For India to become a major player in world trade, an all
encompassing, comprehensive view needs to be taken for the overall development
of the country’s foreign trade. While increase in exports is of vital
importance, we have also to facilitate those imports which are required to
stimulate our economy. 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 an
annual Exim Policy, it is necessary to go much beyond and take an integrated
approach to the developmental requirements of India’s foreign trade. This is the
context of the new Foreign Trade Policy.
Trade is not an end in itself, but a means to economic growth and national
development. The primary purpose is not the mere earning of foreign exchange,
but the stimulation of greater economic activity. The Foreign Trade Policy is
rooted in this belief and built around two major objectives. These are:
These objectives are proposed to be achieved by adopting, among others, the
following strategies:
The new Policy envisages merchant exporters and manufacturer exporters, business
and industry
as partners of Government in the achievement of its stated objectives and goals.
Prolonged and unnecessary litigation vitiates the premise of partnership. In
order to obviate the need for litigation and nurture a constructive and
conducive atmosphere, a suitable Grievance Redressal Mechanism will be
established which, it is hoped, would substantially reduce litigation and
further a relationship of partnership.
The dynamics of a liberalized trading system sometimes results in injury caused
to domestic industry on account of dumping. When this happens, effective
measures to redress such injury will be taken.
This Policy is essentially a roadmap for the development of India’s foreign
trade. It contains the basic principles and points the direction in which we
propose to go. By virtue of its very dynamics,
a trade policy cannot be fully comprehensive in all its details. It would
naturally require modification from time to time. We propose to do this through
continuous updation, based on the inevitable changing dynamics of international
trade. It is in partnership with business and industry that we propose to erect
milestones on this roadmap.
Exports and Imports free unless regulated |
2.1 |
Exports and Imports shall be free, except in cases where they are
regulated by the provisions of this Policy or any other law for the time
being in force. The item wise export and import policy shall be, as
specified in ITC(HS) published and notified by Director General of
Foreign Trade, as amended from time to time.
|
Compliance with Laws |
2.2 |
Every exporter or importer shall comply with the provisions of the
Foreign Trade (Development and Regulation) Act, 1992, the Rules and
Orders made thereunder, the provisions of this Policy and the terms and
conditions of any Licence/certificate/ permission/Authorisation granted
to him, as well as provisions of any other law for the time being in
force. All imported goods shall also be subject to domestic Laws, Rules,
Orders, Regulations, technical specifications, environmental and safety
norms as applicable to domestically produced goods. No import or export
of rough diamonds shall be permitted unless the shipment parcel is
accompanied by Kimberley Process (KP) Certificate required under the
procedure specified by the Gem & Jewellery Export Promotion Council
(GJEPC). |
Interpretation of Policy |
2.3 |
If any question or doubt arises in respect of the interpretation of
any provision contained in this Policy, or regarding the classification
of any item in the ITC(HS) or Handbook (Vol.1) or Handbook (Vol.2), or
Schedule Of DEPB Rate the said question or doubt shall be referred to
the Director General of Foreign Trade whose decision thereon shall be
final and binding.
If any question or doubt arises whether a licence/ certificate/
permission has been issued in accordance with this Policy or if any
question or doubt arises touching upon the scope and content of such
documents, the same shall be referred to the Director General of Foreign
Trade whose decision thereon shall be final and binding. |
Procedure |
2.4 |
The Director General of Foreign Trade may, in any case or class of
cases, specify the procedure to be followed by an exporter or importer
or by any licensing or any other competent authority for the purpose of
implementing the provisions of the Act, the Rules and the Orders made
thereunder and this Policy. Such procedures shall be included in the
Handbook (Vol.1), Handbook (Vol.2), Schedule of DEPB Rate and in ITC(HS)
and published by means of a Public Notice. Such procedures may, in like
manner, be amended from time to time.
The Handbook (Vol.1) is a supplement to the Foreign Trade Policy and
contains relevant procedures and other details. The procedure of
availing benefits under various schemes of the Policy are given in the
Handbook (Vol.1). |
Exemption from Policy/Procedure |
2.5 |
Any request for relaxation of the provisions of this Policy or of
any procedure, on the ground that there is genuine hardship to the
applicant or that a strict application of the Policy or the procedure is
likely to have an adverse impact on trade, may be made to the Director
General of Foreign Trade for such relief as may be necessary. The
Director General of Foreign Trade may pass such orders or grant such
relaxation or relief, as he may deem fit and proper.
The Director General of Foreign Trade may, in public interest, exempt
any person or class or category of persons from any provision of this
Policy or any procedure and may, while granting such exemption, impose
such conditions as he may deem fit. Such request may be considered only
after consulting Norms Committee (NC) if the request is in respect of a
provision of Chapter-4 (excluding any provision relating to Gem &
Jewellery sector) and EPCG Committee if the request is in respect of a
provision of Chapter-5 of the Policy/ Procedure. However, any such
request in respect of a provision other than Chapter-4, Chapter-5 and
Gem & Jewellery sector as given above may be considered only after
consulting Policy Relaxation Committee. |
Principles of Restriction |
2.6 |
DGFT may, through a notification, adopt and enforce any measure
necessary for :
- Protection of public morals.
- Protection of human, animal or plant life or health.
- Protection of patents, trademarks and copyrights and the prevention of
deceptive practices.
- Prevention of use of prison labour.
- Protection of national treasures of artistic, historic or archaeological
value.
- Conservation of exhaustible natural resources.
- Protection of trade of fissionable material or material from which they
are derived; and
- Prevention of traffic in arms, ammunition and implements of war.
|
Restricted Goods |
2.7 |
Any goods, the export or import of which is restricted under ITC(HS)
may be exported or imported only in accordance with a licence/
certificate/ permission or a public notice issued in this behalf. |
Terms and Conditions of a licence/ Certificate/ Permission |
2.8 |
Every Licence/certificate/permission/Authorisation shall be valid
for the period of validity specified in the Licence/ certificate/
permission and shall contain such terms and conditions as may be
specified by the licensing authority which may include:
- The quantity, description and value of the
goods;
- Actual User condition;
- Export obligation;
- The value addition to be achieved; and
- The minimum export price.
|
Authorisation / Licence / Certificate / Permission not a Right |
2.9 |
No person may claim a licence/certificate/ permission as a right and
the Director General of Foreign Trade or the regional authority shall
have the power to refuse to grant or renew a Licence/certificate/permission/Authorisation
in accordance with the provisions of the Act and the Rules made there
under. |
Penalty |
2.10 |
If a Licence / certificate / permission / Authorisation holder
violates any condition of the Licence/certificate/ permission or fails
to fulfill the export obligation, he shall be liable for action in
accordance with the Act, the Rules and Orders made there under, the
Policy and any other law for the time being in force. |
State Trading |
2.11 |
Any goods, the import or export of which is governed through
exclusive or special privileges granted to State Trading Enterprise(s),
may be imported or exported by the State Trading Enterprise(s) as
specified in the ITC(HS) Book subject to the conditions specified
therein. The Director General of Foreign Trade may, however, grant a
Licence/certificate/ permission/Authorisation to any other person to
import or export any of these goods.
In respect of goods the import or export of which is governed through
exclusive or special privileges granted to State Trading Enterprise(s),
the State Trading Enterprise(s) shall make any such purchases or sales
involving imports or exports solely in accordance with commercial
considerations, including price, quality, availability, marketability,
transportation and other conditions of purchase or sale. These
enterprises shall act in a non discriminatory manner and shall afford
the enterprises of other countries adequate opportunity, in accordance
with customary business practices, to compete for participation in such
purchases or sales. |
Importer-Exporter Code Number |
2.12 |
No export or import shall be made by any person without an
Importer-Exporter Code (IEC) number unless specifically exempted. An
Importer-Exporter Code (IEC) number shall be granted on application by
the competent authority in accordance with the procedure specified in
the Handbook (Vol.1). |
Trade with Neighbouring Countries |
2.13 |
The Director General of Foreign Trade may issue, from time to time,
such instructions or frame such schemes as may be required to promote
trade and strengthen economic ties with neighbouring countries. |
Transit Facility |
2.14 |
Transit of goods through India from or to countries adjacent to
India shall be regulated in accordance with the bilateral treaties
between India and those countries and will be subject to such
restrictions as may be specified by DGFT in accordance with
International Conventions. |
Trade with Russia under Debt-Repayment Agreement |
2.15 |
In the case of trade with Russia under the Debt Repayment Agreement,
the Director General of Foreign Trade may issue, from time to time, such
instructions or frame such schemes as may be required, and anything
contained in this Policy, in so far as it is inconsistent with such
instructions or schemes, shall not apply. |
Actual User Condition |
2.16 |
Capital goods, raw materials, intermediates, components,
consumables, spares, parts, accessories, instruments and other goods,
which are importable without any restriction, may be imported by any
person.
However, if such imports require a licence/ certificate/ permission, the
actual user alone may import such goods unless the actual user condition
is specifically dispensed with by the licensing authority. |
Second Hand Goods |
2.17 |
All second hand goods, except second hand capital goods, shall be
restricted for imports and may be imported only in accordance with the
provisions of this Policy, ITC(HS), Handbook (Vol.1), Public Notice or a
Licence/certificate/ permission/Authorisation issued in this behalf.
Import of second hand capital goods, including refurbished/
re-conditioned spares shall be allowed freely. However, second hand
personal computers/laptops, photocopier machines, air conditioners,
diesel generating sets will only be allowed against a license issued in
this behalf.
Import of re-manufactured goods shall be allowed only against a licence
issued in this behalf. |
Import of samples |
2.18 |
Import of samples shall be governed by the provisions given in
Handbook (Vol.1). |
Import of Gifts |
2.19 |
Import of gifts shall be permitted where such goods are otherwise
freely importable under this Policy. In other cases, a Customs Clearance
Permit (CCP) shall be required from the DGFT. |
Passenger Baggage |
2.20 |
Bonafide household goods and personal effects may be imported as
part of passenger baggage as per the limits, terms and conditions
thereof in the Baggage Rules notified by the Ministry of Finance.
Samples of such items that are otherwise freely importable under this
Policy may also be imported as part of passenger baggage without a
Licence/certificate/permission/ Authorisation.
Exporters coming from abroad are also allowed to import drawings,
patterns, labels, price tags, buttons, belts, trimming and
embellishments required for export, as part of their passenger baggage
without a Licence/certificate/permission/ Authorisation. |
Import on Export basis |
2.21 |
New or second hand capital goods, equipments, components, parts and
accessories, containers meant for packing of goods for exports, jigs,
fixtures, dies and moulds may be imported for export without a Licence/certificate/permission/
Authorisation on execution of Legal Undertaking/Bank Guarantee with the
Customs Authorities provided that the item is freely exportable without
any conditionality/requirement of Licence/ permission as may be required
under ITC(HS) Schedule II. |
Re-import of goods repaired abroad |
2.22 |
Capital goods, equipments, components, parts and accessories,
whether imported or indigenous, except those restricted under ITC (HS)
may be sent abroad for repairs, testing, quality improvement or
upgradation or standardization of technology and re-imported without a
Licence/certificate/permission/ Authorisation. |
Import of goods used in projects abroad |
2.23 |
After completion of the projects abroad, project contractors may
import, without a licence/ certificate/ permission, used goods including
capital goods provided they have been used for at least one year. |
Sale on High Seas |
2.24 |
Sale of goods on high seas for import into India may be made subject
to this Policy or any other law for the time being in force. |
Import under Lease Financing |
2.25 |
Permission of licensing authority is not required for import of new
capital goods under lease financing. |
Clearance of Goods from Customs |
2.26 |
The goods already imported/shipped/arrived, in advance, but not
cleared from Customs may also be cleared against the Licence/
certificate/ permission issued subsequently. |
Execution of BG/ LUT |
2.27 |
Wherever any duty free import is allowed or where otherwise
specifically stated, the importer shall execute a Legal Undertaking
(LUT)/Bank Guarantee (BG)/ Bond with the Customs Authority before
clearance of goods through the Customs, in the manner as may be
prescribed. In case of indigenous sourcing, the Licence/ certificate/
permission holder shall furnish LUT / BG / Bond to the licensing
authority before sourcing the material from the indigenous
supplier/nominated agency. |
Exemption from Bank Guarantee |
2.27.1 |
All the exporters who have an export turnover of at least Rupees 5
crore in the current or preceding licencing year and have a good track
record of three years of exports will be exempted from furnishing a BG
for any of the schemes under this Policy and may furnish a LUT in lieu
of BG. |
Private/ Public Bonded Warehouses for Imports |
2.28 |
Private/Public bonded warehouses may be set up in the Domestic
Tariff Area as per the terms and conditions of notification issued by
Department of Revenue.
Any person may import goods except prohibited items, arms and
ammunition, hazardous waste and chemicals and warehouse them in such
private/public bonded warehouses.
Such goods may be cleared for home consumption in accordance with the
provisions of this Policy and against Licence/certificate/ permission,
wherever required. Customs duty as applicable shall be paid at the time
of clearance of such goods.
If such goods are not cleared for home consumption within a period of
one year or such extended period as the custom authorities may permit,
the importer of such goods shall re-export the goods. |
Free Exports |
2.29 |
All goods may be exported without any restriction except to the
extent such exports are regulated by ITC(HS) or any other provision of
this Policy or any other law for the time being in force.
