Foreign Trade Policy (FTP): 2004-09
The Government has set a
long-term vision of making India a major player in
world trade. Foreign Trade Policy (FTP) provides
the basic policy framework of translating this
vision into specific strategies, goals and
targets. The twin objectives of the FTP 2004-09
was doubling of India’s share in global trade in
the next five years, and making trade an effective
instrument of economic growth by giving thrust to
employment generation. The Policy, with clearly
enunciated objectives and strategies and necessary
initiatives taken by the Govt. during the last
five years has been very effective in putting
India’s exports on a higher growth trajectory.
The Indian exports witnessed an
unprecedented and consistently high growth during
the five year period from 2004-05 to 2008-09.
During this period, the exports grew at an average
annual growth rate of 23.9%; increasing from US$
83.5 billion in 2004-05 to US$ 185.3 billion in
2008-09. As per WTO estimates, India’s share of
global merchandise trade rose from 0.94% in 2004
to 1.45% in 2008. The share of global commercial
services export similarly increased from 1.3% in
2004 to 2.7% in 2008. India’s total share in
goods and services trade also went up from 1.08%
in 2004 to 1.65% in 2008.
Keeping in view the second
objective of making trade an effective instrument
of economic growth and employment generation,
sectors with significant export prospects coupled
with employment generation in semi-urban and rural
areas were identified as thrust sectors and
specific initiatives were undertaken for
Agriculture, Handicrafts, Handlooms, Gems &
Jewellery and Leather & Footwear sectors. On
the employment front, studies have suggested that
a large number of jobs were created directly or
indirectly as a result of augmented exports in the
last five years. Contribution of Special Economic
Zones (SEZ) in terms of investment, employment
generation, and exports has been significant.
Foreign Trade Policy (FTP): 2009-14
Approach, Objectives and Strategy
For India to become a major
player in world trade, an all encompassing and
comprehensive vision is required for the overall
development of the country’s foreign trade.
Trade is not an end in itself, but a means to
economic growth and national development.
Coherence and consistency among trade and other
economic policies is important for maximizing the
contribution of such policies to development.
Thus, while incorporating the existing practice of
enunciating a stable Five Year Policy, it is
necessary to go much beyond and take an integrated
approach to the developmental requirements of
India’s foreign trade.
In 2008-09, the world faced an
unprecedented economic slow-down and witnessed one
of the most severe global recessions in the
post-war period that affected countries across the
globe in varying degrees. All major economic
activities like industrial production, trade
capital flows, unemployment, investment and
consumption took a hit.
Minister of Commerce & Industry, Sh. Anand
Sharma, Minister of State of Commerce &
Industry, Sh. Jyotiraditya Scindia and Commerce
Secretary, Dr. Rahul Khullar at the release of
Foreign Trade Policy (2009-14) on 27th August,
India has not been affected to
the same extent as other economies of the world
during this phase. Yet our exports have suffered a
decline since October 2008 significantly due to
shrinkage of demand in the traditional markets of
our exports due to global economic slowdown and
the reduced international prices of commodities.
India’s exports in dollar terms showed a growth
of about 48.1% from April to September, 2008
whereas from October, 2008, it started declining,
bringing down the annual growth to 13.6% in
2008-09. After showing a negative growth for seven
consecutive months in 2009-10, India’s exports
have entered the positive territory (growing at
18.2% during the month of November, 2009-10).
Agriculture and industry has shown remarkable
resilience and dynamism in contributing to a
healthy growth in exports. It is in this context
and background that the current Foreign Trade
Policy (FTP, 2009-14) was announced on 27th
The short term objective of FTP
(2009-14) is to arrest and reverse the
decliningtrend of exports and to provide
additional support especially to those
sectorswhich have been hit badly by recession in
the developed world. The long termpolicy objective
for the Government is to double India’s share in
global trade by 2020.
Objectives of FTP 2009-14
annual export growth of 15% with an annual
export target of US$ 200 billion by March
come back on the high export growth path of
around 25% per annum in the remaining three
years of this Foreign Trade Policy i.e. upto
double India’s exports of goods and
services by 2014;
long term policy objective for the
Government is to double India’s share in
global trade by 2020.
Union Minister of Commerce and Industry, Shri Anand Sharma and Minister
of State of Commerce and Industry, Shri
Jyotiraditya Scindia addressing a Press Conference
announce the Foreign Trade Policy, in New Delhi on
27th August, 2009.
In order to meet the objectives
stated above, the major thrust areas of strategy
spelt out in FTP (2009-14) comprise a mix of
policy measures including fiscal incentives,
institutional changes, procedural rationalization,
enhanced market access across the world and
diversification of export markets. The FTP
envisages three basic pillars for supporting India’s
exports. These are (i) infrastructure related to
exports, (ii) bringing down transaction costs, and
(iii) providing full refund of all indirect taxes
and levies. The prime importance here is on a
stable policy environment conducive to foreign
trade by way of continuation of exporter friendly
and transparent schemes/ facilities. In addition,
after the operationalisation of the Goods and
Services Tax (GST) regime, the Government will
make concerted attempts to see that the GST
rebates are given on all indirect taxes and levies
on exports. A special thrust would be provided to
employment intensive sectors which have witnessed
job losses in the wake of this recession,
especially in the fields of textile, leather,
Given the current economic
climate, policy measures initiated in the FTP
2009-14 would basically be in force for a two year
period after which mid-course corrections could be
undertaken, if required. In the meantime, sectoral
reviews to assess the impact of these measures on
Indian exports would be carried out and
accordingly appropriate initiatives would be
Initiatives Taken in the FTP (2009-14)
new markets have been added under Focus Market
Scheme. These include 16 new markets in Latin
America and 11 in Asia-Oceania.
large number of products from various sectors
including Engineering products, value added
Plastic products, Jute and Sisal products,
Technical Textiles, Green Technology products,
Project goods, vegetable textiles, Electronic
items etc. have been included for benefits
under Focus Product Scheme (FPS).
incentive available under Focus Market Scheme
(FMS) has been raised from 2.5% to 3%.
incentive available under Focus Product Scheme
(FPS) has been raised from 1.25% to 2%.
Linked Focus Product Scheme (MLFPS) has been
greatly expanded by inclusion of products
classified under more than 3600 ITC(HS) Codes
at 8 digit level. Benefits to these products
will be provided, if exports are made to 15
identified markets (Algeria, Egypt, Kenya,
Nigeria, South Africa, Tanzania, Brazil,
Mexico, Ukraine, Vietnam, Cambodia, Australia,
New Zealand, Japan and China). A common
simplified application form has been
introduced for taking benefits under Focus
Product Scheme (FPS), Focus Market Scheme
(FMS), Market Linked Focus Products Scheme (MLFPS)
and Vishesh Krishi and Gram Udyog Yojna (VKGUY).
