Highlights of Foreign Trade Policy 2009-2014
Legal Corner Icon — the image was hosted by the publisher and was not captured.COMMERCE Minister Anand Sharma released the new (without legal basis) Foreign Trade Policy yesterday.
Higher Support for Market and Product Diversification: 26 new markets have been added under Focus Market Scheme. These include 16 new markets in Latin America and 10 in Asia-Oceania.
The incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%.
The incentive available under Focus Product Scheme (FPS) has been raised from 1.25% to 2%. A large number of products from various sectors have been included for benefits under FPS. These include, Engineering products (agricultural machinery, parts of trailers, sewing machines, hand tools, garden tools, musical instruments, clocks and watches, railway locomotives etc.), Plastic (value added products), Jute and Sisal products, Technical Textiles, Green Technology products (wind mills, wind turbines, electric operated vehicles etc.), Project goods, vegetable textiles and certain Electronic items.
A common simplified application form has been introduced for taking benefits under FPS, FMS, MLFPS and VKGUY.
Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) schemes is being provided.
Jaipur, Srinagar and Anantnag have been recognised as ‘Towns of Export Excellence' for handicrafts; Kanpur, Dewas and Ambur have been recognised as ‘Towns of Export Excellence' for leather products; and Malihabad for horticultural products.
To increase the life of existing plant and machinery, export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific export obligation.
To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme is extended beyond 31-12- 2009 till 31.12.2010.
Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been extended for the financial year 2010-11 in the Budget 2009-10.
EOUs: EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%, (where more than one product is manufactured,) without changing the criteria of ‘similar goods', within the overall entitlement of 50% for DTA sale.
To provide clarity to the customs field formations, DOR shall issue a clarification to enable procurement of spares beyond 5% by granite sector EOUs. [Is it binding on Revenue and when will they issue the clarification. What will Commerce Ministry do if CBEC does not issue the clarification?]
DEPB: DEPB rate shall also include factoring of custom duty component on fuel where fuel is allowed as a consumable in Standard Input-Output Norms.
Simplification of Procedures: To facilitate duty free import of samples by exporters, number of samples/pieces has been increased from the existing 15 to 50. Customs clearance of such samples shall be based on declarations given by the importers with regard to the limit of value and quantity of samples.
To allow exemption for up to two stages from payment of excise duty in lieu of refund, in case of supply to an advance authorisation holder (against invalidation letter) by the domestic intermediate manufacturer. It would allow exemption for supplies made to a manufacturer, if such manufacturer in turn supplies the products to an ultimate exporter. At present, exemption is allowed upto one stage only.
Greater flexibility has been permitted to allow conversion of Shipping Bills from one Export Promotion scheme to other scheme. Customs shall now permit this conversion within three months, instead of the present limited period of only one month.
Reduction of Transaction Costs: Electronic Message Exchange between Customs and DGFT in respect of incentive schemes under Chapter 3 will become operational by 31.12.2009. This will obviate the need for verification of scrips by Customs facilitating faster clearances.
For EDI ports, with effect from December '09, double verification of shipping bills by customs for any of the DGFT schemes shall be dispensed with.
An Inter Ministerial Committee will be formed to redress/ resolve problems/issues of exporters.
An updated compilation of Standard Input Output Norms (SION) and ITC (HS) Classification of Export and Import Items has been published.
Directorate of Trade Remedy Measures: To enable support to Indian industry and exporters, especially the MSMEs, in availing their rights through trade remedy instruments, a Directorate of Trade Remedy Measures shall be set up.