37D, shall be entitled to duty credit scrip eqivelent to 2.5% of FOB value of exports. d) New additional products notified / clarified in Appendix 37D of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2008.

Exports made by EOUs / EHTPs / BTPs who do not avail direct tax benefits / exemption shall be eligible, provided they are specifically excluded from computation as given below.

Following exports shall not be taken into account for computation of entitlement. a. (i) Export of imported goods covered under Para 2.35 of FTP; (ii) Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India; b. Export turnover of SEZ units or supplies made to such units or SEZ products exported through DTA units; and c. Deemed Exports.

LIST OF NOTIFIED PRODUCTS UNDER FOCUS PRODUCT SCHEME (FPS) |Sl. No. |A | | | |B | | | |C | |D | |E | |PRODUCT CATEGORY |Admissible from Export Date |

|VALUE ADDED LEATHER PRODUCTS & LEATHER |1.4.2006

|FOOTWEAR |(Table 1) |

| |

|SPORTS GOODS, FIRE WORKS AND STATIONERY |1.4.2006

|ITEMS |(Table 2) |HANDICRAFTS ITEMS |(Table 3) |HANDLOOM PRODUCTS |(Table 4 )

| | |1.4.2006 | |1.4.2006 | |1.4.2006

| | | | | | | |

|VALUE ADDED FISH PRODUCTS |(Table 5) |

|F | |G | |H | | |I | | | |J | |

|VALUE ADDED COIR PRODUCTS |(Table 6) |

|1.4.2006 | |1.4.2007 |

|ADDITIONAL FOCUS PRODUCTS |(Table 7) |

|HIGH TECH PRODUCTS (PARA 3.11 OF FTP), as |As notified in Appendix 37E

|notified in Appendix 37E

| |1.4.2008

|HIGH VALUE ADDED MANUFACTURED GOODS

|(Table 9) |(TO BE NOTIFIED)

| |

| | |1.4.2008 | | | |

|MARKET LINKED FOCUS PRODUCTS |( Table 10) |(TO BE NOTIFIED) |

10. High-Tech Products Export Promotion Scheme [HTPEPS]

A new scheme to give impetus to exports of high tech products, has been launched by the Foreign Trade Policy (As amended on 19th April 2007).

Objective: The objective is to reward exports of specified High Technology products.

Entitlement: Exports of notified High Tech products (as notified in Appendix 37E of HBP v1) through EDI enabled ports to all countries, shall be entitled for Duty Credit scrip equivalent to

a) 1.25 % of FOB value of exports; or b) 5% of incremental growth in FOB value (realized as per BRC/ FIRC) of exports of notified products for current year (i.e., 2008- 09) over previous year (i.e., 2007-08) (all taken together) and similarly for each subsequent licensing year. Exporter may opt for either (a) or (b) above. However, applicants with nil exports in base year shall not be eligible

Ceiling: Duty Credit Scrip shall not exceed Rs 15 Cr for an exporter for all shipments done in a licensing year put together, for which benefit is being claimed under this scheme.

Ineligible Exports / Categories: Following shall not be counted for entitlement (i) Export of imported goods covered under Para 2.35 of Foreign Trade Policy; (ii) Exports originating in third country but transshipped through India; (iii) Exports of SEZ units or SEZ products exported through DTA units; and (iv) Deemed Exports.

11. Gems and Jewellery

To sharpen core strength of promising Gems and Jewellery sector, and to give them a competitive edge Exporters of Gems and Jewellery can import / procure duty free inputs for manufacturing. Replenishment Authorisation Exporters may obtain Replenishment (REP) Authorisations from RA in accordance with procedure specified in HBP v1. Replenishment authorisation may also be for consumables as per paragraph 4A.28 of HBP v1.

Export of Cut & Polished Diamonds for Certification / Grading

Following are authorized laboratories for certification / grading of diamonds of 0.25 carat and above: (i) Indian Diamond Institute, Surat, Gujarat; (ii) Gemological Institute of America (GIA), USA; (iii) The Robert Mouawad Campus, International Gemological Institute (IGI) USA; (iv) European Gemological Laboratory (EGL), USA; (v) Hoge Road Voor Diamond, Antwerp, (HRD); (vi) World Diamond Centre of Diamonds High Council, Antwerp, Belgium; (vii) Central Gem Laboratory, Miyagi Building, 5-15-14 Ueno Taito-Ku, Tokyo, Japan; (viii) American Gem Society Laboratories (AGS Laboratories), 8917 West Sahara Avenue, Las Vegas, Nevada 89117; (ix) Diamond Trading Company, Maidenhead, U.K; and (x) International Diamond Laboratories DMCC, Dubai.

An exporter (with turnover of Rs 5 crores annual export for last three years) may export cut & polished diamonds (each of 0.25 carat or more) abroad to any of above agencies / laboratories with re-import facility at zero duty within 3 months as per Department of Revenue guidelines.

Schemes for Gold / Silver / Platinum Jewellery Exporters of gold / silver / platinum jewellery and articles thereof may import their essential inputs such as gold, silver, platinum, mountings, findings, rough gems, precious and semi-precious stones, synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf.

Nominated Agencies Nominated agencies are MMTC Ltd, Handicraft and Handloom Export Corporation (HHEC), State Trading Corporation (STC), the Project and Equipment Corporation of India Ltd (PEC), Premier Trading House under Paragraph 3.5.2 of FTP and any other agency authorised by RBI. Exporters (except EOU / units in SEZ) may obtain gold / silver / platinum from nominated agency(s). A bank authorised by RBI is allowed export of gold scrap for refining and import standard gold bars as per RBI guidelines.

Items of Export Following items, if exported, would be eligible for facilities: (a) Gold jewellery,including partly processed jewellery and articles including medallions and coins (excluding legal tender coins), whether plain or studded, containing gold of 8 carats and above; (b) Silver jewellery including partly processed jewellery, silverware, silver strips and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% silver by weight; (c) Platinum jewellery including partly processed jewellery and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% platinum by weight.

Value Addition Value Addition (VA) for gems and jewellery sector shall be as per paragraph 4A.2.1 of HBP v1. It would be calculated as under:

AB VA = ----------- x 100, B Where, A = FOB value of the export realised / FOR value of supply received. B = Value of inputs (including domestically procured ) such as gold / silver / platinum content in export product plus admissible wastage along with value of other items such as gemstone etc. Wherever gold has been obtained on loan basis, value shall also include interest paid in free foreign exchange to foreign supplier.

Gem Replenishment Authorisation Gem Replenishment (Gem & Jewellery REP) Authorisation may be issued as given in paragraphs 4A.8, 4A.9 and 4A.10 above.

In case of plain or studded gold / silver / platinum jewellery and articles, value of such Authorisations shall be determined with reference to realisation in excess of prescribed minimum Value Addition. Such Gem REP Authorisations shall be freely transferable. Replenishment Rate and item of import will be as prescribed in Appendix 12B of HBP v1. Diamond Imprest Authorisation

Diamond Imprest Authorisation for import of cut and polished diamonds including semi processed diamonds, half cut diamonds, broken in any form, for mixing with cut and polished diamonds or for export as it is, may be issued for export of cut and polished diamonds and shall carry an EO.

Eligibility An exporter of cut & polished diamonds who is status holder may be issued an Authorisation for import of cut & polished diamonds upto 5% of preceding years export performance of cut & polished diamonds.

Export Obligation (EO) EO will be governed by provisions of paragraph 4A of chapter 4 of HBP v1. The EO against each consignment shall be fulfilled within a period of five months from the date of clearance of such consignment through Customs. The importer, will not be required to maintain records of individual import consignments, or co-relate export consignments with the corresponding import consignments towards fulfillment of export obligation.

Procedure An application for this scheme may be made to the licensing authority concerned in Aayaat Niryaat Form alongwith the documents prescribed therein. Export Promotion Tours / Export of Branded Jewellery Nominated agencies and their associates, with approval of DoC, and others, with approval of Gem & Jewellery EPC (GJEPC), may export gold / silver / platinum jewellery and articles thereof for exhibitions abroad.

Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads and articles and export of branded jewellery is also permitted, subject to conditions as in HBP v1. Private / Public Bonded Warehouse Private / Public Bonded Warehouses may be set up in SEZ / DTA for import and re-export of cut & Polished diamonds, cut & polished coloured gemstones, uncut & unset precious & semiprecious stones, subject to achievement of minimum VA of 5%. Diamond & Jewellery Dollar Accounts Firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones with a track record of at least 3 years in import or export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs. 5 crore or above during preceding three licensing years may also carry out their business through designated Diamond Dollar Accounts (DDA). Dollars in such accounts available from bank finance and / or export proceeds shall be used only for (i) Import / purchase of rough diamonds from overseas / local sources; (ii) Purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources; (iii) Import / purchase of gold from overseas / nominated agencies and repayment of dollar loans from the bank; and (iv) Transfer to Rupee Account of exporter.

Details of this DDA Scheme are given in HBP v1. A non DDA holder is also permitted to supply cut and polished diamonds to DDA holder, receive payment in dollars and convert same into Rupees within 7 days. Cut and polished diamonds and coloured gemstones so supplied by non-DDA holder will also be counted towards discharge of his export obligation and / or entitle him to replenishment Authorisation.

Export of cut & Polished precious and semi-precious stones for treatment and reimport (i) Gems & Jewellery exporters shall be allowed to export cut and polished precious and semi-precious stones for treatment and re-import without payment of Customs duty as per customs rules and regulations and subject to condition that exporter shall declare at the time of shipment: (a) Nature of treatment on cut and polished precious and semi-precious stones ; and

(b) Likely change of such stones after treatment. (ii) Re-importation would be allowed from the same port from where stones were exported for treatment. On re-importation, customs authority shall cross verify the details with the export documents. A maximum time period of 120 days shall be allowed for re-import. However in case treated precious stones or semi-precious stones are meant for domestic consumption, re-imported consignment shall be allowed by Customs on payment of duty on fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges, both ways.

(iii) Imported items shall be re-exported. Export of Diamond and Jewellery on consignment basis Gems & Jewellery exporters shall be allowed to export diamond & jewellery on consignment basis as per HBP v1 and Customs rules and regulations.

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CHAPTER 7

DUTY EXEMPTION / REMISSION SCHEMES

The Duty exemption scheme is the most important scheme in the Foreign Trade Policy, because it is most widely utilized. To understand this scheme fully, a little historical background is necessary.

In the early sixties and seventies, most items were restricted for imports and import duties were also heavy. The domestically manufactured goods also suffered excise duties at each stage i.e. there was the cascading effect of the taxes. Under the circumstances, the Indian manufactures were not competitive and schemes had to be evolved to disburden the duties on the export product and the duties on the inputs used in the manufacture of export product. The availability of essential imported raw materials was also very necessary.

Initially, the Govt. tried out Replenishment (REP) Licenses that enabled the manufacturer to replenish the imported inputs used in the manufacture of the export product. A system of duty drawback co-

existed with the REP scheme to enable the exporter to get back the duties of excise and customs on the raw materials used in the manufacture of export product. In due course, a system of Imprest Licenses was also put in place to enable the exporter to import raw materials against an obligation to use them in the manufacture of the export product and discharge the export obligation.

In the late seventies, the system of Advance License was introduced. Under this system, the manufacturer had to obtain an advance license for import of his raw materials duty free against an obligation to use the duty free imported raw materials in the manufacture of export product and export the manufactured product. Over time, many variants of the Advance License have been introduced, including the facility to source the inputs from domestic suppliers and the facility to fulfill the obligation by effecting deemed exports. All these schemes and variants are broadly known as Advance License Scheme or Duty Exemption Scheme.

Duty Exemption / Remission Schemes

Duty Exemption and Remission Schemes are available to an exporter for offsetting the cost of imports made for the purpose of exports. Duty Exemption is available pre-imports and Remission Schemes are available post-imports

A) Duty Exemption Schemes consist of

(a) Advance Authorisation and

(b) Duty Free Import Authorisation (DFIA).

(a) Advance Authorisation

An Advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts which are consumed / utilised to obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation.

Duty free import of mandatory spares up to 10% of CIF value of Authorisation which are required to be exported / supplied with resultant product are allowed under Advance Authorisation Advance Authorisations are issued for inputs and export items given under SION (Standard Input Output Norms). These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of HBP v1. Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for a) Physical exports:Advance Authorisation may be issued for physical exports including exports to SEZ to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product. b) Intermediate supplies:Advance Authorisation may be issued for intermediate supply to a manufacturer-exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance Authorisation

c) supply of goods to the categories mentioned in paragraph 8.2(b), (c), (d), (e), (f), (g), (i) and (j) of FTP ; d) Supply of stores on board of foreign going vessel / aircraft subject to condition that there is specific SION in respect of item(s) supplied. Benefits under Advance Authorisations Advance Authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, antidumping duty and safeguard duty, if any. However, imports for supplies covered under paragraph 8.2 (h) & (i) will not be exempted from payment of applicable anti-dumping and safeguard duty, if any.

Essential condition under advance authorisations

Actual User Condition Advance Authorisation and / or materials imported thereunder will be with actual user condition. It will not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose off product manufactured out of duty free inputs once export obligation is completed.

Exports with a positive value addition Advance Authorisations necessitate exports with a positive value addition. Exports to SEZ Units / supplies to Developers / Co-developers, irrespective of currency of realization, would also cover. For physical exports for which payments are not received in freely convertible currency, same shall be subject to value addition as specified in Appendix 11 of HBP v1. In case of Authorisation for import of Tea, minimum value addition under Advance Authorisation shall be 100%. .Similarly, in case of spices {covered by Chapter 9 of ITC(HS)}, duty free import of spices shall be permitted only for value addition purposes like crushing / grinding / sterlization or for manufacture of oils and oleoresins and not for simple cleaning, grading, repacking etc. and minimum value addition shall be 15%.

