FOREIGN TRADE POLICY 2015-20

SCHEMES

CONTENTS EXPORTS FROM INDIA SCHEME DUTY EXEMPTION/ REMMISION SCHEMES SCHEMES FOR EXPORTERS OF GEMS & JEWELLERIES EPCG SCHEME DEEMED EXPORTS

EXPORTS FROM INDIA SCHEME

OBJECTIVE

Main objectective is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved. To provide exporters a level playing field.

NATURE OF REWARDS Duty Credit Scrips shall be granted as rewards under MEIS and SEIS.

The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable.

MERCHANDISE EXPORTS FROM INDIA SCHEME,

(MEIS)

INTRODUCTION

In the new Foreign Trade Policy-2015-2020, with effect from 1.4.2015,Merchandise Exports from India Scheme (in short, also known as MEIS) has beenannounced by the Government. It not only replaces five similar incentive schemesavailable under the Foreign Trade Policy 2009-2014, but it rationalize the incentivesunder the erstwhile schemes, removes various kind of restrictions and significantlyenlarges the scope of the earlier schemes. Unlike earlier Schemes, this scheme hasbeen made applicable to exports made by SEZ units.

SCHEMES REPLACED BY MEIS

(i) Focus Product Scheme (FPS),(ii) Market Linked Focus Product Scheme (MLFPS),(iii) Focus Market Scheme (FMS),(iv) Agri. Infrastructure Incentive Scrip (AIIS),(v) Vishesh Krishi Gramin Upaj Yojana (VKGUY).

OBJECTIVES OF SCHEME

Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced /manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.

SALIENT FEATURES OF THE SCHEME Grants rewards in the form of Duty Credit Scrip to the exporter on export of notified goods, which have been produced/ manufactured in India.

Rewards for export of notified goods to notified markets payable as percentage of realized FOB value (in free foreign exchange).

Exports of specified goods through courier or foreign post office using ecommerce of FOB value upto Rs.25000 per consignment entitled for rewards under the scheme. In case of value of consignment being more than Rs.25000/-, benefit is limited on the value of Rs. 25000/- only.

Scrip itself and Goods imported/ domestically procured against the scrip are freely transferable.

Certain specified categories of export or export goods are not eligible for benefit under the Scheme. SEZ Units and EOU/STP/BTP/EHTP units not availing direct tax exemption are also eligible for benefit under the Scheme. Scrip can be used for payment of (i) Customs Duties for import of inputs or goods, except items listed in Appendix 3A; (ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods and (iii)Payment of service tax on procurement of services (iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.

No conditionality attached to the Scrips issued under the Scheme. Different rates have been notified for different destination countries and different commodities. Destination countries divided into three groups- (i) Traditional Market, (ii)emerging & focus market; and (iii) other markets.

EXPORT CATAGORIES/SECTORS NOT ELIGIBLE FOR DUTY CREDIT SCRIPS UNDER MEIS (REF. 3.06 IN FTP)(i) EOUs / EHTPs / BTPs/ STPs who are availing direct tax benefits / exemption.

(ii) Supplies made from DTA units to SEZ units

(iii) Export of imported goods covered under paragraph 2.46 of FTP;

(iv) Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India;

(v) Deemed Exports;

(vi) SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units;

(vii) Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS), unless specifically notified in Appendix 3B.

(viii) Service Export.

(ix) Red sanders and beach sand.

(x) Export products which are subject to Minimum export price or export duty.

(xi) Diamond Gold, Silver, Platinum, other precious metal in any form includingplain and studded jewellery and other precious and semi-precious stones.

(xii) Ores and concentrates of all types and in all formations.

(xiii) Cereals of all types.

(xiv) Sugar of all types and all forms.

(xv) Crude/Petroleum oil and crude/primary and base products of all types and all formulations.

(xvi) Export of milk and milk products.

(xvii) Export of Meat and Meat Products.

(xviii) Products wherein precious metal/diamond are used or Articles which are studded with precious stones.

(xix) Exports made by units in FTWZ.