Scheme at Zero Duty has been introduced for
certain sectors like engineering &
electronic products, basic chemicals &
pharmaceuticals, apparels & textiles,
plastics, handicrafts, chemicals & allied
products and leather & leather products
(subject to exclusions as provided in HBP Vol.
1). The scheme shall be in operation till
Srinagar and Anantnag recognized as ‘Towns
of Export Excellence’ for handicrafts;
Kanpur, Dewas and Ambur recognized for leather
products; and Malihabad for horticultural
for Green products and products from North
accelerate exports and encourage
technological upgradation, additional Duty
Credit Scrips shall be given to Status
Holders @ 1% of the FOB value of past
exports for certain specified sectors.
This facility shall be available for
export up to 31.3.2011.
the Duty Credit scrips being issued to
Status Holders under paragraph 3.8.6 of
FTP under VKGUY Scheme permitted among
Passbook (DEPB) Scheme extended beyond
31-12-2009 till 31.12.2010. DEPB rate
shall also include factoring of custom
duty component on fuel where fuel is
allowed as a consumable in Standard
of 2% for pre-shipment credit for 7
specified sectors has been extended till
Income Tax exemption
to 100% EOUs and to STPI units has been
extended for the financial year 2010-11.
assistance scheme initiated in December
2008 to provide enhanced ECGC cover at 95%
to the adversely affected sectors is
continued till March, 2010.
Export obligation on
import of spares, moulds etc. under EPCG
Scheme has been reduced to 50% of the
normal specific export obligation.
Annual Average Export Obligation for a
particular financial year in which there
is decline in exports from the country,
extended for the 5 year Policy Period,
in the sectors which are exempted from
maintenance of average EO under EPCG
flexibility under Target Plus Scheme (TPS)
/ Duty Free Certificate of Entitlement (DFCE)
Scheme for Status Holders given to Marine
To neutralize duty
incidence on Jewellery exports and hence
to allow Duty Drawback on such exports,
duty drawback rates notified by Department
In an endeavour to
make India a diamond international trading
hub, it is planned to establish “Diamond
consignment basis of cut & polished
diamonds for the purpose of grading/
certification purposes introduced.
Value limits of
personal carriage of Gems & Jewellery
items have been increased from US$ 2
million to US$ 5 million in case of
participation in overseas exhibitions. The
limit in case of personal carriage, as
samples, for export promotion tours,
increased from US$ 0.1 million to US$ 1
transaction and handling costs, a single
window system to facilitate export of
perishable agricultural produce
introduced. The system will involve
creation of multi-functional nodal
agencies to be accredited by APEDA.
allowed re-export of unsold imported raw
hides and skins and semi finished leather
from public bonded ware houses, subject to
payment of 50% of the applicable export
addition under advance authorization
scheme for export of tea reduced from the
existing 100% to 50%.
DTA sale limit of
instant tea by EOU units increased from
the existing 30% to 50%.
Export of tea
covered under VKGUY Scheme benefits.
Period for advance authorizations issued
with 6-APA as input has been increased
from the existing 6 months to 36 months.
Requirement of ‘Handloom
Mark’ for availing benefits under FPS
EOUs allowed to sell
products manufactured by them in DTA upto
a limit of 90% instead of existing 75%,
without changing the criteria of ‘similar
goods’, within the overall entitlement
of 50% for DTA sale.
issued to enable procurement of spares
beyond 5% by granite sector EOUs.
EOUs allowed to
procure finished goods for consolidation
along with their manufactured goods,
subject to certain safeguards.
Board of Approvals
(BOA) to consider, extension of block
period by one year for calculation of Net
Foreign Exchange earnings of EOUs.
EOUs allowed CENVAT
Credit facility for the component of
Education Cess on DTA sale.
To encourage Value
Added Manufactured export, a minimum 15%
value addition on imported inputs under
Advance Authorization Scheme prescribed.
Coverage of Project
Exports and a large number of manufactured
goods under FPS and MLFPS.
In cases, where RBI
specifically writes off the export
proceeds realization, the incentives under
the FTP, not to be recovered from the
exporters subject to certain conditions.
A number of measures
undertaken for reduction of transaction
cost allowing flexibility to exporters and
simplification of procedures, which are
listed separately (para 1.11).
To enable support to
Indian industry and exporters, especially the
MSMEs, in availing their rights through trade
remedy instruments, a Directorate of Trade Remedy
Measures has been set up.
Measures undertaken for
simplification of procedures, reduction of transaction
costs and providing flexibility to exporters
of customs duty for EO shortfall under Advance
Authorization/DFIA/ EPCG authorization allowed by
way of debit of Duty Credit scrips.
of restricted items, as replenishment, now allowed
against transferred DFIAs, in line with the
erstwhile DFRC scheme.
limit of 60 days for re-import of exported gems and
jewellery items, for participation in exhibitions
extended to 90 days in case of USA.
loss claims received from private approved insurance
companies in India now be allowed for the purpose of
EO fulfillment under Export Promotion schemes.
of samples/pieces allowed duty free import increased
from the existing 15 to 50. Customs clearance of
such samples now based on only declarations given by
allowed for up to two stages from payment of excise
duty in lieu of refund, in case of supply to an
advance authorization holder (against invalidation
letter) by the domestic intermediate manufacturer.
At present, exemption is allowed up to one stage
months time period allowed for conversion of
Shipping Bills from one Export Promotion scheme to
other scheme by Customs.
of imported goods directly from the Port to the site
allowed under Advance Authorization scheme for
of manufacturing wastes / scrap now allowed after
payment of applicable excise duty, even before
fulfillment of export obligation under Advance
Authorization and EPCG Scheme.
Authorities now authorized to issue licenses
directly for import of sports weapons by ‘renowned
shooters’, on the basis of NOC from the Ministry
of Sports & Youth Affairs.
procedure for issue of Free Sale Certificate
simplified and the validity of the Certificate
increased from 1 year to 2 years.
industry, having their own R&D establishment,
allowed free import of reference fuels (petrol and
diesel), upto a maximum of 5 KL per annum, which are
not manufactured in India.
application and redemption forms under EPCG scheme
have been simplified.
fee to be charged for grant of incentives under the
Schemes in Chapter 3 of FTP. Further, for all other
18 Authorizations/ license applications, maximum
applicable fee is being reduced to Rs. 100,000 from
the existing Rs 1,50,000
(for manual applications) and Rs. 50,000 from the
existing Rs.75,000 (for EDI applications).
Promotion Councils/ Commodity Boards advised to
issue RCMC through a web based online system. It is
expected that issuance of RCMC would become EDI
enabled before June, 2010.