Advance Authorisation shall be issued in accordance with Policy and procedure in force on Authorisation issue date.

Validity period Validity period of Advance Authorisation for import shall be 24 months including Advance Authorisation for annual requirement, and Replenishment Authorisation for Gem & Jewellery as prescribed in HBP v1.

Free of Cost Supply by Foreign Buyer Facility of Advance Authorisation shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer.

In such cases, for calculation of VA, notional value of free of cost inputs along with value of other dutyfree inputs shall be taken into consideration. However, if all inputs are supplied free of cost, exporter shall also have option to follow provision prescribed by DoR. Export Obligation under Advance Authorisation Period for fulfillment of export obligation under Advance Authorisation shall be as prescribed in HBP v1. Provision for BIFR units: Any firm / company registered with BIFR or any firm / company acquiring a unit, which is under BIFR shall be allowed Export Obligation Period (EOP) extension as per rehabilitation

package prepared subject to approval of BIFR or 5 years if not specified, without payment of composition fee. Provision for SSI units: Above provisions apply also to SSI units as per rehabilitation scheme of concerned State government.

Advance Authorisation for Annual Requirement Advance Authorisation can also be issued for annual requirement. Status Certificate holder and all other categories of exporters having past export performance (in preceding two years) shall be entitled for Advance Authorisation for annual requirement.

Entitlement in terms of CIF value of imports shall be upto 300% of FOB value of physical export and / or FOR value of deemed export in preceding licensing year or Rs 1 crore, whichever is higher.

Advance Release Orders (ARO) and Invalidation Letter

Holder of Advance Authorisation, Advance Authorisation for annual requirement, Diamond Imprest Authorisation and Duty Free Import Authorisation intending to source inputs from indigenous sources / State Trading Enterprises in lieu of direct import has option to source them either against Advance Release Order (ARO) or Invalidation letter denominated in free foreign exchange / Indian rupees. However, supplies may be obtained against Authorisation from EOU / EHTP / BTP / STP / SEZ units, without conversion into ARO or Invalidation letter. Transferee of DFIA shall also be eligible for ARO / invalidation letter facility. Validity period of ARO shall be as prescribed in HBP v1.

Back-to-Back Inland Letter of Credit Holder of Advance Authorisation, Advance Authorisation for annual requirement, DFIA and Diamond Imprest Authorisation may, instead of applying for an ARO or Invalidation letter, avail of the facility of back-to-back Inland Letter of Credit in accordance with procedure specified in HBP v1.

Prohibited Items

Prohibited items of imports mentioned in ITC (HS) shall not be imported under Advance Authorisation / DFIA. Further items reserved for imports by State Trading Enterprises (STEs) cannot be imported against Advance Authorisation / DFIA. However those items can be procured from STEs against ARO or Invalidation letter. STEs are also allowed to sell goods on High Sea Sale basis to holders of Advance Authorisation / DFIA holder. In addition, STEs are permitted to issue No Objection Certificate (NOC) for import by advance Authorisation / DFIA holder. Authorisation Holder would be required to file Quarterly Returns of imports effected against such NOC to concerned STE and STE would submit half-yearly import figures of such imports to concerned administrative Department for monitoring with a copy endorsed to DGFT. Similarly prohibited items of exports mentioned in ITC (HS) shall not be exported under Advance Authorisation / DFIA scheme. Export of restricted items shall be subject to all conditionalities or requirements of export Authorisation or permission, as may be required, under Schedule II of ITC (HS).

Admissibility of Drawback In case of an Advance Authorisation, drawback shall be available for any duty paid material, whether imported or indigenous, used in goods exported, as per drawback rate fixed by DoR, Ministry of Finance (Directorate of Drawback). Drawback allowed shall be mentioned in Authorisation.

(b) Duty Free Import Authorisation (DFIA).

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of DFIA. This scheme is in force from 1st

May, 2006.

Entitlement Provisions of paragraph 4.1.3 shall be applicable in case of DFIA. However, these Authorisations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. In case of post export DFIA, a merchant exporter shall be required to mention only name (s) and address(s) of manufacturer(s) of the export product(s). Applicant is required to file application to concerned RA before affecting exports under DFIA.

Pre-export Authorisation shall be issued with actual user condition and shall be exempted from payment of basic custom duty, additional customs duty, education cess, anti-dumping duty and safeguard duty, if any.

Import items Provisions of paragraphs 4.1.11, 4.1.12, 4.1.13 and 4.1.14 of FTP shall be applicable for DFIA holder.

Value Addition A minimum 20% value addition shall be required for issuance of such authorisation except for items in gems and jewellery sector for which value addition would be as per paragraph 4A.2.1 of HBP v1. Items for which higher value addition is prescribed under Advance Authorisation Scheme shall be applicable.

Export Obligation Procedure and time period related to fulfillment of Export Obligation have been laid down in Chapter 4 of HBP v1.

Transferability Once export obligation has been fulfilled, request for transferability of Authorisation or inputs imported against it may be made before concerned RA. Once, transferability is endorsed, Authorisation holder may transfer DFIA or duty free inputs, except fuel and any other item(s) notified by DGFT. However, for fuel, import entitlement may be transferred only to companies which have been granted authorisation to market fuel by Ministry of Petroleum and Natural Gas. Once transferability is endorsed, imports against authorisation or transfer of imported inputs shall be subject to payment of applicable additional customs duty / excise duty. While endorsing transferability, authorisation would bear a note as to liability of such additional customs duty / excise duty. Such additional customs duty / excise duty would be reimbursed to exporter as drawback. In case of local sales by excisable unit, CENVAT credit would equal excise duty already paid. Wherever SIONs prescribe actual user condition and in case of Acetic Anhydride, Ephedrine and Pseudo Ephedrine, DFIA shall be issued with actual user condition for these inputs and no transferability shall be allowed for these inputs even after fulfillment of export obligation.

However, for authorisations issued prior to 1.4.2007, exemption from Additional Customs Duty / Excise Duty shall continue to be available even after endorsement of transferability, as provided in FTP (RE2006).

CENVAT Facility CENVAT credit facility shall be available for inputs either imported or procured indigenously.

B) Duty Remission Scheme

A Duty Remission Scheme enables post export replenishment / remission of duty on inputs used in the export product. Duty Remission Scheme consists of (a) Duty Free Replenishment Certificate (DFRC), (b) Duty Entitlement Passbook Scheme (DEPB), and (c) Duty Drawback Scheme (DBK).

a) Duty Free Replenishment Certificate This Scheme has been withdrawn for exports with effect from 1.5.2006.Exports made till 30.4.2006 shall be governed by chapter 4 of FTP (as amended upto 31.3.2007).

b) Duty Entitlement Passbook (DEPB) Scheme The objective of the DEPB scheme is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization shall be provided by way of grant of duty credit against the export product. Under the DEPB scheme, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency. The DEPB scheme will continue to be operative until it is replaced by a new scheme, which will be drawn up in consultation with exporters. The DEPB scheme is a facility that provides credit to exporters, which can be used for the import of capital goods, raw materials, intermediates, components, parts and packaging material.

Component of Special Additional Duty and customs duty on fuel shall also be allowed under DEPB (as a brand rate) in case of non-availment of CENVAT credit. Neutralisation shall be provided by way of grant of duty credit against export product. An exporter may apply for credit, at specified percentage of FOB value of exports, made in freely convertible currency or payment made from foreign currency account of SEZ unit / SEZ Developer in case of supply by DTA. Credit shall be available against such export products and at such rates as may be specified by DGFT by way of public notice. Credit may be utilized for payment of Customs Duty on freely importable items. DEPB Scrips can also be utilized for payment of duty against imports under EPCG Scheme w.e.f 1.1.2009. DEPB holder shall have option to pay additional customs duty in cash as well. Validity Validity period of DEPB for import shall be as prescribed in HBPv1. Transferability DEPB and / or items imported against it are freely transferable. Transfer of DEPB shall however be for import at specified port, which shall be the port from where exports have been made. Imports from a port other than the port of export shall be allowed under TRA facility as per terms and conditions of DoR notification. Applicability of Drawback Additional customs duty / Excise Duty and Special Additional Duty paid in cash or through debit under DEPB may also be adjusted as CENVAT Credit or Duty Drawback as per DoR rules.

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CHAPTER 8

SPECIAL FOCUS INITIATIVES

With a view to continously increasing our percentage share of global trade and expanding employment opportunities, especially in semi urban and rural areas, certain special focus initiatives have been

identified for Agriculture, Handlooms, Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries and Sports Goods and Toys sectors.

1. Agriculture and Village Industry

(a) Vishesh Krishi and Gram Udyog Yojana (b) Funds shall be earmarked under ASIDE for development of Agri Export Zones (AEZ) (c) Capital goods imported under EPCG shall be permitted to be installed anywhere in AEZ. (d) Import of restricted items, such as panels, shall be allowed under various export promotion schemes. (e) Import of inputs such as pesticides shall be permitted under Advance Authorisation for agro exports. (f) New towns of export excellence with a threshold limit of Rs 250 crore shall be notified. (g) Certain specified flowers, fruits and vegetables will be entitled to a special duty credit scrip, in addition to the normal benefit under VKGUY

2. Handlooms

(a) Specific funds would be earmarked under MAI /MDA Scheme for promoting handloom exports. (b) Duty free import entitlement of specified trimmings and embellishments shall be 5% of FOB value of exports during previous financial year. (c) Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of exports during previous financial year. (d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair shall be permitted. (e) New towns of export excellence with a threshold limit of Rs 250 crore shall be notified. (f) Handloom mark enables handloom products to develop a niche market with a distinct identity. (g) Machinery and equipment for effluent treatment plants shall be exempt from customs duty.

3. Handicrafts

(a) New Handicraft SEZs shall be established which would procure products from cottage sector and do finishing for exports. (b) Duty free import entitlement of tools,machinery and equipment, trimmings and embellishments shall be 5% of FOB value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers. (c) Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable. (d) Specific funds would be earmarked under MAI & MDA Schemes for promoting Handicraft exports. (e) CVD is exempted on duty free import of trimmings, embellishments and consumables. (f) New towns of export excellence with a reduced threshold limit of Rs 250 crore shall be notified. (g) Machinery and equipment for effluent treatment plants shall be exempt from customs duty.

4. Gems & Jewellery

(a) Import of gold of 8k and above shall be allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content. (b) Duty free import entitlement of consumables, tools, machinery and equipments for Jewellery made out of precious metals other than Gold and Platinum shall be 2% and for Gold and Platinum shall be 1% of FOB value of exports during previous financial year. However, for jewellery made out of rhodiumfinished silver entitlement shall be 3%. (c) Duty free import entitlement of commercial samples shall be Rs.300,000. (d) Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.

5. Leather and Footwear

(a) Duty free import entitlement of specified items shall be 5% of FOB value of exports during preceding financial year.

(b) Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), gloves, travel bags and handbags shall be 3% of FOB value of exports of previous financial year. Such entitlement shall also cover packing material, such as printed and non printed shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear. (c) Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty. (d) Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted. (e) CVD is exempted on lining and interlining material notified at S.No 168 of Customs notification No 21/2002 dated 01.03.2002. (f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

6. Marine Sector

(a) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of 1% of FOB value of preceding financial years export. (b) To allow import of monofilament longline system for tuna fishing at a concessional rate of duty. (c) A self removal procedure for clearance of seafood waste is applicable subject to prescribed wastage norms. (d) Specific marine products are considered for VKGUY scheme.

7. Hi-tech products High Tech Products Export Promotion scheme has been introduced to promote export of notified hi-tech products.

8. Electronics and IT Hardware Manufacturing Industries (a) Expeditious clearance of approvals required from DGFT shall be ensured. (b) Exporters /Associations would be entitled to utilize MAI & MDA Schemes for promoting Electronics and IT Hardware Manufacturing Industries exports.

(c) Hi-tech products of the Electronics and IT Hardware Manufacturing Industries Sector would be considered for inclusion in High Tech Products Export Promotion Scheme.

9. Sports Goods and Toys (a) Sports goods and toys shall be treated as a priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI /MDA Scheme for promoting exports from this sector. (b) Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT. (c) Sports Goods and Toys will be entitled for special duty credit scrip, in addition to the normal benefit under FPS.

Other Facilitations and Incentives a) Trade Facilitation through EDI Initiatives It is endeavor of Government to work towards greater simplification, standardization and harmonization of trade documents using international best practices. As a step in this direction, DGFT shall move towards an automated environment for electronic filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community partners including Customs and Banks. b) DGCI&S Commercial Trade Data To enable users to make commercial decisions in a professional manner, DGCI&S trade data shall be made available with a minimum time lag in a query based structured format on a commercial criteria.

c) Fiscal Incentives to promote EDI Initiatives adoption With a view to promote use of Information Technology, DGFT will provide fiscal incentives to user community. Deductions in Application Fee would be admissible for applications signed digitally or / and where application fee is paid electronically through EFT (Electronic Fund Transfer). Details are enumerated in HBP v1. d) Easing Of Documentation Requirement Pending finalisation of Single Common Document (SCD) for international trade, Government Departments dealing with exports and imports will honour Authorisation issued by other

Government departments based on verification of export documents Like shipping bill, bank realization certificate, Packing list, bill of lading etc. and will not insist upon fresh submission of these documents. e) Exemption / Remission of Service Tax in DTA For all goods and services which are exported from units in DTA and units in EOU / EHTP / STP / BTP, exemption / remission of service tax levied and related to exports shall be allowed, as per prescribed procedure in Chapter 4 of HBP v1. f) Exemption from Service Tax in SEZ Units in SEZ shall be exempted from service tax. g) Exemption from Service Tax on Services received abroad For all goods and services exported from India, services received / rendered abroad, where ever possible, shall be exempted from service tax.