LIST OF ITEMS NOT ALLOWED FOR IMPORT/OR SCRIPS NOT BE USED FORPAYMENT OF CUSTOMS DUTY ON THE FOLLOWING ITEMS.

(1) Garlic, Peas and all other Vegetables with a Duty of more than 30% under Chapter 7 of ITC (HS) Classification of Export and Import items.

(2) Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears and all other fruitswith a Duty of more than 30% under Chapter 8 of ITC (HS) Classification of Export and Import items.

(3) All Spices with a Duty of more than 30% under Chapter 9 of ITC (HS) Classification of Export and Import items (except Cloves)

(4) Tea, Coffee and Pepper as per Chapter 9 of ITC (HS) Classification of Export and Import items.

(5) All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export and Import items.

(6) Natural Rubber as per Chapter 40 of ITC (HS) Classification of Export and Import items.

(7) Capital Goods

(i) General-purpose agricultural tractors above 25 HP and upto 75 HP.

(ii) Stationary Diesel Engines.(iii) Irrigation pumps.(iv) Threshers for cereals.(v) Combine harvesters suitable only for wheat and paddy crops.(vi) Animal driven implements.

NOTIFIED COUNTRY GROUPS UNDER MEIS The Country Groups for the purpose of notified markets are as under:-

Category A: Traditional Markets (30) - European Union (28), USA, Canada. Category B: Emerging & Focus Markets (139), Africa (55), Latin America and Mexico (45), CIS countries (12), Turkey and West Asian countries (13), ASEAN countries (10), Japan, South Korea, China, Taiwan, Category C: Other Markets (70).

COMMODITIES EXPORTED BY POST /COURIER THROUGH E-COMMERCEELIGIBLE FOR REWARD UNDER THE SCHEME

The following six commodities have been notified for being eligible for reward under the Scheme:-

(1) Handicraft Items/Products;(2) Handloom Products;(3) Books/Periodicals;(4) Leather Footwear;(5) Toys; and(6) Customised Fashion Garments.

The Customized Fashion Garments are garments that are made on specific request/order of customer and accordingly tailored/manufactured.

PRODUCTS SUPPORTED UNDER MEIS & LEVEL OF SUPPORT1.Higher rewards have been granted for the following category of products:

Agricultural and Village industry products, presently covered under VKGUY.

Value added and packaged products.

Eco-friendly and green products that create wealth out of waste from agricultural and other waste products that generate additional income for the farmers, while improving the environment.

Labour intensive Products with large employment potential and Products with large number of producers and /or exporters.

Industrial Products from potential winning sectors.

Hi-tech products with high export earning potential.

2. Markets Supported

Most Agricultural products supported across the Globe.

Industrial and other products supported in Traditional and/or Emerging markets only.

3.High potential products not supported earlier:

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

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

Fruits, Flowers, vegetables Tea Coffee, Spices Cereals preparation, shellac, Essential oils Processed foods, Eco Friendly products that add value to waste Marine Products Handloom, Coir, Jute, products and Technical Textiles, Carpets Handmade.

Other Textile and Readymade garments have been supported for European Union,

USA, Canada and Japan. Handicraft, Sports Goods Furniture, wood articles

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

Pharmaceuticals, Herbals, Surgicals Industrial Machinery, IC Engine, Machine tools, Parts, Auto Components/Parts

Hand Tools, Pumps of All Types Automobiles, Two wheelers, Bicycles, Ships, Planes. Chemicals, Plastics Rubber, Ceramic and Glass Leather garments, saddlery items, footwear Steel furniture, Prefabs, Lighters Wood , Paper, Stationary iron, steel, and base metals, products

6. Other sectors supported under MEIS

352 Defence related Product with export of US$ 17.7B consisting of Core Products (20),

Dual Use products (60), General Purpose products (272).

283 Pharmaceutical products of Bulk Drugs & Drug Intermediates, Drug

Formulations Biologicals, Herbal, Surgicals, and Vaccines.

96 lines of Environment related Goods, Machinery, and Equipments.

49 lines where mandatory BIS standards are prescribed.

7 lines of Technical Textiles.

