MCom I Semester Business Environment Export-Import Policy India Study Material Notes

MCom I Semester Business Environment Export-Import Policy India Study Material Notes: New Trade Policy the Reform Period Indian new Foreign Trade Policy Transitional Arrangements General Provisions regarding Imports and Exports Export Promotions Councils Exports from India Schemes Introductions and Objectives Imports and Exports goods Long Answer Questions Short Questions Answer Objectives Questions answer ( Most Important Notes for MCom Students )

CTET Paper Level 2 Language I English Question Model Paper

Export-Import Policy of India

In the pre-independence period India did not have any clearcut trade policy but in specific cases adopted only import restriction viz., discriminating protection since 1923. After independence the Government adopted a trade policy as a component of policy on economic development of the country. In order to provide for development and regulation of foreign trade in 1962, Foreign Trade (Development and Regulation) Act was passed under which export and import policy is framed and trade is regulated. Under this policy all exports and most of the imports have been freed from controls. However, every exporter and importer is required to get a code number from Director General of Foreign Trade who is the highest authority to administer the Act. The trade was subject to notifications issued from time to time.

Export Import Policy India

NEW TRADE POLICY: THE REFORM PERIOD

The period after 1991 has been marked by a substantial liberalisation of the trade policy. These liberalisation were result of both, necessity to make exports competitive and the pressure of international agencies. Moreover, with India joining the WTO in 1995 as a founder member, it is under an obligation to strike down all quantitative restrictions on imports and reduce import tariffs so as to open up’ the economy to world trade and the forces of globalisation.

INDIA’S NEW FOREIGN TRADE POLICY (2015-20)

On April 1, 2015, the Ministry of Commerce and Industry announced the Foreign Trade Policy 2015-20 (FTP) with a vision to making India a significant participant in world trade by 2020 and to enable the country to assume a leadership position in the international trade discourse. FTP links rules, procedures and incentives for exports and imports with other initiatives (for example, Make in India, Digital India and Skill India) with a view to improving ‘ease of doing business’ in India.

Salient Features of FTP

To increase India’s exports of merchandise and services from US$ 465.9 billion in 2013-14 to US$ 900 billion by 2019-20 and to raise India’s share in world exports from 2 per cent to 3.5 per cent during this period.

A new scheme, the Merchandise Exports from India Scheme (MEIS) aimed at the simplification of the incentive structure, replacing multiple schemes is in place. A new scheme, the Services Exports from India Scheme (SEIS) with expanded scope is in place, which will benefit all service providers located in India’ instead of only ‘Indian service providers’.

Allowing transferability and greater flexibility in using ‘duty credit scrips’ which exporters will get under MEIS and SEIS.

Prioritisation of sectors which have domestic manufacturing capabilities and potential demand (for example, drugs and pharmaceuticals, chemicals and electronics) where exports need to grow significantly to achieve overall growth targets.

Other sectors identified with great export potential include engineering, leather, textiles, medical devices, natural resource based items, gems and jewellery, agri-products and defence equipment.

Emphasis on the need to increase India’s participation in global supply chains. Adoption of the ‘whole-of-government approach as a significant step towards better coordination with state governments/other departments.

Indication of the revival of the interest subvention scheme for exports from identified sectors for a period of three years, though sectoral coverage and rate of interest subvention are not indicated.

Envisages a move towards paperless working in a 24 x 7 environment to facilitate the ease of doing business in India.

Under the new FTP, the government has expanded the scope of the new schemes to special economic zones (SEZs). Even though the target set for 2019-20 for exports of goods and services appears achievable, demand conditions in major trade partner economies will have to be supportive and domestic bottlenecks (both in terms of infrastructure and policy) need to be eased significantly. If the world economy grows faster during 2015-19 than in the 2009-14 period as projected by the IMF (2015), India’s exports may fare better than in previous years. Nonetheless, taking exports to the level of US$ 900 billion by 2019-20 will need a higher compound annual rate of growth (CARG) of about 14 per cent during the FTP period (2015-16 to 2019-20) which could be a challenge. Main Provisions of FTP 2015-20

Main provisions of New FTP can be studied under the following headings:

1 Transitional Arrangements

(1) Any License/Authorisation/Certificate/Scrip/any instrument bestowing financial or fiscal benefit issued before commencement of FTP 2015-20 shall continue to be valid for the purpose and duration for which such License Authorisation/Certificate/Scrip/any instrument bestowing financial or fiscal benefit Authorisation was issued, unless otherwise stipulate

(ii) In case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted, notwithstanding such restriction or regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of an irrevocable commercial letter of credit, established before the date of imposition of such restriction and it shall be restricted to the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerized receipt, within 15 days of the imposition of any such restriction or regulation.

