Highlights Of The Foreign Trade Policy 2015-2020

A. SIMPLIFICATION & MERGER OF REWARD SCHEMES

Export from India Schemes:

1. Merchandise Exports from India Scheme (MEIS)

  • Earlier there were 5 different schemes (Focus Product Scheme, Market
    Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure
    Incentive Scrip, VKGUY) for rewarding merchandise exports with different
    kinds of duty scrips with varying conditions (sector specific or actual user
    only) attached to their use. Now all these schemes have been merged into a
    single scheme, namely Merchandise Export from India Scheme (MEIS) and there
    would be no conditionality attached to the scrips issued under the scheme.
    The main features of MEIS, including details of various groups of products
    supported under MEIS and the country groupings are at Annexure-1.
  • Rewards for export of notified goods to notified markets under
    ‘Merchandise Exports from India Scheme (MEIS) shall be payable as percentage
    of realized FOB value (in free foreign exchange). The debits towards basic
    customs duty in the transferable reward duty credit scrips would also be
    allowed adjustment as duty drawback. At present, only the additional duty of
    customs / excise duty / service tax is allowed adjustment as CENVAT credit
    or drawback, as per Department of Revenue rules.

2. Service Exports from India Scheme (SEIS)

  • Served From India Scheme (SFIS) has been replaced with Service Exports
    from India Scheme (SEIS). SEIS shall apply to ‘Service Providers located in
    India’ instead of ‘Indian Service Providers’. Thus SEIS provides for rewards
    to all Service providers of notified services, who are providing services
    from India, regardless of the constitution or profile of the service
    provider. The list of services and the rates of rewards under SEIS are at
    Annexure-2.
  • The rate of reward under SEIS would be based on net foreign exchange
    earned. The reward issued as duty credit scrip, would no longer be with
    actual user condition and will no longer be restricted to usage for
    specified types of goods but be freely transferable and usable for all types
    of goods and service taxdebits on procurement of services / goods. Debits
    would be eligible for CENVAT credit or drawback.

3. Chapter -3 Incentives (MEIS & SEIS) to be available for SEZs

It is now proposed to extend Chapter -3 Incentives (MEIS & SEIS) to units
located in SEZs also.

4. Duty credit scrips to be freely transferable and usable for
payment of custom duty, excise duty and service tax.

  • All scrips issued under MEIS and SEIS and the goods imported against
    these scrips would be fully transferable.
  • Scrips issued under Exports from India Schemes can be used for the
    following:-(i) Payment of customs duty for import of inputs / goods
    including capital goods, except items listed in Appendix 3A.

    (ii) Payment of excise duty 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 DoR
    notification.

  • Basic Customs Duty paid in cash or through debit under Duty Credit
    Scrip can be taken back as Duty Drawback as per DoR Rules, if inputs so
    imported are used for exports.

5. Status Holders

  • Business leaders who have excelled in international trade and have
    successfully contributed to country’s foreign trade are proposed to be
    recognized as Status Holders and given special treatment and privileges to
    facilitate their trade transactions, in order to reduce their transaction
    costs and time.
  • The nomenclature of Export House, Star Export House, Trading House,
    Star Trading House, Premier Trading House certificate has been changed to
    One, Two, Three, Four, Five Star Export House.
  • The criteria for export performance for recognition of status holder
    have been changed from Rupees to US dollar earnings. The new criteria is as
    under:-
Status category Export Performance
FOB / FOR (as converted)

Value (in US $ million) during current and previous two years

One Star Export House 3
Two Star Export House 25
Three Star Export House 100
Four Star Export House 500
Five Star Export House 2000

(d) Approved Exporter Scheme – Self certification by Status Holders

Manufacturers who are also Status Holders will be enabled to self-certify
their manufactured goods as originating from India with a view to qualify for
preferential treatment under different Preferential Trading Agreements [PTAs],
Free Trade Agreements [FTAs], Comprehensive Economic Cooperation Agreements
[CECAs] and Comprehensive Economic Partnerships Agreements [CEPAs] which are in
operation. They shall be permitted to self-certify the goods as manufactured as
per their Industrial Entrepreneur Memorandum (IEM) / Industrial Licence (IL)/
Letter of Intent (LOI).