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

1725 lines of Intermediate Goods - These goods become inputs in the manufacturing of other countries and will strengthen backward manufacturing linkages, which is vital for India’s participation in Global Value Chains.

1109 lines of Capital Goods sector- will also strengthen Manufacturing Base in India.

1730 lines of Consumer Goods sector- We hope a quantum jump in export from this sector with strengthening of Make in India Brand in near future.

8. Technology based analysis:

572 lines-Low skill Technology-intensive manufacturing.

1010 lines-Medium skill Technology-intensive manufacturing.

1309 lines-High Skill Technology-intensive manufacturing.

9.Women Centric Products supported under MEIS

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

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

(i) Manufacture of other food products -Jelly Confectionery, tomato ketchup, cooked stuffed pasta, pawa, mudi and the like, gingerbread ,papad, pastries and cakes.

(ii) Manufacture of wearing apparel-396 lines of Readymade Garments

(c) Sectors that have a significant proportion of female employment(more than 25%):-

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

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

(iii) Consumer Electronics and Electronic Components, watches and clocks -483lines.

SERVICE EXPORT FROM INDIA SCHEME,

(SEIS)

INTRODUCTION In the new Foreign Trade Policy-2015-2020, with effect from 1.4.2015, Service Exports from India Scheme (in short, also known as SEIS) has been announced by the Government. It not only replaces Served from India scheme (SFIS) available under the Foreign Trade Policy 20109-2014, but it rationalize the incentives under the erstwhile schemes, removes various kind of restrictions of use of scrip issued under the Scheme and significantly enlarges the scope of the earlier scheme. Unlike earlier Scheme, this scheme has been made applicable to exports by SEZ units.

SEIS shall apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. Thus SEIS provides for rewards to all Service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider. The present rates of reward are 3% and 5% of net foreign Exchange Earning.

OBJECTIVES

Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India. This Scheme has been announced on 01.04.2015 under the New Foreign Trade Policy- 2015-2020 and has come into effect from 1.4.2015. In other words, the rewards under the scheme are admissible on exports of notified services rendered on or after 1.4.2015.

SALIENT FEATURES OF THE SCHEME Apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’.

Provides for rewards to all Service providers of notified services, who are providing exporting services from India, regardless of the constitution or profile ofthe service provider

Rate of reward under SEIS are based on net foreign exchange earned.

Reward issued as duty credit scrip is freely transferable and usable for all types of goods and service tax Debits on procurement of services / goods.

Debits are eligible for CENVAT credit or drawback.

Certain specified categories of services are not eligible for benefit under the Scheme.

Scrip can be used for payment of

(i) Customs Duties for import of inputs or goods, except items listed in Appendix 3A;

(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods and

(iii) Payment of service tax on procurement of services (iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.

The services and rates of rewards notified are applicable for services export made between 01.4.2015 to 30.09.2015 only. The list of services/rate is subject to review with effect from 01.10.2015.

ELIGIBILITY CRITERIA FOR REWARD UNDER THE SCHEME (REF 3.08 OF FTP) Service Providers of notified services, located in India, eligible for reward under SEIS, subject to conditions as may be notified.

Only Services rendered in Mode I: Cross Border Trade i.e. Supply of a ‘service’ from India to any other country and Mode-2: Consumption abroadSupply of a service’ from India to service consumer(s) of any other country only are eligible.

Supply of service through Mode 3 – Commercial Presence- i.e.- Supply of a ‘service’ from India through commercial presence in any other country and Mode 4- Presence of natural persons i.e. Supply of a ‘service’ from India through the presence of natural persons in any other country- not eligible for reward under the scheme.

The notified services and rates of rewards are as per Appendix 3D.

Minimum net free foreign exchange earnings criterion prescribed is US$15,000 in preceding financial year for eligibility under the Scheme.

For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criterion isUS$10,000 in preceding financial year.

Payment in Indian Rupees for service charges earned on specified services (listed in Appendix 3E) to be treated as receipt in deemed foreign exchange.

In case of IEC holder being manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances to be taken into account for service sector only.