The Director General of Foreign Trade may, however, specify through a
public notice such terms and conditions according to which any goods,
not included in the ITC(HS), may be exported without a licence/
certificate/ permission. |
Export of Samples |
2.30 |
Export of samples and Free of charge goods shall be governed by the
provisions given in Handbook (Vol.1). |
Export of Passenger Baggage |
2.31 |
Bonafide personal baggage may be exported either along with the
passenger or, if unaccompanied, within one year before or after the
passenger’s departure from India. However, items mentioned as Restricted
in ITC(HS) shall require a Licence/ certificate/permission/Authorisation. |
Export of Gifts |
2.32 |
Goods, including edible items, of value not exceeding Rs.5,00,000/-
in a licensing year, may be exported as a gift.
However, items mentioned as restricted for exports in ITC(HS) shall not
be exported as a gift, without a Licence/certificate/ permission/Authorisation. |
Export of Spares |
2.33 |
Warranty spares, whether indigenous or imported, of plant,
equipment, machinery, automobiles or any other goods, except those
restricted under ITC (HS), may be exported along with the main equipment
or subsequently but within the contracted warranty period of such goods
subject to approval of RBI. |
Third Party Exports |
2.34 |
Third party exports, as defined in Chapter 9 shall be allowed under
the Policy. |
Export of Imported Goods |
2.35 |
Goods imported, in accordance with this Policy, may be exported in
the same or substantially the same form without a Licence/certificate/permission/Authorisation
provided that the item to be imported or exported is not mentioned as
restricted for import or export in the ITC(HS).
Exports of such goods imported against payment in freely convertible
currency would be permitted against payment in freely convertible
currency. |
|
2.36 |
Goods, including those mentioned as restricted item for import
(except prohibited items) may be imported under Customs Bond for export
in freely convertible currency without a licence/ certificate/
permission provided that the item is freely exportable without any
conditionality/ requirement of Licence/permission as may be required
under ITC (HS) Schedule II. |
Export of Replacement Goods |
2.37 |
Goods or parts thereof on being exported and found defective damaged
or otherwise unfit for use may be replaced free of charge by the
exporter and such goods shall be allowed clearance by the customs
authorities provided that the replacement goods are not mentioned as
restricted items for exports in ITC(HS). |
Export of Repaired Goods |
2.38 |
Goods or parts, except restricted under ITC (HS), thereof on being
exported and found defective, damaged or otherwise unfit for use may be
imported for repair and subsequent re-export.
Such goods shall be allowed clearance without a licence/certificate/permission
and in accordance with customs notification issued in this behalf. |
Private Bonded Warehouses for Exports |
2.39 |
Private bonded warehouses exclusively for exports may be set up in
DTA as per the terms and conditions of the notifications issued by
Department of Revenue.
Such warehouses shall be entitled to procure the goods from domestic
manufacturers without payment of duty. The supplies made by a domestic
supplier to the notified warehouses shall be treated as physical exports
provided the payments for the same are made in free foreign exchange. |
Denomination of Export Contracts |
2.40 |
All export contracts and invoices shall be denominated either in
freely convertible currency or Indian rupees but the export proceeds
shall be realised in freely convertible currency.
However export proceeds against specific exports may also be realized in
rupees provided it is through a freely convertible Vostro account of a
non resident bank situated in any country other than a member country of
ACU or Nepal or Bhutan. Additionally, the rupee payment through the
Vostro account must be against payment in free foreign currency by the
buyer in his non resident bank account. The free foreign exchange
remitted by the buyer to his non resident bank (after deducting the bank
service charges) on account of this transaction would be taken as the
export realization under the export promotion schemes of this Policy.
Contracts for which payments are received through the Asian Clearing
Union (ACU) shall be denominated in ACU Dollar. The Central Government
may relax the provisions of this paragraph in appropriate cases. Export
contracts and Invoices can be denominated in Indian rupees against EXIM
Bank/Government of India line of credit. |
Realisation of Export Proceeds |
2.41 |
If an exporter fails to realise the export proceeds within the time
specified by the Reserve Bank of India, he shall, without prejudice to
any liability or penalty under any law for the time being in force, be
liable to action in accordance with the provisions of the Act, the Rules
and Orders made there under and the provisions of this Policy. |
Free movement of export goods |
2.42 |
Consignments of items meant for exports shall not be
withheld/delayed for any reason by any agency of the Central/State
Government. In case of any doubt, the authorities concerned may ask for
an undertaking from the exporter. |
No seizure of Stock
|
2.42.1 |
No seizure of stock shall be made by any agency so as to disrupt the
manufacturing activity and delivery schedule of export goods. In
exceptional cases, the concerned agency may seize the stock on the basis
of prima facie evidence. However, such seizure should be lifted within 7
days. |
Export Promotion Councils |
2.43 |
The basic objective of Export Promotion Councils is to promote and
develop the exports of the country. Each Council is responsible for the
promotion of a particular group of products, projects and services. The
list of the councils, and their main functions are given in Handbook
(Vol.1). |
Registration -cum- Membership Certificate |
2.44 |
Any person, applying for (i) a licence/ authorisation/ certificate/
permission to import/ export, [except items listed as restricted items
in ITC(HS)] or (ii) any other benefit or concession under this policy
shall be required to furnish Registration-cum-Membership Certificate
(RCMC) granted by the competent authority in accordance with the
procedure specified in the Handbook (Vol.1) unless specifically exempted
under the Policy. |
|
2.45 |
Deleted |
Trade Facilitation through EDI Initiatives |
2.45.1 |
It is endeavor of the Government to work towards greater
simplification, standardization and harmonization of trade documents
using international best practices. As a step in this direction DGFT
shall move towards an automated environment for electronic filing,
retrieval and authentication of documents based on agreed protocols and
message exchange with other community partners including Customs and
Banks. |
DGCI&S Commercial Trade Data |
2.45.2 |
To enable the users to make commercial decisions in a more
professional manner, DGCI&S trade data shall be made available with a
minimum time lag in a query based structured format on a commercial
criteria. |
Fiscal Incentives to promote EDI Initiatives adoption |
2.45.3 |
With a view to promote the use of Information Technology, DGFT will
provide fiscal incentives to the user community. The details are
enumerated in the Handbook (Vol.I). |
Regularization of EO default and settlement of customs duty and
interest through Settlement Commission |
2.46 |
With a view to providing assistance to firms who have defaulted
under the Foreign Trade Policy for reasons beyond their control as also
facilitating the merger, acquisition and rehabilitation of sick units,
it has been decided to empower the Settlement Commission in the Central
Board of Excise and Customs to decide such cases also with effect from
01.04.2005. |
Easing Of Documentation Requirement |
2.47 |
Pending the finalisation of Single Common Document (SCD)for
international trade, the Government Departments dealing with exports and
imports will honour the permission license/certificate issued by the
other Government departments based on the verification of the export
documents Like shipping bill, bank realization certificate, Packing
list, bill of lading etc .and will not insist upon fresh submission of
these documents. |
Remission of Service Tax in DTA |
2.48.1 |
For all goods and services which are exported from units in Domestic
Tariff Area (DTA) and units in EOU/EHTP/STP/BTP remission of service tax
levied shall be allowed. |
Exemption from Service Tax in SEZ |
2.48.2 |
Units in SEZ shall be exempted from service tax. |
Assistance to States for Infrastructure Development of Exports
(ASIDE) |
3.1 |
The State Governments shall be encouraged to participate in
promoting exports from their respective States. For this purpose,
Department of Commerce has formulated a scheme called ASIDE.
Suitable provision has been made in the Annual Plan of the Department of
Commerce for allocation of funds to the States on the twin criteria of
gross exports and the rate of growth of exports.
The States shall utilise this amount for developing infrastructure such
as roads connecting production centers with the ports, setting up of
Inland Container Depots and Container Freight Stations, creation of new
State level export promotion industrial parks/zones, augmenting common
facilities in the existing zones, equity participation in infrastructure
projects, development of minor ports and jetties, assistance in setting
up of common effluent treatment facilities, stabilizing power supply and
any other activity as may be notified by Department of Commerce from
time to time. |
Market Access Initiative (MAI) |
3.2 |
The Market Access Initiative (MAI) scheme is intended to provide
financial assistance for medium term export promotion efforts with a
sharp focus on a country and product.
The financial assistance is available for Export Promotion Councils,
Industry and Trade Associations, Agencies of State Governments, Indian
Commercial Missions abroad and other eligible entities as may be
notified from time to time.
A whole range of activities can be funded under the MAI scheme. These
include market studies, setting up of showroom/ warehouse, sales
promotion campaigns, international departmental stores, publicity
campaigns, participation in international trade fairs, brand promotion,
registration charges for pharmaceuticals and testing charges for
engineering products etc. Each of these export promotion activities can
receive financial assistance from the Government ranging from 25% to
100% of the total cost depending upon the activity and the implementing
agency, as indicated in the detailed guidelines. The full text of the
guidelines can be seen at http://commerce.nic.in. |
Marketing Development Assistance (MDA) |
3.2.1 |
The Marketing Development Assistance (MDA) Scheme is intended to
provide financial assistance for a range of export promotion activities
implemented by export promotion councils, industry and trade
associations on a regular basis every year.
As per the revised MDA guidelines, assistance under MDA is available for
exporters with annual export turnover upto Rs 10 crores.
These include participation in Trade Fairs and Buyer Seller meets abroad
or in India, export promotion seminars etc.
Further, assistance for participation in Trade Fairs abroad and travel
grant is available to such exporters if they travel to countries in one
of the four Focus Areas, such as, Latin America, Africa, CIS Region,
ASEAN countries, Australia and New Zealand.
For participation in trade fairs etc., in other areas financial
assistance without travel grant is available. |
Meeting Legal expenses for Trade related matters |
3.2.1.1 |
Financial assistance would be provided to deserving exporters on the
recommendation of Export Promotion Councils for meeting the cost of
legal expenses relating to trade related matters. |
Towns of Export Excellence |
3.3 |
A number of towns in specific geographical locations have emerged as
dynamic industrial clusters contributing handsomely to India’s exports.
It is necessary to grant recognition to these industrial clusters with a
view to maximizing their potential and enabling them to move higher in
the value chain and tap new markets.
Selected towns producing goods of Rs. 1000 crore or more will be
notified as Towns of Exports Excellence on the basis of potential for
growth in exports. However for the Towns of Export Excellence in the
Handloom, Handicraft, Agriculture and Fisheries sector, the threshold
limit would be Rs 250 crores.
Common service providers in these areas shall be entitled for the
facility of the EPCG scheme.
The recognized associations of units will be able to access the funds
under the Market Access Initiative scheme for creating focused
technological services.
Further such areas will receive priority for assistance for rectifying
identified critical infrastructure gaps from the ASIDE scheme.
The notified towns of export excellence are listed in Appendix 7. |
Brand Promotion and Quality |
3.4.1 |
The Central Government aims to encourage manufacturers and exporters
to attain internationally accepted standards of quality for their
products. The Central Government will extend support and assistance to
Trade and Industry to launch a nationwide programme on quality awareness
and to promote the concept of total quality management. |
Test Houses |
3.4.2 |
The Central Government will assist in the modernisation and
upgradation of test houses and laboratories in order to bring them at
par with international standards. |
Quality Complaints/Disputes |
3.4.3 |
The Regional Sub-Committee on Quality Complaints (RSCQC) set up at
the Regional Offices of the Directorate General of Foreign Trade shall
investigate quality complaints received from foreign buyers. The
guidelines for settlement of quality complaints, in particular, and such
other complaints, in general, are given in Appendix-16 of Handbook of
Procedures (Vol. I). |
Trade disputes affecting trade relations |
3.4.4 |
If it comes to the notice of the Director General of Foreign Trade
or he has reason to believe that an export or import has been made in a
manner that
- is gravely prejudicial to the trade relations of India with any
other country; and/or
- is gravely prejudicial to the interest of other persons engaged
in exports or imports; and/or
- has brought disrepute to the country;
The Director General Foreign Trade may take action against the
exporter or importer concerned in accordance with the provisions of the
Act, the Rules and Orders made thereunder and this Policy.
|
|
3.5 |
STAR EXPORT HOUSES |
Star Export House |
3.5.1 |
Merchant as well as Manufacturer Exporters, Service Providers,
Export Oriented Units (EOUs) and Units located in Special Economic Zones
(SEZs), Agri Export Zone (AEZ’s), Electronic Hardware Technology Parks
(EHTPs), Software Technology Parks (STPs) and Bio Technology Parks
(BTPs) shall be eligible for applying for status as Star Export Houses. |
Status Category |
3.5.2 |
The applicant shall be categorized depending on his total FOB (FOR -
for deemed exports) export performance during the current plus the
previous three years:
Category |
Performance
(Rupees in Crores) |
One Star Export House |
15 |
Two Star Export House |
100 |
Three Star Export House |
500 |
Four Star Export House |
1500 |
Five Star Export House |
5000 |
- Exporters in the Small Scale Industry/Tiny Sector/ Cottage
Sector, Units registered with KVICs/ KVIBs, Units located in North
Eastern States, Sikkim and J&K, Units exporting handloom/
handicrafts/hand knotted or silk carpets, exporters exporting to
countries in Latin America/CIS/sub- Saharan Africa as listed in
Appendix-9, Units having ISO 9000 (series)/ ISO 14000 (series)
/WHOGMP/ HACCP/SEI CMM level-II and above status granted by agencies
listed in Appendix-6, exports of services and exports of agro
products shall be entitled for double weightage on exports made for
grant of Star Export House status. The Double Weightage shall be
admissible to Merchant as well as Manufacturer Exporters. However, a
shipment can get double weightage only once in any one of the above
categories.