B. BOOST TO “MAKE IN INDIA”

6. Reduced Export Obligation (EO) for domestic procurement under EPCG scheme:

Specific Export Obligation under EPCG scheme, in case capital goods are procured
from indigenous manufacturers, which is currently 90% of the normal export
obligation (6 times at the duty saved amount) has been reduced to 75%, in order
to promote domestic capital goods manufacturing industry.

7. Higher level of rewards under MEIS for export items with high
domestic content and value addition.

It is proposed to give higher level of rewards to products with high domestic
content and value addition, as compared to products with high import content and
less value addition.

C. TRADE FACILITATION & EASE OF DOING BUSINESS

8. Online filing of documents/ applications and Paperless trade in
24×7 environment:

  • DGFT already provides facility of Online filing of various applications
    under FTP by the exporters/importers. However, certain documents like
    Certificates issued by Chartered Accountants/ Company Secretary / Cost
    Accountant etc. have to be filed in physical forms only. In order to move
    further towards paperless processing of reward schemes, it has been decided
    to develop an online procedure to upload digitally signed documents by
    Chartered Accountant / Company Secretary / Cost Accountant. In the new
    system, it will be possible to upload online documents like annexure
    attached to ANF 3B, ANF 3C and ANF 3D, which are at present signed by these
    signatories and submitted physically.
  • Henceforth, hardcopies of applications and specified documents would not
    be required to be submitted to RA, saving paper as well as cost and time for
    the exporters. To start with, applications under Chapter 3 & 4 of FTP are
    being covered (which account for nearly 70% of total applications in DGFT).
    Applications under Chapter-5 would be taken up in the next phase.
  • As a measure of ease of doing business, landing documents of export
    consignment as proofs for notified market can be digitally uploaded in the
    following manner:-

(i) Any exporter may upload the scanned copy of Bill of Entry under his
digital signature.

(ii) Status holders falling in the category of Three Star, Four Star or Five
Star Export House may upload scanned copies of documents.

9. Online inter-ministerial consultations:

It is proposed to have Online inter-ministerial consultations for approval of
export of SCOMET items, Norms fixation, Import Authorisations, Export
Authorisation, in a phased manner, with the objective to reduce time for
approval. As a result, there would not be any need to submit hard copies of
documents for these purposes by the exporters.

10. Simplification of procedures/processes, digitisation and
e-governance

  • Under EPCG scheme, obtaining and submitting a certificate from an
    independent Chartered Engineer, confirming the use of spares, tools,
    refractory and catalysts imported for final redemption of EPCG
    authorizations has been dispensed with.
  • At present, the EPCG Authorisation holders are required to maintain
    records for 3 years after redemption of Authorisations. Now the EPCG
    Authorization Holders shall be required to maintain records for a period of
    two years only. Government’s endeavour is to gradually phase out this
    requirement as the relevant records such as
    Shipping Bills, e-BRC are likely to be available in electronic mode
    which can be archived and retrieved whenever required.
  • Exporter Importer Profile: Facility has been created to upload documents
    in Exporter/Importer Profile. There will be no need to submit copies of
    permanent records/ documents (e.g. IEC, Manufacturing licence, RCMC, PAN
    etc.) repeatedly with each application, once uploaded.
  • Communication with Exporters/Importers: Certain information, like mobile
    number, e-mail address etc. has been added as mandatory fields, in IEC data
    base. This information once provided by exporters, would help in better
    communication with exporters. SMS/ email would be sent to exporters to
    inform them about issuance of authorisations or status of their
    applications.
  • Online message exchange with CBDT and MCA: It has been decided to have
    on line message exchange with CBDT for PAN data and with Ministry of
    Corporate Affairs for CIN and DIN data. This integration would obviate the
    need for seeking information from IEC holders for subsequent amendments/
    updation of data in IEC data base.
  • Communication with Committees of DGFT: For faster and paperless
    communication with various committees of DGFT, dedicated e-mail addresses
    have been provided to each Norms Committee, Import Committee and
    Pre-Shipment Inspection Agency for faster communication.
  • Online applications for refunds: Online filing of application for refund
    of TED is being introduced for which a new ANF has been created.

