a6544new foreign trade policy 2009-14

8/2/2019 a6544New Foreign Trade Policy 2009-14

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Amity School of Business

Module- 6

Foreign Trade Policy

2009-14

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Foreign trade policy 2004-09

Two objectives

To double our percentage share of global

merchandize trade within 5 years and

use trade expansion as an effective

instrument of economic growth andemployment generation.

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Recent developments In the last five years our exports witnessed

robust growth to reach a level of US$ 168billion in 2008-09 from US$ 63 billion in

2003-04. Our share of global merchandise trade was

0.83% in 2003; it rose to 1.45% in 2008 as

per WTO estimates. Our share of global commercial services

export was 1.4% in 2003; it rose to 2.8% in

2008. 4


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Recent developments

Indias total share in goods and services

trade was 0.92% in 2003; it increased to

1.64% in 2008. On the employment front, studies have

suggested that nearly 14 million jobs werecreated directly or indirectly as a result ofaugmented exports in the last five years.

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Foreign Trade policy 2009-14 Anand Sharma, Minister of Commerce &

Industry has announced new foreign tradepolicy in Sept. 2009.

The short term objective of new policy isto arrest and reverse the declining trend ofexports and to provide additional support

especially to those sectors which havebeen hit badly by recession in thedeveloped world.

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Other Objectives

To achieve an annual export growth of15% with an annual export target of US$200 billion by March 2011.

In the last three years of this ForeignTrade Policy i.e. upto 2014, the countryshould be able to come back on the highexport growth path of around 25% perannum.

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Other Objectives To double Indias exports of goods and

services by 2014.

The long term policy objective for the

Government is to double Indias share inglobal trade by 2020.

A special thrust needs to be provided to

employment intensive sectors which havewitnessed job losses in the wake of thisrecession, especially in the fields of textile,

leather, handicrafts, etc. 8


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Three pillars of new policy

Improvement in infrastructure relatedto exports.

Bringing down transaction costs.

providing full refund of all indirect

taxes.

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Policy measures

fiscal incentives

institutional changes

Procedural rationalization Enhanced market access across the world

Diversification of export markets

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Different Policy measures of new

foreign trade policy continue with the DEPB Scheme upto December

2010

income tax benefits under Section 10(A) for ITindustry till 31st march 2011.

income tax benefits under section 10(B) for 100%

export oriented units till 31st March 2011. Enhanced insurance coverage and exposure for

exports through ECGC Schemes has beenensured till 31st March 2010.

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foreign trade policy Indias Look East Policy

Comprehensive Economic Partnership

Agreement with South Korea which will giveenhanced market access to Indian exports.

Trade in Goods Agreement with ASEAN which

will come in force from January 01, 2010 Mercosur Preferential Trade Agreement

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foreign trade policy Brand India through six or more Made in India

shows to be organized across the world every

year. promoting imports of capital goods for certain

sectors under EPCG at zero percent duty.

Status holders recognition to exporters havinggood export performance.

statusholders will be permitted to import capitalgoods duty free.

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foreign trade policy Encourage production and export of green

products

Additional ports/locations would beenabled on the Electronic DataInterchange over the next few years to

reduce the transaction cost andinstitutional bottlenecks.

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Special Focus Initiative: Market

Diversification 26 new countries have been includedwithin the ambit of Focus Market Scheme.

The incentives provided under FocusMarket Scheme have been increased from2.5% to 3%.

There has been a significant increase inthe outlay under Market Linked FocusProduct Scheme by inclusion of moremarkets and products. This ensures

support for exports to all countries in Africa 15


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Market Diversification It is important to take an initiative to diversify

our export markets in emerging markets ofAfrica, Latin America, Oceania and CIS

countries through appropriate policyinstruments. We have endeavored todiversify products and markets through

rationalization of incentive schemes includingthe enhancement of incentive rates whichhave been based on the perceived long termcompetitive advantage of India in a particular

roduct rou and market. New emer in16


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Technological Up gradation

EPCG Scheme at zero duty has been introducedfor certain engineering products, electronicproducts, basic chemicals and pharmaceuticals,apparel and textiles, plastics, handicrafts,chemicals and allied products and leather andleather products.

Steps to encourage Project Exports shall betaken.