- (a) Transfer of export performance from one to another
is not permitted. Therefore disclaimer system shall not be allowed
for counting of export turnover.
- Exports made on re-export basis shall not be counted for the
purpose of recognition.
- Exports made by a subsidiary of a limited company shall be
counted towards export performance of the limited company for the
purpose of recognition only if the limited company has a majority
share holding in the subsidiary company.
- Recognition of One Star Export House status shall be considered
only in case the exporter has minimum export performance of Rs. 15
Crores or more during any two years out of the current and preceding
three years.
|
Privileges |
3.5.2.1 |
A Star Export House shall be eligible for the following facilities:
- Authorisation /Licence/certificate/permissions and Customs
clearances for both imports and exports on self-declaration basis;
- Fixation of Input-Output norms on priority within 60 days;
- Exemption from compulsory negotiation of documents through
banks. The remittance, however, would continue to be received
through banking channels;
- 100% retention of foreign exchange in EEFC account;
- Enhancement in normal repatriation period from 180 days to 360
days;
- Deleted
- Exemption from furnishing of Bank Guarantee in Schemes under
this Policy.
- Two Star Export Houses and above shall be permitted to establish
Export Warehouses, as per the guidelines issued by Department of
Revenue in this regard.
|
Validity Period |
3.5.3 |
All status certificates issued or renewed on or after 01.09.2004
shall be valid from 1st April of the licensing year during which the
application for the grant of such recognition is made upto 31st March,
2009, unless otherwise specified.
On the expiry of status certificate, application for grant of status
shall be required to be made within a period as prescribed in the
Handbook of Procedures (Vol. I), as a fresh application for continued
recognition. During the intervening period, the star export house shall
be eligible to claim the usual privileges under Para 3.5.2.1 above,
subject to furnishing of an undertaking by the applicant at the time of
claiming such facilities and benefits that they are eligible for
continued recognition as per current policy. |
|
3.6 |
SERVICES EXPORTS |
Services Exports |
3.6.1 |
Services include all the 161 tradable services covered under the
General Agreement on Trade in Services where payment for such services
is received in free foreign exchange or in Indian Rupees which are
otherwise considered as having been paid for in free foreign exchange by
RBI. A list of services is given in Appendix-10 of Handbook of
Procedures (Vol. I). All provisions of this Policy shall apply mutatis
mutandis to export of services as they apply to goods, unless otherwise
specified. |
Export Promotion Council for Services |
3.6.2 |
Service exporters are required to register themselves with the
Federation of Indian Exporters Organisation. However, software exporters
shall register themselves with Electronic and Software Export Promotion
Council.
In order to give proper direction, guidance and encouragement to the
Services Sector, an exclusive Export Promotion Council for Services
shall be set up.
The Services Export Promotion Council shall:
- Map opportunities for key services in key markets and develop
strategic market access programmes for each component of the matrix.
- Co-ordinate with sectoral players in undertaking intensive brand
building and marketing programmes in target markets.
- Make necessary interventions with regard to policies, procedures
and bilateral/ multilateral issues, in co-ordination with recognised
nodal bodies of the services industry.
|
Common Facility Centres |
3.6.3 |
Government shall promote the establishment of Common Facility
Centres for use by home-based service providers, particularly in areas
like Engineering & Architectural design, Multi-media operations,
Software developers etc., in State and District-level towns, to draw in
a vast multitude of home-based professionals into the services export
arena. |
|
3.6.4 |
SERVED FROM INDIA SCHEME |
Objective |
3.6.4.1 |
The objective is to accelerate the growth in export of services so
as to create a powerful and unique ‘Served From India’ brand, instantly
recognized and respected world over. |
Eligibility |
3.6.4.2 |
All Service providers of services listed in Appendix-10 of Handbook
of Procedures (Vol. I) who have a total foreign exchange earning or
earning in Indian Rupees which are otherwise considered as having been
paid for in free foreign exchange by RBI, of at least Rs.10 lakhs in the
preceding or current financial year shall be eligible to qualify for a
duty credit scrip.
For individuals who are service providers of services listed in
Appendix-10 of Handbook of Procedures (Vol. I), the total foreign
exchange earned or earning in Indian Rupees which are otherwise
considered as having been paid for in free foreign exchange by RBI
criteria would be Rs.5 lakhs in the preceding financial year. |
Entitlement |
3.6.4.3 |
All Service providers; including Healthcare and Educational Service
providers as well as Engineering Process Outsourcing (EPO) and Knowledge
Process Outsourcing (KPO) service providers; of services listed in
Appendix-10 of Handbook of Procedures (Vol. I) (other than service
providers covered by Para 3.6.4.4) shall be entitled to duty credit
scrip equivalent to 10% of the foreign exchange earned by them in the
preceding financial year. However services or service providers as
listed in Para 3.18.1 of Handbook of Procedures (Vol. I) shall not be
entitled for benefits under the scheme. |
Remittances |
3.6.4.3.1 |
The foreign exchange earned through International Credit Cards and
other instruments as permitted by RBI for rendering of service by the
service providers shall also be taken into account for the purposes of
computation of duty credit entitlement under the scheme. |
Hotels & Restaurants |
3.6.4.4 |
Hotels of one-star and above (including managed hotels and heritage
hotels) approved by the Department of Tourism and other Service
providers in the tourism sector registered with the Department of
Tourism shall be entitled to duty credit equivalent to 5% of the foreign
exchange earned by them in the preceding financial year.
Stand-alone restaurants will be entitled to duty credit equivalent to
10% of the foreign exchange earned by them in the preceding financial
year. |
Imports allowed |
3.6.4.5 |
Duty credit scrip may be used for import of any capital goods
including spares, office equipment and professional equipment, office
furniture and consumables; that are otherwise freely importable under
ITC (HS) Classification of Export and Import items. The imports shall
relate to any service sector business of the applicant.
Utilization of duty credit earned under the scheme shall not be
permitted for payment of duty in case of import of vehicles, even if
such vehicles are freely importable under ITC (HS).
In the case of hotels, golf resorts and stand-alone restaurants having
catering facilities, the duty credit entitlement may also be used for
the import of consumables including food items and alcoholic beverages. |
Non Transferability |
3.6.4.6 |
The entitlement and the goods imported shall be non-transferable.
However, transfer of duty credit scrips / goods imported under the
scheme shall be allowed within the service providers of the Group
Company as defined in chapter 9 and managed hotels, with actual user
condition. |
Healthcare & Education |
3.6.4.7 |
Deleted |
Special provisions |
3.6.4.8 |
Government reserves the right in public interest to specify from
time to time the category or type of service exports which shall not be
eligible for calculation of either eligibility or of entitlement.
Similarly, Government may from time to time also notify the goods, which
shall not be allowed for import under the duty free entitlement
certificate issued under the scheme. |
Import under Lease financing |
3.6.4.9 |
Utilization of duty free credit scrip earned under the scheme shall
be permitted for payment of duty in case of import of capital goods
under lease financing in terms of provision in Para 2.25 of this Policy. |
|
3.7 |
Deleted |
|
3.8 |
VISHESH KRISHI AND GRAM UDYOG YOJANA (SPECIALAGRICULTURE AND
VILLAGE INDUSTRY SCHEME) |
Objective |
3.8.1 |
The objective of Vishesh Krishi and Gram Udyog Yojana (Erstwhile
Vishesh Krishi Upaj Yojana) is to promote export of Fruits, Vegetables,
Flowers, Minor Forest produce, Dairy, Poultry and their value added
products, and Gram Udyog products by incentivising exporters of such
products. |
Entitlement |
3.8.2 |
Exports of Fruits, Vegetables, Flowers, Minor Forest Produce, Dairy,
Poultry and their value added products shall be entitled for duty credit
scrip equivalent to 5% of the FOB value of exports. A detailed list of
these agricultural products and the period of exports for which this
entitlement is to be granted is given in Appendix 37A of the Handbook of
Procedures (Vol. I).
Gram Udyog products as listed in Appendix 37A of the Handbook of
Procedures (Vol. I) shall be entitled for duty credit scrip equivalent
to 5% of the FOB value of exports in respect of the exports made on or
after 1st April 2006.
However, the duty credit scrip shall be granted only at a reduced rate
of 3.5% of the FOB value of exports in such cases where the exporter has
availed the benefits under Chapter 4 of FTP for import of Inputs.
[Old - Chapter 4 of FTP for import of
Agriculture Inputs ] (these words amended by
DGFT NOTIFICATION No. 52(RE-2008)/2004-2009, dated : 30th, October 2008)
(other than catalysts, consumables and packing
materials) relating to export item under this scheme.
The scrip and the items imported against it shall be freely
transferable. |
|
3.8.2.1 |
Under the Scheme, exports of all eligible items (including the value
added variants) are eligible for benefits as per Para 3.8.2 above
provided they are specifically listed in Appendix- 37A of Handbook of
Procedures (Vol. I). Items which are restricted or prohibited for export
under Schedule-2 of the Export Policy in the ITC (HS) Classification of
Export and Import items shall not be eligible for any benefits under
Para 3.8.2. |
|
3.8.2.2 |
Following exports shall not be taken into account for duty credit
entitlement under the scheme:
- Export of imported goods covered under Para 2.35 of the Foreign
Trade Policy or exports made through transshipment.
- Deemed Exports.
- Exports made by SEZs units and EOUs units.
|
|
3.8.2.3 |
However, benefits 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.
(This para is added by
DGFT Notification No 43/2008, Dated 23-09-2008.)
|
Imports allowed |
3.8.3 |
The Duty Credit may be used for import of inputs or goods, which are
otherwise freely importable under ITC (HS) Classifications of Export and
Import Items,
Imports from a port other than the port of export shall be allowed under
TRA facility as per the terms and conditions of the notification issued
by Department of Revenue. |
|
3.8.3.1 |
Items listed in Appendix-37B of Handbook of Procedures (Vol. I)
shall not be allowed to be imported under the scheme. |
Cenvat/ Drawback |
3.8.4 |
Additional customs duty/excise duty paid in cash or through debit
under Vishesh Krishi and Gram Udyog Yojana shall be adjusted as CENVAT
Credit or Duty Drawback as per rules framed by the Department of
Revenue. |
Special Provision |
3.8.5 |
Government reserves the right in public interest, to specify from
time to time the export products, which shall not be eligible for
calculation of entitlement. |
|
3.9 |
FOCUS MARKET SCHEME |
Objective |
3.9.1 |
The objective is to offset the high freight cost and other
disabilities to select international markets with a view to enhance our
export competitiveness to these countries. |
Eligibility |
3.9.2 |
Exports of all products to the notified countries shall be entitled
for duty credit scrip equivalent to 2.5% of the FOB value of exports for
each licensing year commencing from 1st April, 2006. The scrip and the
items imported against it would be freely transferable. |
|
3.9.2.1 |
Under the Scheme, export to all countries as given in Appendix-37- C
of Handbook of Procedures (Vol. I) shall qualify for export benefits as
per Para 3.9.2 above. Items which are restricted or prohibited for
export under Schedule-2 of the Export Policy in the ITC (HS)
Classification of Export and Import items shall not be eligible for any
benefits under Para 3.9.2. |
|
3.9.2.2 |
The following exports shall not be taken into account for
calculation of export performance or for computation of entitlement
under the scheme:
- Export of imported goods covered under Para 2.35 of the Foreign
Trade Policy or exports made through transshipment.
- Export turnover of units operating under SEZ/EOU/ EHTP/STPI/ BTP
Schemes or supplies made to such units or products manufactured by
them and exported through DTA units.
- Deemed Exports.
- Service Exports.
- Diamonds and other precious, semi precious stones.
- Gold, silver, platinum and other precious metals in any form,
including plain and studded Jewellery.
- Ores and Concentrates, of all types and in all forms.
- Cereals, of all types.
- Sugar, of all types and in all forms.
- Crude / Petroleum Oil & Crude / Petroleum based Products covered
under ITC HS codes 2709 to 2715, of all types and in all forms.
|
|
3.9.2.3 |
Exporters shall have the option to apply for benefit either under
the Focus Market Scheme or under the Focus Product Scheme or under
Vishesh Krishi and Gram Udyog Yojana in respect of the same exported
product/s. |
|
3.9.2.4 |
However, benefits 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.
(This para is added by
DGFT Notification No 43/2008, Dated 23-09-2008.) |
Imports allowed |
3.9.3 |
The Duty Credit may be used for import of inputs or goods including
capital goods, provided the same is freely importable under ITC (HS).
