TEXPROCIL

Subject: Highlights of Foreign Trade Policy 2009-14

Dear Member,  

Hon’ble Union Minister of Commerce and Industry, Shri Anand Sharma unveiled the new foreign trade policy (FTP) for the next five-year period (2009-14) today. In the short term, the New Policy aims at achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, India should achieve a high export growth path of around 25% per annum. The long term policy objective for the Government is to double India's share in global trade by 2020.

In order to meet these objectives, the Government would follow a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, enhanced market access across the world and diversification of export markets. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and levies are other measures in this regard.

Following are the Highlights of the Policy which have a bearing on manufacturing and exports of Textile & Clothing: 

 

PROMOTIONAL MEASURES 

    A. FOCUS MARKET SCHEME (FMS)

Ø  26 new countries have been included in the list of countries eligible for the benefit under “Focus Market Scheme”.

Ø  The incentive ( Duty Credit Scrip) provided under Focus Market Scheme has been increased from 2.5% to 3%.

Ø  A significant increase in the outlay under  'Market  Linked  Focus  Product Scheme' by inclusion of more markets (specially in Africa and Latin America) and products.

 

    B. FOCUS PRODUCT SCHEME (FPS)

Ø  The incentive ( Duty Credit Scrip) available under Focus Product Scheme (FPS) has been raised from 1.25% to 2%.

Ø  A large number of products from various sectors (including Technical Textiles & Vegetable Textiles) have been included for benefits under FPS.

     C. MARKET LINKED FOCUS PRODUCT SCHEME (MLFPS)

Ø  Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by inclusion of products (including Textile madeups, Knitted and Crocheted fabrics, Synthetic Textile fabrics). Benefits to these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand).

Ø  MLFPS benefits also extended for export to additional new markets for certain products, including apparels among others.

D. MARKET DEVELOPMENT ASSISTANCE (MDA)

 

Ø  Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) schemes is being provided.

 

E. STATUS HOLDER

Ø Additional duty credit scrip @ 1% of the FOB of past export to the “status holders” shall be granted for specified product groups including textiles. This duty credit scrip can be used for import of capital goods by these status holders. [subject to exclusions of current beneficiaries under Technological Upgradation Fund Schemes (TUFS)].

Ø This facility shall be available upto 31.3.2011.

 

 DUTY ENTITLEMENT PASSBOOK (DEPB) SCHEME

 

Ø Duty Entitlement Passbook (DEPB) Scheme is extended beyond 31-12-2009 till 31.12.2010.

 

Ø DEPB rate shall also include factoring of custom duty component on fuel where fuel is allowed as a consumable in Standard Input-Output Norms.

 

ADVANCE AUTHORISATION SCHEME

Ø To encourage value added manufacture export, a minimum 15% value addition on imported inputs under Advance Authorisation Scheme has been stipulated.

 

 EXPORT PROMOTION CAPITAL GOODS  (EPCG) SCHEME

 

Ø EPCG Scheme at zero duty has been introduced to aid technological upgradation of export sectors including apparels & textiles products (subject to exclusions of current beneficiaries under Technological Upgradation  Fund Schemes (TUFS), administered by Ministry of Textiles and beneficiaries of Status Holder Incentive Scheme in that particular year).

 

Ø The scheme shall be in operation till 31.3.2011.

 

Relaxations in EPCG Scheme

§  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.

§  The facility of Re-fixation of Annual Average Export Obligation for a particular financial year in which there is decline in exports from the country, has been extended for the 5 year Policy period 2009-14.

     

  EXPORT ORIENTED UNITS (EOUs)/ SEZ/s Scheme

 

Ø Income tax benefits under Section 10(B) for 100% export oriented units would continue for one additional year till 31st March 2011

 

Ø EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%, without changing the criteria of ‘similar goods’, within the overall entitlement of 50% for DTA sale.

 

Ø EOUs will now be allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards.

 

Ø  During this period of downturn, Board of Approvals (BOA) to consider, extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs.

 

Ø  EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education Cess on DTA sale.

 

OTHER MEASURES TO  FACILITATE EXPORTS

 

Ø Enhanced insurance coverage and exposure (upto 95%) for exports through ECGC Schemes has been ensured till 31st March 2010.

 

Ø Promote Brand India through at least six 'Made in India' shows to be organized across the world every year .

 

Ø For upgradation of export sector infrastructure, ‘Towns of Export Excellence' & units located therein would be granted additional focused support and incentives.

Ø Transit loss claims received from private approved insurance companies in India will now be allowed for the purpose of EO fulfillment under Export Promotion schemes.

 

Ø In cases, where RBI specifically writes off the export proceeds realization, the incentives under the FTP shall now not be recovered from the exporters subject to certain conditions.

 

 

MEASURES TO REDUCE TRANSACTION COST TO EXPORTERS

 

Ø  No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP. Further, for all other Authorisations/ licence applications, maximum applicable fee is being reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications)

 

Ø To further EDI initiatives, Export Promotion Councils/ Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009.

 

Ø 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.

 

Ø 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.

 

Ø  In cases, where the earlier authorization has been cancelled and a new authorization has been issued in lieu of the earlier authorization, application fee paid already for the cancelled authorisation will now be adjusted against the application fee for the new authorisation subject to payment of minimum fee of Rs. 200.

 

Ø An Inter Ministerial Committee will be formed to redress/ resolve problems/issues of exporters.

 

PROCEDURAL SIMPLIFICATION

 

Ø  A common simplified application form has been introduced for taking benefits under FPS, FMS, MLFPS and VKGUY.

Ø Payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of Duty Credit scrips. Earlier the payment was allowed in cash only.

Ø Import of restricted items, as replenishment, shall now be allowed against transferred DFIAs, in line with the erstwhile DFRC scheme.

Ø 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.

Ø 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.

Ø 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.

Ø To reduce transaction costs, dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorisation scheme for deemed supplies. At present, the duty free imported goods could be taken only to the manufacturing unit of the authorisation holder or its supporting manufacturer.

Ø Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable excise duty, even before fulfillment of export obligation under Advance Authorisation and EPCG Scheme.

Ø Acceding to the demand of trade & industry, the application and redemption forms under EPCG scheme have been simplified.

 HANDLOOM SECTOR

Ø To simplify claims under FPS, requirement of ‘Handloom Mark’ for availing benefits under FPS has been removed.

 

DIRECTORATE OF TRADE REMEDY MEASURES

Ø  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.

 

This is for your kind information.

 Regards   

D.S. Narayana

 

(Joint Director)

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