no-1

Foreign Trade Policy Of India While India has gradually opened up its economy, its tariffs continue to be high when compared with other countries, and its speculation norms are still restrictive. This leads some to see India as a rapid globalizer while others still see it as a highly protectionist economy. The main focus of this page is the foreign trade policy of India. Foreign trade concerning main legislation in India is the Foreign Trade (Development and Regulation) Act, 1992. The Act endow with the expansion and regulation of foreign trade by assisting imports into, and supplementing exports from, India and for matters associated therewith or incidental thereto. As per the requirements of the Act, the government:(i) may make necessities for assisting and controlling foreign trade;

(ii) may proscribe, confine and regulate exports and imports, in all or particular cases as well as subject them to exclusion; (iii) is endorsed to formulate and proclaim an export and import policy and also modify the same from time to time, by notification in the Official Gazette; (iv) Is also authoritative to appoint a 'Director General of Foreign Trade' for the purpose of the Act, including formulation and accomplishment of the export-import policy. Nevertheless, in modern years, the governments stand on trade and investment policy has demonstrated a marked shift from protecting producers to benefiting consumers. This is revealed in its foreign trade policy of India for 2004/09 according to which, "For India to become a major player in world trade we have also to make possible those imports which are required to stimulate our economy." Along with economic transformations, globalization of the Indian economy has been the leading factor in devising the trade policies. The reform procedures pioneered in the subsequent policies have focused on liberalization, ingenuousness and lucidity. They have given export friendly surroundings by simplifying the procedures for trade facilitation. The declaration of a new Foreign Trade Policy of India for a five year period of 2004-09, substituting the till now nomenclature of EXIM Policy by Foreign Trade Policy (FTP) is another step in this course. It takes an incorporated view of the overall development of Indias foreign trade and provides a roadmap for the development of this sector. A dynamic export-led growth strategy of doubling Indias share in global commodities trade (in the next five years), with a spotlight on the sectors having prospects for export expansion and prospective for employment generation, constitute the main lath of the policy. All such events are expected to enhance India's international competitiveness and aid in auxiliary increasing the acceptability of Indian exports. The policy sets out the core intentions, identifies key strategies, spells out focus initiatives, delineates export incentives, and also addresses issues relating to institutional support including simplification of procedures relating to export activities. India is now belligerently pushing for a more liberal global trade regime, especially in services. It has implicit a leadership role among developing nations in global trade debates, and played a critical part in the Doha negotiations. With economic reforms, globalization of the Indian economy has been the guiding factor in formulating the Foreign trade policy of India. In accordance with the provisions of the Act, a "Directorate General of Foreign Trade (DGFT)" has been set up as an attached office of the Ministry of Commerce and Industry. It is leaded by

the 'Director General of Foreign Trade' and is answerable for formulating and implementing the Indian Foreign Trade Policy with the main intent of promoting Indian exports. The DGFT also issues licences to exporters and supervises their consequent commitments through a network of 32 regional offices located at the following places:- Ahmedabad; Amritsar; Bangalore; Baroda (Vadodara); Bhopal; Kolkata; Chandigarh; Chennai; Coimbatore; Cuttack; Ernakulam; Guwahati; Hyderabad; Jaipur; Kanpur; Ludhiana; Madurai; Moradabad; Mumbai; New Delhi; Panaji; Panipat; Patna; Pondicherry; Pune; Rajkot; Shillong; Srinagar(Functioning at Jammu); Surat; Thiruvananthapuram; Varanasi; and Vishakhapatnam. The coming years are sure to witness a vigorous export-led growth strategy of doubling Indias share in global merchandise trade with a focus on the sectors having prospects for export expansion. The rising potential for employment generation will constitute the main backbone for the Indian foreign trade policy.-