Export Import Policy India

2 Trade Facilitation & Ease of Doing Business

Objective: Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian exports more competitive. The various provisions of FTP and measures taken by the Government in the direction of trade facilitation. For the benefit of stakeholders of import and export trade

DGFT as a facilitator of exports/imports: Director General of Foreign Tade (DGFT) has a commitment to function as a facilitator of exports and imports. Focus is on good governance, which depends on efficient, transparent and accountable delivery systems. In order to facilitate international trade, DGFT consults various Export Promotion Councils as well as Trade and Industry bodies from time to time.

Niryat Bandhu-Hand Holding Scheme for new export/import entrepreneurs : (i) DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential exporter on the intricacies of foreign trade through counselling, training and outreach programmes.

(ii) Considering the strategic significance of small and medium scale enterprises in the manufacturing sector and in employment generation, ‘MSME clusters’ have been identified, based on the export potential of the product and the density of industries in the cluster, for focussed interventions to boost exports.

(iii) Outreach activities shall be organized in a structured way with the help of Export Promotion Councils as ‘industry partners’ and other willing ‘knowledge partners’ in academia and research community to achieve the objective of Niryat Bandhu Scheme. Further, in order to ensure optimum utilization of resources, efforts would be made to associate all the stakeholders, including Customs, ECGC, Banks and concerned Ministries.

Citizen’s Charter : DGFT has in place a Citizen’s Charter, giving time schedules for providing various services to clients.

Online Complaint Registration and Monitoring System : An EDI Help Desk is available to assist the exporters in filing online applications on the DGFT portal and resolving other EDI related issues. For assistance an email may be sent at dgftedi@nic.in or Toll Free number 1800111550 can be used. Help Desk facility is also operational at the 4 DGFT Zonal Offices (details at

An Online Complaint registration and monitoring system allows users to register complaint and receive status/reply online (details are at http://dgft.gov.in).

Issue of e-IEC (Electronic-Importer Exporter Code) :  (i) Importer Exporter Code (IEC) is mandatory for export/import from/to India. DGFT has recently introduced the facility of issuing Importer Exporter Code in electronic form (e-IEC). For issuance of e-IEC an application can be made online on DGFT website (http//:dgft.gov.in). Applicants can upload the documents and pay the required fee through Net banking.

(ii) Processing of such applications by Regional Authority (RAS) of DGFT would be done online and a digitally signed e-IEC would normally be issued/ e-mailed to the applicant within 2 working days.

(iii) In case the application is incomplete or otherwise ineligible, the same shall be rejected and a Rejection letter/email (with reasons for rejection) would be sent to the applicant.

(iv) Application for issue of e-IEC can also be made from eBiz platform (https://www.ebiz.gov.in).

e-BRC : One prominent initiative in recent times has been the e-BRC (Electronic Bank Realisation Certificate) project and its successful implementation by DGFT. It has enabled DGFT to capture details of realisation of export proceeds directly from the Banks through secured electronic mode. This has facilitated the implementation of various export promotion schemes without any physical interface with the stakeholders. So far more than one crore e-BRCs have been captured by this system.

MoU with State Governments for sharing of e-BRC data : MoU has been signed with state governments for sharing of e-BRC data to facilitate refund of VAT by the state governments to exporters. MoU has also been signed with Enforcement Directorate. 3. General Provisions Regarding Imports and Exports

Objective: The general provisions governing import and export of goods and services are as follows:

Exports and Imports-Free’, unless regulated :(i) Exports and Imports shall be ‘Free’ except when regulated by way of ‘prohibition’, ‘restriction’ or Sexclusive trading through State Trading Enterprises (STES)’ as laid down in Indian Trade Classification (Harmonised System) (ITC (HS) of Exports and Imports. The list of ‘Prohibited’, Restricted’ and ‘STE’ items can be viewed by clicking on ‘Downloads’ at http://dgft.gov.in.

