EXIM POLICY

Salient Features

• Comprehensive Foreign Trade Policy to make India a global trade player - focus on employment generation, along with massive push to exports.
• Target plus scheme to achieve quantum increase in exports. Special package for agriculture - new scheme “Vishesh Krishi Upaj Yojana” to boost exports.
• All goods and services exported exempt from service tax, all exporters with minimum turnover of Rs 5 crore exempt from bank guarantee requirement, major procedural simplification and rationalisation measures.
• Improvements and additional flexibilities in EPCG scheme, DEPB to continue till replaced by suitable alternative.
• Free trade warehousing zone to make India a global trading hub. EOUs exempted from service tax.
• New rationalised scheme of status holder categorisation introduced. Special focus initiatives introduced in five areas.
• Bio-technology parks to be set up.
• Major thrust to service exports - “served from India” scheme - Export Promotion Council for Services.
• New mechanism for grievance redressal.
• Board of Trade to be revamped and given dynamic role.

<FEATURES OF EXIM POLICY:-

Union Commerce and Industry Minister Mr. Murasoli Maran announced the Eximpolicy for the 5 year period (2002-07) on March 31, 2002. The main thrust of the policyis to push India's exports aggressively by undertaking several measures aimed ataugmenting exports of farm goods, the small scale sector, textiles, gems and jewellery,electronic hardware etc. Besides these, the policy aims to reduce transaction cost to tradethrough a number of measures to bring about procedural simplifications. In addition, theExim policy removes quantitative restrictions (QRs) on exports, except a few sensitiveitems.

1. Special Economic Zones (SEZs):-

1(a) Offshore Banking Units (OBUs) shall be permitted in Special Economic Zones

(SEZs).
1(b) Units in SEZ would be permitted to undertake hedging of commodity price risks,
provided such transactions are undertaken by the units 'on stand alone basis.

2(c) Units in SEZ shall be permitted External Commercial Borrowings (ECBs) for a

tenure of less than three years.

3(d) Four existing EPZs have been converted into SEZs and 13 New SEZs have

already been given approval.

2. Employment Oriented Measures:- Exim (2002-07) policy initiated a number

of measures which would help employment orientation. Among them were the following:

(a) Agriculture :

1 Removal of quantitative and packaging restrictions on wheat and its products,

butter, pulses, grain and flour of barley, maize, bajra, ragi and jowar.

1Removal of restrictions on export of all cultivated (other than wild) varieties of

seed, except jute and onion.

2 20 Agricultural Export Zones have been notified.

3Transport subsidy for export of fruits, vegetables, floriculture, poultry and dairy

products.

43% special DEPB rate for primary and processed foods exported in retail

packaging of 1 kg. or less.

b) Cottage Sector and Handicrafts :

1An amount of Rs. 5 crore under Market Access Initiative (MAl)

has beenearmarked for promoting cottage sector exports coming

under the Khadi and Village Industries Commission (KVIC).

2Market Access Initiative (MAI) scheme for the development of

website for virtual exhibition of products from the handicrafts

sector. ,

3Entitlement for Export House Status at Rs. 5 crore instead of

Rs.15 crore for others.

4Entitlement to duty free imports of an enlarged list of items as

embellishments upto3% of FOB value of exports

(c) Small Scale Industry :

With a view to encouraging further development of centres ofeconomic and export excellence such as Tirpur for hosiery, woollenblankets in Panipat, woollen knitear in Ludhiana, following benefitswould be available to small-scale sector.

1EPCG facility for the common service providers in these areas.

2Market Access Initiative (MAl) for creating focused technological

services and marketing abroad to the recognised associations of

units in SSI.

3Entitlement for Export House Status at Rs. 5 crore instead of

Rs.15 crore for others.

(d) Leather:-

Duty free imports upto 3% of f.o.b. value combined to leather

garments has been extended to all leather products.

(e) Textiles :

1Sample fabrics permitted duty free within the 3% limit for

trimmings and embellishments.

2Additional items such as zip fasteners, inlay cards, eyelets,

rivets, toggles,Velcro tape, cord and cord stopper included in input

output norms.

3Duty Entitlement Passbook (DEPB) rates for all kinds of blended

fabrics permitted.

