Presentation on theme: "EXIM Policy Export Import Policy is two fold, one within the organization and the second is the larger EXIM policy adopted for the nation EXIM Policy of."— Presentation transcript:
1 EXIM PolicyExport Import Policy is two fold, one within the organization and the second is the larger EXIM policy adopted for the nationEXIM Policy of a nation is not of recent origin but dates back to 1970Govt accorded exports and its due importance by formulating the policyIts is known as Export Policy Resolution, 1970
2 FEATURES OF EXPORT POLICY RESOLUTION Making Indian products competitiveModernizing machineryImproving quality controlProviding marketing supportProviding adequate and timely financeProviding adequate shipping facilities at reasonable freight rates
3 EXIM PolicyThe primary objective of the EXIM Policy or FTP is not only to regulate the exports and imports, but to spur economic growthThe Handbook of Procedures is published as a supplement to the Import/ Export Policy of the GovernmentEXIM Policy , tenure of 3 years followed by the next policy period of This policy concentrated on steps to liberalize international trade
4 Policy to expire by 31st March, 1991 Policy to expire by 31st March, However was revised one year earlier due to political changes.New EXIM Policy announced which was then changed to be a policy with a tenure of 5 years. Hence the New EXIM Policy was formulated and announced.Tremendous changes in the EXIM Policy from 1991 onwards with the issues of Devaluation, Trade Policy Reforms
5 OBJECTIVES OF EXIM POLICY To strengthen the base for export production and thereby to create sound and favorable situation for export promotion through diversificationTo facilitate technological up gradation and modernization of domestic productionTo reduce imports to conserve foreign exchange
6 To simplify and streamline foreign trade procedures To impart stability and continuity to enable exporters to draw long term export plans and strategiesTo provide institutional support to export initiativesTo offer different types of export incentives, concessions and facilities to encourage exporters
7 India’s Foreign Trade since 1951 Increased imports since independence caused due to the demand after 2nd World War.Increased consumptionFive year plans implementedFocused on import substitutionEach plan period concentrated on individual sector growth.
8 DEVELOPMENT OF FOREIGN TRADE POLICY Control of foreign trade initiated after second world warConcentrate on restricting imports initially in the DefenceSep 1946, Emergency Provisions(Continuance) Ordinance Act for import controlReplaced by Imports & Exports Control 1947Fluctuations in the tenure of EXIM policyFinalized in 1992( ) to have 5 year policyForeign Trade (Dvpt & Regn)Act,1992
9 GLOBAL ECONOMYInspite of the turmoil in the world capital market, the global mkt kept growing since 1997Growth of world trade and GDP was high in 1997 than ever in 90sIndicator of this economic expansion is the per capita income growth recorded by most of the developed countries126, out of 153 WTO member countries, have registered increase in per capita incomeThe year 2001 witnessed an unexpected decline in world trade which fell down by 1.5% ever since but this got reversed by 2001A good yardstick for the measurement of World economy is GDP which can be defined as “ Sum total of the value of all goods and services produced in the country”.
10 RESULTS OF THE DVPT IN FOREIGN TRADE Goods or services provided are expected to be of international quality and priceService sector has grown and is now 20% of the world tradeImports are allowed for certain CommoditiesExplosion in the visual and written media made people demand high quality goods and as per convenienceThe growth of Information technology industry has touched the life at all levels
11 IMPACT OF RECENT CHANGES IN THE DVPT OF FOREIGN TRADE Dismantling of industrial license which enabled most of the entrepreneurs to decide on the productive venturesAllowing foreign investment without setting limitAllowing NRI and FII to invest in industriesFree flow of technology for modernizing and upgrading industriesRemoval of certain restrictions on imports with reduction in tariff ratesFull convertibility of Indian rupee on the trade accountAllowing the retention of forex earnings by exporters for meeting their expensesAllowing private ventures in the field of banking, civil aviation and telecomPrivate sector investment in Oil, Refining, exploration, marketing and in other infrastructural dvpt’s
12 Reasons for increase in imports Shortage of food grainsImport of capital goods & technical know-how, plant & machinery.War with neighboring countries increased defence needs.
13 Reasons for slower growth of exports Failure of cropsSynthetic substituteFierce competitionPolicy of protection followed by developed and developing countriesReduction in export pricesReduction in exportable surplusIncreased consumption of manufactured goodsInflation
14 Composition of India’s Foreign Trade Import structure- capital goods- raw materials and intermediate goods- consumer goods and food grains2. Major items of imports- food grains- machinery & transport equipments- mineral oil- metals- medicines and chemicals- fertilizers
15 3. Export structure- food, beverages and tobacco- raw materials- manufactured goods4. Major export items- jute- cotton- leather- iron ores- engineering goods- handlooms and handicrafts- chemical products- fruits, vegetables, sugar, unmanufactured tobacco, mica, etc.
16 EXIM PolicyMain trust of the policy was to remove unnecessary controls and restrictions on imports and exportsMaking the export trade procedures simple, transparent and easy to understand and administerPolicy Aims:To accelerate country’s transition to an internationally oriented economy with a view of securing maximum benefits from expanding global market opportunitiesTo augment the productivity, modernization and competitiveness of Indian industry to enhance the potentialities and capabilities
17 To stimulate India’s exports by facilitating access to required raw material, components, etc To encourage the attainment of internationally accepted standards of qualityTo encourage import substitutionTo minimize quantitative restrictionsTo strengthen country’s Research & development capabilities.