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CHAPTER 9

EXPORT PROMOTION CAPITAL GOODS SCHEME [EPCG]

EPCG scheme was introduced in the year 1990 to enable the Indian exporters to obtain capital goods at concessional rate of customs duty against an obligation to export the goods manufactured using the imported capital goods. Initially, the scheme was restricted to manufacturers with past export performance. Subsequently, the scheme has been liberalized and now covers, manufacturers, merchant exporters who name a supporting manufacturer, service providers, software exporters and so on

The present scheme allows import of capital goods for pre production, production and post production (including CKD / SKD thereof as well as computer software systems) at 3% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled in 8 years reckoned from Authorisation issue-date.

In case of agro units, and units in cottage or tiny sector, import of capital goods at 3% Customs duty shall be allowed subject to fulfillment of export obligation equivalent to 6 times of duty saved on capital goods imported in 12 years from Authorisation issue date.

For SSI units, import of capital goods at 3% Customs duty shall be allowed subject to fulfillment of export obligation equivalent to 6 times of duty saved on capital goods in 8 years from Authorisation issue-date and total investment in plant and machinery after such imports does not exceed SSI limit.

However, in respect of EPCG Authorisations with a duty saved amount of Rs. 100 crores or more, export obligation, shall be fulfilled in 12 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.

Capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds. Second hand capital goods without any restriction on age may also be imported under EPCG scheme.

However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning / operating golf resorts subject to condition that : (i) total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current and preceding three licensing years is Rs 1.5 crores or more. (ii) duty saved amount on all EPCG Authorisations issued in a licensing year for import of motor cars, sports utility vehicles / all purpose vehicles shall not exceed 50% of average foreign exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three licensing years. (iii) vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A copy of the Registration certificate should be submitted to concerned RA as confirmation of import of vehicle. However, parts of motor cars, sports utility vehicles / all purpose vehicles such as chassis etc. cannot be imported under EPCG Scheme.

Import of Restricted items of imports mentioned under ITC(HS) shall only be allowed under EPCG Scheme after approval from Exim Facilitation Committee (EFC) at Headquarters.

Spares (including refurbished / reconditioned spares), tools, spare refractories and catalyst for existing plant and machinery shall be allowed to be imported subject to an export obligation equivalent to 8 times of duty saved to be fulfilled in 8 years reckoned from Authorisation issue-date.

EPCG for Projects An EPCG Authorisation can also be issued for import of capital goods under Scheme for Project Imports notified by the Central Board of Excise and Customs under S.No 441 of Customs Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic custom duty on imports is 10% with a CVD of 16% Export obligation for such EPCG Authorisations would be 8 times of duty saved. Duty saved would be difference between effective duty under aforesaid Customs Notification and concessional duty under the EPCG Scheme.

EPCG for Retail Sector To create modern infrastructure in retail sector, concessional duty benefits under EPCG scheme shall be extended for import of capital goods required by retailers having minimum area of 1000 sq meters. Such retailer shall fulfill export obligation i.e., 8 times of duty saved in 8 years.

Eligibility EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s) / vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.

Conditions for import of Capital Goods Import of capital goods shall be subject to Actual User condition till export obligation is completed.

Export obligation The Following conditions shall apply to the fulfillment of the export obligation:-

(i) Export obligation shall be fulfilled by export of goods, manufactured / services rendered by the applicant. Export obligation shall be, over and above, the average level of exports achieved by applicant in preceding three licensing years. Such average would be the arithmetic mean of export performance in last 3 years.

Export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for the same and similar products within the overall export obligation period including extended period, if any; except for categories mentioned in paragraph 5.7.6 of HBP v1. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products. Provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years. Upto 50% Export Obligation may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm / company, or group company / managed hotel, which has the EPCG authorization. However, EPCG authorization issued prior to 1.4.2008 will be governed by earlier policy provisions. However, in such cases, additional export obligation imposed shall be over and above average exports achieved by the unit / company / group company / managed hotel in preceding three years for both the original and the substitute product(s)/ service(s), despite exemption in Para 5.7.6 of HBP v1

(ii) Shipments under Advance Authorisation, DFRC, DFIA, DEPB or Drawback scheme would also count for fulfillment of EPCG export obligation

(iii) Export obligation can also be fulfilled by supply of ITA- 1 items to DTA provided realization is in free foreign exchange.

(iv) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of FTP shall also be counted towards fulfillment of export obligation along with usual benefits available under paragraph 8.3 of FTP.

Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.

Payment received in rupee terms for port handling services, in terms of Chapter 9 of FTP shall also be counted for export obligation discharge.

(v) Foreign exchange counted towards fulfillment of export obligation (over and above the average) shall not be eligible for incentives / rewards under promotional measures / schemes.

. EPCG for agro units LUT / Bond or 15% BG (as applicable) may be given for EPCG Authorisation granted to units in Agri Export Zones provided EPCG Authorisation is taken for export of primary agricultural product (s) notified in Appendix 8 or their value added variants. Technological Upgradation of existing EPCG machinery EPCG Authorisation holders can opt for Technological Upgradation of existing capital good imported under EPCG Authorisation. Conditions governing Technological Upgradation of existing capital goods are as under: (i) Minimum time period for applying for Technological. Upgradation of existing capital goods imported under EPCG is 5 years from Authorisation issue-date. (ii) Minimum exports made under old capital goods must be 40% of total export obligation imposed on first EPCG Authorisation. (iii) Export obligation would be refixed such that total export obligation mandated for both capital goods would be sum total of 6 times of duty saved on both the capital goods, to be fulfilled in 8 years from new authorization issue-date. (iv) Facility for technological upgradation shall be available only once and the minimum imports to be made shall be at least 10% of the existing investment in plant and machinery by applicant. (vi) Capital goods to be imported must be new and technologically superior to earlier CG.

Incentives for Fast Track Companies To incentivise fast track companies with a view to accelerate exports, in cases where Authorisation holder has fulfilled 75% or more of export obligation (including average level of exports) in half or less

than half the original export obligation period specified, remaining export obligation shall be condoned and the Authorisation redeemed by RA concerned. However no benefits under Para 5.12 of HBP v1 shall be available in such cases.

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CHAPTER 10

EXPORT ORIENTED UNITS (EOU), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTP), SOFTWARE TECHNOLOGY PARKS (STP) AND BIO-TECHNOLOGY PARKS (BTP)

Electronic Hardware Technology Parks (EHTP) For encouraging exports of electronic hardware items including hard disk drives, computers, television, etc., such parks have been developed by the Ministry of Communications & Information Technology. An Electronic Hardware Technology Park (EHTP) may be an individual unit by itself or a unit located in an area designated as EHTP Complex. As in the case of STP Scheme, the EHTP Scheme is also administered by the Ministry of Communications & Information Technology. Incentive Package for Electronic Hardware was announced in the Foreign Trade Policy 2002-07. An EHTP can also be set up by the Central Government, State Government, public or private sector undertakings or any combination of them

Software Technology Parks Of India (STP) Software Technology Parks (STPs) are export oriented projects catering to the needs of software development for exports. The present provisions of the STP scheme are contained in Chapter 6 of the Foreign Trade Policy 2004-09. The procedures are included in Chapter 6 of the Handbook of Procedures and Appendices to the Handbook of procedures issued under the Foreign Trade Policy 2004-09. Software Technology Parks of India is an autonomous organization under Ministry of Communications and Information Technology, Govt. of India. New fiscal incentives offered under this scheme, infrastructure created by STPI and the investor friendly environment has contributed to a steep growth in the Software Exports from India. Bio- Technology Parks (BTP)

The Government of India first proposed to establish Biotechnology Parks in the country with all the facilities of 100% Export Oriented Unit in the foreign Trade Policy (2004-09) Bio technology encompasses any technique, which uses living organisms or parts thereof to make or modify products, improve plant or animal productivity or to develop micro organisms for specific use. BTP means Biotechnology Park as notified by Director General of Foreign Trade on the recommendation of the Department of Biotechnology (Ministry of Science and Technology)

100% Export Oriented Units Scheme

A 100 per cent export-oriented unit is an industrial unit offering for export its entire production, excluding the permitted levels of domestic tariff area sales for manufacture of goods, including repair, re-making, reconditioning, re-engineering and rendering of services. Trading units are not covered under this scheme

The EOU scheme was introduced in the year 1980 vide Ministry of Commerce resolution dated 31st December 1980. The purpose of the scheme was basically to boost exports by creating additional production capacity. The EOU scheme is complementary to the EPZ scheme, except that it is widely dispersed in location, unlike EPZs, which are set up at specific locations. The Export Oriented Unit (EOU) Scheme, remains in the forefront of countrys export production schemes. The scheme has witnessed many changes over the last twenty-four years in the context of ever changing economic realities. However, the basic premise remains the same. This premise is that the exporters are treated as a special class and given the required tariff, non-tariff and policy support to facilitate their export efforts. Thus, today the EOU Scheme has emerged as a dynamic policy initiative facilitating the exporting community in the task of increased exports. Earlier, the scheme was basically for manufacturing sector with certain minimum value addition in terms of export earnings. The EOU scheme is presently governed by Chapter 6 of the Foreign Trade Policy 2004-09 and Chapter 6 of the Handbook of Procedures and Appendix 14 I A to Appendix 14 I N.

Salient features

a) No license required for import. b) Exemption from Central Excise Duty in procurement of capital goods, raw-materials, consumables spares etc. from the domestic market.

c) Exemption from customs duty on import of capital goods, raw materials, consumables spares etc. d) Reimbursement of Central Sales Tax (CST) paid on domestic purchases. e) Supplies from DTA to EOUs treated as deemed exports. f) Reimbursement of duty paid on furnace oil, procured from domestic oil companies to EOUs as per the rate of drawback notified by the Directorate General of Foreign Trade. g) 100% Foreign Direct Investment permissible. h) Facility to retain 100% foreign exchange proceeds in EEFC Account. i) Facility to realize and repatriate export proceeds within twelve months. j) Further extension in time period can be granted by RBI and their authorized dealers. k) Re-export of imported goods found defective, goods imported from foreign suppliers on loan basis etc. l) Exemption from industrial licensing requirement for items reserved for SSI sector. m) Profits allowed to be repatriated freely without any dividend balancing requirement n) Access to Domestic Market up to 50% of FOB value of export on concessional rate of duty. o) Duty free goods to be utilized in two years. Further extension granted on liberal basis. p) Job work on behalf of domestic exporters for direct export allowed. q) Conversion of existing Domestic Tariff Area ( DTA) unit into an EOU permitted. r) Can procure duty-free inputs for supply of manufactured goods to advance licence holders. s) Supply of ITA-I items in the domestic market which would be counted for fulfillment of NFE. t) EOUs in agriculture and horticulture engaged in contract farming may be permitted to take out duty free goods listed in Appendix 14-I to the fields of contact farmers for production.

Investment criteria

a) Only projects having a minimum investment of Rs.1 Crore in Plant & Machinery shall be considered for establishment as EOUs

b) This shall, however, not apply to existing units and units in EHTP STP / BTP, Handicrafts / Agriculture / Floriculture / Aquaculture /Animal Husbandry / Information Technology, Services, Brass Hardware and Handmade jewellery sectors. c) Board of Approval (BoA) may also allow establishment of EOUs with a lower investment criteria

Export of Goods and services from EOU / EHTP / STP / BTP An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS). Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfillment of the conditions indicated in ITC (HS) i. Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc. up to a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed ii. State Trading regime shall not apply to EOU manufacturing units. iii. An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture, pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in connection with its activities for use outside bonded area. iv. Gems and jewellery EOUs may source gold / silver /platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold / silver / platinum from nominated agencies, either on loan basis or outright purchase basis shall export gold / silver /platinum within 90 days from date of release. v. EOU / EHTP / STP / BTP units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit / Escrow Rupee Account of buyer subject to RBI clearance, if any. vi. Procurement and export of spares / components up to 1.5% of FOB value of exports may be allowed to same consignee / buyer of export article within the warranty period. vii. Exporter shall have flexibility to fix price and repay gold loan within 180 days from date of export. Price shall be communicated to nominated agencies who will issue a certificate showing final confirmation of rate to bank negotiating document, to ensure export proceeds are realized at this rate. viii. Gem & Jewellery EOUs may re-export imported goods and export domestically procured goods, including goods generated out of partial processing / manufacture. Besides, supply of unsuitable / broken cut and polished diamonds, precious and semi-precious stones up to 5% of value of imported or indigenously procured goods to DTA against valid Gem & Jewellery REP as applicable on payment of appropriate duty is also permitted.

ix. Software units may undertake exports using data communication links or in form of physical exports (which may be through courier service also), including export of professional services x. An EOU / EHTP / STP / BTP unit may export goods manufactured/software developed by it through another exporter or any other EOU / EHTP / STP / SEZ unit subject to conditions mentioned in Handbook of Procedures xi. EOU / EHTP / STP / BTP are permitted to: a) Export goods for holding / participating in exhibitions abroad with permission of Development Commissioner. b) Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads and articles. c) Export goods for display / sale in permitted shops set up abroad. d) Display / sell in permitted shops set up abroad or in show rooms of their distributors /agents. e) Set up show rooms / retail outlets at International Airports.

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CHAPTER 11

AGRI-EXPORT ZONES

The Foreign Trade policy 2004-09 defines AEZ to mean Agricultural Export Zones notified by DGFT in Appendix 8 of Handbook (Vol 1).