Imports from a port other than the port of export shall be allowed under
TRA facility as per the terms and conditions of the notification issued
by Department of Revenue. |
Cenvat / Drawback |
3.9.4 |
Additional customs duty/excise duty paid in cash or through debit
under this scrip shall be adjusted as CENVAT Credit or Duty Drawback as
per rules framed by the Department of Revenue. |
Special provisions |
3.9.5 |
Government reserves the right in public interest, to specify from
time to time the export products or exports to such countries, which
shall not be eligible for calculation of entitlement. |
|
3.10 |
FOCUS PRODUCT SCHEME |
Objective |
3.10.1 |
The objective is to incentivise export of such products which have
high employment intensity in rural and semi urban areas so as to offset
the inherent infrastructure inefficiencies and other associated costs
involved in marketing of these products. |
Eligibility |
3.10.2 |
Exports of notified products to all countries shall be entitled for
duty credit scrip equivalent to 2.5% of the FOB value of exports for
each licensing year commencing from 1st April, 2006. However only 50% of
the export turnover of such products shall be counted for benefits under
the Scheme. The scrip and the items imported against it would be freely
transferable. |
|
3.10.2.1 |
Under the Scheme, export of such products as given in Appendix-37-D
of Handbook of Procedures (Vol. I) shall qualify for export benefits as
per Para 3.10.2 above. |
|
3.10.2.2 |
The following exports shall not be taken into account for
calculation of export performance or for computation of entitlement
under the scheme:
- Export of imported goods covered under Para 2.35 of the Foreign
Trade Policy or exports made through transshipment.
- Exports turnover of units operating under SEZ Scheme and 100%
EOU Scheme or products manufactured by them and exported through DTA
units.
- Deemed Exports.
|
|
3.10.2.3 |
Exporters shall have the option to apply for benefit either under
the Focus Market Scheme or under the Focus Product Scheme or under
Vishesh Krishi and Gram Udyog Yojana in respect of the same exported
product/s. |
|
3.10.2.4 |
However, benefits 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.
(This para is added by
DGFT Notification No 43/2008, Dated 23-09-2008.) |
Imports allowed |
3.10.3 |
The Duty Credit may be used for import of inputs or goods including
capital goods, provided the same is freely importable under ITC(HS).
Imports from a port other than the port of export shall be allowed under
TRA facility as per the terms and conditions of the notification issued
by Department of Revenue. |
Cenvat /Drawback |
3.10.4 |
Additional customs duty/excise duty paid in cash or through debit
under this scrip shall be adjusted as CENVAT Credit or Duty Drawback as
per rules framed by the Department of Revenue. |
Special provisions |
3.10.5 |
Government reserves the right in public interest, to specify from
time to time the export products or exports to such countries, which
shall not be eligible for calculation of entitlement. |
Advance Authorisation |
4.1.3 |
An Advance Authorisation is issued to allow duty free import of
inputs, which are physically incorporated in the export product (making
normal allowance for wastage). In addition, fuel, oil, energy, catalysts
etc. which are consumed/utilised in the course of their use to obtain
the export product, may also be allowed under the scheme. However, the
Director General of Foreign Trade, by means of Public Notice, may in
public interest exclude any product(s) from the purview of advance
Authorisation.
Duty free import of mandatory spares upto 10% of the CIF value of the
Authorisation which are required to be exported/ supplied with the
resultant product may also be allowed under Advance Authorisation.
Advance Authorisations are issued on the basis of the inputs and export
items given under SION. However, they can also be issued on the basis of
Adhoc norms or self declared norms as per para 4.7 of Handbook of
Procedures (Vol. I). Advance Authorisation can be issued either to a
manufacturer exporter or merchant exporter tied to supporting
manufacturer(s):
- for Physical exports (including exports to SEZ); and/ or
- for Intermediate supplies; and /or
- to the main contractor for supply of goods to the categories
mentioned in paragraph 8.2 (b), (c), (d), (e), (f), (g), (i) and (j)
of the Policy;
- supply of stores on board of the foreign going vessel/ aircraft
subject to the condition that there is specific SION in respect of
the item(s) supplied.
for import of inputs required in the manufacture of goods. In
addition, in respect of supply of goods to specified projects mentioned
in paragraph 8.2 (d), (e), (f), (g) and (j) of the Policy, an Advance
Authorisation can also be availed by the sub- contractor of the main
contractor to such project provided the name of the sub contractor(s)
appears in the main contract.
Such Authorisation can also be issued for supplies made to United
Nations Organisations or under the Aid Programme of the United Nations
or other multilateral agencies and paid for in free foreign exchange.
|
|
4.1.4 |
Advance Authorisation is issued for duty free import of inputs, as
defined in paragraph 4.1.3 subject to actual user condition. Such
Authorisations are exempted from payment of basic customs duty,
additional customs duty, education cess, anti dumping duty and safeguard
duty, if any. However, the imports for supplies covered under paragraph
8.2 (i) & (j) will not be exempted from the payment of applicable
anti-dumping and safeguard duty, if any. |
|
4.1.5 |
Advance Authorisation and/or materials imported thereunder shall not
be transferable even after completion of export obligation. However, the
Authorisation holder will have the option to dispose off the product
manufactured out of the duty free inputs once the export obligation is
completed. |
|
4.1.6 |
Advance Authorisations shall be issued with a positive value
addition.
However, for physical exports for which payments are not received in
freely convertible currency, the same shall be subject to value addition
as specified in Appendix-11 of Handbook of Procedures (Vol.1). In case
of supplies to SEZ Units, irrespective of the currency of realization,
Advance Authorisation shall be issued with a positive value addition.
In case of Tea, the minimum value addition under advance Authorisation
shall be 100%.
In case of spices (covered by Chapter 9 of the ITC(HS) Classification of
Export & Import Items, 2004-09), the minimum value addition under
advance Authorisation shall be 15%. |
|
4.1.7 |
Advance Authorisation shall be issued in accordance with the Policy
and procedure in force on the date of issue of Authorisation.
The validity period of advance Authorisation for import shall be as
prescribed in the Handbook of Procedures (Vol.1). |
|
4.1.8 |
The facility of Advance Authorisation shall also be available where
some or all of the inputs are supplied free of cost to the exporter.
In such cases, for calculation of value addition, the notional value of
free of cost inputs along with value of other duty- free inputs shall be
taken into consideration. However, if all the inputs are supplied free
of cost, the exporter shall also have the option to follow the provision
prescribed in paragraph 4.2.7 of the Policy. |
Export Obligation |
4.1.9 |
The period for fulfilment of the export obligation under Advance
Authorisation shall be as prescribed in the Handbook of Procedures
(Vol.1). |
Provision for BIFR units |
4.1.9 A |
Any firm/company registered with BIFR or any firm/ company acquiring
a unit, which is under BIFR shall be allowed EOP extension as per the
rehabilitation package prepared by the operating agency subject to
subsequent approval of BIFR.
However, in cases where the rehabilitation package does not specify the
EOP extension period, a time period upto 5 years reckoned from the date
of issue of authorisation would be permitted on merits of the case for
fulfillment of export obligation.
Similarly, SSI units shall also be entitled for similar facility as per
the rehabilitation scheme of the concerned State government. However, in
cases where the State rehabilitation scheme does not specify the export
obligation extension period, a time period upto 5 years reckoned from
the date of issue of authorisation would be permitted on merits of the
case for fulfillment of export obligation.
Export Obligation Period Extension, as mentioned above, shall be without
the payment of composition fee for cases where rehabilitation package
has been announced/ approved. |
Advance Authorisation for Annual Requirement |
4.1.10 |
Advance Authorisation can also be issued on the basis of annual
requirement for physical exports, intermediate supplies and / or deemed
exports.
One to Five Star Export House shall be entitled for the Advance
Authorisation for annual requirement. All other categories of exporters
having past export performance (in the preceding two years) shall also
be entitled for the Advance Authorisation for annual requirement.
In addition, a merchant exporter shall also be issued the Advance
Authorisation for Annual Requirement provided they agree to the
endorsement of the name(s) of the supporting manufacturer(s) on the
relevant Authorisation.
The entitlement in terms of CIF value of imports under this scheme shall
be upto 300% of the FOB value of physical export and / or FOR value of
deemed export in the preceding licensing year or Rs 1 crore, whichever
is higher. Such Authorisation shall have value addition as specified in
para 4.1.6 of the Foreign Trade Policy. |
Advance Release Orders |
4.1.11 |
An Advance Authorisation holder, holder of advance Authorisation for
annual requirement, holder of Diamond Imprest Authorisation, holder of
DFIA and holder of DFRC intending to source the inputs from indigenous
sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units in lieu
of direct import has the option to source them against Advance Release
Orders denominated in free foreign exchange/ Indian rupees.
The transferee of a DFIA or a DFRC shall also be eligible for ARO
facility. However, supplies may be obtained against the Authorisation
from EOU/EHTP/BTP/STP/ SEZ units, without conversion into ARO.
The validity period of ARO shall be as prescribed in the Handbook of
Procedures (Vol.1). |
Back-to-Back Inland Letter of Credit |
4.1.12 |
An Advance Authorisation holder, holder of advance Authorisation for
annual requirement, holder of DFIA, holder of Diamond Imprest
Authorisation and holder of DFRC may, instead of applying for an Advance
Release Order, avail of the facility of Back-to-Back Inland Letter of
Credit in accordance with the procedure specified in Handbook of
Procedures (Vol.1). |
Prohibited Items |
4.1.13 |
Prohibited items of imports mentioned in ITC(HS) shall not be
imported under the Advance Authorisation/DFIA/DFRC. Further the items
reserved for imports by State Trading Enterprises cannot be imported
against advance Authorisation/ DFIA/DFRC. However those items can be
procured from State Trading Enterprises against ARO or Invalidation
letter issued to the holder of advance Authorisation/DFIA/DFRC.
The State Trading Enterprises are also allowed to sell the goods on High
Sea Sale basis to the holders of Advance Authorisation/DFIA/DFRC.
In addition, the State Trading Enterprises are permitted to issue “No
Objection Certificate (NOC)’ if they so desire, for import by holder of
advance Authorisation. DFIA holders would also be eligible to import
such items based on No Objection Certificate (NOC) from the STEs for
only such products as notified by DGFT. However, the Authorisation
Holder would be required to file Quarterly Returns of the imports
effected against such ‘No Objection Certificate’ to the concerned State
Trading Enterprises (STEs) and the STEs, in turn, would submit
Half-yearly import figures of such imports to the concerned
administrative Department for monitoring with a copy endorsed to the
Department of Commerce.
Similarly prohibited items of exports mentioned in the ITC(HS) shall not
be exported under the Authorisation issued under the Advance
Authorisation/DFIA/DFRC scheme. Further, export of restricted items
shall be subject to all conditionalities or requirements of export
Authorisation or permission, as may be required, under Schedule II of
ITC (HS). |
Admissibility of Drawback |
4.1.14 |
In the case of an Advance Authorisation, the drawback shall be
available in respect of any of the duty paid materials, whether imported
or indigenous, used in the goods exported, as per the drawback rate
fixed by Ministry of Finance (Directorate of Drawback). The Drawback
shall however be restricted to the duty paid materials as mentioned in
the application. |
Scheme for Gems and Jewellery |
4A |
Exporters of gems and Jewellery can import/procure duty free inputs
required for manufacture of gems and jewellery items. |
Replenishment Authorisation |
4A.1 |
Exporters of gems and jewellery are eligible to import their inputs
duty free by obtaining Replenishment (REP) Authorisations from the
licensing authorities in accordance with the procedure specified in this
regard in the Handbook of Procedures of Procedure (Vol.1). |
|
4A.1.1 |
The exporters of gems and jewellery products listed in Appendix-12A
of the Handbook of Procedures (Vol.1) shall be eligible for grant of
Replenishment Authorisations at the rate and for the items mentioned in
the said Appendix to import and replenish their inputs.
Replenishment authorisation may also be issued for import of consumables
as per the details given in paragraph 4A.28 of Handbook of Procedures
(Vol.1). |
Export of Cut & Polished Diamonds for Certification/ Grading |
4A.2 |
Gem and Jewellery exporters may be permitted to send cut & polished
diamonds each weighing 0.25 of a carat and above for
certification/grading to Indian Diamond Institute, Surat, Gujarat. In
addition, Gem and Jewellery exporters with a track record of at least
three years and having an annual average turnover of Rs.5 crores and
above during the preceding three licensing years or the authorized
offices /agencies in India of Gemological Institute of America (GIA),
The Robert Mouawad Campus, International Gemological Institute (IGI) and
European Gemological Laboratory (EGL) in USA, Hoge Road Voor Diamond,
Antwerp, (HRD), World Diamond Centre of Diamonds High Council, Antwerp,
Belgium, Central Gem Laboratory, Miyagi Building, 5-15-14 Ueno Taito-Ku,
Tokyo, Japan, American Gem Society Laboratories (AGS Laboratories), 8917
West Sahara Avenue, Las Vegas, Nevada 89117 and Diamond Trading Company,
Maidenhead, U.K. may also be permitted to export cut & polished diamonds
each weighing 0.25 of a carat and above to the said
laboratories/agencies for the purpose of certification/grading reports
by them with a condition that the same should be re- imported with the
certificate/grading reports issued by them without any import duty at
the time of re-import. |
|
4A.2.1 |
At the time of export of cut and polished diamonds for
certification/grading, exporter should give an undertaking to the
customs that the cut and polished diamonds will be re- imported within
three months of exports for certification/ grading.