To claim reward, Service provider is required to have an active IEC at the time of rendering such services.

INELIGIBLE CATEGORIES UNDER SEIS Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.

Other sources of foreign exchange earnings such as equity or debt participation,donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, - not eligible for benefit under the Scheme.

Following is not to be considered for calculation of entitlement under the scheme

(a) Foreign Exchange remittances:

I. Related to Financial Services Sector

(i) Raising of all types of foreign currency Loans;(ii) Export proceeds realization of clients;(iii) Issuance of Foreign Equity through ADRs / GDRs or other similar instruments;

(iv) Issuance of foreign currency Bonds;(v) Sale of securities and other financial instruments;(vi) Other receivables not connected with services rendered by financial institutions.

II. Earned through contract/regular employment abroad (e.g. labour remittances);

(i) Payments for services received from EEFC Account;

(ii) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc.

(iii) Foreign exchange turnover by Educational Institutions like equity participation, donations etc.

(iv) Export turnover relating to services of units operating under SEZ / EOU/ EHTP / STPI / BTP Schemes or supplies of services made to such units;

LIST OF ITEMS NOT ALLOWED FOR IMPORT/ORSCRIPS NOT BE USED FOR PAYMENT OF CUSTOMS DUTY ON SPECIFIED ITEMS The Scrips issued under the Scrip is not allowed to be used for payment of duty on import of the following Commodities:

(1) Garlic, Peas and all other Vegetables with a Duty of more than 30% under Chapter 7 of ITC (HS) Classification of Export and Import items.

(2) Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears and all other fruits with a Duty of more than 30% under Chapter 8 of ITC (HS) Classification of Export and Import items.

(3) All Spices with a Duty of more than 30% under Chapter 9 of ITC (HS) Classification of Export and Import items (except Cloves)

(4) Tea, Coffee and Pepper as per Chapter 9 of ITC (HS) Classification of Export and Import items.

(5) All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export and Import items.

(6) Natural Rubber as per Chapter 40 of ITC (HS) Classification of Export and Import items.

(7) Capital Goods

(i) General-purpose agricultural tractors above 25 HP and upto 75 HP.

(ii) Stationary Diesel Engines.(iii) Irrigation pumps.(iv) Threshers for cereals.(v) Combine harvesters suitable only for wheat and paddy crops.

(vi) Animal driven implements.

COMMON PROVISIONS FOR MEIS & SEIS Transitional Arrangement

CENVAT/ Drawback

Import under lease financing

Transfer of export performance

Facility of payment of custom duties in case of E.O. defaults and fee through duty credit scrips.

Risk Management System

TRANSITIONAL ARRANGEMENT

For the goods exported or services rendered upto the date of notification of this Policy, which were otherwise eligible for issuance of scrips under erstwhile Chapter 3 of the earlier Foreign Trade Policy(ies) and scrip is applied / issued on or after notification of this Policy against such export of goods or services rendered, the then prevailing policy and procedure regarding eligibility, entitlement, transferability, usage of scrip and any other condition in force at the time of export of goods or rendering of the services, shall be applicable to such scrips.

CENVAT/ DRAWBACK

Additional Customs duty/excise duty/Service Tax paid in cash or through debit under Duty Credit scrip shall be adjusted as CENVAT Credit or Duty Drawback asper DoR rules or notifications. Basic Custom duty paid in cash or through debit under Duty Credit scrip shall be adjusted for Duty Drawback as per DoR rules or notifications.

IMPORT UNDER LEASE FINANCING

Utilization of Duty Credit Scrip shall be permitted for payment of duty in case of import of capital goods under lease financing in terms of provision in paragraph 2.34 of FTP.

TRANSFER OF EXPORT PERFORMANCE Transfer of export performance from one IEC holder to another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shall be counted in export performance / turnover of applicant only if export proceeds from overseas are realized in applicant’s bank account and this shall be evidenced from e - BRC / FIRC.

However, MEIS, rewards can be claimed either by the supporting manufacturer (along with disclaimer from the company / firm who has realized the foreign exchange directly from overseas) or by the company/ firm who has realized the foreign exchange directly from overseas.