The Government of India (GOI) had announced the creation of Agri Export Zone (AEZ) in the EXIM POLICY 2001-02 with the objective of promoting greater exports of fresh and processed agricultural produce from the country The scheme is implemented by the Ministry of Commerce, GoI, through APEDA (the Agriculture and Processed Food Export Development Authority), New Delhi the nodal agency for AEZ ( http://www.apeda.com/) Under AEZ all aspects of agriculture such as production, research, development, extension, post harvest management and marketing are addressed in a focused manner for successful implementation. For

instance, modern production practices are introduced for production of exportable quality produce and improved productivity. Similarly there is an emphasis on setting up of appropriate produce-specific post harvest infrastructure and introduction of post harvest practices, right from farm all the way to market. AEZ are to be identified by the State Government, who would evolve a comprehensive package of services provided by all State Government agencies, State agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector with proven credentials would be encouraged to sponsor new agri export zone or take over already notified agri export zone or part of such zones for boosting agri exports from the zones. Services which would be managed and co-ordinated by State Government/corporate sector and would include provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related research & development etc. APEDA will supplement, within its schemes and provisions, efforts of State Governments for facilitating such exports. Units in AEZ would be entitled for all the facilities available for exports of goods in terms of provisions of the respective schemes.

Facilities enjoyed by AEZ

1. Funds shall be earmarked under ASIDE for development of Agri Export Zones (AEZ) 2. Capital goods imported under EPCG shall be permitted to be installed anywhere in AEZ. 3. AEZ shall be eligible for recognition as export and trading houses. Applicant shall be categorized depending on his total FOB (FOR - for deemed exports) export performance during current plus previous three years (taken together) upon exceeding limit given below. For Export House (EH) Status, export performance is necessary in at least two out of four years (i.e., current plus previous three years).

| |Category |Export House(EH) |Star Export House(SEH) |Trading House(TH) |Star Trading House(STH) |Premier Trading House(PTH)

| |Performance (in rupees) |20 crore |100 crore |500 crore |2500 crore |

| | | | | | 10000 crore |

Note: 1. Exporters in Small Scale Industry (SSI) / Tiny Sector /Cottage Sector, Units registered with KVICs / KVIBs,Units located in North Eastern States, Sikkim and Jammu & Kashmir, Units exporting handloom /handicrafts / hand knotted or silk carpets, exporters exporting to countries in Latin America / CIS / subSaharan Africa as listed in Appendix-9, Units having ISO 9000 (series) / ISO 14000 (series) / WHOGMP / HACCP / SEI CMM level-II and above status granted by agencies listed in Appendix-6 of HBP v1, exports of services and exports of agro products shall be entitled for double weightage on exports made for grant of star export house status. Double Weightage shall be admissible to Merchant as well as Manufacturer Exporters. However, a shipment can get double weightage only once in any one of above categories. 1(a) Transfer of export performance from one to another is not permitted. Therefore disclaimer system shall not be allowed for counting of export turnover. 2. Exports made on re-export basis shall not be counted for recognition. 3. Exports made by subsidiary of a limited company shall be counted towards export performance of limited company for recognition only if limited company has a majority share holding in subsidiary company.

A Status Holder shall be eligible for following facilities: i) Authorisation and Customs clearances for both imports and exports on self-declaration basis; ii) Fixation of Input-Output norms on priority within 60 days; iii) Exemption from compulsory negotiation of documents through banks. Remittance / Receipts, however, would be received through banking channels 100% retention of foreign exchange in EEFC account; v) Enhancement in normal repatriation period from 180 days to 360 days; vi) Exemption from furnishing of Bank Guarantee in Schemes under FTP; and vii) SEHs and above shall be permitted to establish Export Warehouses, as per DoR guidelines. viii) For status holders, a decision on conferring of ACP Status shall be communicated by Customs within 30 days from receipt of application with Customs. ix) As an option, for Premier Trading House (PTH), the average level of exports under EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of 3 years.

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CHAPTER 12

SPECIAL ECONOMIC ZONES

Special Economic Zones (SEZs) are specific geographical regions that have economic laws different from and more liberal than a country's typical economic laws. The goal is usually an increase in foreign direct investment (FDI) in the country.

A well-implemented and designed SEZ can bring about many desired benefits for a host-country: increases in employment, FDI attraction, general economic growth, foreign exchange earnings, international exposure, and the transfer of new technologies and skills.

One of the earliest and the most famous Special Economic Zones were founded by the government of the People's Republic of China under Deng Xiaoping in the early 1980s. The most successful Special Economic Zone in China, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years. Following the Chinese examples, Special Economic Zones have been established in several other countries.

The Government of India (GoI) first introduced the concept of SEZ in the Export -Import Policy 2000 with a view to provide an internationally competitive and hassle free environment for exports. Special Economic Zones (SEZs) are specifically delineated duty-free enclaves treated as a foreign territory for the purpose of industrial, service and trade operations, with exemption from customs duties and a more liberal regime in respect of other levies, foreign investment and other transactions. The policy relating to Special Economic Zones is governed by SEZ Act 2005, and the Rules framed thereunder.

SEZs are part of the governments strategy to generate economic activity and exports, employment, develop world-class infrastructure and promote the investment from both domestic and foreign sources.

Under the SEZ Act 2005, the Central or state government, or any individual can set up an SEZ. Individuals can either apply to the state government authority or directly to the Board of Approvals.

Fiscal provisions to SEZ units and developers include duty free import of goods, exemption from Service Tax and Central Sales Tax. FDI up to 100 percent under the automatic route is allowed for setting up SEZs.

The main objectives of SEZ scheme can be briefly stated as: 1) Attract Foreign Direct Investment (FDI) 2) Earn foreign exchange and contribute to exchange rate stability 3) Boost the export sector, especially non traditional exports 4) Create employment opportunities 5) Introduce new technology 6) Develop backward regions 7) Stimulate sectors such as electronics, information technology, R & D, tourism, infrastructure and human resource development that are regarded as strategically important to the economy 8) Create backward & forward linkages to increase the output and raise the standard of local enterprise that supply goods and services to the zone

Previously Special Economic Zones in India were governed by Chapter X-A of the Customs Act, the Special Economic Zones Rules, 2003, and the Special Economic Zones (Customs Procedures) Regulations, 2003 and Chapter 7 and 7A of Foreign Trade Policy However, w.e.f. 10th February, 2006 the activities relating to Special Economic Zones are guided by the provisions contained in the Special economic zones Act, 2005 and the Special economic zones Rules, 2006. After the enactment of the SEZ Act, 2005 Chapter X-A of the Customs Act, the Special Economic Zones Rules, 2003, and the Special Economic Zones (Customs Procedures) Regulations, 2003 are not in operation.

Incentives / Benefits Available

Besides providing state-of-the-art infrastructure and access to a large well-trained and skilled work force, the SEZ policy also provides enterprises and developers with a favourable and attractive framework of incentives: 100% income tax exemption for a block of five years and an additional 50% tax exemption for two years thereafter 100% FDI in the manufacturing sector permitted through automatic route, barring a few sectors. External commercial borrowings by SEZ units upto US$500 million in a year without any maturity restrictions through recognized banking channels. Facility to retain 100% foreign exchange receipts in Exchange Earners Foreign Currency Account. 100% FDI permitted to SEZ franchisee in providing basic telephone services in SEZs. No cap on foreign investment for small scale sector reserved items.

Exemption from industrial licensing requirements for items reserved for the SSI sector.

No import licence requirements

Exemption from customs duties on import of capital goods, raw materials, consumables, spares etc

Exemption from Central Excise duties on procurement of capital goods, raw materials, consumable spares etc., from the domestic market.

No routine examinations by Customs for export and import cargo.

Facility to realize and repatriate export proceeds within 12 months.

Profits allowed to be repatriated without any dividend-balancing requirement.

 Job work on behalf of domestic exporters for direct export allowed.

Subcontracting both domestic and international is permitted; this facility is available to jewellery units as well.

Exemption from Central Sales Tax and Service Tax

Facilities to set up off-shore banking units in SEZs.

Incentives to Developers

Exemption from duties on import /procurement of goods for the development, operation and maintenance of SEZ. Income tax exemption for a block of 10 years in 15 years. Exemption from Service Tax FDI to develop townships within SEZs with residential, educational, health care and recreational facilities permitted on a case-to-case basis

CHAPTER 13 FREE TRADE & WAREHOUSING ZONES (FTWZ)

Keeping in view importance of enabling infrastructure for growth of the economy and foreign trade, Government had introduced concept of Free Trade Warehousing Zones in the Foreign Trade Policy 2004-2009. The scheme was started with a view to providing global standard warehousing zones in India.

The Free Trade & Warehousing Zones (FTWZ) is a special category of Special Economic Zones with a focus on trading and warehousing. The Special Economic Zones Act, 2005 defines Free Trade and Warehousing zones under Sec 2 (n) as- A Special Economic zone wherein mainly trading and warehousing and other related activities related thereto are carried on

On June 23, 2005, the Parliament of India passed the Special Economic Zones Act 2005 and on February 10, 2006 Government of India notified Special Economic Zones Rules 2006. The Free Trade and Warehousing Zones (FTWZ) is a special category of Special Economic Zone, hence, these Zones will operate on the same lines as SEZ and the provisions of the Special Economic Zones Act, 2005 and Special Economic Zones Rules 2006 shall apply to units in FT&WZ.

100% Foreign Direct Investment is permitted in development and establishment of FTWZ FTWZ is a deemed foreign territory and all equipments and materials sourced from the Domestic Tariff Area will be considered as Imports by the FTWZ and vice versa

Such free trade zones are a well-established concept in global trade. This model has been widely accepted and has exhibited a history of providing substantial encouragement to foreign trade and warehousing activity.

What differentiates the FTWZ from standard warehouses is the integrated platform through which physical, regulatory, and other tangible and intangible services / benefits will be made available to individual users, thus helping them optimise their efficiencies and reduce operational costs. Such FTWZs score over traditional warehouse models since they integrate the benefits of a free zone with professionally handled, high quality physical infrastructure, thereby providing significant benefits to the individual users and the economy as a whole. These benefits include common facilities like cost effective skilled labour, transportation facilities, customised warehouses, sophisticated equipments etc.

This facility would provide to importers a chance to procure goods at competitive rates including small and medium industries which do not have capability/capacity to import large quantities by themselves, while exporters would be able to utilize these warehouses to store goods for export. Moreover, the FTWZ Scheme envisages duty free imports of all goods (except prohibited items) for warehousing.

The FTW zones would also be exempted from Indian income tax and service tax. In these zones, it would be possible to undertake transactions in free foreign currency. Companies would have the freedom to pay duty at the time of taking the goods out of the zone, thereby decreasing costs and making Indian industry more competitive besides providing facility of maintaining minimum stock levels. Another major advantage accruing out of the FTWZ would be the possibility of Indian / foreign companies utilizing the superior infrastructure and operational dynamics available to hub their operations (i.e. service other countries needs from this base).

The warehouse zones would also provide allied support services like banking, Customs clearance, state of the art communication, insurance etc. within the zone for easy use by companies. Other than advantages to actual users of the FTWZ facility, there would be spin-off benefits to the economy also by way of backward and forward linkages by companies to the warehousing industry since trade volumes would in any case increase. An FTWZ development would generate employment opportunities both for operations and maintenance of the zone, as also within companies operating in the zone. Also, employment opportunities would be generated in industries having linkages to the trading and warehousing industry. Further, due to provision of shared infrastructure, the capital cost would be apportioned over a larger base which would reduce logistics costs per capita. Finally, with the provision of efficient infrastructure, superior operational dynamics and reduced logistics costs, the FTWZ would make companies located in India more competitive on a global scale and would help to make India an attractive destination for investments, trading and transshipment.

Objective of FT&WZ: The scheme of Free Trade and Warehousing Zone was established * to create trade related infrastructure * to facilitate import and export of goods & services * to carry out transactions in free currency

Each Zone would provide World Class Infrastructure for : i. Warehousing for various kinds of products ii. Handling and Transportation Equipment iii. Commercial office space iv. All related utilities telecom, power, water, etc

v. One stop clearance of Import and Export of goods

Benefits of FT&WZ: i. Custom Duty deferment benefits for products requiring longer storage time ii. Income taxand Service Tax exemptions for developers and users of the zone iii. Excise duty exemption for products sourced from the domestic markets iv. Assist in meeting specific warehousing requirement for each product category v. Availability of temporary storage facilities to enable users to meet short term demand without incurring significant costs vi. Reduction in custom clearance time and better logistics connectivity leading to improved delivery time vii. Provision of efficient management services and international expertise along with support facilities such as banking, insurance etc.

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CHAPTER 14

DEEMED EXPORTS

Deemed Exports refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in foreign exchange. The Policy relating to Deemed Exports is contained in Chapter-8 of the Foreign Trade Policy.

Categories of supply:

The following categories of supply of goods by the main/sub-contractors are regarded as Deemed Exports provided the goods are manufactured in India:

a) Supply of goods against Advance Authorisation/ Advance Authorisation for annual requirement/ DFIA (Duty Free Import Authorisation) b) Supply of goods to Export Oriented Units (EOUs), Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs) and Bio Technology Parks (BTP). c) Supply of capital goods to holders of licences under the Export Promotion Capital Goods (EPCG) Scheme. d) Supply of goods to projects financed by multilateral or bilateral agencies/funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies/funds, where the legal agreements provide for tender evaluation without including the customs duty. e) Supply of capital goods, including in unassembled/ disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of commercial production and spares to the extent of 10% of the FOR value to fertilizer plants. f) Supply of goods to the power and refineries not covered in the above. g) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty. h) Supply of marine freight containers by 100% EOU (Domestic freight containers-manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the Customs. i) Supply to projects founded by UN agencies. j) Supply of goods to nuclear power projects through competitive bidding. The benefits of deemed exports shall be available under paragraph (d), (e), (f), (g) above only if the supply is made under the procedure of International Competitive Bidding.

