Foreign Trade Polic112

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FOREIGN TRADE POLICY2004 2009

CONTENTS

FOREWORD

GLOSSARY

1- LEGAL FRAMEWORK.

2- SPECIAL FOCUS INITIATIVES

3- BOARD OF TRADE

4-GENERAL PROVISIONS REGARDING IMPORTS AND

5-EXPORTS

6- PROMOTIONAL MEASURES

7-DUTY EXEMPTION / REMISSION SCHEMES

8 EXPORT PROMOTION CAPITAL GOODS SCHEME

9- EXPORT ORIENTED UNITS (EOUs), ELECTRONICS

10-HARDWARE TECHNOLOGY PARKS (EHTPs),

11-SOFTWARE TECHNOLOGY PARK S (STPs) AND

12-BIO-TECHNOLOGY PARKS (BTPs)

13- SPECIAL ECONOMIC ZONES 14-FREE TRADE & WAREHOUSING ZONES

15- DEEMED EXPORTS.

Four years ago we had announced Indias first ever integrated Foreign Trade Policy for the period 2004-09. At thatwe had indicated two major objectives namely (a) to double our percentage of global merchandise trade within 5 yeand (b) to use trade expansion as an effective instrument of economic growth and employment generation.

I am pleased to say that our achievements have exceeded our targets.Not only have we fulfilled our performance imeasure, but we have gone beyond and done it in just four years, instead of five.


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n 2004 our exports stood at a little over US $ 63 billion. In 2007-08, they have exceeded US $ 155 billion; our expoare not just double what they were 4years ago, but 2 times that. We have managed an average cumulative annualgrowth rate (CAGR) of 23%, year on year, way ahead of the average growth rate of international trade.

Our total merchandise trade exports and imports together will be almost US$ 400 billion this past year, accounti.2% of world trade. If the trade in services is added to this, our commercial engagement with the world would be inhe region of US $ 525 billion.,

We have delivered on our second objective as well: that of fashioning trade into an instrument of economic growthand employment generation. Our total trade in goods and services is now equivalent to almost 50% of our GDP.Thisunprecedented in Indias modernconomic history.

On the issue of employment, it is our estimate that during the last 4 years increased trade activity has created 136 laknew jobs. I have always maintained that exports are not just about earning foreign exchange but about boosting our

manufacturing sector, creating large scale economic activity and generating fresh employment opportunities.

What is more remarkable about all these achievements is that they have been accomplished in the face of appreciatiof the rupee (by more than 12% in the last year alone), high interest rates, spiralling oil prices, withdrawal of someGSP benefits to India by other countries and general international economic slowdown in some of our major trademarkets. In spite of all this our exporters have shown great resilience. For this,they deserve our congratulations.

t is in this context that I am happy to present the final Annual Supplement to the Foreign Trade Policy for 2004-200n this Supplement, we have proposed several innovative steps, which include the following:) To promote modernization of our manufacturing and services exports, the import duty under the EPCG scheme isbeing reduced from 5% to 3%.

i) Refund of tax on a large number of services relating to exports has already been announced by the Government. Afew remaining issues regarding refund of service tax on exports would also be resolved soon.

ii) Income tax benefit to 100% EOUs available under Section 10B of Income Tax Act is being extended for one moyear, beyond 2009.

v)Sports and toys are mainly produced by our unorganized labour intensive sector. To promote export of these itand also to compensate disadvantages suffered by them, an additional duty credit of 5% over and above the creditunder Focus Product Scheme is being provided.

v) Our export of fresh fruits and vegetables and floriculture suffers from high incidence of freight cost. To neutralizdisadvantage, an additional credit of 2.5% over and above the credit available under VKGUY is proposed.


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vi)Interest relief already granted for sectors affected adversely by the appreciation of the rupee is being extended formore year

vii) The DEPB scheme is being continued till May 2009.

We still face many structural problems, which need to be addressed. We have to plan an integrated strategy to tacklehese issues. We need to develop world class infrastructure. We need to encourage e-commerce, and to facilitate tradhrough EDI such that turn-aroundime at ports, airports, Inland Container Depots and Land Custom Stations match world standards. We cannot rest ouaurels in terms of trained manpower. We need to establish a chain of sector-specific skill development institutes. Eamplementation of a single Goods and

Services Tax (GST) would enable simultaneous reimbursement of duties and taxes in line with governments policyhese should not be exported. Export Credit Guarantee Corporation ofndia (ECGC) has completed its fifty years of operations, satisfactorily in the last financial year. Continuing with its

mission to provide a variety of services that would strengthen the exporters by way of minimizing the payment risks

heir financial position, ECGC has also drawnplans to operationalise the domestic credit insurance cover for the exporters and its factoring services during the yea2008- 09. ECGC is also expanding its distribution channels by entering into Corporate Agency Arrangements withCommercial Banks, Export Promotion Councils andExporters Association.

The remarkable achievements in trade and commerce of the past four years gives me the confidence to spell out an emore ambitious target that of achieving a 5% share of world trade in both goods and services by the year 2020. Inpractical terms this means a four-fold increase in our percentage share in the next 12 years. Considering that world ts itself increasing, this would translate into an eight-fold increase in absolute terms. Ambitious the target may be, b

achieving it is not impossible. The task is difficult, but the prize is great. If we achieve it, India will once more becohe trading superpower it was two centuries ago.

PREAMBLE

CONTEXT

For India to become a major player in world trade, an all encompassing,comprehensive view needs to be taken for thoverall development of the countrys foreign trade. While increase in exports is of vital importance, we have also tofacilitate those imports which are requiredo stimulate our economy. Coherence and consistency among trade and other economic policies is important for

maximizing the contribution of such policies to development. Thus, while incorporating the existing practice ofnunciating an annual Exim Policy, it is necessary to go much beyond and take an integrated approach to the

developmental requirements of Indias foreign trade. This is the context of the new Foreign Trade Policy.

OBJECTIVES


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Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is notmere earning of foreign exchange, but the stimulation of greater economic activity. The Foreign Trade Policy is roohis belief and built around two major objectives. These are:

(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 generation.

