Highlights of New Foreign Trade Policy 2009 - 2014
- DEPB Scheme upto December 2010.
- To encourage value addition in our manufactured exports and towards this end,
have stipulated a minimum 15%.
- 100% export oriented units for one additional year till 31st March 2011.
- The Government seeks to promote Brand India through six or more ‘Made in India’
shows to be organized across the world every year.
- Foreign Trade Policy is to help exporters for technological upgradation
export sector infrastructure, ‘Towns of Export Excellence’ and units located
therein would be granted additional focused support and incentives.
- To encourage production and export of ‘green products’ through measures such as
phased manufacturing programme for green vehicles, zero duty EPCG scheme and
incentives for exports.
- e-Trade project would be implemented in a time bound manner to bring all
stake holders on a common platform. Additional ports/locations would be enabled
on the Electronic Data Interchange over the next few years.
- Incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to
- Incentive available under Focus Product Scheme(FPS) has been raised from 1.25%
- 26 new markets have been added under Focus Market Scheme. These include 16 new
markets in Latin America and 10 in Asia-Oceania.
- 153 ITC(HS) Codes at 4 digit level Product classified for Market Linked Focus
Product Scheme (MLFPS)
- Focus Product Scheme benefit extended for export of ‘green products’; and for
exports of some products originating from the North East.
- To accelerate exports and encourage technological upgradation, additional Duty
Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past
- Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of
Income Tax Act, has been extended for the financial year 2010-11 in the Budget
- In Tea Sector Minimum value addition under advance authorisation scheme for
export of tea has been reduced from the existing 100% to 50%.
- DTA sale limit of instant tea by EOU units has been increased from the existing
30% to 50%.
- EOUs will now be allowed CENVAT Credit facility for the component of SAD and
Education Cess on DTA sale.
- Time limit of 60 days for re-import of exported gems and jewellery items, for
participation in exhibitions has been extended to 90 days in case of USA.
Free Import of samples by exporters, number of samples/pieces has been
increased from the existing 15 to 50.
- Exemption for up to two stages from payment of excise duty in lieu of refund, in
case of supply to an advance authorisation holder (against invalidation letter)
by the domestic intermediate manufacturer.
- Reduce transaction costs, dispatch of imported goods directly from the Port to
the site has been allowed under Advance Authorisation scheme for deemed
- Free Sale Certificate has been simplified and the validity of the Certificate
has been increased from 1 year to 2 years.
Higher Support for Market and Product Diversification
- Incentive schemes under Chapter 3 have been expanded by way of addition of
new products and markets.
- 26 new markets have been added under Focus Market Scheme. These include 16
new markets in Latin America and 10 in Asia-Oceania.
- The incentive available under Focus Market Scheme
(FMS) has been raised from 2.5% to 3%.
- The incentive available under Focus Product Scheme(FPS) has been raised from 1.25% to 2%.
- A large number of products from various sectors have been included for
benefits under FPS. These include, Engineering products (agricultural machinery,
parts of trailers, sewing machines, hand tools, garden tools, musical
instruments, clocks and watches, railway locomotives etc.), Plastic (value added
products), Jute and Sisal products, Technical Textiles, Green Technology
products (wind mills, wind turbines, electric operated vehicles etc.), Project
goods, vegetable textiles and certain Electronic items.
- Market Linked Focus Product Scheme (MLFPS) hasbeen greatly expanded by inclusion of products classified under as many as 153
ITC(HS) Codes at 4 digit level. Some major products include; Pharmaceuticals,
Synthetic textile fabrics, value added rubber products, value added plastic
goods, textile madeups, knitted and crocheted fabrics, glass products, certain
iron and steel products and certain articles of aluminium among others. Benefits
to these products will be provided, if exports are made to
13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania,
Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand).
- MLFPS benefits also extended for export to additional new markets for certain
products. These products include auto components, motor cars, bicycle and its
parts, and apparels among others.
- A common simplified application form has been introduced for taking benefits
under FPS, FMS, MLFPS and VKGUY.
- Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) schemes is being provided.
- To aid technological upgradation of our export sector, EPCG Scheme at Zero
Duty has been introduced. This Scheme will be available for engineering &
electronic products, basic chemicals & pharmaceuticals, apparels & textiles,
plastics, handicrafts, chemicals & allied products and leather & leather
products (subject to exclusions of current beneficiaries under Technological
Fund Schemes (TUFS), administered by Ministry of Textiles and beneficiaries of
Status Holder Incentive Scheme in that particular year). The scheme shall be in
operation till 31.3.2011.