The export invoice should clearly indicate the estimated value, height,
circumference, weight of each diamond to be exported for certification/
grading so that at the time of their import, the above specification
could be compared with the original ones to establish their identity.
Subsequently these cut and polished diamonds would be exported as per
the provisions of the Policy. |
Schemes for Gold/Silver/ Platinum Jewellery |
4A.3 |
Exporters of gold/silver/platinum jewellery and articles thereof may
import their essential inputs such as gold, silver, platinum, mountings,
findings, rough gems, precious and semi-precious stones, synthetic
stones and unprocessed pearls etc. in accordance with the procedure
specified in this behalf. |
Nominated Agencies |
4A.4 |
Exporters (excepting units operating under EOU/SEZ schemes) availing
the schemes of gold/ silver/platinum jewellery and articles thereof may
obtain gold/silver/platinum from the nominated agencies. The nominated
agencies are MMTC Ltd, Handicraft and Handloom Export Corporation
(HHEC), State Trading Corporation (STC), the Project and Equipment
Corporation of India Ltd (PEC) , Five Star Export House under Paragraph
3.5.2 of the Policy and any other agency authorised by Reserve Bank of
India (RBI).
A bank authorised by RBI is allowed export of gold scrap for refining
and import in the form of standard gold bars. The detailed procedure for
the import of gold will be as per the guidelines notified by RBI
separately. |
Items of Export |
4A.5 |
The following items, if exported, would be eligible for the
facilities under the schemes stipulated in paragraph 4A of the Foreign
Trade Policy:
- Gold jewellery, including partly processed jewellery and any
articles including medallions and coins (excluding the coins of the
nature of legal tender), whether plain or studded, containing gold
of 8 carats and above;
- Silver jewellery including partly processed jewellery,
silverware, silver strips and any articles including medallions and
coins (excluding the coins of the nature of legal tender and any
engineering goods) containing more than 50% silver by weight;
- Platinum jewellery including partly processed jewellery and any
articles including medallions and coins (excluding the coins of the
nature of legal tender and any engineering goods) containing more
than 50% platinum by weight.
|
Value Addition |
4A.6 |
The value addition for the purpose of gems and jewellery sector
shall be as per paragraph 4A.2.1 of Handbook of Procedures (Vol.1).
A – B
V.A. = ————— x 100, where
B
V.A |
Value Addition, |
A |
FOB value of the export realised / FOR value of supply
received. |
B |
The Value of inputs such as gold / silver / platinum content
in the export product plus the admissible wastage along with the
value of the other items such as gemstone etc. ‘Value’ for this
purpose includes both imported as well as domestically procured
inputs. Wherever gold has been obtained on loan basis, the value
shall also include interest paid in free foreign exchange to the
foreign supplier. |
|
Wastage Norms |
4A.7 |
Under the schemes for gold/silver/platinum jewellery, the wastage or
manufacturing loss shall be admissible as per paragraph 4A.2 of the
Handbook of Procedures (Vol.1). |
Export against Supply by Foreign Buyer |
4A.8 |
Where export orders are placed on the nominated agencies/status
holder/ exporters of three years standing having an annual average
turnover of Rs. Five Crore during the preceding three licensing years,
the foreign buyer may supply to the nominated agencies/status
holder/exporter, in advance and free of charge, gold/ silver/ platinum,
alloys, findings and mountings of gold/ silver/ platinum for manufacture
and export.
The exports may be made by the nominated agencies directly or through
their associates or by the status holder/exporter as the case may be.
The import and export of findings shall be on net to net basis. The
foreign buyer may also supply to the nominated agencies/status holder/
exporter in advance and free of charge plain, semi finished
gold/silver/platinum jewellery including findings/ mountings/ components
for repairs/re-make and export subject to minimum value addition of 10%.
However, if the so imported semi finished gold/silver /platinum
jewellery is exported as studded jewellery, value addition of 15% shall
be achieved. In such cases of export, wastage of 2% may be permitted.
The procedures in this regard shall be as prescribed in the Handbook of
Procedures (Vol.1). |
Export Against Supply by Nominated Agencies |
4A.9 |
The exporter may obtain the gold/silver/platinum as an input for
export products from nominated agencies in advance or as replenishment
after exports in accordance with the procedure specified in this behalf. |
Export Against Advance Authorisation |
4A.10 |
An Advance Authorisation may be granted for the duty free import of:
- Gold of fineness not less than 0.995 and mountings, sockets,
frames and findings of 8 carats and above;
- Silver of fineness not less than 0.995 and mountings, sockets,
frames and findings containing more than 50% silver by weight;
- Platinum of fineness not less than 0.900 and mountings, sockets,
frames and findings containing more than 50% platinum by weight.
|
|
4A.11 |
Such authorisations shall carry an export obligation which will be
required to be fulfilled in accordance with the procedure specified in
paragraph 4A of the Handbook of Procedures (Vol.I).
The Advance Authorisation holder may obtain gold/silver/ platinum from
the nominated agencies in lieu of direct import in accordance with the
procedure specified in this behalf. |
Gem Replenishment Authorisation |
4A.12 |
Gem Replenishment (Gem & Jewellery REP) Authorisation may be issued
under the schemes for export of gold/ silver/ platinum jewellery and
articles thereof as given in paragraph 4A.8, 4A.9 and 4A.10 of the
Policy. In the case of plain gold/ silver/platinum jewellery and
articles, the value of such Authorisations shall be determined with
reference to the realisation in excess of the prescribed minimum value
addition.
In the case of studded gold/silver/platinum jewellery and articles
thereof, the value of Gem Replenishment Authorisation shall be
determined by taking into account the value of studdings used in items
exported, after accounting for the value addition on gold/ silver/
platinum including admissible wastage.
Such Gem REP Authorisations shall be freely transferable. |
Gem REP Rate and Item |
4A.13 |
The scale of replenishment and the item of import will be as
prescribed in Appendix 12B of Handbook of Procedures (Vol.1). |
Diamond Imprest Authorisation |
4A.14 |
Diamond Imprest Authorisation for import of cut & polished diamonds
including semi processed diamonds, half cut diamonds, broken in any
form, for mixing with cut & polished diamonds or for export as it is,
may be issued for export of cut & polished diamonds.
Such Authorisations shall carry an export obligation, which has to be
discharged in accordance with the procedure specified in this behalf. |
Eligibility |
4A.14.1 |
An exporter of cut & polished diamonds who is status holder may be
issued a Authorisation for import of cut & polished diamonds upto 5% of
the export performance of the preceding year of cut & polished diamonds. |
Export Obligation |
4A.14.2 |
The export obligation under the scheme will be governed by the
provisions of paragraph 4A of chapter 4 of the Handbook of Procedures (vol.I). |
Export Promotion Tours/ Export of Branded Jewellery |
4A.15 |
The nominated agencies and their associates, with the approval of
Department of Commerce, and others, with the approval of Gem & Jewellery
Export Promotion Council (GJEPC), may export gold/ silver/platinum
jewellery and articles thereof for holding/participating in exhibitions
abroad.
Personal carriage of gold/ silver/platinum jewellery, precious,
semi-precious stones, beads and articles and export of branded jewellery
is also permitted. These exports shall be subject to the conditions as
given in the Handbook of Procedures (Vol.1). |
Personal Carriage of Export/ Import Parcels |
4A.16 |
Personal carriage of gems and jewellery export
parcels by foreign bound passengers and personal carriage of gems &
jewellery import parcels by an Indian importer/foreign national may be
permitted as per the conditions given in Handbook of Procedures (Vol.1). |
Export by Post |
4A.17 |
In case of exports through Foreign Post Office which may include
export via Speed Post through Foreign Post Office, the value of the
jewellery parcels shall not exceed US$50000 and 20 kg. by weight. The
detailed procedure is laid down in chapter 4 of the Handbook of
Procedures (vol.1). |
Private/ Public Bonded Warehouse |
4A.18 |
Private/Public Bonded Warehouses may be set up in SEZ/ DTA for
import and re-export of cut & Polished diamonds, cut & polished coloured
gemstones, uncut & unset precious & semi-precious stones. Import &
re-export of cut & polished diamonds & cut & polished coloured gemstones
will be subject to achievement of minimum value addition of 5%. |
Diamond & Jewellery Dollar Accounts |
4A.19 |
Firms and companies dealing in the purchase/sale of rough or cut and
polished diamonds/ precious metal jewellery plain, minakari and/or
studded with/without diamond and/or other stones with a track record of
at least 3 years in import or export of diamonds/ coloured gemstones/
diamond and coloured gemstones studded jewellery/ plain gold jewellery
and having an average annual turnover of Rs. 5 crore or above during
preceding three licensing years may also carry out their business
through designated Diamond DollarAccounts.
The Diamond Dollar Account Scheme shall operate under the current
licensing scheme of this chapter. This scheme shall be optional and
those importers/exporters who wish to continue to use Rupee Accounts
shall be allowed to do so under the existing policies.
Dollars in such accounts available from bank finance and/or export
proceeds shall be used only for
- Import/purchase of rough diamonds from overseas/ local sources,
- Purchase of cut and polished diamonds, coloured gemstones and
plain gold jewellery from local sources,
- Import/purchase of gold from overseas/ nominated agencies and
repayment of dollar loans from the bank; and
- Transfer to the Rupee Account of the exporter. Details of this
Diamond Dollar Accounts Scheme (DDAS) are given in the Handbook of
Procedures (Vol.1). The procedure outlined in the Handbook of
Procedures (Vol.1) shall also apply to diamond studded jewellery.
A non DDA holder is also permitted to supply cut and polished
diamonds to DDA holder, receive payment in dollars and convert same into
rupees within the period of 7 days and cut and polished diamonds and
coloured gemstones so supplied by non-DDA holder will also be counted
towards the discharge of his export obligation and/or entitle him to
replenishment Authorisation as the case may be.
|
Export of cut & Polished precious and semi-precious stones for
treatment and re-import |
4A.20.1 |
Gems & Jewellery exporters shall be allowed to export cut and
polished precious and semi-precious stones for the treatment and
re-import as per customs rules and regulations. |
Import of precious metal scrap/used jewellery for melting and
re-export of jewellery. |
4A.21 |
Import of precious metal scrap/used jewellery shall be allowed for
melting, refining and re-export of jewellery as per the procedure laid
down in the Handbook of Procedures, Vol. I. However, such import shall
not be allowed through hand baggage. |
Re-import of rejected jewellery |
4A.22 |
Gems & Jewellery exporters shall be allowed to re-import the
rejected precious metal jewellery as per the procedure laid down in para
4A.32 and 4A.32.1 of Handbook of Procedure, Vol. I. |
Export of Jewellery on consignment basis |
4A.23 |
Gems & Jewellery exporters shall be allowed to export jewellery on
consignment basis as per the procedure given in chapter 4 of the
Handbook of Procedures, Vol. I and as per the Customs rules and
regulations in this behalf. |
EPCG Scheme |
5.1 |
The scheme allows import of capital goods for pre production,
production and post production (including CKD/SKD thereof as well as
computer software systems) at 5% Customs duty subject to an export
obligation equivalent to 8 times of duty saved on capital goods imported
under EPCG scheme to be fulfilled over a period of 8 years reckoned from
the date of issuance of Authorisation.
In the case of agro units, import of capital goods at 5% Customs duty
shall be allowed subject to a fulfillment of an export obligation
equivalent to 6 times the duty saved (on capital goods imported under
the Scheme) over a period of 12 years from the date of issue of
Authorisation.
However for SSI units, import of capital goods at 5% Customs duty shall
be allowed subject to a fulfillment of an export obligation equivalent
to 6 times the duty saved (on capital goods imported under the Scheme)
over a period of 8 years from the date of issue of Authorisation
provided the landed CIF value of such imported Capital Goods under the
Scheme does not exceed Rs Twenty Five Lakhs and the total investment in
plant and machinery after such imports does not exceed the SSI limit.
However, in respect of EPCG Authorisations with a duty saved of Rs.100
crore or more, the same export obligation, as the case may be shall be
required to be fulfilled over a period of 12 years.
In case CVD is paid in cash on imports under EPCG, the incidence of CVD
would not be taken for computation of net duty saved provided the same
is not Cenvated.
The capital goods shall include spares (including refurbished/
reconditioned spares), tools, jigs, fixtures, dies and moulds. EPCG
Authorisation may also be issued for import of components of such
capital goods required for assembly or manufacturer of capital goods by
the Authorisation holder.
Second hand capital goods without any restriction on age may also be
imported under the EPCG scheme.
However, import of motor cars, sports utility vehicles/all purpose
vehicles shall be allowed only to hotels, travel agents, tour operators
or tour transport operators and companies owning/operating golf resorts
whose total foreign exchange earning from the hotel, travel & tourism
and golf tourism sectors in the current and preceding three licensing
years is Rs 1.5 crores or more. The ‘duty saved’ amount on all EPCG
Authorisations issued in a licensing year for import of motor cars,
sports utility vehicles/all purpose vehicles shall not exceed 50% of the
average foreign exchange earnings from the hotel, travel & tourism and
golf tourism sectors in the preceding three licensing years. However,
the parts of motor cars, sports utility vehicles/ all purpose vehicles
such as chassis etc. cannot be imported under the EPCG Scheme.