What is International Competitive Bidding?

To understand, International Competitive Bidding we need to understand what is procurement and why is it important in development?

Procurement is the process of: a) Identifying what is needed by Government

b) Determining who is the best person or organization to supply this need c) Ensuring what is needed is delivered to the right place, at the right time, for the best price, and d) Ensuring that all of this is done in a fair and open manner considering the principles of competition, economy and efficiency.

Public institutions which work for the common good procure in this way The volume, size, nature of contracts, with due consideration to economy and efficiency, determine the procurement method to be applied to each contract. Worldwide, the most common methods are International Competitive Bidding (ICB) and National Competitive Bidding (NCB)

Benefits of Deemed Exports

Deemed Exports are eligible for all/any of the following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to the terms and conditions as given in Handbook (Vol 1). 1. Advance Authorisation/ Advance Authorisation for annual requirement / DFIA 2. Deemed Export Drawback, and 3. Exemption from Terminal Excise Duty where supplies are made against International Competitive Bidding. In other cases refund of Terminal Excise Duty will be given

Terms and Conditions for claiming Deemed Exports Benefits

1. In respect of Supply of goods against Advance Authorisation/ Advance Authorisation for annual requirement Procedure for issue of ARO and Back-to-Back Inland Letter of Credit is given in paragraphs 4.14 and 4.15 of HBP v1 which has to be followed.

For the purpose of claiming deemed export benefits, if any, the indigenous supplier shall produce documentary evidence substantiating the realization of proceeds from the recipient through the normal banking channel in the form given in Appendix-22A as well as a copy of ARO/ Non-negotiable copy of Back to Back Inland Letter of Credit.

2. In respect of Supply of goods to Export Oriented Units (EOUs), Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs) and Bio Technology Parks (BTP) - deemed export benefits may be claimed from Development Commissioner or Regional Authority concerned. Advance Authorisation and DFIA shall be claimed from the concerned RA. Such supplies shall be certified by receiving agencies.

3. In respect of Supply of capital goods to holders of licences under the Export Promotion Capital Goods (EPCG) Scheme - supplier shall produce a certificate from EPCG Authorisation holder i.e respective Excise Authorities, evidencing supplies / receipt of manufactured capital goods.

4. In respect of supplies under categories mentioned in paragraphs (d), (e), (f), (g), (i) and (j) above application for advance authorisation shall be accompanied with a Project Authority Certificate in Appendix 27 to HBPv1. Payment against such supplies shall be certified by Project Authority concerned as in Appendix 22C to HBPv1.

5. The benefits of deemed exports shall be available under paragraph (d), (e), (f), (g) above only if the supply is made under the procedure of International Competitive Bidding.

Procedure for claming Deemed Export Drawback & Terminal Excise Duty Refund / Exemption from payment of Terminal Excise Duty

1. Application An application in Form ANF 8 along with prescribed documents shall be made by supplier to Regional Authority concerned. Recipient may also claim benefits on production of a suitable disclaimer from supplier along with a self declaration in Appendix 22C of HBP v1 regarding non-availment of CENVAT credit in addition to prescribed documents.

2. Filing of Claim (i) In case of supplies under paragraph (a), (b) & (c)above, claim shall be filed against receipt of payment through normal banking channel as in Appendix 22B.

Such claims shall be filed within a period of 6 months from end of monthly / quarterly / half yearly period reckoned from the date of payment as per the option of applicant. In cases where payment is received in advance, last date for submission of application may be correlated with date of supply instead of date of receipt of payment.

(ii) In respect of supplies under paragraph (b)above, where supplier wants to claim benefits from RA, RA shall allow deemed export benefits to DTA supplier, on receipt of certified copies of Central Excise attested invoice as proof of supplies made and / or Excise attested CT3 form and proof of validity of LOP.

(iii) In respect of supplies under categories mentioned in paragraphs (d), (e), (f), (g), (h), (i) and (j) of above, claim may be filed for payment received / supplies effected during a particular month / quarter / half year at option of applicant either on the basis of proof of supplies effected or payment received. Claim may be filed either against a particular project or all the projects. Such claims shall be filed within a period of 6 months from end of monthly / quarterly / half yearly period reckoned from date of receipt of supplies by project authority or from date of receipt of the payment as per the option of applicant. Such claims may also be filed where part payments have been received.

3. Exemption from payment of terminal excise duty For claiming, exemption from payment of terminal excise duty procedure prescribed by Central Excise authority shall be followed.

4. Fixation of Brand Rate Where All Industry Rate of Drawback is not available or same is less than 4/5th of duties actually paid on materials or components used in production or manufacture of the said goods, exporter / supplier may apply for fixation of brand rate in application form as given in ANF 8 to RA or DC.

5. Claim application shall be filed along with application for fixation of brand rate of duty drawback in case brand rate is required to be fixed.

Late Cut : Wherever any application is received after expiry of last date for submission of such application but within six months from last date, such application may be considered after imposing a

late cut @ 2 % on entitlement and where Application is received after six months from the prescribed date of submission but not later than one year from the prescribed date such application may be considered after imposing a late cut @ 5 % on entitlement

Supplementary Claim: Wherever any application for supplementary claim is received, within specified time limits, such application may also be considered after imposing a cut @2 % on the entitlement.

6. Provisional Payment RA may consider provisional payment up to 75% of drawback claim in case of private companies and 90% in case of PSUs, pending fixation of Brand Rate.

7. Applicability of Drawback Rules Subject to procedure laid down in the Handbook of Procedures Vol1., Customs and Central Excise Duty Drawback Rules, 1995 shall apply mutatis mutandis to deemed exports.

Invoicing Procedure

For Deemed Exports, four copies of invoices are prepared. The below mentioned details are the important contents of a deemed export invoice. a. Their Letter of Authority running serial number. b. Name and address of the deemed exporter. c. Name and address of the deemed importer. d. Total weight in carats. e. Total value in Indian rupees.

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CHAPTER 15

DEFINITIONS under CHAPTER-9 of the Foreign Trade Policy 2004-2009

For purpose of Foreign Trade Policy, unless context otherwise requires, following words and expressions shall have the following meanings attached to them.

1. "Accessory" or "Attachment" means a part, sub-assembly or assembly that contributes to efficiency or effectiveness of a piece of equipment without changing its basic functions.

2. "Act" means Foreign Trade (Development and Regulation) Act, 1992 (No.22 of 1992) [FT(D&R) Act].

3. "Actual User" means an actual user who may be either industrial or non-industrial.

4. "Actual User (Industrial)" means a person who utilises imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit.

5. "Actual User (Non-Industrial)" means a person who utilises the imported goods for his own use in (i) any commercial establishment carrying on any business, trade or profession; or (ii) any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital; or (iii) any service industry.

6. "AEZ" means Agricultural Export Zones notified by DGFT in Appendix 8 of HBP v1.

7. Appeal is an application filed under section 15 of the Act and includes such applications preferred by DGFT officials in government interest against decision by designated adjudicating / appellate authorities.

8. "Applicant" means person on whose behalf an application is made and shall, wherever context so requires, includes person signing the application.

9. Authorisation means a permission as included in Section 2 (g) of FT(D&R) Act to import or export as per provisions of FTP.

10. "BoA" means the Board of Approval as notified by Department of Commerce.

Under the SEZ Act,2005 Setion 2(e) "Board means the Board of Approval constituted under sub-section (1) of section 8 of that Act.

SEZ Act,2005 Chapter III , Section 8

|CHAPTER III |CONSTITUTION OF BOARD OF APPROVAL |Constitution of Board of Approval

| | |8. (1) The Central Government shall, within |

| | | | |(2) The Board shall consist of-

|fifteen days of the commencement of this Act, | |by notification, constitute, for the purposes | |of this Act, a Board to be called the Board of | |Approval. | |

|(a) an officer not below the rank of an Additional Secretary to the Government of India in the Ministry or | |Department of the Central Government dealing with Commerce - Chairperson, ex officio; | |(b) two officers, not below the rank of a Joint Secretary to the Government of India, to be nominated by the | |Central Government to represent the Ministry or Department of the Central Govt. dealing with revenue | |Members, ex officio; |

|(c) one officer not below the rank of Joint Secretary to the Government of India to be nominated by the | |Central Government the Ministry or Department of the Central Government dealing with economic affairs | |(financial services) Members, ex officio; |

|(d) such number of officers, not exceeding ten, not below the rank of the Joint Secretary to the Government of| |India, to be nominated by the Central Government to represent the Ministries or Departments of the Central | |Government dealing with commerce, industrial policy and promotion, science and technology, small scale | |industries and agro and rural industries, home affairs, defence, environment and forests, law, overseas Indian| |affairs and urban development - Members, ex officio; |(e) a nominee of the State Government concerned - Member, ex |21 of 1860. | |

|officio;

| | | | | | | | | | | | |

|(f) the Director General of Foreign Trade or his nominee - | |Member, ex officio; |

|(g) the Development Commissioner concerned - Member, ex |officio; |

|(h) a Professor in the Indian Institute of Management, being | |a society registered under the Societies Registration Act, | |1860 or the Indian Institute of Foreign Trade, being a |society registered under the Societies Registration Act, | |

|1860, as may be, nominated by the Central Government |Member, ex officio; |

|(i) an officer not below the rank of Deputy Secretary to the Government of India dealing with the Special | |Economic Zones in the Ministry or Department of the Central Government, dealing with commerce to be nominated | |by the Central Government - Member-Secretary, ex officio: |

|Provided that the member, being the Joint Secretary nominated under clauses (b) to (d) of this subsection, | |may, if he is unable to attend the meeting of the Board, authorise any other officer to attend the meeting of | |the Board on his behalf. |

|(3) The term of office of an ex officio Member shall come to an end as soon as he ceases to hold the office by| |virtue of which he was so nominated. |

|(4) For the purpose of performing its functions, the Board may co-opt as members such number of persons as it |

|deems fit who have special knowledge of, and practical experience in, matters relating to, or relevant to | |activity connected with the Special Economic Zones and any such person shall have the right to take part in | |the discussions of the Board but shall not be counted for the quorum and shall not be a member for any other | |purpose and such person shall be entitled to receive such allowances or fees, as the case may be, fixed by the| |Board. |

|(5) The Board shall meet at such times and places as may be appointed by it and shall have the power to | |regulate its own procedure. |

|(6) One third of the total Members of the Board shall form a quorum, and all the acts of the Board shall be | |decided by a general consensus of the Members present. |

|(7) No act or proceeding of the Board shall be called in question on the ground merely of existence of any | |vacancy in, or any defect in the constitution of, the Board. |

|(8) All orders and decisions of the Board and all other instruments issued by it shall be authenticated by the| |signature of the Member-Secretary, or any other Member as may be authorised by the Board in this behalf. | |9. (1) Subject to the provisions of this Act, the Board shall have the duty to |Duties, powers and functions | |promote and ensure orderly development of the Special Economic Zones. |of Board. |

|(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and | |functions of the Board shall include |(a) granting of approval or rejecting proposal or | |

|modifying such proposals for establishment of the Special Economic Zones;

|(b) granting approval of authorised operations to be carried out in the Special Economic Zones by the | |Developer; |

|(c) granting of approval to the Developers or Units (other than the Developers or the Units which are exempt | |from obtaining approval under any law or by the Central Government) for foreign collaborations and foreign | |direct investments, (including investments by a person resident outside India), in the Special Economic Zone | |for its development, operation and maintenance; |

|65 of 1951.|(d) granting of approval or rejecting of proposal for providing infrastructure facilities in a | | |Special Economic Zone or modifying such proposals; |

| |(e) granting, notwithstanding anything contained in the Industries (Development and Regulation) | | | | |Act, 1951, a licence to an industrial undertaking referred to in clause (d) of section 3 of that | |Act, if such undertaking is established, as a whole or part thereof, or proposed to be |established, in a Special Economic Zone; | |

|(f) suspension of the letter of approval granted to a Developer and appointment of an Administrator under | |sub-section (1) of section 10; |(g) disposing of appeals preferred under sub-section (4) of section 15; |(h) disposing of appeals preferred under sub-section (4) of section 16; |(i) performing such other functions as may be assigned to it by the Central Government. |(3) The Board may if so required for purposes of this Act or any other law for the time being in force | |relating to Special Economic Zones, by notification, decide as to whether a particular activity constitutes | | | | |

|manufacture as defined in clause (r) of clause 2 and such decision of the Board shall be binding on all | |Ministries and Departments of the Central Government. |

|(4) The Board may delegate such powers and functions as it may deem fit to one or more Development | |Commissioners for effective and proper discharge of the functions of the Board. |

|(5) Without prejudice to the foregoing provisions of this Act, the Board shall, in exercise of its powers or | |the performance of its functions under this Act, be bound by such directions on the |

|questions of policy as the Central Government may give in writing to it from time to time. |(6) The decision of the Central Government whether a question is one of policy or not shall be final. | |Suspension of letter of approval and |10. (1) If at any time the Board is of the opinion that a |

|transfer of Special Economic Zone in certain|Developer |cases. | | | | | | | | |

|(a) is unable to discharge the functions or perform the duties | |imposed on him by or under the provisions of this Act or rules | |made thereunder; or |

|(b) has persistently defaulted in complying with any direction | |given by the Board under this Act; or | |

|(c) has violated the terms and conditions of the letter of |approval; or |

|(d) whose financial position is such that he is unable to fully | |and efficiently discharge the duties and obligations imposed on | |him by the letter of approval, and |

|the circumstances exist which render it necessary for it in public interest so to do, the Board may, on |

|application, or with the consent of the Developer, or otherwise, for reasons to be recorded in writing, | |suspend the letter of approval, granted to the Developer for a whole or part of his area established as | |Special Economic Zone, for a period not exceeding one year and appoint an Administrator to discharge the | |functions of the Developer in accordance with the terms and conditions of the letter of approval and manage | |the Special Economic Zone accordingly. |

|(2) Consequent upon appointment of an Administrator, the management of the Special Economic Zone of the | |Developer referred to in sub-section (1) shall vest in the Administrator. |

|(3) No letter of approval shall be suspended under sub-section (1) unless the Board has given to the Developer| |not less than three months notice, in writing, stating the grounds on which it proposes to suspend the letter| |of approval, and has considered any cause shown by the Developer within the period of that notice, against the| |proposed suspension. |

|(4) The Board may, instead of suspending the letter of approval under sub-section (1), permit it to remain in | |force subject to such further terms and conditions as it thinks fit to impose, and any further terms or | |conditions so imposed shall be binding upon and be complied with by the Developer and shall be of like force | |and effect as if they were contained in the |

|letter of approval.