(ii) Further, there are some items which are ‘free’ for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force.

Indian Trade Classification (Harmonised System) ITC (HS) of Exports and Imports:(i) ITC (HS) is a compilation of codes for all merchandise Goods are classified based on their group or sub-group goods for export/import. Goods are classified based on the at 2/4/6/8 digits.

(ii) ITC (HS) is aligned at 6 digit level with international Harmonized System goods nomenclature maintained by World Customs Organization (http:// www.wcoomd.org). However, India maintains national Harmonized System of goods at 8 digit level which may be viewed by clicking on ‘Downloads’ at http:// dgft.gov.in.

(iii) The import/export policies for all goods are indicated against each item in ITC (HS). Schedule 1 of ITC (HS) lays down the Import Policy regime while Schedule 2 of ITC (HS) details the Export Policy regime.

(iv) Except where it is clearly specified, Schedule 1 of ITC (HS), Import Policy is for new goods and not for the Second Hand goods.

Compliance of Imports with Domestic Laws:(i) Domestic Laws/Rules/ Orders/Regulations/Technical Specifications/environmental/safety and health norms applicable to domestically produced goods shall apply, mutatis mutandis, to imports, unless specifically exempted.

(ii) However, goods to be utilized/consumed in manufacture of export products, as notified by DGFT, may be exempted from domestic standards/quality specifications.

Authority to specify Procedures : DGFT may specify procedure to be followed by an exporter or importer or by any licensing/Regional Authority (RA) or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedure, or amendments, if any, shall be published by means of a Public Notice.

Importer-Exporter Code (IEC): An IEC is a 10-digit number allotted to a person that is mandatory for undertaking any export/import activities. Now the facility for IEC in electronic form or e-IEC has also been operationalised. Import/Export through State Trading Enterprises

(i) State Trading Enterprises (STEs) are governmental and non-governmental enterprises, including marketing boards, which deal with goods for export and/or import. Any good, import or export of which is governed through exclusive or special privilege granted to State Trading Enterprises (STE), may be imported or exported by the concerned STE as per conditions specified in ITC (HS).

(ii) Such STE (s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale in a non-discriminatory manner and shall afford enterprises of other countries adequate opportunity, in accordance with customary business practices to compete for participation in such purchases or sales.

(iii) DGFT may, however, grant an authorization to any other person to import or export any of the goods notified for exclusive trading through STEs. Trade with Specific Countries

(i) Trade with neighbouring Countries: DGFT may issue instructions or frame schemes as may be required to promote trade and strengthen economic ties with neighbouring countries.

(i) Recognition of Export Promotion Councils (EPCs) to function as Registering Authority for issue of RCMC.

(a) Export Promotion Councils (EPCs) are organizations of exporters, set up with the objective to promote and develop Indian exports. Each Council is responsible for promotion of a particular group of products/projects/services,

(b) EPCs are also eligible to function as Registering Authorities to issue Registration-cum-Membership Certificate (RCMC) to its members. The criteria for EPCs to be recognized as Registering Authorities for issue of RCMC to its members.

(ii) Registration-cum-Membership Certificate (RCMC) Any person, applying for :

(a) An Authorisation to import/export (except items) listed as “Restricted’ items in ITC (HS) or

(b) Any other benefit or concession under FTP shall be required to furnish or upload on DGFT’s website in the Importer Exporter Profile, the RCMC granted by competent authority in accordance with procedure specified in HBP, unless specifically exempted under FTP. Certificate of Registration as Exporter of Spices 53 (CRES) issued by Spices Board shall be treated as Registration-CumMembership Certificate (RCMC) for the purposes under this Policy.

4 Exports from India Schemes

Objective: The objective of schemes is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved and to provide exporters a level playing field.