no- 2
To become a major player in world trade, a comprehensive approach needs to be taken through the Foreign Trade Policy of India . Increment of exports is of utmost importance, India will have to facilitate imports which, are required for the growth Indian economy. Rationality and consistency among trade and other economic policies is important for maximizing the contribution of such policies to development. Thus, while incorporating the new Foreign Trade Policy of India, the past policies should also be integrated to allow developmental scope of Indias foreign trade. This is the main mantra of the Foreign Trade Policy of India. Objectives of the Foreign Trade Policy of India Trade propels economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The Foreign Trade Policy of India is based on two major objectives, they are To double the percentage share of global merchandise trade within the next five years. To act as an effective instrument of economic growth by giving a thrust to employment generation. Strategy of Foreign Trade Policy of India Removing government controls and creating an atmosphere of trust and transparency to promote entrepreneurship, industrialization and trades. Simplification of commercial and legal procedures and bringing down transaction costs. Simplification of levies and duties on inputs used in export products. Facilitating development of India as a global hub for manufacturing, trading and services. Generating additional employment opportunities, particularly in semi-urban and rural areas, and developing a series of Initiatives for each of these sectors. Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through imports and thereby increasing value addition and productivity, while attaining global standards of quality. Neutralizing inverted duty structures and ensuring that India's domestic sectors are not disadvantaged in the Free Trade Agreements / Regional Trade Agreements / Preferential Trade Agreements that India

enters into in order to enhance exports. Upgradation of infrastructural network, both physical and virtual, related to the entire Foreign Trade chain, to global standards. Revitalizing the Board of Trade by redefining its role, giving it due recognition and inducting foreign trade experts while drafting Trade Policy. Involving Indian Embassies as an important member of export strategy and linking all commercial houses at international locations through an electronic platform for real time trade intelligence, inquiry and information dissemination. Partnership Foreign Trade Policy of India foresees merchant exporters and manufacturer exporters, business and industry as partners of Government in the achievement of its stated objectives and goals. Road ahead of Indian foreign trade policy This Foreign Trade Policy of India is a stepping stone for the development of Indias foreign trade. It contains the basic principles and points the direction in which it propose to go. A trade policy cannot be fully comprehensive in all its details it would naturally require modification from time to time with changing dynamics of international trade.

no- 3
The major points of Exim Policy India is discussed as hereunder for each and every export sectors and schemes Service Duty free import facility for service sector having a minimum foreign exchange earning of Rs.10 lakhs. The duty free entitlement shall be 10% of the average foreign exchange earned in the preceding 3 licensing years.

Agro Corporate sector with proven credential will be encouraged to sponsor Agri Export Zone and to provide services such as provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related R&D. Status Holders Duty-free import entitlement for status holders having incremental growth of more than 25% in FOB value of exports. It shall be 10% of the incremental growth in exports and can be used for import of capital goods, office equipment and inputs.

Hardware & Software To promote growth of exports in embedded software, hardware duty free import for testing and development purposes allowed. Hardware upto a value of US$ 10,000 shall be allowed to be disposed off. 100% depreciation to be available for 3 years. Gem & Jewelery Sector Diamond & Jewelery Dollar Account for exporters dealing in purchase/sale of diamonds and diamond studded jewelery. Gem & Jewelery units in SEZ and EOUs can receive precious metal i.e Gold/silver/platinum prior to exports or post exports equivalent to value of jewelery exported. Export Clusters Upgradation of infrastructure in existing clusters/industrial locations under the Department of Industrial Policy & Promotion (DIPP) scheme to increased. Rehabilitation of Sick Units Steps for for revival of sick units and extension of export has been modified. Removal of Quantitative Restrictions Import of 69 items covering animal products, vegetables and spices, antibiotics and films removed from restricted list. Special Economic Zones Sales from Domestic Tariff Area (DTA) to SEZs to be treated as export. Foreign bound passengers will now be allowed to take goods from SEZs to promote trade, tourism and exports. Export/import of all products through post parcel/courier by SEZ units will now be allowed. SEZ units will now be allowed to sell all products including gems and jewelery through exhibitions and duty free shops or shops set up abroad. EOU of Exim Policy India Agriculture/Horticulture processing EOUs will now be allowed to provide inputs and equipments to contract farmers in DTA. Period of utilization of raw materials prescribed for EOUs increased from 1 year to 3 years. Export/import of all products through post parcel/courier by EOUs will now be allowed. EOUs will now be allowed to sell all products including gems and jewelery through exhibitions and duty free shops or shops set up abroad. EPCG of Exim Policy India