11. Forthcoming e-Governance Initiatives

(a) DGFT is currently working on the following EDI initiatives:

  • Message exchange for transmission of export reward scrips from DGFT to
    Customs.
  • Message exchange for transmission of Bills of Entry (import details)
    from Customs to DGFT.
  • Online issuance of Export Obligation Discharge Certificate (EODC).
  • Message exchange with Ministry of Corporate Affairs for CIN & DIN.
  • Message exchange with CBDT for PAN.
  • Facility to pay application fee using debit card / credit card.
  • Open API for submission of IEC application.
  • Mobile applications for FTP

D. Other new Initiatives

12. New initiatives for
EOUs, EHTPs and STPs

  • EOUs, EHTPs, STPs have been allowed to share infrastructural facilities
    among themselves. This will enable units to utilize their infrastructural
    facilities in an optimum way and avoid duplication of efforts and cost to
    create separate infrastructural facilities in different units.
  • Inter unit transfer of goods and services have been allowed among EOUs,
    EHTPs, STPs, and BTPs. This will facilitate group of those units which
    source inputs centrally in order to obtain bulk discount. This will reduce
    cost of transportation, other logistic costs and result in maintaining
    effective supply chain.
  • EOUs have been allowed facility to set up Warehouses near the port of
    export. This will help in reducing lead time for delivery of goods and will
    also address the issue of un-predictability of supply orders.
  • (d) STP units, EHTP units, software EOUs have been allowed the facility
    to use all duty free equipment/goods for training purposes. This will help
    these units in developing skills of their employees.
  • 100% EOU units have been allowed facility of supply of spares/
    components up to 2% of the value of the manufactured articles to a buyer in
    domestic market for the purpose of after sale services.
  • At present, in a period of 5 years EOU units have to achieve Positive
    Net Foreign Exchange Earning (NEE) cumulatively. Because of adverse market
    condition or any ground of genuine hardship, then such period of 5 years for
    NFE completion can be extended by one year.
  • Time period for validity of Letter of Permission (LOP) for EOUs/EHTP/
    STPI/BTP Units has been revised for faster implementation and monitoring of
    projects. Now, LOP will have an initial validity of 2 years to enable the
    unit to construct the plant and install the machinery. Further extension can
    be granted by the Development Commissioner up to one year. Extension beyond
    3 years of the validity of LOP, can be granted, in case unit has completed
    2/3rd of activities, including the construction activities.
  • At present, EOUs/EHTP/STPI units are permitted to transfer capital goods
    to other EOUs, EHTPs, STPs, SEZ units. Now a facility has been provided that
    if such transferred capital goods are rejected by the recipient, then the
    same can be returned to the supplying unit, without payment of duty.
  • A simplified procedure will be provided to fast track the de-bonding /
    exit of the STP/ EHTP units. This will save time for these units and help in
    reduction of transaction cost.
  • EOUs having physical export turnover of Rs.10 crore and above, have been
    allowed the facility of fast track clearances of import and domestic
    procurement. They will be allowed fast tract clearances of goods, for export
    production, on the basis of pre-authenticated procurement certificate,
    issued by customs / central excise authorities. They will not have to seek
    procurement permission for every import consignment.

13. Facilitating & Encouraging Export of dual use items (SCOMET).

(a) Validity of SCOMET export authorisation has been extended from the
present 12 months to 24 months. It will help industry to plan their activity in
an orderly manner and obviate the need to seek revalidation or relaxation from
DGFT.