Message Exchange between Customs and DGFT in respect
of incentive schemes under Chapter 3 to become
Inter Ministerial Committee formed to redress/
resolve problems/issues of exporters.
updated compilation of Standard Input Output Norms (SION)
and ITC (HS) lassification of Export and Import
Items has been published.
Details of the major scheme-wise
initiatives announced under the Foreign Trade Policy,
2009-14 are given below.
Duty Neutralization/Remission Schemes
Duty Entitlement Passbook (DEPB) Scheme
In its constant endeavor to provide a
stable Foreign Trade Policy and to remove uncertainty
about the future of the most popular exporter friendly
scheme i.e., the DEPB scheme, Government extended the
validity of the scheme till 31st December 2010. One of
the major initiatives taken to keep its promise to
neutralize duties on all the inputs used in the
manufacture of the export product and to meet the basic
of DEPB scheme to neutralize incidence of customs duty
on import content of export product, the Custom duty
component, of the ‘consumable’ fuel, has been
allowed in the DEPB rate. Further since DEPB scheme
allows duty credit, which for all practical purposes is
equivalent to cash, utility of DEPB scheme for payment
of customs duty, in case of default in fulfillment of
export obligation under various schemes, has been
allowed. DEPB rates for certain items have been notified
and to allow the exporters to avail the DEPB benefit on
the prevailing international prices, value cap for
certain products have been revised upwards.
Advance Authorization Scheme
To promote value added product,
minimum value addition under the scheme has been raised
to 15% in lieu of earlier positive value addition.
Exemption from payment of excise duty in lieu of refund
in case of downstream product manufacturer, supply
against invalidation letter by the Intermediate
manufacturer up to 2 stages have been allowed, provided
the finished product is physically exported by the
ultimate exporters. To reduce the transaction time and
cost, henceforth, advance authorization holder shall be
able to take the imported components directed to the
site of project site instead of taking the same through
the manufacturing premises of the exporter. Further for
the first time, a specific facility has been spelt out
in the FTP allowing disposal of the manufacturing waste
prior to fulfillment of export obligation. Further, to
remove the existing procedure of double verification of
the export documents at customs end, shipments made from
the EDI ports w.e.f. 1st April, 2009 would be
automatically transmitted online between the customs and
DGFT, thereby dispensing with the requirement of
submission of hard copies of shipping bills.
Gems & Jewellery
Gems & Jewellery exports
constitute a major proportion of our total
merchandiseexports. It is an employment oriented
sector. Exports fromthis sector suffered significantly
on account of the global economic slowdown. Some of
the measures undertaken for gems and jewellery sector
were in terms of announcement of Duty Drawback rates
for the gems & jewellery items by Department of
Revenue; To establish “Diamond Bourses” in an
endeavour to make India a diamond international
trading hub, introduction of a new facility to allow
import on consignment basis of cut & polished
diamonds for the purpose of grading / certification;
value limits of personal carriage of Gems &
Jewellery items have been increased from US$ 2 million
to US$ 5 million in case of participation in overseas
exhibitions; enhancement in the limit in case of
personal carriage, as samples, for export promotion
tours from US$ 0.1 million to US$ 1 million etc.
Service Tax Refund
The Government has already announced refund
of service tax for almost all prime services, which are
directly related to export production and supply. A few
pending issues relating to Service Tax refund on exports have
been resolved recently. These include:
service related to transport of export goods by road form
any Container Freight Stations (CFS) or Inland Container
Depot (ICD) to the port or Airport and on service related
to transport of export goods by road directly from their
place of removal, to an ICD, a CFS, a port or airport;
provided by Foreign Agent Commission service.
for refund of service tax simplified by allowing refund on
self certification in case refund claim does not exceed
0.25% of FOB value of exports; and certification by
Chartered Accountant in case of others;
period for filing refund claim increased to 1 year from
the date of export (as against half-yearly).
Vishesh Krishi and Gram Udyog Yojna (Special Agriculture and
Village Industry Scheme)
Keeping in view the objective of Foreign
Trade Policy 2009-14 to promote employment generation in rural
and semi urban areas, Vishesh Krishi And Gram Udyog Yojana has
been expanded to include export of Agricultural Produce and
their value added products; Minor Forest Produce and their
value added variants; Gram Udyog Products; and Other products,
as notified from time to time.
Duty Credit Scrip benefits are granted with
an aim to compensate high transport costs, and to offset other
disadvantages. Exporters, of products notified in Appendix 37A
of HBP vol.1, shall be entitled for Duty Credit Scrip
equivalent to 5% of FOB value of exports (in free foreign
exchange) for exports made from 27.8.2009 onwards. However,
reduced rate of 3% is applicable in such cases where exporter
has also availed benefits of Drawback, at rates higher than
1%; or Specific DEPB rate (i.e. other than Miscellaneous
Category – Sr. Nos. 22D & 22C of Product Group 90); or
Advance Authorization or Duty Free Import Authorization for
import of inputs (other than catalysts, consumables and
packing materials) for the exported product for which Duty
Credit Scrip under VKGUY is being claimed. Additional 2% rate,
over and above the 5% or 3% rate, is admissible for products
specified in Table 2, Appendix 37A of HBP vol.1 (like Flowers,
Fruits, Vegetables and other products etc.).
Higher Incentive for Status holders is
available in the form of duty credit scrip equal to 10% of FOB
value of agricultural exports, limited to Rs. 100 crore per
annum, for products covered under ITC HS Chapters 1 to 24, to
permit import of Capital Goods/equipments like Cold Storage
Units; Pre-cooling Units and Reefer Van/Containers etc.
Focus Market Scheme (FMS)
For offsetting high freight cost and other
externalities to select international markets with a view to
enhance India’s export competitiveness in these countries,
“Focus Market Scheme” has been launched w.e.f. 1.4.2006.
Exporters of all products to notified countries (as in
Appendix 37C of HBP vol.1) shall be entitled for Duty Credit
Scrip equivalent to 3% of FOB value of exports. So far, the
Scheme covers a total of 110 markets (52 markets in Africa; 31
in Latin America; 10 in CIS-CAR Block; 5 in East Europe; 1 in
Asia; and 11 in Asia-Oceania Block).
During the period April – November
2009-10, a total of 3854 authorizations having CIF value of Rs.
295 crore and FOB value of Rs.12504 crore have been issued
under the scheme.
Focus Product Scheme (FPS)
To incentivize export of such products
which have high export intensity / employment potential, so as
to offset infrastructure inefficiencies and other associated
costs involved in marketing of these products, a Scheme called
Focus Product Scheme, has been introduced w.e.f. 1.4.2006.