18 1992 -97 POLICY FEATURES Valid for 5 years and not for 3 yrs Linked with 8th five yr planGovt has made the procedure simple, transparent and easy to administerMain thrust was to remove unnecessary controls and restrictions on imports and exports.Contains a number of new incentives for export growth80% of old restrictions have been removed indicating the extent of liberalizationImport duty on capital goods has been reduced with an increased export obligationDeemed exports have been accorded a special import licenseSubstantially eliminates licensing and discretionary controls by introducing negative list of items, imports and exports of which is either prohibited or restricted
19 Reducing negative list means encouraging exporters and importers to undertake trading activities freely in the case of large number of commoditiesThrust of the policy is a drastic reduction in import controlManufacturers of export oriented goods can import machines, technology, etc. without procedural delays.Scope of Duty Exemption Scheme has been enlarged by introducing value based advance licence besides the quality based advance licence.EOUs and units under EPZs are given(i) special treatment and incentives,(ii) greater autonomy and flexibility,(iii) can install any machinery, own or leased,(iv) allows inter unit transfer
20 Deemed exports have been defined and benefits such as duty exemption schemes, duty drawback schemes and exemption from terminal excise duty have been extended to deemed exports.Certain categories of exports and exporters are eligible to receive special import licencesTwo windows are opened for concessional duty imports under EPCG scheme.(i) The 1st window provides concessional customs duty of 25% with export obligation 3 times the value of CIF for a period of 4 yrs(ii) The 2nd provides for 15 % duty with export obligation 4 times the CIF value to be met in 5 yrsPartial convertibility of the rupee provides that all imports, barring those of canalised items are to be funded by foreign exchange obtained at a market determined rate.
21 IMPLICATIONS OF EXIM POLICY 1992-97 Decline in protectionist measures- import tariff reduction and liberalisedmeasures- Declining protectionist measures fordomestic industryEmerging buying markets- entry of MNC, stiff competition- shift from sellers market to the buyer’s market- domestic marketers facing growing challengesAdded thrust to exports providing higher efficiency on part of Indian firms.
22 Globalisation of Indian Foreign trade Technological upgradationImplication of liberalised importsImplication of decanalisationInternational competitive import sustitutitonProcedural simplificationForeign investment policyPrivate bonded warehouseImplication of Zero duty under EPCG schemeExpansion of Deemed exports
23 HIGHLIGHTS OF 2002-2007 POLICY Objectives To facilitate sustained growth in exports to attain a share of at least 1% of global merchandise tradeTo stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing serviceTo enhance technological strength and efficiency of Indian Agriculture sectorImproving competitive strength while generating employment opportunitiesAttain internationally accepted quality standardsProviding consumers good quality goods and services
24 GENERAL PROVISIONS i. Exports and imports Shall be free unless restrictedii. ProcedureAs per Handbook of proceduresiii. Restricted GoodsMay be traded on obtaining Special licence/ certificate/ permissioniv. State TradingCanalised items to be traded through exclusive or special privilegesv. IEC Novi. Actual user conditionvii. Second hand goodsviii. Realisation of export proceedsix. RCMC
25 EOU/ EHTP/STP Eligibilty Units undertaking to export their entire production of goods and services, expect permissible sales in DTAsSecond hand Capital goodsImported duty free without age limitSale in DTA50% of FOB value of goods can be sold on fulfilling the export obligationEntitlement of supplies from DTASupply from DTA to EOU/ EHTP/ STP units will be treated as Deemed Exports. Concessions to DTA units on such transfer are:i) Reimbursement of CSTii) Exemption from payment of Central Excise Duty on all goodsiii) Reimbursement of duty paid on fuels procured from domestic oil companiesiv) Eligible for grant of Replenishment licence
26 Other entitlements of EOU/ EHTP/STP units i) Exemption from payment of Income Taxii) Clubbing of FOB value of export of an EOU/ EHT/ STP with FOBvalue of export of its parent company in the DTA or vice versa forthe purpose of according Registered exporters and statusiii) 100% FDI in manufacturing sectoriv) Software units allowed to use system for training purpose but notto be installed outside the bonded premisesv) Exemption from industrial licensing for SSI sector
27 Inter unit transferi) permittedii) Capital goods may be transferred or given on loan to other units on prior permission of concerned Development CommissionerSub- Contractingi) Through job work to other EOU/EHTP/STPii) May also be permitted abroadiii) Permission from the concerned Development Commissioneriv) Scrap/ waste/ remnants generated through job work to be cleared from the job work premise on payment of applicable duty or destroyed in the presence of the authorities.
28 Sale of unutilized Material i) Transferred to other EOU/EHTP/STP or disposed in DTA on payment of applicable duties and submission of the licenceii) Capital goods and spares will beallowed depreciationiii) No duty applicable for goods destroyed with customs concurrenceReconditioning, Repair and Re-engineeringi) Activities carried out in freely convertibleforeign currencyii) Few concessions not available to these units
29 i) Subject to payment of duties Exit from EOU schemei) Subject to payment of dutiesii) If export obligation not attained, penalty may be imposed by the competent authorityConversioni) Existing DTA may apply for cinversion but no concessions for plants and machineries already installedii) Can be merged
30 SEZ SCHEMEDefinition: Specifically delineated duty free enclave and shall be deemed to be foreign territory for the trade operations and tariffsStatus: Goods and services going from SEZ to DTA or vice versa treated as exports or imports as the case may beNFEPositive NFE= A-B>0A is the FOB value of exports of SEZB is the CIF value of the imported inputs, capital goods and value of payments made in foreign currency for commission, royalty, fees, dividends, interest on external borrowings, etc