  • Authorisation for repeat orders will be considered on automatic basis
    subject to certain conditions.
  • Verification of End User Certificate (EUC) is being simplified if SCOMET
    item is being exported under Defence Export Offset Policy.
  • Outreach programmes will be conducted at different locations to raise
    awareness among various stakeholders.

14 Facilitating & Encouraging Export of Defence Exports

  • Normal export obligation period under advance authorization is 18
    months. Export obligation period for export items falling in the category of
    defence, military store, aerospace and nuclear energy shall be 24 months
    from the date of issue of authorization or co-terminus with contracted
    duration of the export order, whichever is later. This provision will help
    export of defence items and other high technology items.
  • A list of military stores requiring NOC of Department of Defence
    Production has been notified by DGFT recently. A committee has been formed
    to create ITC (HS) codesfor defence and security items for which industrial
    licenses are issued by DIPP.

15. e-Commerce Exports

  • Goods falling in the category of handloom products, books / periodicals,
    leather footwear, toys and customized fashion garments, having FOB value up
    to Rs.25000 per consignment (finalized using e-Commerce platform) shall be
    eligible for benefits under FTP. Such goods can be exported in manual mode
    through Foreign Post Offices at New Delhi, Mumbai and Chennai.
  • Export of such goods under Courier Regulations shall be allowed manually
    on pilot basis through Airports at Delhi, Mumbai and Chennai as per
    appropriate amendments in regulations to be made by Department of Revenue.
    Department of Revenue shall fast track the implementation of EDI mode at
    courier terminals.

16. Duty Exemption

  • Imports against Advance Authorization shall also be eligible for
    exemption from Transitional Product Specific Safeguard Duty.
  • In order to encourage manufacturing of capital goods in India, import
    under EPCG Authorisation Scheme shall not be eligible for exemption from
    payment of anti-dumping duty, safeguard duty and transitional product
    specific safeguard duty.

17. Additional Ports allowed for Export and import

Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been notified as
registered ports for import and export.

18. Duty Free Tariff Preference (DFTP) Scheme

India has already extended duty free tariff preference to 33 Least Developed
Countries (LDCs) across the globe. This is being notified under FTP.

19. Quality complaints and Trade Disputes

  • In an endeavour to resolve quality complaints and trade disputes,
    between exporters and importers, a new chapter, namely, Chapter on Quality
    Complaints and Trade Disputes has been incorporated in the Foreign Trade
    Policy.
  • For resolving such disputes at a faster pace, a Committee on Quality
    Complaints andTrade Disputes (CQCTD) is being constituted in 22 offices and
    would have members from EPCs/FIEOs/APEDA/EICs.

20. Vishakhapatnam and Bhimavaram added as Towns of Export Excellence

Government has already recognized 33 towns as export excellence towns. It has
been decided to add Vishakhapatnam and Bhimavaram in Andhra Pradesh as towns of
export excellence (Product Category– Seafood)

Annexure-1

I. Merchandise Exports from India Scheme

  • Merchandise Exports from India Scheme has replaced 5 different schemes
    of earlier FTP (Focus Product Scheme, Market Linked Focus Product Scheme,
    Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) for
    rewarding merchandise exports which had varying conditions (sector specific
    or actual user only) attached to their use.
  • Now all these schemes have been merged into a single scheme, namely
    Merchandise Export from India Scheme (MEIS) and there would be no
    conditionality attached to the scrips issued under the scheme. Notified
    goods exported to notified markets would be rewarded on realised FOB value
    of exports.

A. Country Groups:

Category A: Traditional Markets (30) – European Union (28),
USA, Canada.

Category B: Emerging & Focus Markets (139), Africa (55), Latin
America and Mexico (45), CIS countries (12), Turkey and West Asian countries
(13), ASEAN countries (10), Japan, South Korea, China, Taiwan,

Category C: Other Markets (70).

