Unit-4

EXPORT-IMPORT (EXIM) POLICY, 1991

In July-August, 1991 the Narasimha Rao Government announced certain major reforms in Exim Policy, 1990 after making some necessary reforms in it. All these reforms strengthened the export incentives, eliminated a considerable volume of import licensing and optimal import compression. The main features of this policy were as follows: 1. The new policy strengthened the system of advance license provided to exporters with duty free access to inputs. 2. The procedure followed for the import of capital goods was simplified. 3. The list of restricted items was reviewed and accordingly 98 items were shifted from the restricted list to limited permissible list and 37 items were also shifted from limited permissible list to OGL list 4. The policy aimed at progressive reduction in the extent of canalisation. 5. The Policy permitted Export Houses, Trading House and State Trading Houses to import a wide range of items. 6. Export Processing Zones (EPZ) and 100 per cent Export Oriented d Units (EOUs) were granted several concessions. EXPORT-IMPORT POLICY 1992-97 A new five year export import policy was announced by the Government on March 31, 1992.The main objectives of the new policy are to establish the framework for globalization of Indias foreign trade : to promote the productivity, modernization and competitiveness of Indian industry and thereby to enhance its export capabilities ; to encourage the attainment of high internationally accepted standards of quality and thereby enhance the image of Indias product abroad ; to foster countrys R & D; and to simplify and streamline the procedures governing exports and imports. The main features of this new policy were: 1. Import of various items including capital goods will be allowed freely excepting a negative list (Consumer goods and 70 other items). 2. Imports of some items like newsprint, natural rubber, non- ferrous metals, raw material, fertilizer etc. were decanalised and 8 items (petroleum products, edible oil, fertilizers etc.) continue to he canalised. 3. Export of all items are declared free excepting a negative list of 7 items (beef tallow, wild life, human skeletons, wood and wood products etc.) are restricted and 10 items have been canalised. Exports of 46 other items are permitted with minimum regulation. Thus about 144 items are removed from negative list of exports. 4. Special import facilities for hotels and tourism industry and for sports bodies were announced. 5. Import of capital goods are liberalized further and it will no longer remain in the negative list. Import of second hand capital goods was allowed. 6. Export credit policy was introduced to ensure adequate supply of credit to exporters and RBI instructed the banks to provide credit for exports at low rate of interest. 1

Unit-4 EXPORT-IMPORT (EXIM) POLICY 1997-2002 A new five year export import (exim) policy has announced by the Government on March 31, 1997. The main features of the policy are as follows: 1. The new Exim policy transferred 542 items from the restricted list to the special import license (SIL) category 2. Under the export promotion capital goods (EPCG) scheme, duty on capital goods has been reduced from 15 per cent to 10 per cent. 3. The policy has emphasized on giving a boost to agricultural exports and stated that double weightage would be given for such exports in calculating the eligibility for export house and trading house status. 4. The policy states that one per cent additional SIL on total value of exports would be given for exports of fruits, vegetables, and floriculture and horticulture products if such exports constitute 10 per cent of total exports. 5. The SIL for export of products of small-scale industries has been increased from one per cent to two per cent. As a special incentive to exports of goods by the SSI sector in the north-eastern states, additional SIL of one per cent on total value of exports will be given to these states. 6. An additional SIL of one per cent of total value of exports will be given to export houses and trading houses where such exports from these states constitute 10 per cent or more of total exports. 7. In order to ensure quality and enhance competitiveness of Indian exports, the SIL entitlement of exporters holding ISO 9000 certification has been increased from two per cent to five per cent. 8. The eligibility criteria for recognition as export house/trading house/star trading house and super star trading house has been revised from Rs. 10 crore, Rs. 15 crore, Rs. 250 crore and Rs. 750 crore to Rs. 20 crore, Rs. 100 crore, Rs. 500 crore and Rs. 1500 crore, respectively.

Unit-4 FOREIGN TRADE POLICY 2006-07 1. Reduction in peak rate of basic customs duties from 12.5 per cent to 10 per cent, reduction in the customs duty on polyester fibres and yarns, cut and polished diamonds and rough synthetic stones, etc. 2. To make exports an effective instrument of economic growth by giving thrust to employment generation particularly in semi-urban and rural areas, in the Annual Supplement to Foreign Trade Policy (FTP) 2004-09 in 2007, initiatives have been announced which include broadening the scope of Vishesh Krishi and Gram Udyog Yojana (VKGUY) by inclusion of forest based products like artistic wooden furniture, etc., and a number of agricultural products. 3. A new scheme was launched for duty free import of capital goods related to infrastructure meant for agro processing to promote agricultural exports and provide employment. 4. EPCG Scheme has been rationalized and the tiny and cottage sector has been provided extended export obligation facility. EXIM POLICY 2009- 10 HIGHLIGHTS FTP BENEFITS WITHOUT BRC Duty credit scrips under Chapter 3 and under DEPB scheme shall now be issued without waiting for realization of export proceeds. The exporters shall the be required to submit proof of export proceeds realization within the time limits prescribed by Reserve Bank of India. The issuance of these benefits without BRC would be subject to a Bank Guarantee/LUT in terms of Circular to be issued. This provision shall be applicable for applications made on or after 1.4.2009. ADDITIONAL BENEFITS UNDER PROMOTIONAL SCHEMES Rupees 325 crore would be provided under Promotional Schemes for Leather, Textile etc. for exports made with effect from 1.4.09. Benefit of 5% under FPS has been notified for export of Handmade carpets, in lieu of 3.5% benefit allowed earlier under VKGUY Scheme. Technical textiles and stapling machine have been added under Focus by Product Scheme. An additional benefit of 2.5% is notified for export of dried vegetables under VKGUY. GEMS & JEWELLERY SECTOR STCL Limited, Diamond India Limited, MSTC Limited, Gem & and Jewellery Export Promotion Council and Star Trading Houses (for gem and jewellery sector) have been added under the list of nominated agencies of Foreign Trade Policy for the purpose of import of precious metals. The procedure and monitoring provisions for implementation of these additional agencies would be notified separately in line with RBI guidelines. Import restrictions on worked corals have been removed to address the grievance of gem and jewellery exporters. 3

Unit-4 ADVANCE AUTHORISATION Export obligation period against authorization has been extended up to 36 months in view of the present global economic slowdown. DEPB SCHEME At present, DEPB/Duty Credit Scrip can be used for payment of duty only on items which are under free category. The utilization is now extended for payment of duty for import of restricted items also. EPCG SCHEME Under EPCG scheme, in case of decline in exports of a product(s) by more than 5%, the export obligation for all exporters of that product(s) is to be reduced proportionately. This provision has been extended for the year 2009-10, for exports during 2008-09. PREMIER TRADING HOUSES At present, Govt. recognizes Premier Trading Houses based on an export turnover of Rs. 10,000 crores in the previous three years and the current year taken together. In view of the prevailing global slowdown, the threshold limit for recognition as Premier Trading House has now been reduced to Rs.7500 crores. TOWNS OF EXPORT EXCELLENCE Bhilwara in Rajasthan and Surat in Gujarat have been recognized as Towns of Export Excellence, for textiles and diamonds respectively.