|(5) In case the Board suspends a letter of approval under this section, it shall serve a notice of suspension |

|upon the Developer and fix a date on which the suspension shall take effect.

|(6) Upon suspension of the letter of approval under sub-section (1), the Special Economic Zone of the | |Developer referred to in sub-section (5) shall vest in the Administrator under sub-section (2) for a period | |not exceeding one year or up to the date on which his letter of approval for such Special Economic Zone is | |transferred, whichever is earlier, in accordance with the provisions contained in sub-sections (7) and (9), as| |the case may be. |

|(7) Where the Board has given notice for suspension of letter of approval under sub-section (5), the Developer| |may, after prior approval of the Board, transfer his letter of approval to any person who is found eligible by| |the Board for grant of such approval. |

|(8) If at any time, it appears to the Board that the purpose of the order appointing the Administrator has | |been fulfilled or that for any reason it is undesirable that the order of appointment should remain in force, | |the Board may cancel the order and thereupon the Administrator shall be divested of the management of the | |Special Economic Zone which shall, unless otherwise directed by the Board, again vest in the person, being the| |Developer, in whom it was vested immediately prior to the date of appointment of the Administrator. | |(9) Where the Board suspends the letter of approval, under this section, in respect of any Developer, the | |following provisions shall apply, namely:|

|(a) the Board shall invite applications for transferring the letter of approval of the Developer, whose |

|approval has been suspended and select the person or persons, in accordance with the procedure as may be | |prescribed, to whom the letter of approval of the Developer in the Special Economic Zone may be transferred; | |(b) upon selection of person or persons under sub-section (a), the Board may, by notice in writing, require | |the Developer to transfer his letter of approval in a Special Economic Zone to the person or the persons so | |selected and thereupon the Developer shall transfer his interests, rights and liabilities in the Special | |Economic Zone (hereafter in this section referred to as the transferee) who has been selected by the Board | |on such terms and conditions and consideration |

|as may be agreed upon between the Developer and the transferee;

|(c) all the rights, duties, obligations and liabilities of the Developer, on and from the date of suspension | |of letter of approval or on and from the date, if earlier, on which his letter of approval in the Special | |Economic Zone of the Developer has been transferred to the transferee, shall cease absolutely except for any | |liabilities which have accrued prior to that date; |

|(d) the Board may make such interim arrangements in regard to the operation of the Special Economic Zone as | |may be considered appropriate; |

|(e) the Administrator shall exercise such powers and discharge such functions as the Board may direct. | |(10) The Board may, in order to promote exports or to protect the interest of Units or in the public interest,| |issue such directions or formulate such scheme as it may consider necessary for operation of the Special |

|Economic Zone.

11. "BTP" means Biotechnology Park as notified by DGFT on recommendation of Department of Biotechnology.

12. "Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion. It also includes packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector.

13. "Competent Authority" means an authority competent to exercise any power or to discharge any duty or function under the Act or Rules and Orders made thereunder or under FTP.

14. "Component" means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A component includes an accessory or attachment to another component.

15. "Consumables" means any item, which participates in or is required for a manufacturing process, but does not necessarily form part of end-product. Items, which are substantially or totally consumed during a manufacturing process will be deemed to be consumables.

16. "Consumer Goods" means any consumption goods, which can directly satisfy human needs without further processing and includes consumer durables and accessories thereof.

17."Counter Trade" means any arrangement under which exports / imports from / to India are balanced either by direct imports /exports from importing / exporting country or through a third country under a Trade Agreement or otherwise. Exports / Imports under Counter Trade may be carried out through Escrow Account, Buy Back arrangements, Barter trade or any similar arrangement. Balancing of exports and imports could wholly or partly be in cash, goods and / or services.

18. "Developer" means a person or body of persons, company, firm and such other private or government undertaking, who develops, builds, designs, organises, promotes, finances, operates, maintains or manages a part or whole of infrastructure and other facilities in SEZ as approved by Central Government and also includes a co-developer.

Under the SEZ Act,2005 Section 2 (f ), and (g) , the meaning of Co-Developer and Developer respectively is as follows:

"Co-Developer" means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (12) of section 3; Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a CoDeveloper;

19. "Development Commissioner" means Development Commissioner of SEZ.

Under the SEZ Act,2005 Section 2(h) "Development Commissioner" means the Development Commissioner appointed for one or more Special Economic Zones under sub-section (1) of section 11;

Under Chapter IV, Section 11(1) of the SEZ Act,2005

The Central Government may appoint any of its officers not below the rank of Deputy Secretary to the Government of India as the Development Commissioner of one or more Special Economic Zones.

20. "DFRC" means Duty Free Replenishment Certificate.

21. "Domestic Tariff Area (DTA)" means area within India which is outside SEZs and EOU / EHTP / STP / BTP.

22. "Drawback in relation to any goods manufactured in India and exported, means rebate of duty chargeable on any imported material or excisable material used in manufacture of such goods in India. Goods include imported spares, if supplied with capital goods manufactured in India.

23. "EHTP" means Electronic Hardware Technology Park.

24. "EOU" means Export Oriented Unit for which an LOP has been issued by Development Commissioner.

25. "Excisable goods" means any goods produced or manufactured in India and subject to a duty of excise under Central Excise and Salt Act 1944 (1 of 1944).

26."Exporter" means a person who exports or intends to export and holds an IEC number unless otherwise specifically exempted.

27. "Export Obligation" means obligation to export product or products covered by Authorisation or permission in terms of quantity, value or both, as may be prescribed or specified by Regional or competent authority.

28. FTP means the Foreign Trade Policy which specifies policy for exports and imports under section 5 of the Act.

29. Group Company means two or more enterprises which, directly or indirectly, are in a position to (i) exercise twenty-six per cent, or more of voting rights in other enterprise; or (ii) appoint more than fifty percent, of members of board of directors in the other enterprise. For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of group, the group company should have been in existence at least 2 years prior to date of application under any of export promotion schemes notified in FTP.

30. HBP v1 and HBP v2 means the Handbook of Procedures (Vol.1) and Handbook of Procedures (Vol.2) respectively published under provisions of paragraph 2.4 of FTP.

31. "Importer" means a person who imports or intends to import and holds an IEC number unless otherwise specifically exempted.

32. "Infrastructure facilities" means industrial, commercial and social infrastructure or any other facility for development of SEZ as notified.

33."ITC(HS)" means ITC(HS) Classifications of Export and Import Items Book.

34. "Jobbing" means processing or working upon of raw materials or semi-finished goods supplied to job worker so as to complete a part of process resulting in manufacture or finishing of an article or any operation which is essential for aforesaid process.

35. "Licensing Year" means period beginning on the 1st April of a year and ending on 31st March of following year.

36. "Managed Hotel" means hotels managed by a three star or above hotel / hotel chain under an operating management contract for a duration of at least three years between operating hotel / hotel chain and hotel being managed. Management contract must necessarily cover the entire gamut of operations / management of managed hotel.

37. "Manufacture" means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of Foreign Trade Policy, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining.

38. "Manufacturer Exporter" means a person who exports goods manufactured by him or intends to export such goods.

39. "MAI" means Market Access Initiative Scheme notified by Department of Commerce.

40. Merchant Exporter means a person engaged in trading activity and exporting or intending to export goods.

41. "NC" means the Norms Committee in the Directorate General of Foreign Trade for recommending grant of Authorisations under Duty Exemption Scheme and for recommending Input Output norms and value addition norms to be notified by DGFT.

42. "NFE" means Net Foreign Exchange.

43. "Notification" means a notification published in Official Gazette.

44. "Order" means an Order made by Central Government under the Act.

45. "Part" means an element of a sub-assembly or assembly not normally useful by itself and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory.

46. "Person" includes an individual, firm, society, company, corporation or any other legal person including the DGFT

officials.

47. "Policy" means FTP 2004-2009 as amended from time to time.

48. "Prescribed" means prescribed under the Act or the Rules or Orders made thereunder or under FTP.

49. "Public Notice" means a notice published under provisions of paragraph 2.4 of FTP.

50. "Raw material" means: (i) basic materials which are needed for manufacture of goods, but which are still in a raw, natural, unrefined or unmanufactured state; and (ii) for a manufacturer, any materials or goods which are required for his manufacturing process, whether they have actually been previously manufactured or are processed or are still in a raw or natural state.

51. "Regional Authority" means authority competent to grant an Authorisation under the Act / Order.

52."Registration-Cum-Membership Certificate" (RCMC) means certificate of registration and membership granted by an Export Promotion Council / Commodity Board / Development Authority or other competent authority as prescribed in FTP or HBP v1.

53. "Rules"

means Rules made by Central Government under Section 19 of the Act.

54."Services" include all tradable services covered under General Agreement on Trade in Services and earning free foreign exchange.

55. "Service Provider" means a person providing (i) Supply of a service from India to any other country; (ii) Supply of a service from India to service consumer of any other country in India; and (iii) Supply of a service from India through commercial or physical presence in territory of any other country. (iv) Supply of a service in India relating to exports paid in free foreign exchange or in Indian Rupees which are otherwise considered as having being paid for in free foreign exchange by RBI.

56. "SEZ" means Special Economic Zone notified by Ministry of Commerce & Industry, Department of Commerce.

57. "Ships" mean all types of vessels used for sea borne trade or coastal trade and shall include second hand vessels.

58. "SION" means Standard Input Output Norms notified by DGFT in HBP v2, 2004-09 / approved by Board of Approval.

59. "Spares"

means a part or a sub-assembly or assembly for substitution, that is ready to replace an identical or similar part or sub-assembly or assembly. Spares include a component or an accessory.

60. "Specified" means specified by or under provisions of this Policy through Notification / Public Notice.

61. "Status holder" means an exporter recognized as Export House / Trading House etc. by DGFT / Development Commissioner.

62. Stores means goods for use in a vessel or aircraft and includes fuel and spares and other articles of equipment, whether or not for immediate fitting.

63."STP" means Software Technology Park

64. "Supporting Manufacturer" means any person who manufactures any product or part / accessories / components of that product. Name of supporting manufacturer as well as the exporter must be endorsed on export documents.

65. "Third-party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/manufacturer and third party exporter(s). BRC, GR declaration, export order and invoice should be in the name of third party exporter.

66. "Transaction Value" as defined in Customs Valuation Rules of Department of Revenue.

67. "Wild Animal" means any wild animal as defined in Section 2(36) of Wildlife (Protection) Act, 1972.

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CHAPTER 16

OVERVIEW OF ANNUAL SUPPLEMENT TO THE FOREIGN TRADE POLICY 2008-09

Unveiling the annual supplement to the Foreign Trade Policy (FTP) in New Delhi, on 11th April 2008, Commerce and Industry Ministry Kamal Nath said interest subvention to help rupee-hit exporters will be extended by one more year, while the average export obligation under the EPCG scheme will reduced. The export target for the current financial year has been pegged at $200 billion, he said adding, the total exports during 2007-08 are likely to exceed $155 billion, lower than target of $160 billion. As part of the fiscal exercise to check inflation, which touched 7.41 per cent, the Government has withdrawn incentives for export of cement, primary steel products. The other export promotion measures announced include: 1. DUTY ENTITLEMENT PASSBOOK SCHEME (DEPB)

To impart continuity and stability to our foreign trade regime, DEPB scheme is being extended till May 2009. 2. REFUND OF SERVICE TAX The Government has already announced refund of service tax on almost all the services, which are directly relatable to export production and supply. Some services related to export, which do not attract service tax have also been clarified through a Circular.