STRATEGYThese objectives are proposed to be achieved by adopting, among others, the following strategies:(i) Unshackling of controls and creating an atmosphere of trust and transparency to unleash the innatentrepreneurship of our businessmen, industrialists and traders.

(ii) Simplifying procedures and bringing down transaction costs.

(iii) Neutralizing incidence of all levies and duties on inputs used in export products, based on the fundamental prinhat duties and levies should not be exported.

(iv) Facilitating development of India as a global hub for manufacturing, trading and services.

(v) Identifying and nurturing special focus areas which would generate additional employment opportunities, particn semi-urban and rural areas, and developing a series of Initiatives for each of these.

(vi) Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially thmport of capital goods and equipment, thereby increasing value

addition and productivity while attaining internationally accepted standards of quality.

vii) Avoiding inverted duty structures and ensuring that our domestic sectors are not disadvantaged in the Free TradAgreements/Regional Trade Agreements/Preferential TradeAgreements that we enter into in order to enhance our exports.

viii) Upgrading our infrastructural network, both physical and virtual, relatedo the entire Foreign Trade chain, to international standards.

ix) Revitalising the Board of Trade by redefining its role, giving it due recognition and inducting experts on TradePolicy.

x) Activating our Embassies as key players in our export strategy and linking our Commercial Wings abroad througlectronic platform for real time trade intelligence and enquiry dissemination.

PARTNERSHIP

The new Policy envisages merchant exporters and manufacturer exporters, business and industry as partners ofGovernment in the achievement of its stated objectives and goals. Prolonged and unnecessary litigation vitiates thepremise of partnership.


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In order to obviate the need for litigation and nurture a constructive and conducive atmosphere, a suitable Grievanc

Redressal In order to obviate the need for litigation and nurture a constructive and conducive atmosphere, a suitableGrievance R

Mechanism will be established which, it is hoped, would substantially reduce litigation and further a relationship ofpartnership. The dynamics of a liberalized trading system sometimes results in injury caused to domestic industry onaccount of dumping. When this happens, effective measures to redress such injury will be taken.

ROADMAP:

This Policy is essentially a roadmap for the development of Indias foreign trade. It contains the basic principles andpoints the direction in which we propose to go. By virtue of its very dynamics, a trade policy cannot be fullyomprehensive in all its details. It would naturally require modification from time to time. We propose to do this throntinuous updation, based on the inevitable changing dynamics of international trade. It is in partnership with busin

and industry that we propose to erect milestones on this roadmap.

ACC Assistant Commissioner of Custom

ACU Asian Clearing Union

AEZ Agri Export Zone

ANF Aayaat Niryaat Form

ARO Advance Release Order

ASIDE Assistance to States for Infrastructure Development of Exports

BG Bank Guarantee

BIFR Board of Industrial and Financial Reconstruction

BoA Board of Approval

BoT Board of Trade

BRC Bank Realisation Certificate

BTP Bio Technology Park

CBEC Central Board of Excise and customsCCP Customs Clearance PermitCEA Central Excise AuthorityCEC Chartered Engineer Certificate


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CIF Cost, Insurance & FreightCIS Commonwealth of Independent StatesCoD Cash on DeliveryCoO Certificate of OriginCVD Counter Vailing Duty

DA Document against AcceptanceDoBT Department of Bio TechnologyDC Development CommissionerDEPS Duty Entitlement Passbook SchemeDFIA Duty Free Import AuthorisationDFRC Duty Free Replenishment CertificateDGCI&S Director General, Commercial Intelligence and StatisticsDGFT Director General of Foreign TradeDIPP Department of Industrial Policy & PromotionDoC Department of CommerceDoE Department of Electronics

DoIT Department of Information TechnologyDoR Department of RevenueDoT Department of TourismDTA Domestic Tariff AreaEDI Electronic Data InterchangeEEFC Exchange Earners Foreign CurrencyEFC Exim Facilitation CommitteeEFT Electronic Fund TransferEH Export HouseEHTP Electronic Hardware Technology ParkEIC Export Inspection CouncilEPCG Export ObligationEOP Export Obligation PeriodEOU Export Oriented UnitEPC Export Promotion CouncilEPCG Export Promotion Capital GoodsEPO Engineering Process OutsourcingFDI Foreign Direct InvestmentFIEO Federation of Indian Export organisationFIRC Foreign Exchange Inward Remittance CertificateFMS Focus Market SchemeFOB Free On BoardFPS Focus Product SchemeFTDO Foreign Trade Development OfficerFTP Foreign Trade PolicyGATS General Agreement on Trade in ServicesGRC Grievance Redressal CommitteeHACCP Hazard Analysis and Critical Control ProcessCD Inland Container DepotCM Indian Commercial Mission


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EC Importer Exporter CodeSO International Standards OrganisationTPO India Trade Promotion Organisation

LoC Line of CreditLoI Letter of Intent

LoP Letter of PermitLUT Legal Under TakingMAI Market Access InitiativeMDA Market Development AssistanceMEA Ministry of External AffairsMoD Ministry of DefenceMoF Ministry of Finance

NC Norms CommitteeNFE Net Foreign ExchangeNOC No Objection Certificate

PRC Policy Relaxation Committee

PTH Premier Trading HousePSU Public Sector UndertakingR&D Research and DevelopmentRA Regional AuthorityRBI Reserve Bank of IndiaRCMC Registrationcum- Membership CertificateRSCQC Regional Sub-Committee on Quality ComplaintsS / B Shipping BillSEH Star Export HouseSFIS Served from India SchemeSIA Secretariat for Industrial AssistanceSION Standard Input Output NormsSSI Small Scale IndustrySTE State Trading EnterpriseTEE Towns of Export ExcellenceTRQ Tariff Rate Quota

SPECIAL FOCUS INITIATIVES

With a view to continously increasing our percentage share of global trade andexpanding employment opportunitispecially in semi urban and rural areas, certain special focus initiatives have been identified for Agriculture, Handl

Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries and SpGoods and Toys sectors. Government of India shall make concerted efforts to promote exports in these sectors bypecific sectoral strategies that shall be notified from time to time.