- Jaipur, Srinagar and Anantnag have been recognised as
‘Towns of Export Excellence’ for handicrafts; Kanpur, Dewas and Ambur have been
recognised as ‘Towns of Export Excellence’ for leather products; and Malihabad
for horticultural products.
EPCG Scheme Relaxations
- To increase the life of existing plant and machinery, export obligation on
import of spares, moulds etc. under EPCG Scheme has been reduced to 50% of the
normal specific export obligation.
- Taking into account the decline in exports, the facility of Re-fixation of
Annual Average Export Obligation for a particular financial year in which there
is decline in exports from the country, has been extended for the 5 year Policy
Support for Green products and products from North
- Focus Product Scheme benefit extended for export of
‘green products’; and for exports of some products originating from the North
- To accelerate exports and encourage technological
upgradation, additional Duty Credit Scrips shall be given to Status Holders @ 1%
of the FOB value of past exports. The duty credit scrips can be used for
procurement of capital goods with Actual User condition. This facility shall be
available for sectors of leather (excluding finished leather), textiles and
jute, handicrafts, engineering
(excluding Iron & steel & non-ferrous metals in primary and intermediate form,
automobiles & two wheelers, nuclear reactors & parts, and ships, boats and
floating structures), plastics and basic chemicals (excluding pharma products)
[subject to exclusions of current beneficiaries under Technological Upgradation
Fund Schemes (TUFS)]. This facility shall be available upto
- Transferability for the Duty Credit scrips being issued to Status Holders
under paragraph 3.8.6 of FTP under VKGUY Scheme has been permitted. This is
subject to the condition that transfer would be only to Status Holders and
Scrips would be utilized for the procurement of Cold
Chain equipment(s) only.
Stability/ continuity of the Foreign Trade Policy
- To impart stability to the Policy regime, Duty Entitlement
Passbook (DEPB) Scheme is extended beyond 31-12-
2009 till 31.12.2010.
- Interest subvention of 2% for pre-shipment credit for 7 specified sectors
has been extended till 31.3.2010 in the Budget 2009-10.
- Income Tax exemption to 100% EOUs and to STPI units under Section 10B and
10A of Income Tax Act, has been
extended for the financial year 2010-11 in the Budget
- The adjustment assistance scheme initiated in December,
2008 to provide enhanced ECGC cover at 95%, to the adversely affected sectors,
is continued till March, 2010.
- Fisheries have been included in the sectors which are exempted from
maintenance of average EO under EPCG Scheme, subject to the condition that
Fishing Trawlers, boats, ships and other similar items shall not be allowed to
be imported under this provision. This would provide
a fillip to the marine sector which has been affected by the present downturn in
- Additional flexibility under Target Plus Scheme (TPS) / Duty Free
Certificate of Entitlement (DFCE) Scheme for Status Holders has been given to
Gems & Jewellery Sector
- To neutralize duty incidence on gold Jewellery exports, it has now been
decided to allow Duty Drawback on such exports.
- In an endeavour to make India a diamond international trading hub, it is
planned to establish “Diamond Bourse
- A new facility to allow import on consignment basis of cut & polished
diamonds for the purpose of grading/ certification purposes has been introduced.
- To promote export of Gems & Jewellery products, the
value limits of personal carriage 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, has also been
increased from US$ 0.1 million to US$ 1 million.
- To reduce transaction and handling costs, a single window system to
facilitate export of perishable agricultural produce has been introduced. The
system will involve creation of multi-functional nodal agencies to be accredited
- Leather sector shall be allowed re-export of unsold imported raw hides and
skins and semi finished leather from public bonded ware houses, subject to
50% of the applicable export duty.
- Enhancement of FPS rate to 2%, would also significantly benefit the leather
- Minimum value addition under advance authorisation scheme for export of tea
has been reduced from the existing 100% to 50%.
- DTA sale limit of instant tea by EOU units has been increased from the
existing 30% to 50%.
- Export of tea has been covered under VKGUY Scheme benefits.
- Export Obligation Period for advance authorizations issued with 6-APA as
input has been increased from the existing 6 months to 36 months, as is
available for other products.
- Pharma sector extensively covered under MLFPS for countries in Africa and
Latin America; some countries in Oceania and Far East.
- To simplify claims under FPS, requirement of ‘Handloom Mark’ for availing
benefits under FPS has been removed.
- EOUs have been 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.
- To provide clarity to the customs field formations, DOR shall issue a
clarification to enable procurement of spares beyond 5% by granite sector EOUs.
