FTP 2015-2020 - How to compute Export Performance for Status Holders?
PARAS 3.20 to 3.24 of the FTP 2015-2020 contain the provisions relating to Status Holders. The norms for the five specified categories of exporters (from one star to five star) are given in the Table given under para 3.21.
It is heard that there is lot of confusion in export community with regard to the manner of computation of export performance. What caused the confusion is the absence of certain words in the new Policy vis a vis similar provisions in the old Policy.
Foreign Trade Policy 2009-2014 | Foreign Trade Policy 2015-2020 | |||
|---|---|---|---|---|
Para 3.10.2: Status Category: Status recognition depends upon export performance. An applicant shall be categorized as status holder upon achieving export performance indicated in table below. The export performance will be counted on the basis of FOB value of export proceeds realized during current plus previous three years (taken together). For Export House (EH) Status, export performance is necessary in at least two out of four years. | Para 3.20 - Status Holder : (b): Status recognition depends upon export performance. An applicant shall be categorized as status holder upon achieving export performance during current and previous two financial years , as indicated in paragraph 3.21 of Foreign Trade Policy. The export performance will be counted on the basis of FOB value of export earnings in free foreign exchange. (d) For granting status, export performance is necessary in at least two out of three years. | |||
Para 3.21:Status Category | ||||
Status Category | Export Performance FOB/FOR Value (Rupees in Crores) | Status Category | Export Performance FOB/FOR(as converted) Value (in USD million) | |
Export House (EH) | 20 | * | One Star Export House | 3 |
Star Export House (SEH) | 100 | ** | Two Star Export House | 25 |
Trading House (TH) | 500 | *** | Three Star Export House | 100 |
Star Trading House (STH) | 2500 | **** | Four Star Export House | 500 |
Premier Trading House (PTH) | 7500 | ***** | Five Star Export House | 2000 |
From the old Policy, it is very clear that the status is given based on the TOTAL exports during the current and previous three years.
In the absence of the words, “plus” and “taken together” in the new Policy, two interpretations are making rounds. One is that the export performance should be taken together for all three years as it existed in the old policy and the other is the export performance should be taken year-wise as omission of these important words is intentional. To give an illustration,
Current Year Exports | 5 million USD |
|---|---|
2014-15 | 30 million USD |
2013-14 | 80 million USD |
If the performance is taken together, the exporter will get ‘Three Star Status' (more than 100 million USD). If the exports are taken year-wise, he will get only One star status (more than 3 million in each year)
There is also confusion with regard to para 3.20(d) which reads as:
(d) For granting status, export performance is necessary in at least two out of three years.
Perhaps what they meant by the phrase “export performance” is that there should be some exports during at least two years. But use of the phrase “export performance” gives an impression that it is the “quantum of export” for deciding the status. In other words, for getting ‘One Star Status', an exporter should have exported goods valued at 3 million USD in at least two of the three years.
When DDT contacted some officers of DGFT, they said they were also not sure whether the exports are to be taken together as was in practice or if any intentional change has been made in the new Policy.
We request the DGFT authorities to issue a clarification with some illustrations, before this snowballs into a major issue.