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OLD

With a view to doubling our percentage share of global trade within 5 years and expanding employment opportunitispecially in semi urban and rural areas, certain special focus initiatives have been identified for agriculture, handlo

handicraft, gems & jewellery, leather and Marine sectors. Government of India shall make concerted efforts to promxports in these sectors by specific sectoral strategies that shall be notified from time to time.]

Further Sectoral Initiatives in other sectors will also be announced to be announced from time to time.Thrust sectors shall be extended following facilities:i) 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) NI.

(d) NI.

(e) Capital goods imported under EPCG shall be permitted to be installed anywhere in AEZ

(f) Import of restricted items, such as panels, shall be allowed under various export promotion schemes.

(g) Import of inputs such as pesticides shall be permitted under Advance Authorisation for agro exports.

(h) New towns of export excellence with a threshold limit of Rs 250 crore shall be notified limit.

i) Certain specified flowers, fruits and vegetables will be entitled to a special duty credit scrip, in addition to

normal benefit under VKGUY.

ii) 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 exportsduring previous financial year.

(c) Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of exports during previfinancial year.

(d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair shall bepermitted.

(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.


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iii) Handicrafts

a) New Handicraft SEZs shall be established which would procure products from cottage sector and do finishing foxports.

b) Duty free import entitlement of tools, machinery and equipment, trimmings and embellishments shall be 5% of Fvalue 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 exporterwhom 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.


iv) Gems & Jewellery

a) Import of gold of 8k and above shall be allowed under replenishment scheme subject to import being accompanian Assay Certificate specifying purity,

(b) Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of

Consumables, Tools, Machinery and Equipments for:

1. Jewellery made out of

(a) Precious metals (other than Gold & Platinum) 2%

(b) Gold and Platinum 1%

(c) Rhodium finished Silver 3%

2. Cut and Polished Diamonds 1%

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.

v) Leather and Footwear

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

(b) Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather well as synthetic), gloves, travel bags and handbags shall be 3% of FOB value of exports of previous financial year.ntitlement shall also cover packing material, such as printed and non-printed shoeboxes, small cartons made of wo

or plastic materials for packing footwear.


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(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 d01.03.2002.

(f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

vi) Marine Sector

(a) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of 1% oFOB value of preceding financial years export.

(b) To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fishuna fishing at Nil 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.

vii) Hi-tech products Export

Promotion Scheme

The scheme has been introduced to promote export of notified hi-tech products.

viii) 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 an

Hardware Manufacturing Industries exports.

(c) Hi-tech products of the Electronics and IT Hardware Manufacturing Industries Sector would be consid

or inclusion in High Tech Products Export Promotion Scheme.

ix) Sports Goods and Toys

a) Sports goods and toys shall be treated as a priority sector under MDA / MAI Scheme. Specific funds woul

armarked under MAI /MDA Scheme for promoting exports from this sector.


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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, inaddition to the normal benefit under

FPS.

OLDFurther

Sectoral Initiatives in other sectors will also be announced from time to time.Thrust sectors shall be extended following facilities:

i) Agriculture and Village Industrya) Vishesh Krishi and Gram UdyogYojana

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.

f) Import of restricted items, such as panels, shall be allowed under variousxport promotion schemes.

g) Import of inputs such as pesticides shall be permitted under Advance Authorisation for agro exports.

h) New towns of export excellence with a threshold limit of Rs 250 crore shall be notified.

ii) 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 duprevious financial year.

c) Duty free import entitlement of handknotted carpet samples shall be 1% of FOB value of exports during previousfinancial year.

d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-exportafter 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.


iii) Handicrafts:(a) New Handicraft SEZs shall be established which would procure products from cottage sector and do finishing fxports.


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(b) Duty free import entitlement of tools, machinery and equipment, trimmings and embellishments shall be 5% of value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant expoied up with supporting manufacturers.

c) Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporter

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.


iv) Gems & Jewellery

a) Import of gold of 8k and above shall be allowed under replenishment scheme subject to import being accompanian Assay Certificate specifying purity, weight and alloy content.

b) Duty free import entitlement of consumables, tools, machinery and equipments for metals other than Gold, Platinhall be 2% and for Gold and Platinum shall be 1% of FOB value of exports during previous financial year. Howevehodium-plated silver jewellery, 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.

e) Cutting and polishing of gems and jewellery, shall be treated as manufacturing for purposes of exemption underSection 10A of Income Tax Act.

v) Leather and Footweara) Duty free import entitlement of specified items shall be 5% of FOB value of exports during preceding financial y

b) Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather aas synthetic), gloves, travel bags and handbags shall be 3% of FOB value of exports of previous financial year. Suchntitlement shall also cover packing material, such as printed and non printed shoeboxes, small cartons made of woo

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 da01.03.2002.

f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).


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vi) Marine Sector

a) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of 1% of value of preceding financial years export.

b) To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fishfouna fishing at Nil 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.

vii) Hi-tech products Export Promotion Scheme

The scheme has been introduced to promote export of notified hi-tech products.

viii) 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 consider

or inclusion in High Tech Products Export Promotion Scheme.

ix) 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 fr

his 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, inaddition to the normal benefit unde

FPS.

[OLDFurther Sectoral Initiatives in other sectors will also be announced from time to time.Thrust sectors shall be extended following facilities:

i) 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 AEZd) Import of restricted items, such as panels, shall be allowed under various export promotion schemes.


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e) Import of inputs such as pesticides shall be permitted under AdvanceAuthorisation for agro exports.f) New towns of export excellence with a threshold limit of Rs 250 crore shall be notified.

ii) Handlooms :a) Specific funds would be earmarked under MAI / MDA Scheme for promoting handloom exports.b) Duty free import entitlement ofspecified 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 previou

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.

iii) Handicrafts:(a) New Handicraft SEZs shall be established which would procure products from cottage sector and do finishing fxports.b) Duty free import entitlement of tools, machinery and equipment, trimmings and embellishments shall be 5% of F

value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant expoied up with supporting manufacturers.c) Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporter

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.iv) Gems & Jewellerya) Import of gold of 8k and above shall be allowed under replenishment scheme subject to import being accompani

an Assay Certificate specifying purity, weight and alloy content.b) Duty free import entitlement of consumables, tools, machinery and equipments for metals other than Gold,

Platinum shall be 2% and for Gold and Platinum shall be 1% of FOB value of exports during previous financial yeaHowever, for rhodium-plated silver jewellery, 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.e) Cutting and polishing of gems and jewellery, shall be treated as manufacturing for purposes of exemption

under Section 10A of Income Tax Act.

v) Leather and Footweara) Duty free import entitlement of specified items shall be 5% of FOB value of exports during preceding financial yb) Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather a

as synthetic), gloves, travel bags and handbags shall be 3% of FOB value of exports of previous financial year. Suchntitlement shall also cover packing material, such as printed and non printed shoeboxes, small cartons made of wooin 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.