- EOUs will now be allowed to procure finished goods for consolidation along
with their manufactured goods, subject to certain safeguards.
- During this period of downturn, Board of Approvals
(BOA) to consider, extension of block period by one year for calculation of Net
Foreign Exchange earning of EOUs.
- EOUs will now be allowed CENVAT Credit facility for the component of SAD and
Education Cess on DTA sale.
Thrust to Value Added Manufacturing
- To encourage Value Added Manufactured export, a minimum 15% value addition
on imported inputs under Advance Authorization Scheme has now been prescribed.
- Coverage of Project Exports and a large number of manufactured goods under
FPS and MLFPS.
- DEPB rate shall also include factoring of custom duty component on fuel
where fuel is allowed as a consumable
in Standard Input-Output Norms.
Flexibility provided to exporters
- Payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of
Duty Credit scrips. Earlier the payment was allowed in cash only.
- Import of restricted items, as replenishment, shall now be allowed against
transferred DFIAs, in line with the erstwhile DFRC scheme.
- Time limit of 60 days for re-import of exported gems and jewellery items,
for participation in exhibitions has been extended to 90 days in case of USA.
- Transit loss claims received from private approved insurance companies in
India will now be allowed for the purpose of EO fulfillment under Export
Promotion schemes. At present, the facility has been limited to public sector
general insurance companies only.
Waiver of Incentives Recovery, On RBI Specific Write off
- In cases, where RBI specifically writes off the export proceeds realization,
the incentives under the FTP shall now not be recovered from the exporters
subject to certain conditions.
Simplification of Procedures
- To facilitate duty free import of samples by exporters, number of
samples/pieces has been increased from the existing 15 to 50. Customs clearance
of such samples shall be based on declarations given by the importers with
regard to the limit of value and quantity of samples.
- To allow exemption for up to two stages from payment of excise duty in lieu
of refund, in case of supply to an advance authorisation holder (against
invalidation letter) by the domestic intermediate manufacturer. It would allow
exemption for supplies made to a manufacturer,
if such manufacturer in turn supplies the products to an ultimate exporter. At
present, exemption is allowed upto one stage only.
- Greater flexibility has been permitted to allow conversion of Shipping Bills
from one Export Promotion scheme to other scheme. Customs shall now permit this
conversion within three months, instead of the present limited period of only
- To reduce transaction costs, dispatch of imported goods directly from the
Port to the site has been allowed under Advance Authorisation scheme for deemed
supplies. At present, the duty free imported goods could be taken only to the
manufacturing unit of the authorisation holder or
its supporting manufacturer.
- Disposal of manufacturing wastes / scrap will now be allowed after payment
of applicable excise duty, even before fulfillment of export obligation under
Advance Authorisation and EPCG Scheme.
- Regional Authorities have now been authorised to issue licences for import
of sports weapons by ‘renowned shooters’, on the basis of NOC from the Ministry
of Sports & Youth Affairs. Now there will be no need to approach DGFT(Hqrs.) in
- The procedure for issue of Free Sale Certificate has been simplified and the
validity of the Certificate has been increased from 1 year to 2 years. This will
solve the problems faced by the medical devices industry.
- Automobile industry, having their own R&D establishment, would be allowed
free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per
annum, which are not manufactured in India.
- Acceding to the demand of trade & industry, the application and redemption
forms under EPCG scheme have been simplified.
Reduction of Transaction Costs
- No fee shall now be charged for grant of incentives under the Schemes in
Chapter 3 of FTP. Further, for all other
Authorisations/ licence 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).
- To further EDI initiatives, Export Promotion Councils/ Commodity Boards have
been advised to issue RCMC through a web based online system. It is expected
that issuance of RCMC would become EDI enabled before the end of 2009.
- Electronic Message Exchange between Customs and DGFT in respect of incentive
schemes under Chapter 3 will become operational by 31.12.2009. This will obviate
the need for verification of scrips by Customs facilitating faster clearances.
- For EDI ports, with effect from December ’09, double verification of
shipping bills by customs for any of the DGFT schemes shall be dispensed with.
- In cases, where the earlier authorization has been cancelled and a new
authorization has been issued in lieu of the earlier authorization, application
fee paid already for the cancelled authorisation will now be adjusted against
the application fee for the new authorisation subject to payment of minimum fee
of Rs. 200.
- An Inter Ministerial Committee will be formed to redress/
resolve problems/issues of exporters.
- An updated compilation of Standard Input Output Norms
(SION) and ITC (HS) Classification of Export and Import
Items has been published.
Directorate of Trade Remedy Measures
- 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 shall be set up.