FACILITY OF PAYMENT OF CUSTOM DUTIES IN CASE OF E.O. DEFAULTS AND FEE THROUGH DUTYCREDIT SCRIPS

Duty Credit Scrip can be utilised / debited for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapters 4 and 5 of this Policy. Such utilization /usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes. However, penalty / interest shall be required to be paid in cash.

Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under para 4.49 of HBP 2015-20.

RISK MANAGEMENT A Risk Management System shall be in operation whereby every month Computer system in DGFT Headquarters, on random basis, will select 10% of cases for each RA where scrips have already been issued, under each scheme. RA in turn may call for original documents in all such selected cases for further examination in detail. In case any discrepancy and/ or over claim is found on such examination, the applicant shall be under obligation to rectify such discrepancy and/or refund over claim in cash with interest at the rate prescribed under section 28 AA of the Customs Act 1962, from the date of issue of scrip in the relevant Head of Account of Customs within one month. The original holder of scrip, however, may refund such over claim by surrendering the same scrip whether partially utilized or fully unutilized, without interest.

Regional Authority may ask for original proof of landing certificate, annexures attached to ANFs or any other document, which has been uploaded digitally at any time within three years from the date of issue of scrip. Failure to submit such documents in original would make applicant liable to refund the reward granted along with interest at the rate prescribed under section 28 AA of the Customs Act 1962, from the date of issuance of scrip. It would be the responsibility of applicant to maintain such documents, certificate etc. for a period of at least three years from the date of issuance of scrips.

STATUS HOLDERS Business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade are proposed to be recognized as Status Holders and given special treatment and privileges to facilitate their trade transactions, in order to reduce their transaction costs and time. Nomenclature of Export House:1.One star Export House2.Two star Export House3.Three star Export House4.Four Star Export House5.Five Star Export House

• CRITERIA FOR RECOGNITION OF STATUS HOLDERS HAS BEEN CHANDED FROM INR TO USD.

Status CatagoryExport Performance FOB / FOR

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

One star Export House 3

Two star Export House 25

Three star Export House 100

Four Star Export House 500

Five Star Export House 2000

Approved Exporter Scheme - Self certification by Status Holders. Under this scheme the Manufacturers who are also star holders can also self certify their products to be originating from India and take advantages in different Trade blocks like, 1.PTA2.FTA3.CECA-Comprehensive Economic Cooperation Agreements 4.CEPA-Comprehensive Economic Partnerships Agreements

They shall be permitted to self-certify the goods as manufactured as per their Industrial Entrepreneur Memorandum (IEM) / Industrial Licence (IL)/ Letter of Intent (LOI).

BOOST TO "MAKE IN INDIA" Reduced Export Obligation (EO) for domestic procurement under EPCG scheme:

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

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

DUTY EXEMPTION/ REMMISION SCHEMES

DUTY EXEMPTION/ REMMISION

SCHEMES

OBJECTIVE

These schemes enable duty free import of inputs for export production, including replenishment of input or duty remission.

SCHEMES Duty exemption Schemes

1.Advance Authorisation Scheme (AA)2.Duty Free Import Authorisation (DFIA)

Duty Remmision Schemes

1)Duty Drawback (DBK) Scheme, administered by Department of Revenue.

ADVANCE AUTHORISATION (AA) Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product. In addition, fuel, oil, catalyst which is consumed / utilised in the process of production of export product, may also be allowed. Allowed for products under:-1.SION- Standard Input Output Norms2.On the basis of self declaration as per paragraph 4.07 of Handbook of Procedures.

ELIGIBILITY CONDITION TO OBTAIN ADVANCE AUTHORISATION FOR ANNUAL REQUIREMENT Exporters having past export performance (in at least preceding two financial years) shall be entitled for Advance Authorisation for Annual requirement.

Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and / or FOR value of deemed export in preceding financial year or Rs 1 crore, whichever is higher.