Exports from India Schemes: There shall be following two schemes for exports of Merchandise and Services respectively :

(i) Merchandise Exports from India Scheme (MEIS).

(ii) Service Exports from India Scheme (SEIS).

(i) Merchandise Exports from India Scheme (MEIS) : Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.

(ii) Service Exports from India Scheme (SEIS): Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India.

Nature of Rewards: Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported/domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for :

(i) Payment of Customs Duties for import of inputs or goods, except items listed in Appendix 3A.

(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per DoR notification.

(iii) Payment of service tax on procurement of services as per DoRnotification.

5. Duty Exemption/Remission Schemes

Objective: Schemes enable duty free import of inputs for export production, including replenishment of input or duty remission.

Schemes: (a) Duty Exemption Schemes: The Duty Exemption schemes consist of the following:

(i) Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement).

(ii) Duty Free Import Authorisation (DFIA).

(b) Duty Remission Scheme: Duty Drawback (DBK) Scheme, administered by Department of Revenue.

Applicability of Policy & Procedures : Authorisation shall be issued in accordance with the Policy and Procedures in force on the date of issue of the Authorisation.

Duty Free Import Authorisation Scheme (DFIA): Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed/utilised in the process of production of export product, may also be allowed. 6. Export Promotion Capital Goods (EPCG) Scheme

Objective: The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services to enhance India’s export competitiveness.

(a) EPCG Scheme allows import of capital goods for preproduction, production and post-production at Zero customs duty. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources in accordance with provisions. Capital goods for the purpose of the EPCG scheme shall include:

(i) Capital Goods including in CKD/SKD condition thereof;

(ii) Computer software systems;

(iii) Spares, moulds, dies, jigs, fixtures, tools & refractories for initial lining and spare refractories; and

(iv) Catalysts for initial charge plus one subsequent charge.

7. Export Oriented Units (EOUS), Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs)

(i) Introduction and Objective

(a) Units undertaking to export their entire production of goods and services (except permissible sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP) Scheme. Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, reengineering, rendering of services, development of software, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not covered under these schemes.

 (b) Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation.

Export Import Policy India

(ii) Export and Import of Goods

(a) An EOU/EHTP/STP/BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS).

(b) Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfilment of the conditions indicated in ITC (HS).

8. Deemed Exports

“Deemed Exports” refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as specified shall be regarded as “Deemed Exports” provided goods are manufactured in India.

9. Quality Complaints and Trade Disputes

(i) Objective : Exporters need to project a goods image of the country abroad to promote exports. Maintaining an enduring relationship with foreign buyers is of utmost importance, and complaints or trade disputes, whenever they arise, need to be settled amicably as soon as possible. Importers too may have grievances as well.

In an endeavour to resolve such complaints or trade disputes and to create confidence in the business environment of the country, a mechanism is being laid down to address such complaints and disputes in an amicable way.

(ii) Quality Complaints/Trade disputes: The following type of complaints may be considered :

(a) Complaints received from foreign buyers in respect of poor quality of the products supplied by exporters from India;

(b) Complaints of importers against foreign suppliers in respect of quality of the products supplied; and

(c) Complaints of unethical commercial dealings categorized mainly as nonsupply/partial supply of goods after confirmation of order; supplying goods other than the ones as agreed upon; non-payment; non-adherence to delivery schedules, etc.

Export Import Policy India

EXERCISE QUESTIONS

Long Answer Type Questions

1 Explain the New Export-Import Policy of India.

2. Explain the main objectives and features of New

Short Answer Type Questions

1 What is meant by Trade Policy?

2. Write down the characteristics of Foreign Trade Policy 2015-20.

3. What are the main objectives of Foreign Trade Policy, 2015-20 ?

4. Evaluate the New Foreign Trade Policy.

III. Objective Type Questions

Select the correct alternative :

1 The trade policy in India was made liberal in :

(a) 1990

(b) 1991

(c) 1992

(d) 1993

2. The New FTP 2015-20 was declared on:

(a) 1 April, 2015

(b) 1st April, 2014

(c) 27th August, 2015

(d) 27th October, 2015

[Ans. 1. (b), 2. (a).]

Export Import Policy India