Shall allow import of capital goods for pre-production and post-production facilities also. To facilitate upgradation of existing plant and machinery, import of spares shall also be allowed. To facilitate diversification into the software sector. DEPB of Exim Policy India Facility for provisional DEPB rate introduced to encourage diversification and promote export of new products. DFRC of Exim Policy India Duty Free Replenishment Certificate scheme extended to deemed exports to provide a boost to domestic manufacturer. Value addition under DFRC scheme reduced from 33% to 25%. Advance License Standard Input Output Norms for 403 new products notified in Exim Policy India. Anti-dumping and safeguard duty exemption to advance license for deemed exports for supplies to EOU/SEZ/EHTP/STP. Transaction Cost Reduction Applications filed online shall have a 50% lower processing fee as compared to manual applications is notified in Exim Policy India. Other benefits extended by new Exim Policy India are Actual user condition for import of second hand capital goods upto 10 years old dispensed with. Reduction in penal interest rate from 24% to 15% for all old cases of default under Exim Policy. Export of free of cost goods for export promotion @ 2% of average annual exports in preceding three years subject to ceiling of ` 5 lakh permitted.

no- 4
Shri Kamal Nath, Union Minister of Commerce & Industry, unveiled a series of important trade initiatives to put Indian exports on a trajectory of quantum growth and announced that India's merchandise exports had crossed the magic figure of US $ 100 billion 2005-06. "In fact, they have touched US $ 101 billion, with an annual growth rate of 25%", he said while releasing the Annual Supplement to the Foreign Trade Policy (2004-09) at a press conference here. Describing it as a 'grand leap forward' by India's exports, Shri Kamal Nath mentioned that within just two years, India's exports had jumped 60% -- from US $ 63 billion to US $ 101 billion. "The Foreign Trade Policy has served us well. Merchandise trade in the

very first year of the policy period (2004-05) grew at the rate of 26% and this year's export figures are unprecedented", he said.

Shri Kamal Nath announced the introduction of two new schemes to give a push to employment generation, particularly in semi-urban and rural areas - a key objective of the Foreign Trade Policy. These 2 schemes are: the "Focus Product Scheme" to give a thrust to the manufacture and export of certain industrial products which could generate large employment per unit of investment compared to other products; and the "Focus Market Scheme" to penetrate markets to which India's exports were comparatively low and which Indian exporters had perhaps been neglecting due to high freight costs and undeveloped networks but which were markets of the future.

The Focus Product Scheme would allow duty-credit facility at 2.5% of the FOB value of exports on 50% of the export turnover of notified products, such as value added fish and leather products, stationery items, fireworks, sports goods and toys, and handloom & handicraft items. The Focus Market Scheme, on the other hand, allows duty credit facility at 2.5% of the FOB value of exports of all products to the notified countries. The scrip and the items imported against it for both these schemes would be freely transferable. These two Schemes would replace the Target Plus Scheme, the Minister said. In order to take the benefits of foreign trade further to rural areas, the Minister announced that the Krishi Vishesh Upaj Yojana was being expanded to include village and cottage industries and was being renamed as the Vishi Krishi Upaj Aur Gram Udyog Yojana. Thus, it had been decided to incentivise export of village and cottage industry products by awarding a duty-free scrip at the rate of 5% of FOB value of exports under the expanded scheme, he said. In another major initiative, Shri Kamal Nath announced that the incidence of unrebated Service Tax and Fringe Benefit Tax on exports would be factored in the various duty neutralisation and remission schemes, adding that details of this were being worked out and would be announced separately. In order to promote services exports which account for 52% of India's GDP, and provide jobs to a large number of urban educated youth, a number of features were being added in the Served from India Scheme to promote services exports, he said. "The Scheme will now allow transfer of both the scrip and the imported input to the Group Service Company, whereas earlier transfer of imported material only was allowed". Announcing a slew of measures to exploit India's potential to become an international hub for gems & jewellery, Shri Kamal Nath said: "The diamond trade, which was concentrated in Antwerp, is moving out - to Dubai, to Tel Aviv. I want Mumbai be right up there, and not lose out to its fellow Asian cities. This Supplement now introduces a number of measures for facilitating export of value added products catering to changing needs of the market and facilitating easier