ELLIGIBLITY All Eligible & Non Eligible catagories are been clearly specified in Appendix 4(c) & 4(D) and in Chpter 9 & 12 of ITC(HS) Book. INELLIGIBLE CATAGORIES Horn, hoof and any other organ of animal Honey Rough Marble Blocks/Slabs Rough Granite Vitamins except for use in pharmaceutical industry

IMPORTANT POINTS Non transferable Validity period for import of Advance Authorisation shall be 12 months from the date of issue of Authorisation. Advance Authorisation shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer. In such cases, notional value of free of cost input shall be added in the CIF value of import and FOB value of export for the purpose of computation of value addition. However, realization of export proceeds will be equivalent to an amount excluding notional value of such input.

DUTY FREE IMPORT AUTHORISATION (DFIA) Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed.

Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty.

Additional customs duty/excise duty, being not exempt, shall be adjusted as CENVAT credit as per DoR rules.

Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid inputs, whether imported or indigenous, used in the export product.

ELIGIBILITY Duty Free Import Authorisation shall be issued on post export basis for products for which Standard Input Output Norms have been notified. Application is to be filed with concerned Regional Authority before effecting export under Duty Free Import Authorisation. Merchant Exporter shall be required to mention name and address of supporting manufacturer of the export product on the export document viz. Shipping Bill / Airway Bill / Bill of Export / ARE-1 / ARE-3.

IMPORTANT POINTS Export shall be completed within 12 months from the date of online filing of application and generation of file number. After completion of exports and realization of proceeds, request for issuance of transferable Duty Free Import Authorisation may be made to concerned Regional Authority within a period of twelve months from the date of export or six months (or additional time allowed by RBI for realization) from the date of realization of export proceeds, whichever is later. While doing export/supply, applicant shall indicate file number on the export documents viz. Shipping Bill / Airway Bill/ Bill of Export / ARE-1 / ARE-3, Central Excise certified Invoice.

Separate DFIA shall be issued for each SION and each port. Exports under DFIA shall be made from from a single port as mentioned in paragraph 4.37 of Handbook of Procedures. No Duty Free Import Authorisation shall be issued for an export product where SION prescribes ‘Actual User’ condition for any input. Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authority.

SCHEMES FOR EXPORTERS OF GEMS

& JEWELLERS

SCHEMES Advance Procurement / Replenishment of Precious Metals from Nominated Agencies Replenishment Authorisation for Gems Replenishment Authorisation for Consumables Advance Authorisation for Precious Metals.

ADVANCE PROCUREMENT/ REPLENISHMENT OF PRECIOUS METALS FROM NOMINATED AGENCIES

Exporter of gold / silver / platinum jewellery and articles there of including mountings and findings may obtain gold / silver / platinum as an input for export product from Nominated Agency, in advance or as replenishment after export in accordance with the procedure specified in this behalf.

REPLENISHMENT AUTHORISATION FOR GEMS Exporter may obtain Replenishment Authorisation for Gems from Regional Authority in accordance with procedure specified in Handbook of Procedures. Replenishment Authorisation for Gems may be issued against export including that made against supply by Nominated Agency (paragraph 4.41 of FTP) and against supply by foreign buyer (paragraph 4.45 of FTP). In case of plain or studded gold / silver / platinum jewellery and articles, value of such Authorisation shall be determined with reference to realisation in excess of prescribed minimum value addition. Replenishment Authorisation for Gems shall be freely transferable.

REPLENISHMENT AUTHORISATION FOR CONSUMABLES Replenishment authorization for duty free import of Consumables, Tools and other items namely, Tags and labels, Security censor on card, Staple wire, Poly bag (as notified by Customs) for Jewellery made out of precious metals (other than Gold & Platinum) equal to 2% and for Cut and Polished Diamonds and Jewellery made out of Gold and Platinum equal to 1% of FOB value of exports of the preceding year, may be issued on production of Chartered Accountant Certificate indicating the export performance. However, in case of Rhodium finished Silver jewellery, entitlement will be 3% of FOB value of exports of such jewellery. This Authorisation shall be non-transferable and subject to actual user condition.

ADVANCE AUTHORISATION FOR PRECIOUS METALS.