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e) CVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No 21/2002 da01.03.2002.f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS). Package for Marin

Sectorvi) (a) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of

% 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.

Hi-tech products Export Promotion Schemevii) The scheme has been introduced to promote export of notified hi-tech products.

BOARD OF TRADEBoard of Trade- BOT has a clear and dynamic role in advising government on relevant issues connected with foreigrade.BOT)

Terms of Reference- BOT has following terms of reference:

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

II. To review export performance of various sectors, identify constraints and suggest industry specificmeasures to optimize export earnings;

III. To examine existing institutional framework for imports and exports and suggest practical measures further streamlining to achieve desired objectives;

IV. To review policy instruments and procedures for imports and exports and suggest steps to rationalize hannelise such schemes for optimum use;

V. To examine issues which are considered relevant for promotion of Indias foreign trade, and to strengtnternational competitiveness of Indian goods and services; andVI. To commission studies for furtherance of above objectives.

Composition- Government shall nominate an eminent person or expert on trade policy to be Chairman of BOT.Government shall also nominate 25 persons, of whom at least 10 will be experts in trade policy. In addition,Chairmen of recognized EPCs and President or Secretary-Generals of National Chambers of Commerce will beex-officio members. BOT will meet at least once every quarter.


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GENERAL PROVISIONS REGARDING IMPORTS AND EXPOR

Exports and Imports free unless regulated- Exports and Imports shall be free, except where regulated by FTP ny other law in force. The item wise export and import policy shall be, as specified in ITC (HS) notified by DGFT, asmended from time to time. Import of rough diamond from Cote dIvoire shall be prohibited in compliance to Paragr

of UN Security Council Resolution (UNSCR) 1643(2005).

mport / export of arms and related material from / to Iraq shall be prohibited.

Direct or indirect export and import of following items, whether or not originating in Democratic Peoples Republic ofKorea (DPRK), to / from, DPRK is prohibited: All items, materials equipment, goods and technology including as setn lists in documents S/2006/814,S/2006/815 and S/2006/853(United Nations Security Council Documents) which contribute to DPRKs nuclear-related, ballistic missile-related or other weapons of mass destruction-related program

Direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute

rans enrichment-related, reprocessing or heavy water related activities, or to development of nuclear weapon delivystems, as mentioned below whether or not originating in Iran, to / from Iran is prohibited:

) 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 exupply, sale or transfer of equipment covered by B.I when such equipment is for light water reactors and lowenricheranium covered by A.1.2 when it is incorporated in assembled nuclear fuel elements for such reactors;

) items listed in S/2006/815 except supply sale or transfer of items covered by 19.A.3 of Category II. Above-mentUN Security Council documents are accessible from DGFT web site.

Compliance with Laws- Every exporter or importer shall complywith the provisions of FT (D&R) Act, RulesandOrders made there-under, FTP andterms and conditions of any Authorisationgranted to him.All imported goods shlso be subject to domestic Laws, Rules, Orders,Regulations, technical specifications,environmental and safety nor

pplicable to domestically produced goods. No import or export of rough diamonds shall be permitted unlessccompanied by Kimberley Process (KP) Certificate as specified by Gem & Jewellery EPC (GJEPC).

nterpretation of Policy - If any question or doubt arises in respect of interpretation of any provision contained inor classification of any item in ITC (HS) or HBP v1 or HBP v2 or Schedule of DEPB Rates (including content, scope ossue of an authorization there under), said question or doubt shall be referred to DGFT whose decision thereon shanal and binding.

Procedure- DGFT may, specify procedure to be followed for an exporter or importer or by any licensing or any otheompetent authority for purpose of implementing provisions of FT (D&R) Act, the Rules and the Orders made there nd FTP. Such procedures shall be published by means of a Public Notice, and may, in like manner, be amended froime to time.

Exemption from Policy / Procedure- DGFT may pass such orders or grant such relaxation or relief, as he may detnd proper, on grounds of genuine hardship and adverse impact on trade. 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 suchexemption, impose such conditions as he may deem fit. Such request may be considered only after consultingommittees as under:


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Principles of Restriction- DGFT may, through a notification, adopt and enforce any measure necessary for: -Protection of public morals.Protection of human, animal or plant life or health.

i Protection of patents, trademarks and copyrights and the prevention of deceptive practices.v Prevention of use of prison labour.v Protection of national treasures of artistic, historic or archaeological value.

vi Conservation of exhaustible natural resources.vii Protection of trade of fissionable material or material from which they are derived; andviii Prevention of traffic in arms, ammunition and implements of war.

Restricted Goods- Any goods, export or import of which is restricted under ITC(HS) may be exported or importeonly in accordance with an Authorisation or in terms of a public notice issued in this regard.

Terms and Conditions of a licence / Certificate / Permission / Authorisation- Every Authorisation shall be or

prescribed period of validity and shall contain such terms and conditions as may be specified by RA which may inclua) Quantity, description and value of goods;b) Actual User condition;c) Export obligation;d) Value addition to be achieved; ande) Minimum export / import price.

Authorisation / Licence / Certificate / Permission not a Right- No person may claim an Authorization asa rind DGFT or RA shall have powerto refuse to grant or renew the same inaccordance with provisions of FT (D&R)A

Rules made there under and FTP.

Penalty- If an Authorisation holder violates anycondition of such Authorisation or fails tofulfill export obligation, h

hall be liablefor action in accordance with FT (D&R)Act, the Rules and Orders made thereunder, FTP and any otheor time being in force.