Under the Scheme, exports of notified
products (as in Appendix 37D of HBP vol.1) to all countries
(including SEZ units) would be entitled for Duty Credit scrip
equivalent to 2% of FOB value of exports (in free foreign
exchange) for exports made from 27.8.2009 onwards. However,
Special Focus Product (s) / sector (s), covered under Table 2
and Table 5 of Appendix 37D [toys and sports goods, carpets
and handicrafts, at present], shall be granted Duty Credit
Scrip equivalent to 5% of FOB value of exports. Over 1150
products have so far been covered at 8 digit level under the
Scheme, which include leather products and footwear, handloom
products, handmade carpets and other textile floor coverings,
handicrafts, coir and jute products, technical textiles,
engineering products, Green technology products, electronic
products, value added plastic and Glass products etc.
During the period April – November
2009-10, a total of 5770 authorizations having CIF value of
Rs.252 crore and FOB value of Rs.15093 crore have been issued
under the scheme.
Market Linked Focus Products Scheme (MLFPS)
To give significant boost to market
penetration of specific product in specified markets, a
variant under Focus Product Scheme called Market Linked Focus
Products was introduced from 1.4.2008. Under the Scheme,
export of products /sectors of high export intensity
/employment potential (which are not covered under the FPS
List) would be incentivized at 2% of FOB value of exports (in
free foreign exchange) under FPS when exported to the Linked
Markets (countries), which are not covered in the present FMS
List, as notified in Appendix 37D of HBPv1, for exports made
from 27.8.2009 onwards.
Presently, the products covered under the
scheme include Motor vehicles, auto-components, apparels,
knitted and crocheted fabrics, pharma products, value added
plastic and rubber goods, Glass products, dyes and chemicals,
household articles of Aluminium, Machine Tools, Earth moving
equipments, Transmission Towers, Electrical & Power
equipments, steel tubes/pipes/galvanized sheets, compressors,
Iron & Steel structures, three wheelers etc. The countries
covered under the Scheme include Algeria, Egypt, Kenya,
Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine,
Australia, New Zealand, Cambodia, Vietnam, Japan and China.
There are over 3600 products so far covered at 8 digit levels.
Served from India Scheme
The objective of the Scheme is to
accelerate growth in export of services so as to create a
powerful and unique ‘Served from India’ brand, instantly
recognized and respected the world over. All Indian Service
Providers, of services listed in Appendix 10 of HBP vol.1, who
have free foreign exchange earning of at least Rs.10 lakhs in
preceding financial year / current financial year shall
qualify for Duty CreditScrip. For Individual Indian Service
Providers, minimum free foreign exchange earnings would be
Rs.5 lakhs. All service providers of 161 tradable services are
entitled to Duty Credit Scrip @ 10% of the free foreign
exchange earned, except a few ineligible sectors / services.
Import allowed with actual user condition for import of
capital goods, office equipments, consumables, etc. During the
period April-November 2009-10, a total of Rs 750 crore worth
duty credit scrips have been issued under the scheme.
Status Holders Incentive Scheme (SHIS)
With an objective to promote investment in
upgradation of technology of some specified sectors such as
Leather, Textiles, Jute, Handicrafts, Engineering, Plastics,
Basic Chemicals, Status Holders shall be entitled to incentive
scrip @ 1% of FOB value of exports made during 2009-10 and
during 2010-2011, of these specified sectors, in the form of
duty credit [subject to prescribed exclusions as specified]
for procurement of capital goods for technology upgradation,
with actual user condition. This shall be over and above any
duty credit scrip claimed/availed under Chapter-3 of FTP. This
facility is available for exports made upto 31.3.2011.
Export Promotion Capital Goods (EPCG) Scheme
In order to facilitate augmentation of
imports under the Scheme, at present, there are two EPCG
Schemes, that is, 3% concessional duty scheme and Zero duty
concessional EPCG Scheme.
3% Concessional Duty Scheme
The salient features of 3% concessional
duty scheme are as under:
Scheme was initially introduced in the Import and Export
1990-93 for import of Capital Goods at a concessional
rate of Customs
Duty @ 25%. The concessional rate of duty has been
reduced gradually to 3% since 1.4.2008.
scheme allows import of capital goods for
pre-production, production and post production as well
as for computer software systems subject to an export
obligation equivalent to 8 times of duty saved amount
(50% of Export Obligation in case of import of
spares),to be fulfilled in 8 years reckoned from
scheme also requires maintenance of average level of
exports achieved by the exporter in the preceding three
licensing years for the same and similar products within
the overall export obligation period including extended
period, except for categories mentioned in para 5.7.6 of
Hand Book of Procedure.
encourage exports from the tiny and cottage sector, an
export obligation period of 12 years is granted for
fulfillment of export obligation.
authorization can also be issued for import of spares,
tools and refractory for initial lining and catalyst for
initial charge for existing plant and machinery.
(imported earlier under the EPCG Scheme or otherwise).
case of agro units, the export obligation is equivalent
to 6 times duty saved on imported capital goods to be
completed within a period of 12 years.
case of SSI Units, the EO is equivalent to 6 times duty
saved to be fulfilled over a period of 8 years provided
the cif value of such imported capital goods does not
exceed Rs.50 lakh and total investment in plant and
machinery after such imports does not exceed the SSI
EPCG authorizations with a duty saved amount of Rs.100
crore or more, the export obligation period is 12 years.
of second hand capital goods is allowed without any age
of motor car, sports utility vehicles/all purpose
vehicles is allowed only to hotels, travel agents, tour
operators or tour transport operators and companies
owning / operating golf resorts whose total foreign
exchange earnings from their respective sectors in the
current and preceding three licensing years is Rs.1.5
crore or more.
imported under EPCG Scheme are to be so registered that
the vehicles are used for tourist purpose only. Parts of
cars, such as chassis, cannot be imported under EPCG
Authorization can also be issued for import of capital
goods underScheme for Project Imports notified by the
Central Board of Excise andCustoms under S. No.441 of
Customs Exemption Notification No.21/2002 dated
01.03.2002. Export obligation for such EPCG
authorizationswould be eight times of duty saved. Duty
saved would be the difference between the effective duty
under aforesaid Customs
Export Obligation (EO) Conditions
under EPCG Scheme
to be fulfilled by export of goods
manufactured/service rendered by applicant.
to 50% of EO may be fulfilled by exports of other
goods manufactured or services provided by the same
firm/ company/ group companies.
shall be physical exports. Certain deemed exports
will also be counted towards fulfillment of EO.
export obligation under the Scheme shall be over and
above, the average level of exports achieved by the
EPCG authorization holder in the preceding three
licensing years for the same and similar products
within the overall export obligation period
including extended period, other than the categories
exempted for this purpose.
average EO condition for certain sectors like
handicraft, handlooms, cottage, tiny sector,
agriculture, aqua-culture, animal husbandry,
floriculture, horticulture, pisciculture, poultry
in EO period may be granted for a period of 2 years
+ 2 years subject to certain conditions specified in
Para 5.1 of HBP.