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Support to status holders To incentivize and encourage the statusholders, as well as to encourageTechnological up gradation of export

production, additional duty credit scrip @ 1 %of the FOB of past export shall be granted forspecified product groups including leather,

specific sub sectors in engineering, textiles,plastics, handicrafts and jute.

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Handlooms & Handicrafts

Specific funds are earmarked under MAI / MDAScheme for promoting handloom exports.

Duty free import entitlement of specifiedtrimmings and embellishments is 5 % of FOBvalue of exports during previous financial year.

Duty free import entitlement of hand knotted

carpet samples is 1 % of FOB value of exportsduring previous financial year.

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Gems & Jewellery Duty Free Import Entitlement (based on FOB

value of exports during previous financial year)of Consumables and Tools, for Jewellery made

out of(a) Precious metals (other than Gold &Platinum) 2%(b) Gold and Platinum 1%

(c ) Rhodium finished Silver 3%

d) Cut and Polished Diamonds 1% (d) Duty free re-import entitlement for rejected

jewellery shall be 2% of FOB value of exports.

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Leather and Footwear

Duty free import entitlement of specified items is3% of FOB value of exports of leather garmentsduring preceding financial year.

Machinery and equipment for Effluent TreatmentPlants shall be exempt from basic customs duty.

Re-export of unsuitable imported materials such

as raw hides & skins and wet blue leathers ispermitted.

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Marine Sector

Imports for technological upgradation underEPCG in fisheries sector.

Duty free import of specified specialisedinputs / chemicals and flavouring oils isallowed to the extent of 1% of FOB value ofpreceding financial years export.

Marine products are considered for VKGUYscheme.

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Electronics and IT Hardware

Manufacturing Industries

Expeditious clearance of approvals requiredfrom DGFT shall be ensured.

Exporters /Associations would be entitled toutilize MAI & MDA Schemes for promoting

Electronics and IT Hardware Manufacturingindustry exports.

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Sports Goods and Toys Duty free import of specified specialised inputs

allowed to the extent of 3 % of FOB value ofpreceding financial years export.

Sports goods and toys shall be treated as aPriority sector under MDA / MAI Scheme.Specific funds would be earmarked under MAI

/MDA Scheme for promoting exports from this

sector. Applications relating to Sports Goods and Toys

shall be considered for fast track clearance byDGFT.

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Green products and technologies India aims to become a hub for production and

export of green products and technologies. Toachieve this objective, special initiative will be

taken to promote development and manufactureof such products and technologies for exports.To begin with, focus would be on items relatingto transportation, solar and wind power

generation and other products as may benotified which will be incentivized under RewardSchemes of Chapter 3 of FTP.

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Incentives for Exports from the

North Eastern Region

In order to give a fillip to exports of

products from the north-eastern States,notified products of this region would beincentivized under Reward Schemes

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Export Documents and ProceduresOn the basis of the functions to be performed, exportdocuments are classified under four categories:1. Trade Documents: These include commercial invoices,bills of exchange, bills of lading, letter of credit,marine insurance policy and certificates, etc.2. Regulatory Documents: These are the documents which arerequired for complying with the rules and regulations governingexport trade transactions such as foreign exchange regulations,customs formalities, export inspection, etc.3. Export Assistance Documents: These are the documents which

are required for claiming assistance under the various exportassistance measures as may in operation form time to time.4. Foreign Documents: These are the documents which arerequired by the importer to satisfy the requirements of hisgovernment . These include certificates of origin, consular

invoice, quality control certificate etc. 28


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Characteristics of Export Documents:1. Commercial Invoice:

Basic document in an export transaction, contains allthe information which is required for the preparation of

all other documents, gives description of the goods,customs co-operation council nomenclature, pricecharged, the terms of shipment and the marks andnumbers on the packages containing the merchandise.

The date, name and address of both buyer and seller,name of shipping vessel and the port of debarkationshould be included.

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Amity School of Business2. GR FormThis form has been prescribed by the RBI to ensure that

the foreign exchange receipts in respect of exports arerepatriated to India.

This form has to be prepared in duplicate. Both of thecopies have to be submitted to the customs authority at

the port of shipment.

3. Letter of Credit, 4. Bill ofExchange, 5. Bill of Lading.

Covered in module 4.