State Trading- Any goods, import or export of which is governed through exclusive or special privileges granted toSTE(s), may be imported or exported by STE(s) as per conditions specified in ITC (HS). DGFT may, however, grant Authorisation to any other person to import or export any of these goods. Such STE(s) shall make any such purchasales involving imports or exports solely in accordance with commercial considerations, including price, quality,vailability, marketability, transportation and other conditions of purchase or sale in a non discriminatory manner anhall afford enterprises of other countries adequate opportunity, in accordance with customary business practices, tompete for participation in such purchases or sales.

mporter-Exporter Code (IEC) Number- No export or import shall be made by any person without an IEC numbe

nlesspecifically exempted. An IEC number shall be granted on application by competent authority in accordance with

procedure specified in HBP v1.

Trade with Neighbouring Countries- DGFT may issue instructions or frame schemes as may be required to promrade and strengthen economic ties with neighbouring countries.


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Transit Facility- Transit of goods through India from / or to countries adjacent to India shall be regulated in accorwith bilateral treaties between India and those countries and will be subject to such restrictions as may be specifiedDGFT in accordance with International Conventions.

Trade with Russia under Debt- Repayment Agreement- In case of trade with Russia under Debt RepaymentAgreement, DGFT may issue instructions or frame schemes as may be required, and anything contained in FTP, in ss it is inconsistent with such instructions or schemes, shall not apply.

Actual User Condition- Capital goods, raw materials,intermediates, components, consumables,spares, parts,ccessories, instrumentsand other goods, which are importablewithout any restriction, may be importedby any pe

However, if such imports require an Authorisation, actual user alone may import such goods unless actual user conds specifically dispensed with by RA.

Second Hand Goods- All second hand goods, except secondhand capital goods, shall be restricted forimports andbe imported only inaccordance with provisions of FTP, ITC(HS), HBP v1, Public Notice or anAuthorisation issued inegard.

Import of second hand capital goods,including refurbished / re-conditionedspares shall be allowed freely. Howevecond hand personal computers /laptops, photocopier machines, airconditioners, diesel generating sets will

only be allowed against a licence.

mport of re-manufactured goods shall be allowed only against a licence.

Scrap/Waste in SEZ- Any waste or scrap or remnant includingany form of metallic waste & scrapgenerated durimanufacturing orprocessing activities of an SEZ Unit/Developer/Co-developer shall be allowedto be disposed in DTreely subject topayment of applicable Customs Duty.(New added)

mport of samples- Import of samples shall be governed byHBP v1.

mport of Gifts- Import of gifts shall be permitted wheresuch goods are otherwise freelyimportable under FTP. Iother cases, aCustoms Clearance Permit (CCP) shall berequired from DGFT.

Passenger Baggage- Bonafide household goods and personaleffects may be imported as part ofpassenger baggas per limits, termsand conditions thereof in Baggage Rulesnotified by Ministry of Finance.Samples of such items tre otherwisefreely importable under FTP may also beimported as part of passenger baggagewithout an Authorisa

Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts,rimming and embellishments required for export, as part of their passenger baggage without an Authorisation.

mport on Export basis- Freely exportable new or second handcapital goods, equipments, components,parts an

ccessories, containers meantfor packing of goods for exports, jigs,fixtures, dies and moulds may beimported forexport without anAuthorisation on execution of LUT / BGwith Customs Authorities.

Re-import of goods repaired abroad- Capital goods, equipments, components,parts and accessories, whethermportedor indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement pgradation or standardization of technology and re-imported without an Authorisation.

mport of goods used in projects abroad- After completion of projects abroad,project contractors may import,without


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n Authorisation used goods including capital goods provided they have been used for at least one year.

Sale on High Seas- Sale of goods on high seas for import intoIndia may be made subject to FTP or anyother laworce.

mport under Lease Financing- Permission of RA is not required forimport of capital goods under leasefinancing

Clearance of Goods from Customs- Goods already imported / shipped /arrived, in advance, but not cleared fromCustoms may also be cleared against an Authorisation issued subsequently.

Execution of BG / LUT- Wherever any duty free import is allowedor where otherwise specifically stated,importeexecute prescribed LUT /BG / Bond with Customs Authority beforeclearance of goods. In case of indigenoussourciAuthorisation holder shallfurnish LUT / BG / Bond to RA concernedbefore sourcing material from indigenoussupplienominated agency asprescribed in HBP v1.

Private / Public Bonded Warehouses for Imports- Private / Public bonded warehouses maybe set up in DTA aserms andconditions of notification issued by DoR.Any person may import goods exceptprohibited items, arms andmmunition,hazardous waste and chemicals andwarehouse them in such bondedwarehouses.Such goods may be

leared for homeconsumption in accordance withprovisions of FTP and againstAuthorisation, wherever required.Customs duty as applicable shall be paid at the time of clearance of such goods. If such goods are not cleared for hoonsumption within a period of one year or such extended period as the custom authorities may permit, importer ofoods shall re-export the goods.

Free Exports- All goods may be exported without anyrestriction except to extent such exportsare regulated by ITHS) or any otherprovision of FTP or any other law for timebeing in force.DGFT may, however, specify through ap

notice such terms and conditionsaccording to which any goods, notincluded in ITC (HS), may be exportedwithout Authorisation.

Export of Samples Export of samples and Free of chargegoods shall be governed by provisionsgiven in HBP v1.

Export of Passenger Baggage- Bonafide personal baggage may beexported either along with passenger or,ifnaccompanied, within one year beforeor after passenger's departure from India.However, items mentioned asestricted inITC (HS) shall require an Authorisation.Government of India officials proceedingabroad on official posthall, however,be permitted to carry alongwith theirpersonal baggage, food items (free,restricted or prohibited) stor theirpersonal consumption.

Export of Gift - Goods, including edible items, of valuenot exceeding Rs.5,00,000/- in a licensingyear, may beexported as a gift. However,items mentioned as restricted for exportsin ITC (HS) shall not be exported as agift, wn Authorisation.