BIFR units, EO period may be extended as per BIFR
package or 12 years, if not specified by BIFR.
Import of Capital Goods shall be subject to Actual
User Condition till EO is completed.
Goods imported (excepting tools) for manufacturing
of export products relating to handicraft,
handlooms, cottage, tiny sector, agriculture,
aqua-culture, animal husbandry, floriculture,
horticulture, pisciculture, poultry and sericulture
are not transferable for a period of five years from
date of import even if EO is fulfilled. However,
transfer of capital goods is allowed within group
companies within five years from the date of import
after fulfillment of EO under intimation to RA and
jurisdictional Central Excise Authority.
and concessional duty under the EPCG Scheme.
scope of the EPCG scheme has been extended to Common
Service Providers (CSP) who are designated / certified
as a Common service Providers by the DGFT, Department of
Commerce or State Infrastructural Corporation in a Town
of Export Excellence.
person holding an EPCG license may source the capital
goods from a domestic manufacturer instead of importing
them. The domestic manufacturer supplying CG to EPCG
authorization holder shall be eligible for deemed export
benefits under Para 8.3 of the Policy.
license may be issued for retail sector for import of
capital goods required by the retailer to create modern
infrastructure in the retail sector.
Authorizations holders can opt for Technological
up-gradation of existing Capital goods imported under
EPCG authorizations’ subject to conditions stipulated
in para 5.8 (i) to (v) of FTP
Zero Duty EPCG Scheme
The scheme has been introduced in the new
Foreign Trade Policy 2009-14 for specified sectors, viz for
exporters of engineering & electronic products, basic
chemicals & pharmaceuticals, apparels & textiles,
plastics, handicrafts, chemicals & allied products and
leather & leather products; subject to exclusions as
provided in HBP vol. I. The salient features of the scheme are
zero duty EPCG Scheme, EO equivalent to 6 times of duty
saved amount on capital goods is required to be fulfilled
in 6 years from authorization issue date.
validity period for import of capital goods under zero
duty EPCG Scheme is nine months;
period of 6 years can be extended for a maximum period of
2 years only.
All other provisions pertaining to 3% duty
EPCG scheme, to the extent they are not inconsistent with the
above provisions of zero duty EPCG Scheme, are applicable to
the zero duty EPCG Scheme also. The zero duty EPCG Scheme will
be in operation till 31.3.2011.
Export Oriented Units (EOUs)/Electronic Hardware Technology
Park(EHTP)/Software Technology Park (STP)/Biotechnology Park (BTP)
The following incentives have been
announced by Hon’ble Commerce & Industry Minister while
announcing Foreign Trade Policy (2009-2014) on 27th August
2009 with regard to EOU/EHTP/STP/BTP:-
have been allowed to sell products manufactured by them in
DTA up to a limit of 90% instead of existing 75%, without
changing the criteria of ‘similar goods’, within the
overall entitlement of 50% for DTA sale.
will now be allowed to procure finished goods for
consolidation along with their manufactured goods, subject
to certain safeguards.
this period of downturn, Board of Approvals (BOA) to
consider, extension of block period by one year for
calculation of Net Foreign Exchange earnings of EOUs.
will now be allowed CENVAT Credit facility for the
component of Education Cess on DTA sale.
sale limit of instant tea by EOU units has been increased
from the existing 30% to 50%.
Tax benefits under Section 10A for IT Industry and under
Section 10B for 100% Export Oriented Units have been
continued for one additional year till 31st March, 2011.
Further, following additions/changes have
been made in FTP/HBP Vol-I:-
Board of Approvals (BoA) to allow, on a case to case
basis, requests of EOU/ EHTP/ STP/BTP units in sectors
other than Gems & Jewellery, for consolidation of
goods related to manufactured articles and export thereof
along with manufactured article. Such goods may be allowed
to be imported/procured from DTA by EOU without payment of
duty, to the extent of 5 %FOB value of such manufactured
articles exported by the unit in preceding financial year.
This is subject to certain conditions;
a unit is unable to export due to prohibition /
restriction imposed on export of any product mentioned in
Letter of Permission (LoP), the five year block period for
calculation of NFE earnings may be suitably extended by
BoA. BoA may also consider extension of block period by
another one year, for calculation of NFE, on case to case
basis, for those units which complete 5 years block period
in between 30.09.2008 and 30.09.2009, keeping in view of
the decline in exports in that particular unit, due to
economic slowdown only.
for conversion into an EOU / EHTP/ STP / BTP unit from
existing DTA units, having an investment of Rs. 50 crore
and above in plant and machinery or exporting Rs. 50 crore
and above annually, shall be placed before BoA for a
is payable on delay in refund of CST, if the case is not
settled within 30 days of receipt of complete application.
authorized person of Gems & Jewellery EOU may also
import gold in primary form, up to 10 Kgs in a financial
year through personal carriage, as per guidelines
prescribed by RBI and Department of Revenue (DoR).
has been allowed in period of EO against import of items
covered by Chapter 9 of ITC (HS) certain spices and
of production process abroad has been elaborated.
case of goods exported for holding/participating in
exhibitions in USA, the time period has been increased to
90 days from earlier 60 days.
case of personal carriage of goods for
holding/participating in overseas exhibitions, value of
gems & jewellery.
Commissioner of Central Excise & Customs
Development Commissioner of the Zone
other nominee of any Department/ Agency as
has been increased to US$ 5
million in place of earlier 2 million.
carriage of gold/silver/platinum jewellery,
cut and polished diamonds, precious,
semi-precious stones, beats and articles as
samples has been increased to US$ 10 lakh from
earlier US$ 1 lakh for export promotion tours
and temporary display/sale abroad by EOUs.
Approval Committee for EOUs has been notified
with composition as given in previous page.
sub para 6.9 (e) of FTP, supplies of
goods/services to organizations entitled for
duty free import under the following Ministry
of Finance Notifications are eligible:
No. 106/58-Cus. Dated 29.3.58
No. 152/94-Cus. Dated 13.7.94
No. 50/96-Cus dated 23.7.96
No. 39/96-Cus dated 23.7.96
No. 84/97-Cus dated 11.11.97
As per the FTP (2009-2014) the
following provisions have been made in HBP v-I to
facilitate deemed exports:-
from Terminal Excise Duty (TED) shall also be
available for supplies made by an Advance
Authorization holder to a manufacturer holding
another Advance Authorization if such
manufacturer, in turn, supplies the product(s)
to an ultimate exporter.
interest is payable if a claim for refund of
duty draw back / TED is not settled within 30
days of receipt of complete application.
for seeking refund of TED for supply of high
speed diesel of furnace
from depots of domestic oil PSUs has been
Minister of Commerce and Industry, Shri Anand
additional incentives for exporters on January 12,
Additional Incentives to
Exporters announced on 12th
Products under Focus Product Scheme
(FPS): 112 new products added under
FPS at 8 digit level, eligible for
benefits @ 2% of FOB value of exports to
all markets. Major sectors include
Engineering, Electronics, Rubber,
Chemicals, Plastics, Carton boxes and
Egg powder. 113 new products at 8 digit
level given higher benefits @ 5% of FOB
value of exports under Special FPS on
exports to all markets. Major sectors
include Hand Tools, parts of agriculture
& horticulture machinery, sewing
machines and parts, liquid pumps, nuts,
bolts, washers, screws, staplers, and
parts of machinery for soldering,
brazing and welding.