Advance Authorisation shall be granted on pre-import basis with ‘Actual User’ condition for duty free import of:-1.Gold of fineness not less than 0.995 and mountings, sockets, frames and findings of 8 carats and above.2.Silver of fineness not less than 0.995 and mountings, sockets, frames and findings containing more than 50% silver by weight.3.Platinum of fineness not less than 0.900 and mountings, sockets, frames and findings containing more than 50% platinum by weight.

Advance Authorization shall carry an export obligation which shall be fulfilled as per procedure indicated in Chapter 4 of Handbook of Procedures.

IMPORTANT POINTS Duty Free Import Authorisation scheme shall not be available for Gems and Jewellery sector. Exporters may obtain gold / silver / platinum from Nominated Agency. Exporter in EOU and units in SEZ would be governed by the respective provisions of Chapter-6 of FTP / SEZ Rules, respectively. Nominated Agencies are MMTC Ltd, The Handicraft and Handlooms Exports Corporation of India Ltd, The State Trading Corporation of India Ltd, PEC Ltd, STCL Ltd, MSTC Ltd, and Diamond India Limited

Four Star Export House from Gems & Jewellery sector and Five Star Export House from any sector may be recognized as Nominated Agency by Regional Authority. Reserve Bank of India can authorize any bank as Nominated Agency. Procedure for import of precious metal by Nominated Agency (other than those authorized by Reserve Bank of India and the Gems & Jewellery units operating under EOU and SEZ schemes) and the monitoring mechanism thereof shall be as per the provisions laid down in Hand Book of Procedures. A bank authorised by Reserve Bank of India is allowed export of gold scrap for refining and import standard gold bars as per Reserve Bank of India guidelines.

An exporter (with annual export turnover of Rs 5 crores for each of the last three years) may export cut & polished diamonds (each of 0.25 carat or above) to any of the agencies/laboratories mentioned under paragraph 4.74 of Handbook of Procedures with re-import facility at zero duty within 3 months from the date of export. Such facility of re-import at zero duty will be subject to guidelines issued by Central Board of Customs & Excise, Department of Revenue. Export of jewellery through Foreign Post Office including via Speed Post is allowed. The jewellery parcel shall not exceed 20 kgs by weight. Private / Public Bonded Warehouses may be set up in SEZ/DTA for import and re-export of cut and polished diamonds, cut and polished coloured gemstones, uncut & unset precious & semi-precious stones, subject to achievement of minimum value addition of 5% by DTA units.

EXPORT PROMOTION CAPITAL GOODS

(EPCG)SCHEME

OBJECTIVE The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services to enhance India’s export competitiveness.

EPCG SCHEME EPCG Scheme allows import of capital goods for pre-production, production and post-production at Zero customs duty. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources in accordance with provisions of paragraph 5.07 of FTP.

IMPORTANT POINTS Capital goods for the purpose of the EPCG scheme shall include:

(i) Capital Goods as defined in Chapter 9 including in CKD/SKD condition thereof;(ii) Computer software systems;(iii) Spares, moulds, dies, jigs, fixtures, tools & refractories for initial lining and spare refractories; and(iv) catalysts for initial charge plus one subsequent charge.

Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme.

Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duty saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation. Authorisation shall be valid for import for 18 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted. In case countervailing duty (CVD) is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved, provided CENVAT is not availed. Second hand capital goods shall not be permitted to be imported under EPCG Scheme.

Authorisation under EPCG Scheme shall not be issued for import of any Capital Goods (including Captive plants and Power Generator Sets of any kind) for

1.Export of electrical energy (power)2.Supply of electrical energy (power) under deemed exports3.Use of power (energy) in their own unit,4.Supply/export of electricity transmission services

Import of items which are restricted for import shall be permitted under EPCG Scheme only after approval from Exim Facilitation Committee (EFC) at DGFT Headquarters.