Export of Spares- Warranty spares (whether indigenous orimported) of plant, equipment,machinery, automobileny othergoods, (except those restricted under ITC(HS)) may be exported along with mainequipment or subseque

but withincontracted warranty period of such goodssubject to approval of RBI.

Third Party Exports

Third party exports, as defined in Chapter 9 shall be allowed under FTP.


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Export of Imported Goods- Goods imported, in accordance with FTP,may be exported in same or substantiallysaorm without an Authorisation provided that item to be imported orexported is not restricted for import orexport inHS).Export of such goods imported againstpayment in freely convertible currencywould be permitted against pay

ofreely convertible currency.

Export of Imported Goods- Goods, including those mentioned asrestricted for import (except prohibiteditems) mbe imported under CustomsBond for export in freely convertiblecurrency without an Authorisationprovided that itereely exportablewithout any conditionality / requirementof Licence / permission as may berequired under ITC (HS

Schedule II.

Export of Replacement Goods- Goods or parts thereof on being exportedand found defective / damaged orothenfit for use may be replacedfree of charge by the exporter and suchgoods shall be allowed clearance byCustomsuthorities provided thatreplacement goods are not mentioned asrestricted items for exports in ITC (HS).

Export of Repaired Goods- Goods or parts, except restricted underITC (HS), thereof on being exported and

ound defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such gohall be allowed clearance without an Authorisation and in accordance with customs notification.

Private Bonded Warehouses for Exports- Private bonded warehouses exclusively forexports may be set up in s pererms and conditions of notifications issued by DoR. Such warehouses shall be entitled to procure goods from dome

manufacturers without payment of duty. Supplies made by a domestic supplier to such notified warehouses shall bereated as physical exports provided payments are made in free foreign exchange.

Denomination of Export Contracts- All export contracts and invoices shall bedenominated either in freelyonvertibleurrency or Indian rupees but export proceeds shall be realised in freely convertible currency.However export proce

gainst specific exports may also be realized in rupees provided it is through a freely convertible Vostro account of aesident bank situated in any country other than a member country of ACU or Nepal or Bhutan. Additionally, rupee

payment through Vostro account must be against payment in free foreign currency by buyer in his nonresident bankccount. Free foreign exchange remitted by buyer to his nonresident bank (after deducting the bank service chargesccount of this transaction would be taken as export realization under export promotion schemes of FTP. Contracts

which payments are received through Asian Clearing Union (ACU)] shall be denominated in ACU Dollar. CentralGovernment may relax provisions of this paragraph in appropriate cases. Export contracts and Invoices can beenominated in Indian rupees against EXIM Bank / Government of India line of credit.

Realisation of Export Proceeds- If an exporter fails to realise export proceeds within time specified by RBI, he shwithout prejudice to any liability or penalty under any law in force, be liable to action in accordance with provisions FT (D&R) Act, Rules and Orders made there under and FTP.

No seizure of Stock- No seizure of stock shall be made by any agency so as to disrupt manufacturing activity andelivery schedule of exports. In exceptional cases, concerned agency may seize the stock on basis of prima facie

evidence. However, such seizure should be lifted within 7 days.

Export Promotion Councils (EPC)- Basic objective of Export Promotion Councils (EPCs) is to promote and develondian exports. Each Council is responsible for promotion of a particular group of products, projects and services as n HBP v1.


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Registration -cum- Membership Certificate (RCMC)Any person, applying for:i) an Authorisation to import / export, [except items listed as restricted items in ITC(HS)] orii) any other benefit or concession under FTP shall be required to furnish RCMC granted by competent authority inccordance with procedure specified in HBP-v1, unless specifically exempted under FTP.

Certificate of Registration as Exporter of Spices (CRES) issued by Spices Board shall be treated asRegistration-Cum-Membership Certificate (RCMC) for the purposes under this Policy.

OLDAny person, applying for:i) an Authorisation to import / export, [except items listed as restricted items in ITC(HS)] or

ii) any other benefit or concession underFTP shall be required to furnish RCMC granted by competent authority inccordance with procedure specified in HBP v1 unless specifically exempted under FTP. ]

Trade Facilitation through EDI Initiatives- It is endeavor of Government to work towards greater simplificationtandardization 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 documentsbased on agreed protocols and message exchange with other community partners including Customs and Banks.

DGCI&S CommercialTrade Data- To enable users to make commercial decisions in a professional manner, DGCrade data shall be made available with a minimum time lag in a query based structured format on a commercial cri

DGCI&S Commercial Trade Data - To enable users to make commercial decisions in a professional manner, DG

rade data shall be made available with a minimum time lag in a query based structured format on a commercial cri

Fiscal Incentives to promote EDI Initiatives adoption- With a view to promote use of Information TechnoloDGFT willprovide fiscal incentives to user community. Deductions in Application Fee would be admissible for applicationsigned digitally or / and where application fee is paid electronically through EFT (Electronic Fund Transfer). Details a

enumerated in HBP v1.

Regularization of EOdefault andsettlement ofcustoms duty andinterest throughSettlementCommissioWith a view to providing assistance to firms who have defaulted under FTP for reasons beyond their control as alsoacilitating merger, acquisition and rehabilitation of sick units, it has been decided to empower Settlement Commiss

CBEC to decide such cases also with effect from 01.04.2005.

Easing Of Documentation Requirement- Pending finalisation of Single CommonDocument (SCD) for internatiorade,

Government Departments dealing with exports and imports will honour Authorisation issued by other Governmentepartments based on verification of export documents Like shipping bill, bank realization certificate, Packing list, b

ading etc. and will not insist upon fresh submission of these documents.


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Exemption / Remission of Service Tax in DTA- For all goods and services which areexported from units in DTAnits in

EOU / EHTP / STP / BTP, exemption / remission of service tax levied and related to exports shall be allowed, as peprescribed procedure in Chapter 4 of HBP v1.

Exemption from Service Tax in SEZ- Units in SEZ shall be exempted fromservice tax.

Exemption from Service Tax on Services received abroad- For all goods and services exported fromIndia, seeceived / renderedabroad, where ever possible, shall beexempted from service tax.