Products and New Markets under Market
Linked Focus Product Scheme (MLFPS): 1837
new products added under MLFPS at 8
digit level, eligible for benefits @ 2%
of FOB value of exports to specified
markets. Major sectors include Machine
Tools, Earth moving equipments,
Transmission towers, Electrical and
Power Equipments, Steel Tubes, pipes and
galvanized sheets, Compressors, Iron and
Steel Structures, Auto components, Three
wheelers and cotton woven fabrics.
(Chemicals have been included for
providing benefit for a limited period
of 6 months). Two new major markets viz.
China and Japan added under MLFPS.
products under Vishesh Krishi and Gram
Udyog Yojana (VKGUY): Sesame seeds
and minor coconut products added under
VKGUY scheme, eligible for benefits @ 5%
of FOB value of exports to all markets.
market added under Focus market Scheme
(FMS): Timor Leste added as new FMS
country, eligible for benefits @ 3% of
FOB value of exports of all products.
under Market Access Initiative (MAI)
scheme for setting up of Warehouse
in Latin America by Export Promotion
Council for Handicrafts.
oil from depots
of domestic oil PSUs has been included.
no separate application for claiming interest
is required and single cheque for main claim
and interest can be issued to the claimant.
regard to mega power projects, the requirement
of ICB would not be mandatory, if the
requisite quantum of power has been tied up
through tariff based competitive bidding or if
the project has been awarded through tariff
based competitive bidding.
1222.93 crore have been provided till
15.02.2010 to ensure refund of claims of
TED/Duty drawback on deemed exports. For
further pending/expected claims of FY 2009-10,
a request has been made for allocation of more
Stimulus Package for Exports
The global financial crisis and
the resultant contraction in demand have adversely
affected India’s export performance during
2008-09, especially since Oct., 2008. To counter
the negative fallout of the global slowdown on the
Indian economy, the Government / RBI responded by
providing carefully designed and calibrated
stimulus packages in the form of fiscal, monitory
and export promotion measures from time to time,
including the announcements made in the Budget
2009-10 and in the Foreign Trade Policy (FTP)
2009-14, to provide support, particularly to
employment intensive sectors. The key measures
announced in the stimulus packages are given in
Through the EDI initiatives,
O/o DGFT is engaged in enabling web based
international trade transactions so as to
facilitate exporting community in expeditious
import/export clearances. Towards this end,
several steps are being taken under the Electronic
Data Interface (EDI) programme. These are as
message exchange with Export Promotion
Councils (EPCs) regarding Registration Cum
Membership Certificate (RCMC) to be
operational by end of 2009-10.
Promotion Schemes like FPS, FMS & VKGUY to
be EDI enabled with Customs by June 2010.
of eTRADE project to be accelerated, so as to
bring all stakeholders on a common platform;
Broad services under e-trade project would
include electronic filing and clearance of
export/import documents, e-payment of duties
and inter agency message exchange extended to
ports, Banks, CONCOR, Airlines and shipping
lines, among others.
exchange of information with Customs on
Importer-Exporter Code (IEC) number,
authorization details etc. based on an agreed
ports / locations to be EDI enabled in next
Grievance Redressal Committee
A Grievance Redressal Committee
(GRC) headed by the Additional Secretary,
Department of Commerce has been set up to handle
to facilitate speedy redressal of grievances of
trade and industry. The Exporters may send their
grievances to the Committee in Electronic form,
besides all other normal modes. Representations to
the Committee may be forwarded by post addressed
to the Chairman of the Committee. The application
of the aggrieved party must contain the name of
the applicant, IEC No., address (with contact Nos.
and e-mail ID), the details of reference earlier
made to DGFT, if any and the grounds in support of
grievances, in brief.
Any decision relating to
Foreign Trade Policy i.e. decisions of ALC, EPCG,
PIC, PRC, EPZ/EOU etc. i.e. all non- statutory
matters relating to Foreign Trade Policy which has
caused grievances to the exporter/importer will be
heard by the Committee. Grievance Committee
functioning in DGFT may be approached in the first
instance for redressal of the grievances. The
petitioner may thereafter refer the matter to GRC
if still aggrieved with the decision of the
Grievance Committee of DGFT. An opportunity for a
personal hearing with GRC is also available.
During the period April-2009 to December-2009, the
GRC met 4 times wherein 53 cases were considered
and decided. The minutes of the meetings of GRC
and the decisions are made available on the
website of Department of Commerce (http://commerce.gov.in).
Commodity specific policy decisions taken during
The government has also taken
several specific measures pertaining to import and
export of major commodities like rice wheat,
pulses, sugar, oilseeds etc. keeping in view
domestic and international price situation. The
import specific measures are given in Annexure 4.1
and the export specific measures are given in
Trends of authorizations issued under Export
Promotion & Duty Neutralization Schemes of
Foreign Trade Policy during the period April, 2009
– November, 2009
During the period April 09–November
09, a total of 1,29,562 authorizations having
CIF/Duty credit value of Rs. 89,557 Crore and FOB
/ Export Obligation of Rs. 4,32,713 Crore have
been issued. This represents a growth of 7% in
number, decline of 16% in CIF/Duty credit value
and increase of 17% in FOB value/ EO over the
corresponding period of last year. However,
category wise, pattern of issuance of
authorizations during the period remained the same
as in the corresponding period of last year. A
statement on total number of authorizations issued
and their CIF/duty credit & FOB values during
April,09-November,09 and during the corresponding
period of last year is given in Table -4.1.