If the goods proposed to be exported under EPCG authorisation are restricted for export, the EPCG authorisation shall be issued only after approval for issuance of export authorisation from Exim Facilitation Committee at DGFT Headquarters. Import of capital goods shall be subject to Actual User condition till export obligation is completed. Shipments under Advance Authorisation, DFIA, Drawback scheme or reward schemes under Chapter 3 of FTP; would also count for fulfillment of EO under EPCG Scheme. Export shall be physical export. Royalty payments received by the Authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.

Payment received in rupee terms for such Services as notified in Appendix 3E shall also be counted towards discharge of export obligation under the EPCG scheme.

POST EXPORT EPCG DUTY CREDIT SCRIP(S) Post Export EPCG Duty Credit Scrip(s) shall be available to exporters who intend to import capital goods on full payment of applicable duties in cash and choose to opt for this scheme. Basic Customs duty paid on Capital Goods shall be remitted in the form of freely transferable duty credit scrip(s), similar to those issued under Chapter 3 of FTP. Specific EO shall be 85% of the applicable specific EO under the EPCG Scheme. However, average EO shall remain unchanged. Duty remission shall be in proportion to the EO fulfilled.

All provisions for utilization of scrips issued under Chapter 3 of FTP shall also be applicable to Post Export EPCG Duty Credit Scrip (s).

All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this scheme.

DEEMED EXPORTS

OBJECTIVE

To provide a level-playing field to domestic manufacturers in certain specified cases, as may be decided by the Government from time to time.

DEEMED EXPORTS “Deemed Exports” refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange.

CATEGORIES OF SUPPLY

Supply of goods under following categories (a) to (d) by a manufacturer and under categories (e) to (h) by main / sub-contractors shall be regarded as “Deemed Exports”

BENEFITS FOR DEEMED EXPORTS Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods, qualifying as deemed exports,

1.Advance Authorisation / Advance Authorisation for annual requirement / DFIA.2.Deemed Export Drawback.3.Refund of terminal excise duty, if exemption is not available.

NEW INITIATIVES FOR EOUS, EHTPS AND STPS

EOUs, EHTPs, STPs have been allowed to share infrastructural facilities among themselves. This will enable units to utilize their infrastructural facilities in an optimum way and avoid duplication of efforts and cost to create separate infrastructural facilities in different units. Inter unit transfer of goods and services have been allowed among EOUs, EHTPs, STPs, and BTPs. This will facilitate group of those units which source inputs centrally in order to obtain bulk discount. This will reduce cost of transportation, other logistic costs and result in maintaining effective supply chain. EOUs have been allowed facility to set up Warehouses near the port of export. This will help in reducing lead time for delivery of goods and will also address the issue of un-predictability of supply orders.

STP units, EHTP units, software EOUs have been allowed the facility to use all duty free equipment/goods for training purposes. This will help these units in developing skills of their employees. 100% EOU units have been allowed facility of supply of spares/ components up to 2% of the value of the manufactured articles to a buyer in domestic market for the purpose of after sale services. At present, in a period of 5 years EOU units have to achieve Positive Net Foreign Exchange Earning (NEE) cumulatively. Because of adverse market condition or any ground of genuine hardship, then such period of 5 years for NFE completion can be extended by one year.

Time period for validity of Letter of Permission (LOP) for EOUs/EHTP/ STPI/BTP Units has been revised for faster implementation and monitoring of projects. Now, LOP will have an initial validity of 2 years to enable the unit to construct the plant and install the machinery. Further extension can be granted by the Development Commissioner up to one year. Extension beyond 3 years of the validity of LOP, can be granted, in case unit has completed 2/3rd of activities, including the construction activities.

At present, EOUs/EHTP/STPI units are permitted to transfer capital goods to other EOUs, EHTPs, STPs, SEZ units. Now a facility has been provided that if such transferred capital goods are rejected by the recipient, then the same can be returned to the supplying unit, without payment of duty.

EOUs having physical export turnover of Rs.10 crore and above, have been allowed the facility of fast track clearances of import and domestic procurement. They will be allowed fast tract clearances of goods, for export production, on the basis of pre-authenticated procurement certificate, issued by customs / central excise authorities. They will not have to seek procurement permission for every import consignment.

M V S SAI HEMANT