GRIEVANCE REDRESSAL

DGFT as a facilitator of exports / imports- DGFT has a commitment to function as afacilitator of exports andmports. Focus ison good governance, which depends on clean, transparent and accountabledelivery systems.

Citizens Charter- DGFT has in place a Citizens Charter,giving time schedules for providingservices to clients, anetails ofgrievance committees at different levels.

Grievance Redressal Committee (GRC)- In order to facilitate speedy redressal ofgrievances of trade and industnewrievance redressal mechanism has been put in place in the form of GRC by a Government Resolution. The Governm

s committed to resolving all outstanding problems and disputes pertaining to past policy periods through GRC set u27.10.2004, for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputesoverentitlements, granting extensions for utilization of Authorisations.

Force Majeure Clause- Export Obligation period and validity of an authorization shall be extended for a furtherppropriate period to be notified by DGFT, from date of expiry of its validity in case unit / firm / company suffers onccount of unforeseen circumstances / reasons and force majeure.]

PROMOTIONAL MEASURES

Assistance to States for Infrastructure Development of Exports (ASIDE)- Scheme for Assistance to States fonfrastructure Development of Exports(ASIDE) is formulated to encourage StateGovernments to participate in

promotingexports, and is administered byDepartment of Commerce (DoC).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,


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vi) Development of minor ports and jetties,vii) Assistance in setting up of common effluent treatment facilities,viii) Stabilizing power supply, andix) Any other activity as may be notified by DoC.

Details of ASIDE are available at

Market Access Initiative (MAI)- MAI scheme, intended to provide financialassistance for medium term exportpromotion efforts with sharp focus on acountry / product, and is administered byDoC.Financial assistance is availaor Export

Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Governments, Indian CommeMissions (ICMs) abroad and other eligible entities as may be notified. A whole range of activities can be funded undeMAI 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, anderm export promotion efforts with sharp focus on a country /product,ix) Testing charges for engineering products. Each of these export promotion activities can receive financial assistarom Government ranging from 25% to 100% of total cost depending upon activity and implementing agency. Full tuidelines is available at

Marketing Development Assistance (MDA)- (MDA) Scheme is intended to providefinancial assistance for a ranexportpromotion activities implemented by EPCs, ITAs on a regular basis every year. The scheme is administered by DoC.Assistance includes, amongst others, participation ini) Trade Fairs and Buyer Seller meets abroad or in India, andii) Export promotion seminars. Financial assistance with travel grant is available to exporters traveling to Latin Ame

Africa, CIS region, ASEAN countries, Australia and New Zealand. In other areas, financial assistance without travel g

s available. MDA assistance is available for exporters with annual export turnover upto Rs. 15 Crores. Full text ofuidelines is available

Meeting Legal Expenses for Trade Related Matters- DOC would provide financial assistance todeserving expoon recommendationof EPCs for meeting cost of legal expensesfor trade related matters.

Towns of Export Excellence (TEE)-A number of towns have emerged asdynamic industrial clusters contributinghandsomely to Indias exports. It isnecessary to grant recognition to theseindustrial clusters with a view tomaximheir potential and enablingthem to move higher in the value chainand tap new markets.Selected towns producingoods of Rs.1000 crore or more will be notified as TEEbased on potential for growth in exports.However for TEE in

Handloom, Handicraft,Agriculture and Fisheries sector, threshold limit would be Rs 250 crores. Recognized associations of units will be ablccess funds under MAI scheme for creating focused technological services. Common service providers in these area

hall be entitled for EPCG scheme. Further such areas will receive priority for assistance under ASIDE scheme. NotifTEE are listed in Appendix 7 ofHBP v1.

Brand Promotion and Quality- Central Government aims to encouragemanufacturers and exporters to attainnternationally accepted standards ofquality for their products. CentralGovernment will extend support andassistanTrade and Industry tolaunch a nationwide programme onquality awareness and to promote totalquality managem

Test Houses - Central Government will assist inmodernisation and upgradation of testhouses and laboratories to hem atpar with international standards.


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Quality Complaints / Disputes- Regional Sub-Committee on QualityComplaints (RSCQC) set up at RegionalOffichis Directorate shall investigaten quality complaints received from foreignbuyers. Guidelines for settlement ofqualomplaints, in particular, and suchother complaints, in general, are given inAppendix-16 of HBP v1.

Trade Disputes affecting Trade Relations If it comes to DGFT notice or he hasreason to believe that an export omporthas been made in a manner thati) is gravely prejudicial to trade relations of India with any other country; and / orii) is gravely prejudicial to interest of other persons engaged in exports or imports; and / oriii) has brought disrepute to the country; DGFT may take action against such exporter or importer in accordance w

FT (D&R) Act, Rules and Orders made there-under and FTP.

EXPORT AND TRADING HOUSESExport and Trading Houses- Merchant as well as Manufacturer Exporters, Service Providers, ExportOriented UnitEOUs) and Units located in Special Economic Zones (SEZs), AgriExport Zones (AEZs), Electronic HardwareTechno

Parks (EHTPs), SoftwareTechnology Parks (STPs) and Bio-Technology Parks (BTPs) shall be eligiblefor status.

Status Category Applicant shall be categorized dependingon his total FOB (FOR - for deemedexports) exportperformance duringcurrent plus previous three years (takentogether) upon exceeding limit below. ForExport HousEH) Status, exportperformance is necessary in at least twoout of four years (i.e., current plusprevious three year

Status Export PerformanceCategory FOB / FOR

Value(Rupees in Crores)

Export House

(EH) 20

Star ExportHouse (SEH) 100

Trading House(TH) 500

Star TradingHouse (STH) 2500

PremierTrading House 10000

(PTH)

Note 1. Exporters in Small Scale Industry (SSI) / Tiny Sector / Cottage Sector, Units registered with KVICs / KVIBs,ocated in North Eastern States, Sikkim and Jammu & Kashmir, Units exporting handloom / handicrafts / hand knott


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ilk carpets, exporters exporting to countries in Latin America / CIS / sub- Saharan Africa as listed in Appendix-9,Units having ISO 9000 (series) / ISO 14000 (series) / WHOGMP / HACCP / SEI CMM level-II and above status grantgencies listed in Appendix-6 of HBP v1, exports of services and exports of agro products shall be entitled for doubl

weightage on exports made for grant of status. Double Weightage shall be admissible to Merchant as well asManufacturer 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 bellowed 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 companecognition only if limited company has a majority share holding in subsidiary company.