Comparative picture of authorizations issued
& their CIF values during the period April-November of the
years 2008-09 & 2009-10 is depicted through Charts-4.1
& 4.2. Percentage share of authorizations issued &
their CIF values by Category during April-November, 2009 is
depicted through Charts 4.3 & 4.4.
of Authorizations Issued Under Export Promotion & Duty
2008 to November 2008
to November 2009
/ Duty credit (Rs Crore)
/ Duty credit (Rs Crore)
for Deemed Export
from India scheme
for Status Holder
Free Import Authorization (DFIA)
Free Replenishment Certificate
license for negative list of import items
Krishi and Gram Udyog Yojana (VKGUY)
Concessional Duty 03%
Duty EPCG Scheme
Changes made In Item-wise Import Policy
during the Year 2009 – 10
of cigarette or any other tobacco product to
comply with the provisions contained in the
“Cigarettes and other Tobacco Products
(Packaging and Labelling) Amendment Rules,
2009”. (Notification No. 108, dated
of Mobile Handsets without International
Mobile Equipment Identity No. (IMEI) and CDMA
mobile phones without Electronic Serial
Numbers (ESN)/ Mobile Equipment Identifier (MEID)
prohibited. (Notification No. 112, dated
16.6.2009 and Notification No. 14, dated
of reference fuels for automobile industries,
having R&D registration made free.
(Notification No. 2, dated 27.8.2009)
of Electrical Energy made restricted.
(Notification No. 7, dated 8.9.2009)
of the items Carbon black, Polysters and
Flat-rolled products of iron or non-alloy
steel made free. (Notification No. 8, dated
9.9.2009 and Notification No. 23, dated
of wild animals (including their parts and
products) in respect of those species listed
in Convention on International Trade in
Endangered Species (CITES) made subject to the
provisions of CITES. (Notification No. 13,
prohibition on import of milk and milk
products from China extended for a period of
six months with effect from 24.12.2009.
(Notification No. 22, dated 23.12.2009)
of toys made free subject to certificate of
conformance of prescribed standards.
(Notification No. 27, dated 27.1.2010)
of new vehicles permitted through the Customs
port at Mumbai Air Cargo Complex, Chennai
Airport and ICD Talegaon, Pune.
Changes Made In Item-wise Export Policy
during the Year 2009 – 10
of edible oils is prohibited w. e. f. 17.3.08.
on export of Edible Oil has been extended up
effect from 1st November, 2009, export of
edible oils has been permitted in branded
consumer packs of up to 5 Kgs. subject to a
fresh limit of 10,000 tons during the period
from 1.11.2009 to 31.10.2010; such exports are
allowed only from Customs EDI Ports.
of non-basmati rice was completely prohibited
vide Notification No.93 dated 1st April, 2008.
However, export of PUSA-1121 variety of
non-basmati rice was allowed w. e. f. 3.9.08.
With effect from 5th November, 2008, PUSA-1121
variety of non-basmati rice was categorized as
‘Basmati rice’ and it became exportable as
basmati rice subject to applicable MEP and
quantity of 10 lakh tones of non-basmati rice
was allowed to be exported to 21 African
countries through STC, MMTC and PEC.
Export Price for export of Basmati rice was
reduced from US $ 1100 PMT previously to US $
900 per ton or Rs. 41,400/-per ton FOB w. e.
was also decided subsequently that in Kharif
Marketing season 2009-10 Department of
Commerce may continue with the export of
non-basmati rice on diplomatic basis from
private stocks for the quantity which has
already been approved by the Ministry of
External Affairs and Ministry of Commerce.
Such export shall, however, be undertaken
directly by the CPSUs of Department of
Commerce and these PSUs will themselves
procure and export rice without engaging any
on export of non-basmati rice is to continue.
of pulse had been prohibited initially for a
period of six months but extended till
of pluses except Kabuli Chana is prohibited
till 31.3.2010. (Vide Notification No.99 dated
of wheat and wheat products was prohibited vide
Notification No. 33 dated 8th October, 2007.
of Wheat Flour (Maida), Samolina (Rava / Sirgi), Whole
meal atta and resultant atta has been permitted freely
subject to a limit of 6, 50,000 MTs up to 31st March,
2010; export is allowed only from Customs EDI Ports.
has however, been decided that in 2009-10, export of wheat
by private trade may not be allowed other than the export
of 6.5 lakh tonnes of wheat products, which has already
been permitted by the Government.
Measures taken by the Government:
subvention of 2% provided till 30.09.2009,
extended upto 31.3.2010, to the following
labour intensive sectors for exports:-
Textiles (including Handlooms), Handicrafts,
Carpets, Leather, Gems & Jewellery, Marine
Products and SMEs;
funds of Rs 350 crore provided (in December
2008) for Handicraft items etc. in Vishesh
Krishi and Gram Udyog Yojana (VKGUY);
Linked Focus Product Scheme extended for
bicycle parts, Motor Cars and Motor Cycles,
Apparels and Clothing accessories, Auto
Components etc. for exports from 1.4.09 to
Support for Market and Product Diversification
extended in FTP, 2009-14:
incentive available under Focus Market
Scheme (FMS) raised from 2.5% to 3%;
incentive available under Focus Product
Scheme (FPS) raised from 1.25% to 2%;
new markets added under Focus Market Scheme.
These include 16 new markets in Latin
America and 10 in Asia-Oceania;
large number of products (527 new products
at 8 digit level and 82 new Handicraft
products) from various sectors included for
benefits under FPS;
Linked Focus Product Scheme (MLFPS) greatly
expanded by inclusion of products classified
under as many as 1500 products at 8 digit
level for export to 13 new countries
(Algeria, Egypt, Kenya, Nigeria, South
Africa, Tanzania, Brazil, Mexico, Ukraine,
Vietnam, Cambodia, Australia and New
benefits also extended for export to
additional new markets for certain existing
products, like auto components, motor cars,
bicycle and its parts and apparels, among
Product Scheme benefit extended for export
of ‘green technology products’; and for
exports of some products originating from
the North East;
Exports and a large number of manufactured
goods covered under FPS and MLFPS;
funds provided to ensure full refund of
pending claims of CST / Terminal Exciseduty
/Duty drawback on deemed exports;
friendly and the popular Duty Neutralization
Scheme i.e., Duty Entitlement Passbook (DEPB)
Scheme extended upto 31st December, 2010;
rates for all items where they were reduced in
November, 2008, restored to higher rates from
retrospective effect and the adhoc increase in
DEPB rates from 1% to 3% since 2007,
Drawback rates on certain items restored to
higher rates effective from 1st September,
2008; Duty drawback rates retained at the same
level inspite of reduction in Excise tariff
across the board and customs tariff for few
items; Duty drawback rates announced for the
first time for precious metal jewellery items;
and Freely Transferable Incentive Schemes
provisionally allowed without awaiting receipt
of Bank Realization Certificate (BRC);
Obligation Period under Advance authorization
Scheme enhanced from 24 months to 36 months
without payment of composition fee;
aid technological upgradation of our export
sector, EPCG Scheme at Zero Duty has been
introduced for certain sectors. The scheme
shall be in operation till 31.3.2011;
accelerate exports and encourage technological
upgradation, additional Duty Credit Scrips
shall be given to Status Holders @ 1% of the
FOB value of past exports of certain sectors
for procurement of capital goods. This
facility shall be available upto 31.3.2011.