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6. Shipping bill,

7. Marine Insurance Policy.

8. Airway Bill9. Transport Document.

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Amity School of BusinessINCOTERMS:

Inco terms, also referred to as Terms of Sale,stand for International Commercial Terms.Inco terms define the terms of shipment anddelivery, as well as the transfer of risk,

between the buyer and seller.

Contract of Carriage

The Inco term utilized in a transaction will dictatewhich party is responsible for each transportationsegment and its corresponding contract of carriage.

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Pre-Carriage:the transportation segment from the sellerslocation to the point where the cargo would leave from the

sellers side. Example, to arrange for pre-carriage, youwould contract with an inland carrier to make delivery to aport or airport.Main Carriage: the transportation segment from the sellers

side to the buyers side. Example, to arrange for main-carriage, you would contract for ocean or air carriage.On-Carriage: the transportation segment from the point ofarrival on the buyers side to the designated ultimate

receiver. Example, to arrange for on-carriage, you wouldcontract with an inland carrier to make delivery from theport/airport of arrival to the ultimate receiver.Delivery: Delivery is the point where the risk transfers fromthe seller to the buyer. Delivery is defined for each Inco

term.


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General Groups of Terms

E term: sellers obligation and control of shipment is at itsminimumF terms: require the buyer to arrange for main carriageC terms: require the seller to arrange for main carriageD terms: sellers obligation and control is at its maximum

Inco terms 11 Terms

EXW - Ex WorksFCA Free Carrier

CPT Carriage Paid ToCIP Carriage and Insurance Paid To

DAT Delivered at Terminal

DAP Delivered at PlaceDDP Delivered Duty PaidFAS Free Alongside Ship

FOB Free On BoardCFR Cost and Freight

CIF Cost, Insurance and Freight


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Refer to Word Document forINCOTERMS

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Processing of an Export Order:Why is an Export Order Processed?

To meet the requirements of materials required by the importers.Timely delivery of material, conforming to the specificationsstipulated.

Parties, Acts and Publications Involved.The most important acts/publications which must be consulted by an

exporter are: Foreign Trade(Development and Regulation) Act,

Carriage of goods by Sea Act, Schedule of charges of Goods inrespect of the port of shipment, EXIM Policy of the government,Handbook of procedures.

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The important steps required to enable abusinessman to undertake export

business:

1. Obtaining the RBI Code number.

2. Registration with Export promotioncouncils.

3. Obtaining the Importer Exporter codenumber.

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Amity School of BusinessStages:

First stage: The exporter should scrutinize the exportorder with reference to the terms and conditions ofthe contract. This is the most important stage. Theexport order must specify the mode of payment inunmistakable terms such as letter of credit,

Documents on payment, Documents againstacceptance, the essential terms and conditions ofthe export order must tally with those of the L/C. Thedocuments which are demanded by the importer are;

Bills of exchange, Commercial Invoices, On board clean billof lading, marine insurance policy, packing list, certificateof origin.

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Amity School of BusinessContinuing:Second Stage: As soon as the export order is

confirmed, preparation for the dispatch of goods arestarted. A delivery note is sent to the works manageror Factory manager. It includes the description ofgoods as has been given to the export order, along

with the instructions from the importer.

Third stage: After the goods have been manufactured,the clearance of the Excise authorities has to be

obtained, export inspection authority has toinformed to conduct quality checks, the goods aredispatched to the port of shipment.

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Amity School of BusinessContinuing:

Fourth Stage: After the goods have been dispatched tothe port town, the works manager sends a dispatchadvice to the Export department, the application is sentto the insurance company for marine insurance cover.

Fifth Stage: The clearing and forwarding agent takesdelivery of the consignment from the Railways andarranges its storage in the warehouse. Thereafter, heprepares the requisite copies of the shipping bill. The

particulars to be filled in the shipping bill are:

Consignees name and address, Vessels name, Agentsname, Color, Port, Final destination, Exporters name andaddress, Number of packages, value, numbers etc.

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Amity School of BusinessContinuing:

Sixth Stage: After the shipping bill has been passedby the Customs, the clearing and forwarding agentpresent the port trust copy of the shipping bill to theshed superintendent and obtains carting order forbringing the export cargo in the transit shed cargo,

the dock challan is prepared.Delivery of the material to the importer.

Scrutiny of the documents with reference to the L/C.

PAYMENT MADE TO THE EXPORTER.