product movement across the borders and allowing import of precious metal scrap for refining". The measures include allowing import of precious metal scrap and used jewellery for melting, refining and re-export of jewellery; and reduction in value-addition norm on export of gold and silver jewellery from 7% to 4.5% in view of the increase of gold & silver prices in the international market in recent years which had made the present value-addition norms unrealistic. In order to help India emerge as a hub of auto components, import of new vehicles by auto component manufacturers for R&D purposes would now be allowed without homologation (i.e. testing for fitness on Indian roads required for import of new models of cars) so as to give the sector easier access to latest technologies. In order to tap the business opportunity in supplies of stores (food, beverages and other supplies) and refueling of long distance flights, it has been decided to treat such supplies on an equal footing with other exports, making them eligible for benefits under various export promotion schemes. This would enable India to offer competitive fuel prices and attract mid-route stops of international flights, the Minister said. Currently, most airlines replenish supplies or refuel at Thailand, Malaysia or Singapore since these supplies were not treated as exports in India. Further, the salient features of the Advance Licensing Scheme (which allows imports of inputs before exports) and Duty Free Replenishment Certificate (which allows transfer of import entitlements) have been clubbed to launch a new scheme called "Duty Free Import Authorisation Scheme". The rationale is that export production requires use of many inputs in small quantities as per the standard input-output norms, and though such inputs were allowed to be imported dutyfree under the Advance Licence Scheme, exporters generally were not importing such items because of lack of economies of scale and were forced to source them locally at a higher price. The new scheme addresses the issue by offering the facility to import the required inputs before exports and allows the transfer of scrip once the export obligation is complete. The scheme will be effective from 1st May, 2006. Simultaneously, the DFRC scheme would be phased out and shall be available only for exports effected upto 30th April, 2006. The Supplement introduces certain flexibilities in the conditions relating to maintenance of average export performance under the Export Promotion Capital Goods (EPCG) scheme as in a number of situations exporters were finding it difficult to maintain average export performance and undertake additional export obligations either because of sickness or international market dynamics or technology changes. Further, as an export facilitation measure, it has been decided to extend the period of export obligation fulfilment by a further period of two years based on certain condition. As a trade facilitative measure, it has been decided that interest on delayed payment of refunds would be paid by the government to ensure accountability and cut delays. Further, fast track clearance procedures would be put in place for units of Export Oriented Units (EOUs) having turnover of Rs.15 crore. Announcing major initiatives on the Electronic Data Interchange (EDI) or ecommerce front, Shri Kamal Nath said: "We are committed to simplifying

procedures relating to international trade and putting in place an exporter friendly regime for obtaining import authorizations and disbursement of export linked incentives. A web based online system of filing import & export applications is functional. Requests for obtaining authorizations relating to Advance Licence, EPCG Licence and DEPB are to be filed on the DGFT website with a digital signature and payment of licence fee through the Electronic Fund Transfer mode. No manual applications and supporting documents are required to be submitted. All EDI applications are processed within one working day. We propose to take more EDI initiatives in the next six months to take the process further".