3. INCOME TAX ON EOUs Income tax benefit to 100% EOUs under Section 10B of I.T. Act, being extended by Govt. for one more year, beyond 31.3.2009. 4. SECTORAL INITIATIVES a) IT hardware sector as Special focus initiative - Specific items to be included for benefits under High Tech Product Scheme. There will also be earmarked funds for this sector under the MDA and MAI Schemes. b) Setting up a new Export Promotion Council for Telecom Sector to provide institutional support to exports from telecom sector. c) Export of Toys & Sports Goods will be given an additional duty credit scrip @ 5 % (in addition to the existing benefits under Focus Product scheme). Separate funds for market promotion activities will also be given for promoting these exports under ongoing MDA Scheme and MAI Scheme. d) Additional duty credit scrip of 2.5% over and above the normal benefit available under VKGUY, for export of certain flowers, vegetables and fruits. 5. RELIEF TO SECTORS AFFECTED BY RUPEE APPRECIATION a) Interest subvention provided last year to sectors affected by rupee appreciation and to SMEs, has been extended by one more year. b) Reduced average export obligation under EPCG, for sectors, which have witnessed decline in exports in the previous year. 6. PROMOTION OF HIGH VALUE ADDED MANUFACTURED PRODUCTS An enhanced duty credit scrip of 2.5% (instead of the normal 1.25% under FPS) would be allowed for export of High value added manufactured products. The list of products will be notified separately. 7. EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG) a) The customs duty payable under EPCG Scheme has been reduced from 5% to 3%. b) To improve export competitiveness of Indian exports, all exports made towards fulfillment of export obligation under EPCG scheme will now be eligible for incentives/rewards under promotional schemes. c) Average export obligation under EPCG for Premier Trading Houses shall, as an option, be calculated, based on the average of last 5 years export, instead of the present 3 years. 8. FOCUS MARKET & PRODUCT SCHEMES

a) Coverage of FMS has been increased and additional 10 countries have been included. These are Mongolia, Bosnia-Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia. b) FMS/FPS would also be calibrated, so that products of general high export intensity, presently not covered under FPS, but which have low penetration in countries, not covered under FMS, would be considered for export incentives as a focus product for that particular country. 9. SUBSTANTATIVE MEASURES TAKEN TO FACILITATE EXPORTS a) To ensure that terminal excise duty and CST refund is made to the exporters in time, it has been decided that interest @ 6% per annum shall be paid to the exporter, in case refund is not made within one month of the due date. This interest on delayed refund will be paid on all such claims that have become due on or after 1.4.2007. b) The facility of export on consignment basis has been extended to the export of coloured gem stones. c) In case of textile and granite sector EOUs, payment of only excise duty on DTA sale, in case the use of duty paid imported inputs is up to 3% of the FOB value of exports. d) Any waste or scrap or remnant generated during manufacturing or processing activities of an SEZ Unit / Developer / Co-developer to be disposed in DTA freely, subject to payment of applicable Customs Duty. e) Withdrawal of the requirement of submission of non-a ailment of MODVAT certificate in case of quantity based advance license issued prior to 1.4.2002. This step is likely to lead to closure of approximately 7000 old advance licenses. f) Surat Hira Bourse has been recognized as port of export for jeweler, in addition, to the existing facility for export diamonds from the Bourse. g) A few additional ports have been included under Export Promotion Schemes. This will help in reducing costs and adhering to delivery schedules. Some more ports are also under consideration. 10. MEASURES TO REDUCE TRANSACTION COST TO EXPORTERS a) Advance Authorization Scheme and EPCG Scheme will be EDI enabled through the electronic message exchange with effect from 1.7.2008. This will do away with the present requirement of physical verification and registration at Customs end. b) W.e.f. 01.01.2009, all existing EDI ports will be treated as a single port and there will be no requirement of TRA under Advance Authorization Scheme. c) Payment of duty under EPCG scheme through debit of duty credit scrips under the promotional schemes or DEPB w.e.f. 1.1.2009.

d) Application fee for duty credit scrips and for EPCG Authorizations reduced from Rupees 5 per thousand to Rupees 2 per thousand. The application fee for Importer-Exporter Code Number has been reduced from Rupees 1000 to Rupees 250. e) Reduction of fee in case of supplementary claims from 10% to 2%. 11. PROCEDURAL SIMPLIFICATION a) EOUs shall be allowed to pay excise duty on monthly basis, instead of the present system of paying duty on consignment basis, subject to conditions/documentation to be notified by Deptt. of Revenue. b) Prorata enhancement/reduction in CIF value or duty saved amount beyond 10% has been allowed under EPCG scheme, by Regional Authorities under DGFT. c) In respect of duty free import of R&D equipment, units not registered with Central Excise will be allowed to give installation certificate issued by an independent Chartered Engineer in place of excise authorities. d) Certificate of Registration as Exporter of Spices (CRES) issued by Spices Board shall be treated as Registration-Cum-Membership Certificate (RCMC) for all purposes under this Policy. e) Central Excise to issue installation certificate under EPCG Scheme within 30 days of intimation by the exporter. f) To facilitate faster clearance of deemed export benefits, Central Excise to endorse supply invoice within 21 days of supply. g) Split-up facility under DFIA Scheme introduced. h) Export of sawn timber processed from imported logs made easier from select Customs ports. i) The limit of duty free import of samples has been increased from Rs.75,000 to Rs.1, 00,000. j) The time period for re-import of branded jeweler remaining unsold, has been extended from 180 days to 365 days. k) Value of jeweler parcels, through Foreign Post Office, raised from US$ 50,000 to US$ 75,00

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CHAPTER 17

PROFESSIONAL OPPORTUNITIES FOR CHARTERED ACCOUNTANTS IN INTERNATIONAL TRADE

Export- Import Trade 1. Advisory on Foreign Trade Policy and Procedures 2. Compliance with Foreign Trade Procedures 3. Setting up 100% EOU/STP/EHTP/BTP/SEZ units 4. Assistance in fulfilling the regulatory and licensing requirements 5. Obtaining government clearances 6. Liasioning across related government agencies 7. Assistance in Risk assessment 8. Ensuring compliance of various national rules and regulations 9. Judicious management of finance, credit and security 10. Analysis of business operations and facilitation services 11. Formation of a company/subsidiary of a foreign company 12. Development of strategies and implementation plans according to the specific needs of the clients 13. Consulting, documentation and facilitation for a. Taxation b. Accounting and auditing services c. Licenses d. Incentives e. Logistics f. Export-Import Finance and benefits from Government Schemes and Programmes g. Export-Import legal matters h. Getting Foreign Investment and related matters like Setting up of Business Operations in India including Liaison Office, Branch Office, Subsidiary Company, Joint Ventures, i. Approval of Investments from RBI/FIPB/Ministries,

j. Quality certification for Foreign Companies exporting to India (as required under BIS regulations), k. Domestic operations & Incorporations like Formation of companies in India & related issues with ROC, RBI & other Government departments, Registrations with DGFT(IEC), EPC(RCMC), Industry Ministry (IEM), Income tax (PAN), Sales tax, Excise, Representation of Cases Before Central Excise Appellate Authorities, Customs Authorities, Fixation of /Brand Rates for Drawback, Rebate/ Refund of Central Excise Duties, Customs Duties etc. 14. Application and Issuance of DEPB, DFRC, Advance License, EPCG License, Duty Drawback, Deemed Export Benefits 15. Representation and Liaison a. With DGFT, RBI and Ministries for import-export licenses & other matters, b. For Foreign companies/NRIs/OCBs in India, Indian Investments Abroad, OCBs etc 16. Technical Advisory to Government bodies and Policy makers on Policy Formulation 17. Planning, Strategizing and implementation for clearances of Project Imports, Plant Relocations, Restricted Items Imports 18. Representing the corporate and non-corporate clients before customs and subsequent statutory authorities. 19. Helping the Customs Department in correct assessment the valuation aspects of Imported goods

SEZ / EOU/STP/BTP/EHTP/FT&WZ 1. Assistance in preparation of project report 2. A project report outlining the economic and commercial viability of the project needs to be attached along with Form A i.e. Application for setting up a unit in Special Economic Zone. 3. Assistance in Necessary applications, compliances etc. with the Board of Approval, State Government, Development Commissioner, Approval Committee, etc. 4. Consultancy services for setting up units in Special Economic Zones, 5. Representation before Board of Approval on behalf of any person aggrieved by the order passed by the Approval Committee.

6. Rule 55 of Special Economic Zones Rules, 2006 states that any person aggrieved by an order passed by the Approval Committee under section 15 of the Special Economic Zones Act, 2005 or against cancellation of Letter of Permission under section 16, may prefer an appeal to the Board in the Form J. 7. Rule 61 of the Special Economic Zones Rules, 2006 states every appellant may appear before the Board in person or authorize one or more chartered accountants or company secretaries or cost accounts or legal practitioners or any of his or its officers to present his or its case before the Board. 8. Certification of reports Form I ( Annual performance reports for Units) 9. There is a requirement under Rule 22 of the Special Economic Zones Rules, 2006 that the grant of exemptions, drawbacks and concession to the entrepreneur or developer of a Special economic zone will be subject to the condition that the Unit submits an Annual Performance Report in Form I to the Development Commissioner who in turn will submit it to the Approval committee for his consideration. The information given in the form should be authenticated by the authorized signatory of the unit and certified by a Chartered Accountant. 10. Audit report under section 80-I(7)/80-IA(7)/80-IB/80-IC of the Income-tax Act, 1961 in Form 10CCB 11. Report under section 10A (5) and Section 10 B (5) of the Income-tax Act, 1961in FORM NO. 56F and Form No. 56 G respectively certifying that the deduction has been made in accordance with the corresponding section 12. Report under section 80LA(3) of the Income-tax Act, 1961 in Form No. 10CCF 13. Report on Annual performance of units -The information given in the formats for APRs should be authenticated by the authorized signatory of the unit and should be certified for its correctness by a Chartered Accountant with reference to the account records and registers maintained by the unit (Appendix 14 I-F Handbook of procedures of Foreign Trade Policy) 14. Certificate on production and exports- DTA sale of Gem & Jewellery items will be permitted on annual basis by the Development Commissioners up to 10% of FOB value of exports during the preceding year subject to certain conditions. One such condition is that The application by an EOU has be submitted to DC concerned on yearly basis (licensing-year) giving the details of production and exports made during the preceding licensing year duly certified by a Chartered Accountant and endorsed by the jurisdictional Custom Authority.( Appendix 14- I-H Handbook of procedures of Foreign Trade Policy) 15. Certificate for CST reimbursements certifying receipt of the goods(Appendix 14- I-I Handbook of procedures of Foreign Trade Policy)- The Export Oriented Units (EOUs) and units in Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP) will be entitled to full reimbursement of Central Sales Tax (CST) paid by them on purchases made from the Domestic Tariff Area (DTA), for production of goods and services as per EOU Scheme subject to certain conditions

i. The unit has to present its claim for reimbursement of CST in the prescribed form (Annexure I) to the Development Commissioner of the SEZ concerned or the designated officer of the EHTP/STP.

Eligibility criteria for Chartered Accountants firms: (i)In case of units located in the States of J&K, Orissa, North-Eastern States, Andaman and Nicobar Islands and Lakshadweep, the Chartered Accountant firm should be at least a Sole Proprietorship firm who should be an FCA and engaged full time with the firm. (ii) In case of partnership Chartered Accountant firms located in the regions indicated in (i) above, should have at least two full time partners, one of whom should be an FCA. (iii) In case of units located in other regions, the partnership Chartered Accountant firms should have at least one full time partner, who should be an FCA. (iv) For the regions indicated in (i) above, the Chartered Accountant firm be located in the area where the unit is situated otherwise qualification of (iii) shall apply. (Appendix 14-I-I Handbook of procedures of Foreign Trade Policy) 16. Assistance in registration with Software Technology Parks of India. 17. Certification of Statement of Exports made in the preceding licensing year in the format given in Appendix 26 for Annual Advance License purposes ( Handbook of Procedures Vol 1-2004-09) [Advance licence can be applied for annual requirement for a particular product group by status holders and by the other exporters having at least past two years export performance. For the completion of the export obligation as stipulated in the condition of the licence, the exporters are required to submit proof of export obligation fulfillment]

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CHAPTER 18

USEFUL WEBSITES

i. Central Board of Excise & Customs

http://www.cbec.gov.in/ ii. Department of Commerce http://commerce.nic.in/ iii. Director General of Foreign Trade http://dgft.delhi.nic.in/ iv. Directory of Govt. of India http://goidirectory.nic.in/ v. GSI India - Barcode / EDI Standards http://www.gs1india.org/ vi. Income Tax Dept. http://www.incometaxindia.gov.in/ vii. Ministry of External Affairs http://meaindia.nic.in/ viii. Ministry of Finance http://finmin.nic.in/ ix. National Informatics Centre http://indiaimage.nic.in/ x. Reserve Bank of India http://rbi.org.in/home.aspx xi. Forward markets commission http://www.fmc.gov.in/ xii. National Centre For Trade Information http://www.ncti-india.com/ xiv Export Import bank of India

http://www.eximbankindia.in/index.asp

About the author Mr. Rajkumar Adukia is a consultant, writer, and speaker .He is a rank holder from Bombay University and did his graduation from Sydenham College of Commerce & Economics. He received a Gold Medal for highest marks in Accountancy & Auditing in the Examination. He passed the Chartered Accountancy and Cost Accountancy Course in 1983 and was among the top rank holders in both the courses. In addition to being a Chartered Accountant and Cost Accountant, Mr. Adukia also holds a degree in law. He has been involved in the activities of the Institute since 1987. He was the Chairman of the Western Region of Institute of Chartered Accountants of India in 1997 and has been actively involved in various committees of ICAI. He became a member of the Central Council in 1998 During his tenure, he has worked tirelessly towards knowledge sharing, professional development and enhancing professional opportunities for members. He coordinates with various professional institutions, associations universities, University Grants Commission and other educational institutions. He actively participates with accountability and standards-setting organizations in India and at the international level. He has served on the Board of Directors in the capacity of independent director at BOI Asset Management Company private limited and Bharat Sanchar Nigam Limited .Presently he holds the directorship at SBI mutual funds trustee company private limited. Mr Adukia has simultaneously expanded his practice to include internal audit, business advisory and planning, commercial law compliance , project work, taxation and trusts. His clients include : large corporations, owner-managed companies, small manufacturers, service businesses, property management and construction, exporters and importers, and professionals. The author has written numerous articles on most aspects of finance-accounting, auditing, , taxation, valuation, public finance . His authoritative articles appear regularly in financial papers like Business India, Financial Express, Economic Times and professional and business magazines. He has authored several accounting and auditing manuals. He has authored books on vast range of topics including Internal Audit, Bank Audit, SEZ, CARO, PMLA, Anti-dumping, Income Tax Search, Survey and Seizure, etc.His books are known for their practicality and for their proactive approaches to meeting practice needs.. Mr Adukia is a frequent speaker on trade and finance at seminars and conferences organized by the Institute of Chartered Accountants of India, various chambers of Commerce, income tax offices and other professional associations. He has lectured at the S.P. Jain Institute of Management, Intensive Coaching Classes for Inter & Final CA students and Direct Taxes Regional Training Institute of CBDT | |