B. Products supported under MEIS

Level of Support:

Higher rewards have been granted for the following category of products:

  • Agricultural and Village industry products, presently covered under
    VKGUY.
  • Value added and packaged products.
  • Eco-friendly and green products that create wealth out of waste from
    agricultural and other waste products that generate additional income for
    the farmers, while improving the environment.
  • Labour intensive Products with large employment potential and Products
    with large number of producers and /or exporters.
  • Industrial Products from potential winning sectors.
  • Hi-tech products with high export earning potential.

C. Markets Supported

  • Most Agricultural products supported across the Globe.
  • Industrial and other products supported in Traditional and/or Emerging
    markets only.

D. High potential products not supported earlier:

Support to 852 Tariff lines that fit in the product criteria but not provided
support in the earlier FTP. Includes lines from Fruits, Vegetables, Dairy
products, Oils meals, Ayush & Herbal Products, Paper, Paper Board Products.

E. Global support has been granted to the following category:

  • Fruits, Flowers, vegetables
  • Tea Coffee, Spices
  • Cereals preparation, shellac, Essential oils

    Processed foods,

  • Eco Friendly products that add value to waste
  • Marine Products
  • Handloom, Coir, Jute, products and Technical Textiles, Carpets Handmade.
    Other Textile and Readymade garments have been supported for European Union,
    USA, Canada and Japan.
  • Handicraft, Sports Goods
  • Furniture, wood articles

F. Support to major markets have been given to the following product
categories

  • Pharmaceuticals, Herbals, Surgicals
  • Industrial Machinery, IC Engine, Machine tools, Parts, Auto
    Components/Parts
  • Hand Tools, Pumps of All Types
  • Automobiles, Two wheelers, Bicycles, Ships, Planes
  • Chemicals, Plastics
  • Rubber, Ceramic and Glass
  • Leather garments, saddlery items, footwear
  • Steel furniture, Prefabs, Lighters
  • Wood , Paper, Stationary
  • iron, steel, and base metals, products

G. Other sectors supported under MEIS

  • 352 Defence related Product with export of US$ 17.7B consisting of Core
    Products (20), Dual Use products (60) ,General Purpose products (272).
  • 283 Pharmaceutical products of Bulk Drugs & Drug Intermediates, Drug
    Formulations Biologicals, Herbal, Surgicals, and Vaccines.
  • 96 lines of Environment related Goods, Machinery, Equipment’s.
  • 49 lines where mandatory BIS standards are prescribed.
  • 7 lines of Technical Textiles.

H. Participation in global value chain of the items falling under the
scheme:

  • 1725 lines of Intermediate Goods – These goods become inputs in the
    manufacturingof other countries and will strengthen backward manufacturing
    linkages which is vital for India’s participation in Global Value Chains.
  • 1109 lines of Capital Goods sector- will also strengthen Manufacturing
    Base in India.
  • 1730 lines of Consumer Goods sector- We hope a quantum jump in export
    from this sector with strengthening of Make in India Brand in near future.

I. Technology based analysis:

  • 572 lines-Low skill Technology-intensive manufacturing.
  • 1010 lines-Medium skill Technology-intensive manufacturing.
  • 1309 lines-High Skill Technology-intensive manufacturing.

J. Women Centric Products supported under MEIS

(a) Women workers constitute 52% of plantation workers-203 lines of Tea
Coffee, Spices, Cashew.

(b) 69% of the aggregate female employment is concentrated in the following
sectors:

  • (i) Manufacture of other food products -Jelly Confectionery, tomato
    ketchup,cooked stuffed pasta, pawa, mudi and the like, gingerbread , papad,
    pastries and cakes.
  • Manufacture of wearing apparel-396 lines of Readymade Garments(c) Sectors that have a significant proportion of female employment (more
    than 25%):

    (i) Agricultural and animal husbandry service activities, except veterinary
    activities– 263 lines of basic Agriculture products.

    (ii) Manufacture of footwear – 28 Footwear and Leather products.