(f) Gem and Jewellery :

1Import of rough diamonds is allowed freely at 0% customs duty.
2Licensing regime for rough diamond is being abolished.
3Value addition norms for export of plain jewellery reduced to 7%

and for all merchandised unstudded jewellery to 3%. .

4Personal carriage of jewellery allowed through Hyderabad and

Jaipur airport as well.

TECHNOLOGY ORIENTED

(a) Electronic Hardware:-

1Conversion of the Electronic Hardware Technology Park (EHTP)

into zero duty regime under the ITA (Information Technology

Agreement)-I

2Net Foreign Exchange as Percentage of Exports (NEEP) to be

made positive in 5 years.

3No other export obligation for units in EHTP.

(b) Chemicals and Pharmaceuticals :

165% of DEPB rate for pesticides formulations.
2No limit on export of samples. .
3Reimbursement of 50% of registration fees on registration of

drugs.

(c) Projects:

1Free import of equipment and other goods used abroad for

more than one year.

GROWTH ORIENTED

(a) Strategic Package for Status Holders:

1License, certificate, permissions. and customs clearances for both

imports and exports on self-declaration basis.

2Priority finance for medium and long term capital requirement as

per conditions notified by the RBI.

3Exemption from compulsory negotiation of documents through

banks, However, the remittance would continue to be received through

banking channels.

4100% retention of foreign exchange in Exchange Earner's Foreign

Currency 1EEFC) account.

5Enhancement in normal repatriation period from 180 days to

360 days,

(b) Diversification of Markets :

1Setting up of "Business Centre" in Indian missions abroad for visiting

Indian exporters/businessmen...

2ITPO portal to host a permanent virtual exhibition of Indian export

products.

3Focus Latin American Countries (LAC) has been extended upto March

2003.

4Focus Africa has been launched for developing trade relations with the

Sub-Saharan African region. The exporters exporting to these markets

shall be given Export House Status. on export of Rs. 5 crore.

5Links with the Commonwealth of Independent States (CIS) countries to

be revived.

(c) North Eastern States, Sikkim and Jammu and Kashmir :

1Transport subsidy for exports to be given to units located in North East,

Sikkim and-Jammu and Kashmir so as to offset the disadvantage of being

far from ports.

(d)Neutralising High Fuel Cost:-

1Fuel costs to be rebated for all export products. This would enhance the

cost competitiveness of our export products.

.

PROCEDURAL REFORMS

(a) DGFT:

1The new 8 digit commodity classification for imports introduced by

the Director General of Foreign Trade (DGFT) would also be adopted bythe Customs and Director: General of Commercial Intelligence andStatistics (DGCI&S) shortly. This will eliminate the classification disputesand hence reduce transaction costs and time.

2The maximum fee limit for electronic application under various

schemes has been reduced from Rs. 1.5 lakh to Rs. 1.00 lakh.

1 Same day licensing introduced in all regional offices.

(b) Customs :

1 Adoption and harmonisation of the 8 digit Indian Trade Classification

(ITC) Harmonised System (HS) code.

2 The percentage of physical examination of export cargo has already

been reduced to less than 10% except for a few sensitive destinations.

3 Fixation of special brand rate of drawback within 15 days.

(c) Banks :

1 Direct negotiation of export documents to be permitted.

2 100% retention in Exchange Earners Foreign Currency (EEFC)

accounts.

3 Enhancement in normal repatriation period from 180 days to 360

days.'

TRUST BASED

1(a) Import and export of samples to be liberalised for encouraging

product up gradation

2(b) Penal interest rate for bonafide defaults to be brought down from

24% to 15%.

3(c) No penalty for non-realisation of export proceeds in respect of cases

covered. by ECGC insurance package.
4(d) No seizure of stock in trade so as to disrupt the manufacturing
process affecting delivery

schedule of exporters.
1(e) Foreign Inward Remittance Certificate (FIRC) to be accepted in lieu of
Bank Realisation

Certificate for documents negotiated directly.

(f) Optional facility to convert from one scheme to another scheme. In

case the

exporter is denied the benefit under one scheme, he shall be entitled to claim
benefit under
some other scheme.
(g) Newcomers. to be entitled for licences without any verification against
execution of Bank

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