Import of Restricted items of imports mentioned under ITC(HS) shall only
be allowed to be imported under the Scheme after approval from the
Import Licensing Committee. |
|
5.1A |
Spares (including refurbished/ reconditioned spares), tools, spare
refractories, catalyst & consumable for the existing plant and machinery
imported/to be imported under the Scheme shall also be allowed subject
to an export obligation equivalent to 8 times of duty saved to be
fulfilled over a period of 8 years reckoned from the date of issuance of
Authorisation. |
EPCG for Projects |
5.1B |
An EPCG Authorisation can also be issued for import of capital goods
under the Scheme for Project Imports notified by the Central Board of
Excise and Customs under S.No 441 of Customs Exemption Notification No
21/2002 dated 01.03.2002 wherein the basic customs duty on imports is
10% with a CVD of 16%.
The export obligation for such EPCG Authorisations would be eight times
the duty saved. The duty saved would be the difference between the
effective duty under the aforesaid Customs Notification and the
concessional duty under the EPCG Scheme. |
EPCG for Retail Sector |
5.1 C |
To create modern infrastructure in the retail sector, concessional
duty benefits under EPCG scheme shall be extended for import of capital
goods required by retailers having minimum area of 1000 sq meters. The
retailer shall fulfil the export obligation i.e. 8 times the duty saved
in 8 years. |
Eligibility |
5.2 |
The scheme covers manufacturer exporters with or without supporting
manufacturer(s)/ vendor(s), merchant exporters tied to supporting
manufacturer(s) and service providers. |
Conditions for import of Capital Goods |
5.3 |
Import of capital goods shall be subject to Actual User condition
till the export obligation is completed. |
Export obligation |
5.4 |
The following conditions shall apply to the fulfillment of the
export obligation:
- The export obligation shall be fulfilled by the export of goods
capable of being manufactured or produced by the use of the capital
goods imported under the scheme.
The export obligation may also be fulfilled by the export of same
goods, for which EPCG Authorisation has been obtained, manufactured
or produced in different manufacturing units of the Authorisation
holder/specified supporting manufacturer (s).
When Capital Goods are imported for pre/ post- production or license
is taken for import of spares, the license holder shall fulfill the
export obligation by export of products manufactured from the plant
/ project to which the pre/ post- production capital goods/ spares
are related.
The export obligation under the scheme shall be, over and above, the
average level of exports achieved by him in the preceding three
licensing years for same and similar products within the overall
export obligation period including extended period, if any except
for categories mentioned in Handbook (Vol.1).
Alternatively, export obligation may also be fulfilled by exports of
other good(s) manufactured or service(s) provided by the same
firm/company or group company/ managed hotel which has the EPCG
Authorisation.
However, in such cases, the additional export obligation imposed
under EPCG scheme shall be over and above the average exports
achieved by the unit/company/group company/ managed hotel in
preceding three years for both the original and the substitute
product(s) /service (s) even in cases where the average is exempt
for the substitute product (s)/ service (s) as given in para 5.7.6
of the Handbook (Vol 1).
- The export obligation under the scheme shall be, in addition to
any other export obligation undertaken by the importer, except the
export obligation for the same product under Advance Authorisation,
DFRC, DEPB or Drawback scheme.
- The export obligation can also be fulfilled by the supply of
ITA-1 items to the DTA provided the realization is in free foreign
exchange.
- Exports shall be physical exports. However, deemed exports as
specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of Policy
shall also be counted towards fulfilment of export obligation
alongwith the usual benefits available under paragraph 8.3 of the
Policy.
Royalty payments received in freely convertible currency and foreign
exchange received for R& D services shall also be counted for
discharge under the EPCG scheme. Payment received in rupee terms for
the port handling services, in terms of Chapter 9 of the Foreign
Trade Policy shall also be counted for export obligation discharge
under the Scheme.
Payments received against ‘Counter Sales’ in free foreign exchange
through banking channels as per the RBI guidelines shall be counted
for fulfillment of export obligation under Para 5.1 C.
|
Provision for BIFR units |
5.5.1 |
Any firm/company registered with BIFR or any firm/ company acquiring
a unit, which is under BIFR shall be allowed EO extension as per the
rehabilitation package prepared by the operating agency subject to
subsequent approval of BIFR.
However, in cases where the rehabilitation package does not specify the
EO extension period, a time period upto 12 years reckoned from the date
of issue of Authorisation would be permitted on merits of the case for
fulfillment of export obligation.
Similarly, small-scale SSI units shall also be entitled for similar
facility as per the rehabilitation scheme of the concerned State
government. However, in cases where the State rehabilitation scheme does
not specify the export obligation extension period, a time period upto
12 years reckoned from the date of issue of Authorisation would be
permitted on merits of the case for fulfillment of export obligation |
EPCG for agro units |
5.5.2 |
In the case of EPCG Authorisations issued to agro units in the agri
export zones, a period of 12 years reckoned from the date of issue of
the Authorisation would be permitted for the fulfillment of export
obligation.
The agro units in the agri export zones would also have the facility of
moving the capital good (s) imported under the EPCG within the agri
export zone.
An LUT/ Bond or a 15% BG (as the case may be) may be given for EPCG
Authorisation granted to units in the Agri Export Zones provided the
EPCG Authorisation is taken for export of the primary agricultural
product (s) notified in Appendix 8 or their value added variants. |
Indigenous Sourcing of Capital Goods and benefits to Domestic
Supplier |
5.6 |
A person holding an EPCG Authorisation may source the capital goods
from a domestic manufacturer instead of importing them. The domestic
manufacturer supplying capital goods to EPCG Authorisation holders shall
be eligible for deemed export benefit under paragraph 8.3 of the Policy. |
Benefits to Domestic Supplier |
5.7 |
In the event of a firm contract between the EPCG Authorisation
holder and domestic manufacturer for such sourcing, the domestic
manufacturer may apply for the issuance of Advance Authorisation for the
import of inputs including components required for the manufacturer of
said capital goods.
The domestic manufacturer may also replenish the inputs including
components after supply of capital goods to the EPCG Authorisation
holders. |
Fixation of Export Obligation |
5.7A |
In case of direct imports, the export obligation relating to the
EPCG Authorisation shall be reckoned with reference to the duty saved
value on the CIF value of capital goods (including spares, jigs,
fixtures, dies and moulds) actually imported. In case of domestic
sourcing, the export obligation relating to EPCG shall be reckoned with
reference to the notional Customs duties saved on the FOR of capital
goods (including spares, jigs, fixtures, dies and moulds). |
|
5.8 |
Service provider in Agri export zone shall have the facility to move
or shift the capital goods within the zone provided he maintains
accurate record of such movements. However, such equipments shall not be
sold or leased by the Authorisation holder. |
Maintenance of Average exports under EPCG |
5.9 |
As per the provisions of para 5.4(i), the EPCG Authorisation holder
would have to maintain the average level of exports equivalent to the
average of the exports in the preceding three licencing years for the
same and similar products except for exempted categories given in
Handbook (Vol 1) during the entire period of export obligation.
Notwithstanding the above, the Authorisation holder shall maintain the
average exports in any particular year (s) provided the same is offset
by excess exports to fulfil the average in other year (s). |
Technological Upgradation of existing EPCG machinery |
5.10 |
EPCG Authorisation holders can opt for Technological Upgradation of
the existing capital good imported under the EPCG Authorisation.
The conditions governing the Technological Upgradation of the existing
capital goods are as under:
- The minimum time period for applying for Technological
Upgradation of the existing capital goods imported under EPCG is 5
years from the date of issuance of the Authorisation.
- The minimum exports made under the old capital goods must be 40%
of the total export obligation imposed on the first EPCG
Authorisation.
- The export obligation would be refixed such that the total
export obligation mandated for both the capital goods would be the
sum total of 6 times the duty saved on both the capital goods.
- The procedure governing the replacement of capital goods is
given in para 5.20 of the Handbook (Vol1).
- The facility for technological upgradation shall be available
only once and the minimum imports to be made shall be at least 10%
of the existing investment in plant and machinery by the applicant
firm.
|
Incentives for Fast Track Companies |
5.11 |
To incentivise fast track companies with a view to accelerate
exports under the Scheme, in cases where the Authorisation holder has
fulfilled 75% or more of the export obligation under the Scheme
(including average level of exports) in half or less than half the
original export obligation period specified in the Authorisation, the
remaining export obligation shall be condoned and the Authorisation
redeemed by the licensing authority concerned.
However no benefits under Para 5.12 of Handbook (Vol.I) shall be
available in such cases. |
Eligibility |
6.1 |
Units undertaking to export their entire production of goods and
services (except permissible sales in the DTA), may be set up under the
Export Oriented Unit (EOU) Scheme, Electronic Hardware Technology Park
(EHTP) Scheme, Software Technology Park (STP) Scheme or Bio-Technology
Park (BTP) scheme for manufacture of goods, including repair, re-making,
reconditioning, re-engineering and rendering of services. Trading units,
however, are not covered under these schemes. |
Export and Import of Goods |
6.2 |
- An EOU/EHTP/STP/BTP unit may export all kinds of goods and
services except items that are prohibited in the ITC (HS). Export of
Special Chemicals, Organisms, Materials, Equipment and Technologies
(SCOMET) shall be subject to fulfillment of the conditions indicated
in the ITC (HS).
Procurement and supply of export promotion material like brochure /
literature, pamphlets, hoardings, catalogues, posters etc. upto a
maximum value limit of 1.5% of FOB value of previous years exports
shall also be allowed.
- An EOU/EHTP/STP/BTP unit may import and/ or procure from DTA or
bonded warehouses in DTA / international exhibition held in India
without payment of duty all types of goods, including capital goods,
required for its activities, provided they are not prohibited items
of import in the ITC (HS). Any permission required for import under
any other law shall be applicable. The units shall also be permitted
to import goods including capital goods required for the approved
activity, free of cost or on loan/lease from clients. The import of
capital goods will be on a self certification basis. Goods imported
by a unit shall be with actual user condition and shall be utilized
for export production.
- State Trading regime shall not apply to EOU manufacturing units.
- EOU/EHTP/STP/BTP units may import/procure from DTA without
payment of duty certain specified goods for creating a central
facility which will be used by software units. These software units
can be EOU/ DTA units who will use the facility for export of
software.
- An EOU engaged in agriculture, animal husbandry, aquaculture,
floriculture, horticulture, pisciculture, viticulture, poultry or
sericulture may be permitted to remove specified goods in connection
with its activities for use outside the bonded area.
- Gems and jewellery EOUs may source gold /silver/ platinum
through the nominated agencies on loan/ outright purchase basis. The
units obtaining gold/ silver /platinum from the nominated agencies,
either on loan basis or outright purchase basis shall export
gold/silver/platinum within 90 days from the date of release.
- EOU/EHTP/STP/BTP units, other than service units, may export to
Russian Federation in Indian Rupees against repayment of State
Credit/Escrow Rupee Account of the buyer subject to RBI clearance,
if any.
- Procurement and export of spares/components upto 1.5% of the FOB
value of exports may be allowed to the same consignee/buyer of the
export article within the warranty period.
|
Second Hand Capital Goods |
6.3 |
Second hand capital goods, without any age limit, may also be
imported duty free. |
Leasing of Capital Goods |
6.4 |
An EOU/EHTP/STP/BTP unit may, on the basis of a firm contract
between the parties, source the capital goods from a domestic/foreign
leasing company without payment of customs/excise duty. In such a case,
the EOU/EHTP/STP/BTP unit and the domestic/foreign leasing company shall
jointly file the documents to enable import/procurement of the capital
goods without payment of duty. |
Net Foreign Exchange Earnings (NFE) |
6.5 |
EOU/EHTP/STP/BTP unit shall be a positive net foreign exchange
earner except for sector specific provision of Appendix 14-I-C of
Handbook, where a higher value addition shall be required. Net Foreign
Exchange Earnings (NFE) shall be calculated cumulatively in blocks of
five years, starting from the commencement of production. |
Letter of Permission/ Letter of Intent and Legal Undertaking |
6.6 |
- On approval, a Letter of Permission (LOP) /Letter of Intent
(LOI) shall be issued by the Development Commissioner/designated
officer to EOU/EHTP/ STP/BTP unit. The LOP/LOI shall have an initial
validity of 3 years by which time the unit should have commenced
production. Its validity may be extended further up to 3 years by
the competent authority. However, proposals for extension beyond six
years shall be considered in exceptional circumstances, on a
case-to-case basis by the BOA. Once the unit commences production,
LOP/LOI issued shall be valid for a period of 5 years for its
activities. This period may be extended further by the Development
Commissioner for a period of 5 years at a time.
- LOP/LOI issued to EOU/EHTP/STP/BTP units by the concerned
authority subject to compliance of provision in para 6.2 above,
would be construed as an Authorisation for all purposes.
- The unit shall execute a legal undertaking with the Development
Commissioner concerned. Failure to ensure positive NFE or to abide
by any of the terms and conditions of the LOP/LOI/IL/LUT shall
render the unit liable to penal action under the provisions of the
Foreign Trade (Development & Regulation) Act, 1992 and the Rules and
Orders made thereunder without prejudice to action under any other
law/rules and cancellation or revocation of LOP/LOI/IL.
|
Investment Criteria |
|
- Only projects having a minimum investment of Rs.