  • Consumer Electronics and Electronic Components, watches and clocks -483
    lines.

Annexure-2

II. Services Exports from India Scheme

  • Served from India Scheme (SFIS) has been replaced with Service Exports
    from India Scheme (SEIS). SEIS shall apply to `Service Providers’ located in
    India’ instead of `Indian Service Providers’. Thus SEIS provides for rewards
    to all Service providers of notified services, who are providing services
    from India, regardless of the constitution or profile of the service
    provider.
  • The rate of reward under SEIS would be based on net foreign exchange
    earned. The reward issued as duty credit scrip, would no longer be with
    actual user condition and will no longer be restricted to usage for
    specified types of goods but be freely transferable and usable for all types
    of goods and service tax debits on procurement of services/goods. Debits
    would be eligible for CENVAT credit or drawback.
  • The present rates of reward are 3% and 5%. The list of services and the
    rates of rewards would be reviewed after 30.9.2015.
Sl No SECTORS Admissible rate
1 BUSINESS SERVICES
A Professional services Legal services, Accounting,
auditing and bookkeeping services, Taxation services, Architectural
services , Engineering services, Integrated engineering services, Urban
planning and landscape architectural services, Medical and dental
services, Veterinary services, Services provided by midwives, nurses,
physiotherapists and paramedical personnel.
5%
B Research and development services R&D services on
natural sciences, R&D services on social sciences and humanities,
Interdisciplinary R&D services
5%
C. Rental/Leasing services without operators Relating to
ships, Relating to aircraft, Relating to other transport equipment,
Relating to other machinery and equipment
5%
D Other business services Advertising services, Market
research and public opinion polling services Management consulting
service, Services related to management consulting, Technical testing
and analysis services, Services incidental to agricultural, hunting and
forestry, Services incidental to fishing, Services incidental to mining,
Services incidental to manufacturing, Services incidental to energy
distribution, Placement and supply services of personnel, Investigation
and security, Related scientific and technical consulting services,
Maintenance and repair of equipment (not including maritime vessels,
aircraft or other transport equipment), Building- cleaning services,
Photographic services, Packaging services, Printing, publishing and
Convention services
3%
2 COMMUNICATION SERVICES Audiovisual services
Motion picture and video tape production and distribution service,
Motion picture projection service, Radio and television services, Radio
and television transmission services, Sound recording
5%
3 CONSTRUCTION AND RELATED ENGINEERING SERVICES
General Construction work for building, General Construction work for
Civil Engineering, Installation and assembly work , Building completion
and finishing work
5%
4 EDUCATIONAL SERVICES (Please refer Note
1)Primary education services, Secondary education services, Higher
education services, Adult education
5%
5 ENVIRONMENTAL SERVICES Sewage services, Refuse disposal
services, Sanitation and similar services
5%
6 HEALTH-RELATED AND SOCIAL SERVICES Hospital
services
5%
7 TOURISM AND TRAVEL-RELATED SERVICES
A. Hotels and Restaurants (including catering)
a. Hotel 3%
b. Restaurants (including catering) 3%
B. Travel agencies and tour operators services 5%
C. Tourist guides services 5%
8 RECREATIONAL, CULTURAL AND SPORTING SERVICES
(other than audiovisual services) Entertainment services (including
theatre, live bands and circus services), News agency services,
Libraries, archives, museums and other cultural services, Sporting and
other recreational services
5%
9 TRANSPORT SERVICES (Please refer Note 2)
A. Maritime Transport Services Passenger transportation*,
Freight transportation* , Rental of vessels with crew *, Maintenance and
repair of vessels, Pushing and towing services, Supporting services for
maritime transport
5%
B. Air transport services Rental of aircraft with crew,
Maintenance and repair of aircraft, Airport Operations and ground
handling
5%

Note:

(1) Under education services, SEIS shall not be available on Capitation fee.

(2) *Operations from India by Indian Flag Carriers only is allowed under
Maritime transport services.

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