of non recovery of incentives granted to
exporters, subject to RBI specifically writing
off the export proceed realization along with
a certificate from Indian Missions abroad;
number of measures taken to reduce transaction
cost for the exporters such as abolition of
application fee on all incentive schemes;
application fee reduced for duty
neutralization schemes; target to implement
e-Trade Project in a time bound manner to
bring all stakeholders including Customs, DGFT,
Banks, Ports, Airlines etc. on a common
platform; Duty Neutralization Schemes such as
Advance authorization and EPCG schemes brought
under E-commerce mechanism;
promote Brand India through six or more “Made
in India” Shows, to be organized across the
World every year;
guarantee made available to ECGC to the extent
of Rs 350 crore to enable it to provide
guarantees for exports to difficult markets/
products. ECGC is now able to widen its
funds provided to the Ministry of Textiles to
clear the backlog claims of textile units
under Technology Upgradation Fund (TUF);
resources made available under MDA and MAI
items allowed within the existing duty free
imports entitlement for the following
employment oriented sectors:
5 additional items for sports goods sector;
items for leather garments and footwear and
Benefit Tax (FBT) abolished;
10A and 10B (Sunset clauses for STPI and EOUs
schemes respectively), extended for the
financial year 2010-2011. Anomaly removed in
Section 10AA relating to taxation benefit of
‘unit vis-à-vis assessee’;
pending issues relating to Service Tax refund
on exports—resolved. Some of these are:
Exemption from Service tax on services linked to
service related to transport of export goods
by road form any CFS or ICD to the port or
Airport and on service related to transport of
export goods by road directly from their place
of removal, to an ICD, a CFS, a port or
provided by Foreign Agent Commission service.
for refund of service tax simplified by
allowing refund on self certification, in case
refund claim does not exceed 0.25% of FOB
value of exports; and certification by
Chartered Accountant in case of others;
period for filing refund claim increased to 1
year from the date of export (as against
incentive available under Focus Product Scheme
(FPS) raised from 1.25% to 2%;
new markets added under Focus Market Scheme. These
include 16 new markets in Latin America and 10 in
large number of products (527 new products at 8
digit level and 82 new Handicraft products) from
various sectors included for benefits under FPS;
Linked Focus Product Scheme (MLFPS) greatly
expanded by inclusion of products classified under
as many as 1500 products at 8 digit level for
export to 13 new countries (Algeria, Egypt, Kenya,
Nigeria, South Africa, Tanzania, Brazil, Mexico,
Ukraine, Vietnam, Cambodia, Australia and New
For Fast Track
Resolution of a number of procedural issues
thereby reducing delays for the exporters, a
Committee constituted under the Chairmanship of
Finance Secretary including Secretaries of
Department of Revenue and Commerce; A number of
issues sorted out accordingly;
under the Chairmanship of Finance Secretary has
been constituted to resolve all problems related
to Non-availability of Dollar Credit to exporters
by the concerned Banks;
support to Indian industry and exporters,
especially the MSMEs, in availing their rights
through trade remedy instruments, a Directorate of
Trade Remedy Measures proposed to be set up;
reduced across the board by 4 per cent, for all
products except petroleum products and those
products where current rate was less than 4%.
Excise Duty was further reduced by another 2% on
certain products like Leather etc.;
cover under Credit Guarantee Scheme for Micro and
Small Enterprises on loans doubled to Rs 1 crore,
with a guarantee cover of 50%. The guarantee cover
extended by Credit Guarantee Fund Trust increased
to 85% for credit facility upto Rs. 5 lakh. The
lock-in period for such collateral-free loans
Assistance Scheme, initiated in December ’08 to
provide enhanced ECGC cover at 95% to the badly
hit sectors, continued till March, 2010;
To protect the
domestic manufacturing industry from dumped/cheap
imports, in particular, from China, import
restrictions imposed on some items like auto
forged components, HR coil, Carbon Black,
Polyester Filament Yarn (PFY) and Radial Tyres
(Bus & Trucks); subsequently withdrawn for PFY,
HR Coils and Carbon black.
clusters in West Bengal and Tamil Nadu and Power
loom cluster in Rajasthan and New Mega clusters
for carpets in Srinagar and Mirzapur approved;
and Anantnag recognized as ‘Towns of Export
Excellence’ for handicrafts; Kanpur, Dewas and
Ambur recognized for leather products; and
Malihabad for horticultural products;
duty of 5% on Rough / Un-worked corals abolished;
The situation is
regularly monitored at the highest level of
Government, so that immediate further
corrective measures, can be taken as may be
required. In this regard, the Government
constituted the following two High Level
Committees for deliberating the issues on
An Apex Group chaired by
Prime Minister with Finance Minister, Commerce
Minister, Deputy Chairman (Planning
Commission), RBI Governor;
Committee of officers
chaired by Cabinet Secretary, including
Finance Secretary, Commerce Secretary,
Secretary(DIPP), Secretary (Planning
Commission)- to meet regularly to look into
the suggestions made by Trade and Industry and
the respective Administrative Ministries in
respect of the current global economic and
financial crisis and to recommend action to
the Apex Group.
(ii) Measures taken by RBI:
Repo rate and Reverse Repo rate (from Oct
’08, CRR reduced from 9% to 5% (now
modified to 5.5% on 13.02.10 and to be
enhanced to 5.75% w.e.f. 27.2.2010), SLR
reduced from 25% to 24% (restored to 25%
in Oct.’09), Repo Rate reduced from 7.5%
to 4.75%, and Reverse Repo Rate reduced
from 6% to 3.25%).
to the EXIM Bank for an amount of Rs. 5000
crore for providing pre-shipment and
post-shipment credit in Rs. or dollars;
A special re-finance
facility put in place for banks for the
purpose of extending finance to exports,
micro and small enterprises, mutual funds
and NBFCs. Provisioning requirements had
been lowered. Export Credit Refinance
facility for commercial banks increased to
50% (now restored to 15% on 27.10.2009) of
the outstanding Rupee Export Credit.
for continued selling of foreign exchange
(US $) through banks, to augment supply in
the domestic foreign exchange market;
Interest rates on
export credit in foreign currency have
been reduced to LIBOR + 200 basis points
in February 2010 from the earlier
LIBOR+350 basis points.
period of pre-shipment and post-shipment
Rupee Export Credit enhanced by 90 days
Time period of
export realization for non-status holder
exporters increased to 12 months, at par
with the Status holders. This facility
which was available up to 03.06.09 has
been extended for one more year.
Banks, consequent to measures announced by
RBI, reduced the margin money on
Guarantees for export units.