1 Crore in Plant & Machinery shall be considered for establishment
as EOUs under the scheme. This shall, however, not apply to existing
units and units in EHTP/STP/BTP, Handicrafts/ Agriculture/
Floriculture/ Aquaculture/ Animal Husbandry / Information
Technology, Services, Brass Hardware and Handmade jewellery sectors.
The Board of Approval (BOA) may also allow establishment of EOUs
with a lower investment criteria
|
Application & Approvals |
6.7 |
- Applications for setting up of units under EOU
scheme other than proposals for setting up of units in the services
sector (except R&D , software and IT enabled services, or any other
service activity as may be delegated by the BOA), shall be approved
or rejected by the Units Approval Committee within 15 days as per
the criteria indicated in Handbook (Vol-I).
- In other cases, approval may be granted by the
Board of Approval (BOA) set up for this purpose as indicated in the
Handbook (Vol-I)
- Proposals for setting up EOU requiring
industrial licence may be granted approval by the Development
Commissioner after clearance of the proposal by the Board of
Approval and Department of Industrial Policy and Promotion within 45
days.
|
DTA Sale of Finished Products/ Rejects/ Waste/ Scrap/ Remnants and
By-products |
6.8 |
The entire production of EOU/EHTP/STP/BTP units shall be exported
subject to the following:
- Units, other than gems and jewellery units, may sell goods upto
50% of FOB value of exports subject to fulfilment of positive NFE on
payment of concessional duties. Within the entitlement of DTA sale,
the unit may sell in DTA its products similar to the goods, which
are exported or expected to be exported from the units. No DTA sale
at concessional duty shall be permissible in respect of motor cars,
alcoholic liquors, books, tea (except instant tea), pepper & pepper
products, marble and such other items as may be notified from time
to time. Such DTA sale shall also not be permissible to units
engaged in the activities of packaging / labeling / segregation /
refrigeration /compacting/ micronisation/pulverization/granulation/conversion
of monohydrate form of chemical to anhydrous form or vice-versa.
Sales made to a unit in SEZ shall also be taken into account for the
purpose of arriving at FOB value of export by EOU provided payment
for such sales are made from Foreign Exchange Account of SEZ unit.
Sale to DTA would also be subject to mandatory requirement of
registration of pharmaceutical products (including bulk drugs).
- For services, including software units, sale in the DTA in any
mode, including on line data communication shall also be permissible
up to 50% of FOB value of exports and /or 50% of foreign exchange
earned, where payment of such services is received in foreign
exchange.
- Gems and jewellery units may sell upto 10% of FOB value of
exports of the preceding year in DTA subject to fulfillment of
positive NFE. In respect of sale of plain jewellery, the recipient
shall pay concessional rate of duty as applicable to sale from
nominated agencies. In respect of studded jewellery, duty shall be
payable as applicable.
- Unless specifically prohibited in the LOP, rejects within an
overall limit of 50% may be sold in the Domestic Tariff Area (DTA)
on payment of duties as applicable to sale under paragraph 6.8(a) on
prior intimation to the Customs authorities. Such sales shall be
counted against DTA sale entitlement. Sale of rejects upto 5% of FOB
value of exports shall not be subject to achievement of NFE.
- Scrap/ waste/ remnants arising out of production process or in
connection therewith may be sold in the DTA as per the Standard
Input-Output norms notified under the Duty Exemption Scheme on
payment of concessional duties as applicable within the overall
ceiling of 50% of FOB value of exports. Such sales shall not,
however, be subject to achievement of positive NFE. In respect of
items not covered by the norms, the Development Commissioner may fix
ad-hoc norms on the basis of data for a period of six months and
within this period, he shall get the norms fixed by the BOA. Sale of
waste/scrap/remnants by units not entitled to DTA sale or sales
beyond the DTA sale entitlement, shall be on payment of full duties.
The scrap/waste/remnants may also be exported.
- There shall be no duties/taxes on scrap/waste/ remnants in case
the same are destroyed with the permission of Customs authorities.
- By-products included in the LOP may also be sold in the DTA
subject to achievement of positive NFE on payment of applicable
duties within the overall entitlement of paragraph 6.8(a). Sale of
by-products by units not entitled to DTA sales or beyond the
entitlements of paragraph 6.8 (a) shall also be permissible on
payment of full duties.
- EOU/ EHTP/ STP/BTP units may sell finished products, except
pepper and pepper products and marble which are freely importable
under the Policy in the DTA under intimation to the Development
Commissioner against payment of full duties provided they have
achieved the positive NFE.
- In the case of units manufacturing electronics hardware and
software, the NFE and DTA sale entitlement shall be reckoned
separately for hardware and software.
- In case of DTA sale of goods manufactured by EOU/ EHTP/STP/BTP,
where basic duty and CVD is nil, such goods may be considered as
non-excisable for the purpose of payment of duty.
- In case of new EOUs, advance DTA sale will be allowed not
exceeding 50% of its estimated exports for the first year except the
pharmaceutical units where this will be based on its estimated
exports for the first two years.
|
Other Supplies in DTA |
6.9 |
Following supplies effected from EOU/EHTP/STP/BTP units to DTA will
be counted for the purpose of fulfilment of positive NFE:
- Supplies effected in DTA to holders of advance Authorisation/advance
Authorisation for annual requirement/DFRC under the duty exemption /
remission scheme /EPCG scheme.
- Deleted
- Supplies to other EOU/EHTP/STP//BTP/SEZ units provided that such
goods are permissible for procurement in terms of paragraph 6.2 of
the Policy.
- Supplies made to bonded warehouses set up under the policy and/
or under section 65 of the customs act and free trade and
warehousing zones, where payment is received in foreign exchange.
- Supplies of goods and services to such organizations which are
entitled for duty free import of such items in terms of general
exemption notification issued by the Ministry of Finance.
- Supply of services (by services units) relating to exports paid
for in free foreign exchange or for such services rendered in Indian
Rupees which are otherwise considered as having been paid for in
free foreign exchange by RBI.
- Supplies of Information Technology Agreement (ITA -1) items and
notified zero duty telecom/ electronic items.
|
Export through others |
6.10 |
An EOU/EHTP/STP/BTP unit may export goods manufactured/software
developed by it through another exporter or any other EOU/EHTP/STP/SEZ
unit subject to the conditions mentioned in para 6.19 of Handbook. |
Entitlement for supplies from the DTA |
6.11 |
- Supplies from the DTA to EOU/EHTP/STP/BTP units will be regarded
as “deemed exports” and the DTA supplier shall be eligible for the
relevant entitlements under chapter 8 of the Policy besides
discharge of export obligation, if any, on the supplier.
Notwithstanding the above, EOU/ EHTP/ STP/BTP units shall, on
production of a suitable disclaimer from the DTA supplier, be
eligible for obtaining the entitlements specified in chapter 8 of
the Policy. For the purpose of claiming deemed export duty drawback,
they shall get Brand Rates fixed by the Development Commissioner.
wherever All Industry Rates of Drawback are not available.
- Suppliers of precious and semi-precious stones, synthetic stones
and processed pearls from DTA to EOU shall be eligible for grant of
Replenishment Licenses at the rates and for the items mentioned in
the Handbook (Vol.1).
- In addition, the EOU/EHTP/STP/BTP units shall be entitled to the
following:-
- Reimbursement of Central Sales Tax on goods manufactured in
India.
- Exemption from payment of Central Excise Duty on goods
procured from DTA on goods manufactured in India.
- deleted
- Reimbursement of Duty paid on fuels procured from domestic
oil companies as per the rate of Drawback notified by the DGFT
from time to time.
- CENVAT Credit on service tax paid.
|
Other Entitlements |
6.12 |
Other entitlements of EOU/EHTP/STP/BTP units are as under:
- Exemption from payment of Income Tax as per the provisions of
Section 10A and 10B of Income Tax Act.
- Exemption from industrial licensing for manufacture of items
reserved for SSI sector.
- deleted
- Export proceeds will be realized within 12 Months.
- Will be allowed to retain 100% of its export earning in the EEFC
account.
- The Units will not be required to furnish bank guarantee at the
time of import or going for job work in DTA, where the unit has (i)
a turnover of Rupees 5 crores or above, (ii) the unit is in
existence for at least three years and (iii) unit having an
unblemished track record.
- 100% FDI investment permitted through Automatic Route similar to
SEZ units.
|
Inter Unit Transfer |
6.13 |
- Transfer of manufactured goods from one EOU/ EHTP/STP/BTP unit
to another EOU/EHTP/STP/ BTP unit is allowed with prior intimation
to the concerned Development Commissioner and Customs authorities
following the procedure of in- bond movement of goods.
- Capital goods may be transferred or given on loan to other
EOU/EHTP/STP/BTP/SEZ units with prior intimation to the concerned
Development Commissioner and Customs authorities.
- Goods supplied by one unit of EOU/EHTP/STP/ BTP to another unit
shall be treated as imported goods for the second unit for the
purpose of payment of duty, on DTA sale by the second unit.
|
Sub-Contracting |
6.14 |
-
- EOU/EHTP/STP/BTP units, including gem and jewellery units, may on
the basis of annual permission from the Customs authorities, subcontract
production processes to DTA through job work which may also involve
change of form or nature of goods, through job work by units in the DTA.
- These units may also subcontract upto 50% of the overall production
of the previous year in value terms for job work in DTA with the
permission of the Customs Authorities.
-
- EOU may, on the basis of annual permission from the Customs
authorities, undertake job work for export, on behalf of DTA exporter,
provided that the goods are exported directly from EOU and export
document shall jointly be in the name of DTA/EOU. For such exports, the
DTA units will be entitled for refund of duty paid on the inputs by way
of Brand Rate of duty drawback.
- Duty free import of goods for execution of export order placed on
EOU by Foreign Supplier on job work basis would be allowed subject to
the condition that no DTA clearance shall be allowed.
- Subcontracting of both production and production processes may also
be undertaken without any limit through other EOU/EHTP/ STP/SEZ/BTP
units on the basis of records maintained in the unit.
- Subcontracting of part of production process may also be permitted
abroad with the approval of the Development Commissioner.
- Scrap/waste/remnants generated through job work may either be cleared
from the job worker ’s premises on payment of applicable duty on transaction
value or destroyed in the presence of Customs/ Excise authorities or
returned to the unit. Destruction shall not apply to gold, silver, platinum,
diamond, precious and semi precious stones.
- Sub-contracting/exchange by gems and jewellery EOUs through other EOUs
or SEZ units or units in DTA shall be as per procedure indicated in Handbook
(Vol-I).
|
Sale of Un-utilised Material |
6.15 |
- In case an EOU/EHTP/STP/BTP unit is unable to utilize the goods
and services, imported or procured from DTA, it may be
- transferred to another EOU/SEZ/EHTP/STP/BTP unit or
- disposed off in the DTA with the approval of the Customs
authorities on payment of applicable duties and submission of
import Authorisation, if required, or
- exported. Such transfer from EOU/EHTP/STP/BTP unit to
another such unit would be treated as import for the receiving
unit.
- Capital goods and spares that have become obsolete/ surplus, may
either be exported, transferred to another EOU/EHTP/STP/BTP/SEZ or
disposed of in the DTA on payment of applicable duties. The benefit
of depreciation, as applicable, will be available in case of
disposal in DTA. No duty shall be payable in case capital goods, raw
material, consumables, spares, goods manufactured, processed or
packaged, and scrap/ waste/ remnants/ rejects are destroyed within
the Unit after intimation to the Custom authorities or destroyed
outside the Unit with the permission of Custom authorities.
Destruction as stated above shall not apply to gold, silver,
platinum, diamond, precious and semi precious stones.
- In the case of textile sector, disposal of left over material
/fabrics upto 2% of cif value or quantity of import, whichever is
lower, on payment of duty on transaction value may be allowed,
subject to certification of central excise/custom officers that
these are leftover items.
- Disposal of used packing material will be allowed on payment of
duty on transaction value.
|
Reconditioning/Repair and Re-engineering |
6.16 |
EOU/EHTP/STP/BTP units may be set up with the approval of BOA to
carry out reconditioning, repair, remaking, testing, calibration,
quality improvement, up-gradation of technology and re-engineering
activities for export in foreign currency. The provisions of paragraphs
6.8, 6.9,6.10, 6.13, 6.14 of policy and para 6.29 of Handbook shall not,
however, apply to such activities. |
Replacement/ Repair of imported/ Indigenous Goods |
6.17 |
- The general provisions of the Policy relating to export / import
of replacement / repair of goods would also apply equally to
EOU/EHTP/STP/BTP units. Cases not covered by these provisions shall
be considered on merits by the Development Commissioner.
- The goods sold in the DTA and not accepted for any reasons may
be brought back for repair/ replacement, under intimation to the
concerned jurisdictional Customs/Excise authorities.
- Goods or parts thereof on being imported/indigenously procured
and found defective or otherwise unfit for use or which have been
damaged or become defective subsequently may be returned and
replacement obtained or destroyed. In the event of replacement, the
goods may be brought back from the foreign suppliers or their
authorized agents in India or indigenous suppliers. However
destruction shall not apply to precious and semi precious stones and
precious metals.
|
Exit from EOU Scheme |
6.18 |
- With the approval of the Development Commissioner, EOU units may
opt out of the scheme. Such exit from the scheme shall be subject to
payment of Excise and Customs duties and the industrial policy in
force at the time of exit.