A Status Holder shall be eligible for following facilities:

) Authorisation and Customs clearances for both imports and exports on selfdeclaration basis;) Fixation of Input-Output norms on priority within 60 days;i) Exemption from compulsory negotiation of documents through banks. Remittance / Receipts, however, would beeceived through banking channels;v) 100% retention of foreign exchange in EEFC account;v) Enhancement in normal repatriation period from 180 days to 360 days;vi) Deletedvii) Exemption from furnishing of BG in Schemes under FTP; andviii) SEHs and above shall be permitted to establish Export Warehouses, as per DoR guidelines.x) For status holders, a decision on conferring of ACP Status shall be communicated by Customs within

days from receipt of application withCustoms.x) As an option, for Premier Trading House (PTH), the average level of exports under EPCG Scheme shalhe arithmetic mean of export performance in last 5 years, instead of 3 years.

SERVICES EXPORTS:

Services Exports- Services include all 161 tradable servicescovered under GATS where payment forsuch serviceseceived in free foreignexchange. A list of services is given inAppendix 10 of HBP v1.

Registration cum Membership Certificate (RCMC) for Service Providers- Software exporters shall registerhemselves with Electronics and Software EPC. Exporters of14 specific services listed in Sl. No. 34 of Appendix-2 of

v1 are required to register themselves with Services EPC. Other service exporters shall register themselves with

Federation of Indian Exporters Organisation (FIEO).

OLDSoftware exporters shall register themselves with Electronics and Software EPC. Exporters of 13 specific services listSl. No. 34 of Appendix 2 of HBP v1 are required to register themselves with Services EPC. Other service exporters segister themselves with Federation of Indian Exporters Organisation (FIEO).]

Common FacilityCentres- Government shall promote establishment of Common Facility Centres for use by homebased service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, Softwa


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evelopers etc., in State and Districtlevel towns, to draw in a vast multitude of home-based professionals into servicexport arena.

SERVED FROM INDIA SCHEME (SFIS)

Objective- Objective is to accelerate growth in exportof services so as to create a powerful andunique Served Frondia brand,instantly recognized and respected worldover.

Eligibility- All Service Providers, of services listed inAppendix 10 of HBP v1, who have a totalfree foreign exchangearning of at leastRs. 10 Lakhs in preceding financial yearshall qualify for Duty Credit scrip. ForIndividual ServiceProviders, minimumwould be Rs 5 Lakhs.

Entitlement- All Service Providers (except Hotels,Restaurants and other Service Providersin Tourism Sector) shalentitled toDuty Credit scrip equivalent to 10% offree foreign exchange earned duringpreceding financial year.Howervices and service providers aslisted in Paragraph 3.18.1 of HBP v1 shallnot be entitled.

Resmittance- Free foreign exchange earned throughInternational Credit Cards and otherinstruments as permitte

RBI forrendering of service shall also be takeninto account for Duty Credit scrip.

Hotels, Restaurants & Other Service Providers in Tourism Sector- Hotels of one-star and above (includingmanaged hotels) and heritage hotelsapproved by Department of Tourism(DOT) and other Service providers intourector registered with DOT as well as Clubs having residential facility of minimum 30 rooms shall beentitleduty credit scrip equivalent to

5% of free foreign exchange earned during preceding financial year. Stand-alone restaurants will be entitled to dutyredit scrip equivalent to 10% of free foreign exchange earned during preceding financial year.

OLDHotels of one-star and above (including managed hotels) and heritage hotels approved by Department of Tourism (D

nd other Service providers in tourism sector registered with DoT shall be entitled to duty credit scrip equivalent to ree 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 inpreceding financial year.]

mports Allowed - Duty Credit scrip may be used for importof any capital goods including spares,office equipmenprofessionalequipment, office furniture andconsumables; that are otherwise freelyimportable under ITC (HS). Imphallrelate to any service sector business ofapplicant.Utilization of Duty Credit scrip earnedshall not be permitted

payment ofduty in case of import of vehicles, even ifsuch vehicles are freely importable underITC (HS).In case ofhotels, golf resorts and standalonerestaurants having cateringfacilities, Duty Credit scrip may also beused for imp

onsumables includingfood items and alcoholic beverages.

Non Transferability- Entitlement / goods (imported / procured)shall be non transferable (except withingroupompany and managed hotels) andbe subject to Actual User condition.

Procurement from Domestic Sources- Utilization of Duty Credit Scrip shall bepermitted for payment of excise dnterms of DoR notification issued forprocurement from domestic sources, ofitems permitted under Para 3.6.4.5


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VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) (SPECIAL AGRICULTURE AND VILLAGE INDUSTRSCHEME)

ObjectiveObjective of VKGUY is to promote exports ofi) Agricultural Produce and their value added products;ii) Minor Forest Produce and their value added variants; for exports w.e.f 1.4.2004iii) Gram Udyog Products, for exports w.e.f 01.04.2006; andiv) Forest Based Products, for exports w.e.f 01.04.2007; andv) Other products, as notified from time to time.

Such products shall be listed in Appendix 37A of HBP v1.

EntitlementDuty Credit scrip benefits are granted with an aim to compensate high transport costs. Exporters, of products notifieAppendix 37A of HBP v1, shall be entitled for Duty Credit scrip equivalent to 5% of FOB value of exports (realized inoreign exchange). However, Duty Credit scrip benefits shall be granted only at a reduced rate of 3.5% of FOB value

exports (realized in free foreign exchange) in such cases where exporter has availed benefits under Chapter 4 of FTmport of Agriculture Inputs (other than catalysts, consumables and packing materials) relating to export item undecheme.

However, for exports made w.e.f. 1.4.2008, Flowers, Fruits and Vegetables, as listed in Table 13 of Appe37A, shall be entitled to an additional duty credit scrip equivalent to 2.5% of FOB value of exports; overabove the 5% / 3.5% VKGUY entitlement.

Foreign Trade Polic112

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