Introduction Foreign trade is of vital importance to the economic development of Bangladesh. The country's import needs are large and the imperative to increase exports is immediate. In order to finance those imports and also to reduce the country's dependence on foreign aid grants, the government, since liberation, has been trying to enhance foreign exchange earnings through planned and increased exports. The significance of foreign trade to the economy is manifest in a number of facts and figures. In 1991-92, foreign trade's contribution to government revenue was more than 37 percent; export-oriented industries' contribution to industrial value-addition was 56 percent; export industries' share of employment in the manufacturing sector was 60 percent, and the growth of export earnings was 16.09 percent. During the last decade export earnings at current dollar prices increased by 14 percent per annum. At present, major exports are raw jute, jute goods, tea, leather, frozen fish and read-made garments, while major imports are capital goods, food grains, petroleum and oil, yarn and textiles. Export Earnings Export growth is one of the corner stones of development strategy of the present government. In 1991 total export earning was US$ 1,718 million; it increased by over 47 percent and was more than US$ 2,533 million in 1993-94; during 1994-95 fiscal year the export target has been fixed at US$ 3,100 million. This along with higher remittances from abroad has helped reduce the country's debt service ratio from over 20 percent in I991, to less than 13 percent in the fiscal year 1993-94. The continued improvement in export trade was accompanied by the benign structural shift in composition of exports with non traditional items contributing increasingly higher share of total exports. The share of non-traditional items in the country's total exports which stood at 75 percent increased to 86. In respect of economic classification of export commodities, the primary as well as the manufactured items and export commodities recorded a balanced growth with their respective shares in total exports remaining more or less at the same levels. Recently a trend of increased price of raw jute is being observed in the international market. The government is determmed that restructuring of jute manufacturing industry should move apace for much needed viability and external competitiveness. There is need for requisite technological inputs to adequately exploit the potentials of this fibre. New opportunities have emerged to produce pulp from jute through chemical process. Steps are underway for production of 25,000 MT of pulp for industrial grade paper during the current jute season. Total import payments increased by 21 percent from US$ 3,470 million in 1990-91 to US$4,191 million in 1993-94. Structure of import now reflects a significant pick up of overall economic

activities. Imports of intermediate goods, industrial raw materials and capital and miscellaneous machinery recorded increases during 1993-94 fiscal year. Industrial raw materials which constituted 29 percent of total imports in 1990-91 increase to over 38 percent in 1993-94. Despite satisfactory performance of the export sector the balance of trade experienced some fluctuations owing mainly to fluctuations in the import levels. However the trade gap which had stood at US$ 1,800 million in 1990-91 has declined to US$ 1,650 million in 1993-94. Export earnings as percentage to import payment which was about 50 percent in 1990-91, reached over 60 percent in 1993-94. Strategies The government has taken following strategies to boost export: Simplification of export procedures and strengthening export-led co-operation through reducing regulatory role of the government; Rationalization of the value of Taka to make the export trade more attractive; Creation of an Export Promotion Fund (EPF) for strengthening the export activities; Encouraging establishment of backward linkage industries through utilization of locally available raw materials; Participation in international trade fairs, single country exhibitions and specialized fairs and sending business delegations abroad for expansion and consolidation of existing markets and creation of new markets; Expediting BMRE of existing wet-blue producing tanneries and converting them into finished leather producing and exporting units; Accelerating expansion of improved traditional and semi-intensive methods of shrimp cultivation for enhancing export off Allowing import of high quality foundation-tea for blending and establishing the brand name of Bangladesh tea through marketing; Taking measures to improve quality, increase production and expand market of exportable agricultural products; Undertaking activities for increasing export of computer software, engineering consultancy and services; Expediting steps for export of labor intensive electronic and engineering products keeping in view the market requirements in the USA and other developed countries;

 Promoting export of electronic components and engineering items to various countries; Providing appropriate financing facilities for production of components of electronic and engineering items for marketing on consignment basis; Expanding the list of products under crash programme beyond 4 products (toys, luggage and fashion items electronic and leather goods) and including 8 more items such as diamond cutting and polishing, jewelries making, stationery articles, silk, gift items, cut artificial flower & orchid, vegetables, engineering consultancy & services for export; Organizing commodity-wise trade fairs of international standard in the country; Developing and expanding infrastructural facilities for export trade; and Creating product-development councils for important products.

http://www.reportbd.com/articles/31/2/Bangladesh--Export-and-Import-Overview/Page2.html

Introduction An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. In this section, we have discussed various topics related to foreign exchange rates in detail. Export from India required special document depending upon the type of product and destination to be exported. Export Documents not only gives detail about the product and its destination port but are also used for the purpose of taxation and quality control inspection certification. Shipping Bill / Bill of Export Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. A shipping bill is issued by the shipping agent and represents some kind of

certificate for all parties, included ship's owner, seller, buyer and some other parties. For each one represents a kind of certificate document. Documents Required for Post Parcel Customs Clearance In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender. Despatch Note- It is filled by the exporter to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted. Commercial Invoice - Issued by the exporter for the full realisable amount of goods as per trade term. Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export. Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate. Legalised / Visaed Invoice - This shows the seller's genuineness before the appropriate consulate or chamber or commerce/ embassy. Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery. Packing List - It shows the details of goods contained in each parcel / shipment. Certificate of Inspection It is a type of document describing the condition of goods and confirming that they have been inspected. Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s). Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and is available. Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc. Certificate of Shipment - It signifies that a certain lot of goods have been shipped. Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc. Antiquity Measurement It is issued by Archaeological Survey of India in case of antiques. Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date. Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc. Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter. Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.

Export License.

Introduction Canalisation Application for an Export License Exports Free Unless Regulated

Introduction

An export license is a document issued by the appropriate licensing agency after which an exporter is allowed to transport his product in a foreign market. The license is only issued after a careful review of the facts surrounding the given export transaction. Export license depends on the nature of goods to be transported as well as the destination port. So, being an exporter it is necessary to determine whether the product or good to be exported requires an export license or not. While making the determination one must consider the following necessary points:

What are you exporting? Where are you exporting? Who will receive your item? What will your items will be used?

Canalisation

Canalisation is an important feature of Export License under which certain goods can be imported only by designated agencies. For an example, an item like gold, in bulk, can be imported only by specified banks like SBI and some foreign banks or designated agencies.

Application for an Export License

To determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying what is called ITC (HS) Classifications. Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application can be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for issue of export licenses.
Exports Free unless regulated

The Director General of Foreign Trade (DGFT) from time to time specifies through a public notice according to which any goods, not included in the ITC (HS) Classifications of Export and Import items may be exported without a license. Such terms and conditions may include Minimum Export Price (MEP), registration with specified authorities, quantitative ceilings and compliance with other laws, rules, regulations.

Customs Procedure for Export.

In India custom clearance is a complex and time taking procedure that every export face in his export business. Physical control is still the basis of custom clearance in India where each consignment is manually examined in order to impose various types of export duties. High import tariffs and multiplicity of exemptions and export promotion schemes also contribute in complicating the documentation and procedures. So, a proper knowledge of the custom rules and regulation becomes important for the exporter. For clearance of export goods, the exporter or export agent has to undertake the following formalities: Registration Any exporter who wants to export his good need to obtain PAN based Business Identification Number (BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for clearance of export goods. The exporters must also register themselves to the authorised foreign exchange dealer code and open a current account in the designated bank for credit of any drawback incentive. Registration in the case of export under export promotion schemes: All the exporters intending to export under the export promotion scheme need to get their licences / DEEC book etc.

Processing of Shipping Bill - Non-EDI: In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to apply different forms of shipping bill/ bill of export for export of duty free goods, export of dutiable goods and export under drawback etc. Processing of Shipping Bill - EDI: Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is printed and given by the Service Center to the exporter/CHA immediately after submission of shipping bill. The cess can be paid on the strength of the challan at the designated bank. No copy of shipping bill is made available to exporter/CHA at this stage. Quota Allocation The quota allocation label is required to be pasted on the export invoice. The allocation number of AEPC (Apparel Export Promotion Council) is to be entered in the system at the time of shipping bill entry. The quota certification of export invoice needs to be submitted to Customs along-with other original documents at the time of examination of the export cargo. For determining the validity date of the quota, the relevant date needs to be the date on which the full consignment is presented to the Customs for examination and duly recorded in the Computer System. Arrival of Goods at Docks: On the basis of examination and inspection goods are allowed enter into the Dock. At this stage the port authorities check the quantity of the goods with the documents. System Appraisal of Shipping Bills: In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made by the exporters without any human intervention. Sometimes the Shipping Bill is also processed on screen by the Customs Officer. Customs Examination of Export Cargo: Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and check list to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow "let export" for the shipment and inform the exporter or his agent.

Stuffing / Loading of Goods in Containers The exporter or export agent hand over the exporters copy of the shipping bill signed by the Appraiser Let Export" to the steamer agent. The agent then approaches the proper officer for allowing the shipment. The Customs Preventive Officer supervising the loading of container and general cargo in to the vessel may give "Shipped on Board" approval on the exporters copy of the shipping bill. Drawal of Samples: Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency in the ICES/E system. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent. The disposal of the three copies of the test memo is as follows:

Original to be sent along with the sample to the test agency. Duplicate Customs copy to be retained with the 2nd sample. Triplicate Exporters copy.

The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also order for sample to be drawn for purpose other than testing such as visual inspection and verification of description, market value inquiry, etc. Amendments: Any correction/amendments in the check list generated after filing of declaration can be made at the service center, if the documents have not yet been submitted in the system and the shipping bill number has not been generated. In situations, where corrections are required to be made after the generation of the shipping bill number or after the goods have been brought into the Export Dock, amendments is carried out in the following manners. 1. The goods have not yet been allowed "let export" amendments may be permitted by the Assistant Commissioner (Exports). 2. Where the "Let Export" order has already been given, amendments may be permitted only by the Additional/Joint Commissioner, Custom House, in charge of export section. In both the cases, after the permission for amendments has been granted, the Assistant Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the shipping bill to the Dock Appraiser for cancellation before amendment is approved on the system. Export of Goods under Claim for Drawback: After actual export of the goods, the Drawback claim is processed through EDI system by the officers of Drawback Branch on first come first served basis without feeling any separate form.

Generation of Shipping Bills: The Shipping Bill is generated by the system in two copies- one as Custom copy and one as exporter copy. Both the copies are then signed by the Custom officer and the Custom House Agent.

Documents Required

Export procedure describes the documents required for exporting from India. Special documents may be required depending on the type of product or destination. Certain export products may require a quality control inspection certificate from the Export Inspection Agency. Some food and pharmaceutical product may require a health or sanitary certificate for export. Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the goods being subject to certain conditions which are mentioned below:

Export duty/ cess Free of duty/ cess Entitlement of duty drawback Entitlement of credit of duty under DEPB Scheme Re-export of imported goods

The following are the export documents required for the processing of the Shipping Bill:

GR forms (in duplicate) for shipment to all the countries.

4 copies of the packing list mentioning the contents, quantity, gross and net weight of each package.

4 copies of invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods etc.

Contract, L/ C, Purchase Order of the overseas buyer.

AR4 (both original and duplicate) and invoice.

Inspection/ Examination Certificate.

The formats presented for the Shipping Bill are as given below:

White Shipping Bill in triplicate for export of duty free of goods.

Green Shipping Bill in quadruplicate for the export of goods which are under claim for duty drawback.

Yellow Shipping Bill in triplicate for the export of dutiable goods.

Blue Shipping Bill in 7 copies for exports under the DEPB scheme.

Note :- For the goods which are cleared by Land Customs, Bill of Export (also of 4 types - white, green, yellow & pink) is required instead of Shipping Bill.

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender.

Despatch Note, also known as CP2. It is filled by the sender to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted.

Prescriptions regarding the minimum and maximum sizes of the parcel with its maximum weight :

Minimum size: Total surface area not less than 140 mm X 90 mm. Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m./ 2.00 m. Maximum weight: 10 kg usually, 20 kg for some destinations.

Commercial invoice - Issued by the seller for the full realisable amount of goods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate.

Legalised/Visaed Invoice - This shows the seller's genuineness before the appropriate consulate/ chamber of commerce/ embassy. It do not have any prescribed form.

Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.

Packing List - It shows the details of goods contained in each parcel/ shipment.

Certificate of Inspection - It shows that goods have been inspected before shipment.

Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s).

Weight Note - Required to confirm the packets or bales or other form are of a stipulated weight.

Manufacturer's/ Supplier's Quality/ Inspection Certificate.

Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and are available.

Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of India in case of antiques.

Transhipment Bill - It is used for goods imported into a customs port/ airport intended for transhipment.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc.

Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter.

Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.

Shipping Advice - It is prepared in aligned document to be used to inform the overseas customer about the shipment of goods.

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Export/Import Procedures and Documentation