ANNUAL SUPPLEMENT

1
ANNUAL SUPPLEMENT TO THE FOREIGN TRADE POLICY
2004-09 FOR FINANCIAL YEAR 2005-06 ISSUED ON
8TH APRIL 2005
2
GENESIS OF ANNUAL FTP SUPPLEMENT
Fast changing Global economic scenario
necessitate evaluation of Foreign Trade Policy
at regular intervals and to take initiatives for
framing apposite transformational course of
action considering required Strategic
realignment basis assessment of the
varying Global economic scenario.
The annual supplement endeavors to incorporate
additional policy initiatives and to simplify
procedures of the existing schemes for
greater efficiencies and efficacy thereby
facilitating persistent enhancement of Indias
share in International trade.
3
OUTLINE ON INDIAs SHARE IN WORLD TRADE
Worth of Exports 80 billion dollars against
Target of 74 billion dollars in the FY 2004-05.
Growth rate of nearly 24.
Export target revised to 92 billion dollars for
the FY 2005-06. Target Export by 2008-09 150
billion dollars.
Worth of Imports 105 billion dollars in the FY
2004-05. Fuel oil import accounted for 29
billion dollars. Growth rate of nearly 34
Total Trade deficit on merchandise goods 25
billion dollars for FY 2004-05. Excluding Fuel
oil Imports Trade Surplus of 5 billion dollars.
Estimated Service Exports 30 billion dollars.
4
MAJOR INITIATIVES
EXPORT CESS Proposal to abolish cess on export
of all agricultural (wheat, soya meals etc.) and
plantation commodities levied under these Acts.
Consultations with other Ministries to abolish
cess on other commodites (iron ore etc.)
administered by them under the different
Commodity Board Acts
Respective cess acts requires instant amendment
for implementation
5
MAJOR INITIATIVES
EPCG SCHEME
For Agro SSI units, export obligations reduced
to 6 times of duty saved fullfilment period to 12
year in place of normal export obligations of 8
times of duty saved and 8 years fullfilment
period
EPCG Scheme extended for import of capital goods
required by retailers.
Firms fulfilling 75 or more of their export
obligation in half the original obligation
period, shall be freed from the balance export
obligation.
Submission of Chartered Engineer Certificate
permitted for all units Importing capital goods
and spares in lieu of submission of installation
certificates issued by Central Excise Authorities
Facility of clubbing license further liberalized
by permitting clubbing of licenses issued under
same customs notification
6
MAJOR INITIATIVES
SERVICE EXPORTS
Goods Imported under served from india scheme
allowed to be Transferred within Group companies
with actual user condition
Self declaration permitted in lieu of Chartered
Accountants certificate to the effect that duty
benefit availed under the served from india
Scheme have been passed to consumer.
7
MAJOR INITIATIVES
DUTY EXEMPTION - ADVANCE LICENSE
Removal of requirement of Advance Release order
for supplies to EOU/EHTP/STP/BTP units with
permission of direct debit of the Advance license
by the Bond officer of respective units
Advance License for physical exports,
intermediate supplies and deemed Exports merged
into single category
Annual Annual License extended to all categories
of exporters instead of status holders. Limit of
obtaining Annual Advance License enhanced to
300 of FOB value of export from earlier 200
Transfer of Duty free material imported under
Advance License from one Unit to another unit of
the same company allowed with intimation instead
of obtaining permission from jurisdictional
Central Excise Authority.
8
MAJOR INITIATIVES
DUTY REMISSION - DFRC DEPB
DEPB Scheme continued with no changes in scheme
except that DEPB benefits now also available for
supply of goods to SEZs for the period
01-04-2003 to 11-05-2004.
Provisions for 95 re-credit on account of
rejected items imported under DFRC permitted in
line with Advance License scheme
9
MAJOR INITIATIVES
EOU
De-bonding procedure for EOU simplified. Self
assessment procedure to be in place for
compliances
Capital Goods will be allowed to be transferred
to other units with Intimation to both Excise
development commissioner
EOU permitted to claim IT exemption in respect of
export proceeds realised within a period of 12
months from date of export
10
MAJOR INITIATIVES
ASSORTED INITIATIVES OTHER PROCEDURAL
SIMPLIFICATION
EDI Linkage of all community trade partners like
DGFT, Customs, banks Export Promotion councils
etc. to facilitate web based filing, retrieval
and verification of documents.
A fast rack mechanism for clearances,
examination, testing, quarantine, packaging etc.
to be set up to facilitate import/export of
perishable cargo.
Trade data to be made available enabling users to
make commercial decisions
DGFT offices to provide facilitation to exporters
in regard to developments in WTO and
International Trade Arena
11
MAJOR INITIATIVES
ASSORTED INITIATIVES OTHER PROCEDURAL
SIMPLIFICATION
Benefits of Vishesh Krishi Upaj Yojana extended
to exports of poultry and dairy products
Duty free credit certificates in split form
permitted making utilization easier.
Duty free import of specialized inputs/chemicals
and flavoring oils as per a defined list shall
be allowed to the extent of 1 of FOB value of
exports of preceding financial year
Duty free imports of Gems Jewelry samples
enhanced to 3 lac from 1 lakh in a F.Y. or 0.25
of average of last 3 year export turnover of Gems
and Jewelry item whichever is lower.
Exporters of plain/studded/precious metal jewelry
will be allowed to import plain/studded/precious
metal jewelry for the purpose of exports
12
SURVEILLANCE 1
This supplement is primarily directed towards
relaxing conditions of earlier schemes and to
iron out jagged procedures exporters and
importers were encountering with bureaucracy.
Abolishment of cess on export of commodities will
be real booster for agri exporters in particular.
Much awaited substitute to DEPB scheme has been
kept in abeyance, possibly for another 6 to 12
months. This again will be a great soother to
trade. Eventually, considering international
trade commitments, direct subsidies at the least
needs neutralization. Nevertheless, ministry has
done a good job to grant further time to trade to
gear up for exporting goods and services with
their efficiencies rather than making subsidy as
only pedestal.
13
SURVEILLANCE 2
Ministrys commitment to resolving all
outstanding problems and disputes pertaining to
the past policy periods as regards condoning
delays, regularizing breaches in bonafide cases,
resolving entitlements disputes, granting
extensions for utilization of licences etc.
needs to be applauded. This move has been
successful and trade has been benefited largely.
14
SURVEILLANCE 3
Initiatives to create structure in order to
combat contradicting trade stand of developed
economies are still not visible. Developed
Economies are freely using Non Tariff barriers
and taking shelter under Sanitary and
Phytosanitary regulations to restrict free trade
to their advantage. Tariffs and Quotas may be of
little consequence in coming time. Resisting and
structuring to fight against economic war guns
viz., NTBs and SPS of developed economies is the
greatest challenge which Indian traders are going
to face in future. Partnering with trade
associations, industry and specialized
professionals to create skeleton for catering
above in time will be decisive for positive
balance of trade on revenue account.
15
SURVEILLANCE 4
Last but not the least issue of another prime
importance is significance of PTAs and RTAs on
Indian economy. Trade is baffled on agreement
with Sri Lanka and Nepal in particular. In many
sectors, these agreements instead of benefiting
Indian economy is rather proving detrimental.
Though RTAs and PTAs should benefit Indian
foreign trade economy, however, considering
negative in quite a few sectors, its time
Ministry conduct appraisal on impact of these
agreements at brisk pace before couple industries
fall into sector of beyond recovery.
16
Thank You
Deoki Nandan Muchhal