- If the unit has not achieved the obligations under the scheme,
it shall also be liable to penalty at the time of exit.
- In the event of a gem and jewellery unit ceasing its operation,
gold and other precious metals, alloys, gem and other materials
available for manufacture of jewellery, shall be handed over to an
agency nominated by the Ministry of Commerce and Industry
(Department of Commerce) at the price to be determined by that
agency.
- An EOU//EHTP/STP/BTP unit may also be permitted by the
Development Commissioner, to exit from the scheme on payment of duty
on capital goods under the prevailing EPCG Scheme as a one time
option. This will be subject to fulfilment of the eligibility
criteria under that Scheme and standard conditions indicated in
Handbook (Vol-I).
- The unit proposing to exit out of the EOU scheme shall intimate
the Development Commissioner and Customs and Central Excise
authorities in writing. The unit shall assess the duty liability
arising out of debonding and submit the details of such assessment
to customs and Central Excise authorities. The Customs and Central
Excise authorities shall confirm the duty liabilities on priority
basis. After payment of duty and clearance of all dues the unit
shall obtain “No Dues Certificate” from the Customs and Central
Excise authorities. On the basis of No dues certificate so issued by
the Customs and Central Excise authorities, the unit shall apply to
the Development Commissioner for final debonding. In case there is
no proceeding pending under FT(DR) Act 1992, the Development
commissioner shall issue final debonding order within a period of 7
working days. During the period between “No dues certificate” issued
by the Customs and Central Excise authorities and the final
debonding order by the Development Commissioner, the unit shall not
be entitled to claim any exemption for procurement of capital goods
or input. The unit can however, claim Advance License/ DEPB / Duty
Drawback.
- In cases where a unit is initially established as DTA unit with
machine procured from abroad after payment of applicable import duty
or from domestic market after payment of excise duty and the unit is
subsequently converted to EOU, in such cases removal of such capital
goods to DTA after de-bonding would be without payment of duty.
Similarly, in cases where a DTA unit imported capital goods under
the EPCG Scheme and after completely fulfilling the export
obligation under the EPCG scheme gets converted into EOU, the unit
would not be charged customs duty on capital goods at the time of
removal of such capital goods in DTA at the time of debonding.
|
Conversion |
6.19 |
- Existing DTA units, may also apply for conversion into an
EOU/EHTP/STP/BTP unit, and Income Tax benefits under Section 10-A &
10-B will be available under the scheme for plant, machinery and
equipment already installed.
- The existing EHTP/STP units may also apply for conversion/merger
to EOU unit and vice-versa. In such cases, the units will remain in
bond and avail the exemptions in duties and taxes as applicable
under the relevant scheme.
|
Monitoring of NFE |
6.20 |
The performance of EOU/EHTP/STP/BTP units shall be monitored by the
Units Approval Committee as per the guidelines given in Handbook (Vol-I). |
Export through Exhibitions/Export Promotion Tours / Export through
showrooms abroad/ Duty Free Shops. |
6.21 |
EOU/EHTP/STP/BTP are permitted to :
- Export goods for holding/ participating in exhibitions abroad
with the permission of Development Commissioner.
- Personal carriage of gold/ silver/ platinum jewellery, precious,
semi-precious stones, beads and articles.
- Export goods for display/sale in the permitted shops set up
abroad.
- Display/sell in the permitted shops set up abroad or in the show
rooms of their distributors/agents.
- Set up show rooms/retail outlets at the International Airports.
|
Personal Carriage Of Import / Export Parcels Including through
Foreign bound Passengers |
6.22 |
Import/ export through personal carriage of gem and jewellery items
may be under-taken as per the procedure prescribed by Customs. The
export proceeds shall, however, be realized through normal banking
channel. Import/export through personal carriage by units, other than
gem and jewellery units, shall be allowed provided the goods are not in
commercial quantity. |
Export /Import by Post /Courier |
6.23 |
Goods including free samples, may be exported/imported by airfreight
or through Foreign Post Office or through courier, subject to the
procedure prescribed by Customs. |
Administration of EOUs/Power of Development Commissioner |
6.24 |
Details of administration of EOUs and Power of Development
Commissioner are given in Handbook (Vol.1). |
Revival of Sick units |
6.25 |
Subject to a unit being declared sick by the appropriate authority,
proposals for revival of the unit or its take over may be considered by
the Board of Approval. |
Approval for EHTP/STP |
6.26 |
In the case of units under EHTP/STP Schemes, necessary approval /
permission under relevant paragraphs of this Chapter shall be granted by
the officer designated by the Ministry of Communication and Information
Technology, Department of Information Technology for the purpose instead
of the Development Commissioner and by the Inter-Ministerial Standing
Committee (IMSC) instead of BOA. |
Approval of BTP |
6.27 |
Bio-Technology Parks (BTP) would be notified by the DGFT on the
recommendations of Department of Biotechnology. In the case of units in
the BTP, necessary approval/permission under relevant provisions of this
chapter will be granted by designated officer of the Department of
Biotechnology. |
The policy relating to Special Economic Zones is governed by SEZ
Act 2005, and the Rules framed thereunder.
The policy relating to Free Trade and Warehousing Zones is
governed by SEZ Act 2005, and the Rules framed thereunder.
Deemed Exports |
8.1 |
“Deemed Exports” refers to those transactions in which the goods
supplied do not leave the country and the payment for such supplies is
received either in Indian rupees or in free foreign exchange. |
Categories of Supply |
8.2 |
The following categories of supply of goods by the main/ sub-
contractors shall be regarded as “Deemed Exports” under this Policy,
provided the goods are manufactured in India:
- Supply of goods against Advance Authorisation / Advance
Authorisation for annual requirement;
- Supply of goods to Export Oriented Units (EOUs) or Software
Technology Parks (STPs) or Electronic Hardware Technology Parks
(EHTPs) or Bio Technology Parks (BTP);
- Supply of capital goods to holders of Authorisations under the
Export Promotion Capital Goods (EPCG) scheme;
- Supply of goods to projects financed by multilateral or
bilateral agencies/funds as notified by the Department of Economic
Affairs, Ministry of Finance under International Competitive Bidding
in accordance with the procedures of those agencies/ funds, where
the legal agreements provide for tender evaluation without including
the customs duty;
Supply and installation of goods and equipment (single
responsibility of turnkey contracts) to projects financed by
multilateral or bilateral agencies/funds as notified by Department
of Economic Affairs, Ministry of Finance under International
Competitive Bidding in accordance with the procedures of those
agencies/funds, which the bids may have been invited and evaluated
on the basis of Delivered Duty Paid (DDP) prices for the goods
manufactured abroad.
- Supply of capital goods, including in unassembled/ disassembled
condition as well as plants, machinery, accessories, tools, dies and
such goods which are used for installation purposes till the stage
of commercial production and spares to the extent of 10% of the FOR
value to fertilizer plants;
- Supply of goods to any project or purpose in respect of which
the Ministry of Finance, by a notification, permits the import of
such goods at zero customs duty;
- Supply of goods to the power projects and refineries not covered
in (f) above;
- Supply of marine freight containers by 100% EOU (Domestic
freight containers-manufacturers) provided the said containers are
exported out of India within 6 months or such further period as
permitted by the customs;
- Supply to projects funded by UN agencies; and
- Supply of goods to nuclear power projects through competitive
bidding as opposed to International Competitive Bidding.
The benefits of deemed exports shall be available under paragraph
(d), (e), (f) and (g) only if the supply is made under the procedure of
International Competitive Bidding (ICB).
|
Benefits for Deemed Exports |
8.3 |
Deemed exports shall be eligible for any/all of the following
benefits in respect of manufacture and supply of goods qualifying as
deemed exports subject to the terms and conditions as given in Handbook
(Vol.1):
- Advance Authorisation
- Deemed Export Drawback.
- Exemption from terminal excise duty where supplies are made
against International Competitive Bidding. In other cases, refund of
terminal excise duty will be given.
|
Benefits to the Supplier |
8.4.1 |
- In respect of supplies made against Advance Authorisation in
terms of paragraphs 8.2(a) of the Policy, the supplier shall be
entitled to Advance Authorisation for intermediate supplies.
- If the supplies are made against Advance Release Order (ARO) or
Back to Back Letter of Credit issued against Advance Authorisation
in terms of paragraphs 4.1.11 and 4.1.12 of the Policy, supplier
shall be entitled to the benefits listed in paragraphs 8.3(b) and
(c) of the Policy, whichever is applicable.
- If the supplies are made against Advance Release Order (ARO) or
Back to Back Letter of Credit issued against DFRC, the supplier
shall be entitled to the benefit listed in paragraph 8.3(b) of the
Policy.
|
|
8.4.2 |
In respect of supply of goods to EOU/ EHTP/ STP/BTP in terms of
paragraphs 8.2 (b) of the Policy, the supplier shall be entitled to the
benefits listed in paragraph 8.3(a),(b)and (c) of the Policy, whichever
is applicable. |
|
8.4.3 |
In respect of supplies made under paragraph 8.2(c) of the Policy,
the supplier shall be entitled to the benefits listed in paragraph
8.3(a), (b) and (c), of the Policy, whichever is applicable. |
|
8.4.4 |
- In respect of supplies made under paragraphs 8.2 (d), (f) and
(g) of the Policy, the supplier shall be entitled to the benefits
listed in paragraphs 8.3(a), (b) and (c),whichever is applicable.
- In respect of supplies mentioned in paragraph 8.2(d), supplies
to the projects funded by such agencies alone, as may be notified by
Department of Economic Affairs, Ministry of Finance, shall be
eligible for deemed export benefits. A list of such agencies/ funds
is given in Appendix-13 of Handbook (Vol.I).
- The benefits of deemed exports under para 8.2(f) of the Policy
shall be applicable in respect of items, import of which is allowed
by the Department of Revenue at zero customs duty subject to
fulfillment of conditions specified under Notification No.21/
2002-Customs dated 1.3.2002, as amended from time to time.
- Supply of Capital goods and spares upto 10% of the FOR value of
the capital goods to the power projects in terms of paragraphs
8.2(g) shall be entitled for deemed export benefits provided the
International Competitive Bidding procedures have been followed at
Independent Power Producer (IPP)/Engineering and Procurement
Contract(EPC) stage. The benefit of deemed exports shall also be
available for renovation/ modernization of power plants. The
supplier shall be eligible for benefits listed in paragraph 8.3(a)
and (b) of the Policy, whichever is applicable. However , supply of
goods required for setting up of any mega power projects as
specified in S.No. 400 of Department of Revenue Notification
No.21/2002-Customs dated 1.3.2002, as amended, shall be eligible for
deemed exports benefits as mentioned in paragraph 8.3(a), (b) and
(c) of the Policy, whichever is applicable, if such mega power
project is –
- an inter state thermal power plant of capacity of 1000 MW or
more; or
- an inter state Hydel power plant of capacity of 500 MW or
more.
- Supplies under paragraph 8.2(g) of the Policy to the new
refineries being set up during the Ninth plan period and spilled
over to the Tenth plan period shall be entitled for deemed export
benefits in respect of goods mentioned in list 17 specified in
S.No.228 of Notification No.21/2002-Customs dated 1.3.2002, as
amended from time to time. The supplier shall be eligible for
benefits listed in paragraphs 8.3(a) and (b) of the Policy,
whichever is applicable.
|
|
8.4.5 |
In respect of supplies made under paragraph 8.2(e) of the Policy,
the supplier shall be eligible for the benefits listed in paragraph
8.3(a) and (b) of the Policy, whichever is applicable. The benefit of
deemed exports shall be available in respect of supplies of capital
goods and spares to fertilizer plants which are set up or expanded/
revamped/ retrofitted/modernized during the Ninth Plan period. The
benefit of deemed exports shall also be available on supplies made to
Fertilizer plants, which have started in the 8th /9th Plan periods and
spilled over to the 10th Plan period. |
|
8.4.6 |
The supplies of goods to projects funded by UN agencies covered
under Para 8.2(i) of the Policy are eligible for benefits listed in
paragraph 8.3(a) and (b) of the Policy, whichever is applicable |
|
8.4.7 |
In respect of supplies made to nuclear Power Projects under para
8.2(j) of the policy, the supplier would be eligible for benefits given
in para 8.3 (a), (b) and (c) of the Policy, whichever is applicable.
Supply of only those goods required for setting up any nuclear power
project specified in list 43 at S.No.401 of Notification
No.21/2002-Customs dated 1.3.2002,as amended from time to time having a
capacity of 440 MW or more as certified by an officer not below the rank
of Joint Secretary to the Government of India in the Department of
Atomic Energy shall be entitled for deemed exports benefits in cases
where the procedure of competitive bidding (and not international
competitive bidding) has been followed. |
Eligibility for refund of terminal excise duty/ drawback |
8.5 |
Supply of goods will be eligible for refund of Terminal Excise Duty
in terms of para 8.3 (c) of Policy provided the recipient of the goods
does not avail CENVAT credit /rebate on such goods. Similarly, supplies
will be eligible for deemed export drawback in terms of para 8.3(b) of
Policy on the Central Excise paid on inputs /components, provided CENVAT
credit facility/rebate has not been availed by the applicant. Such
supplies will however be eligible for deemed export drawback on the
customs duty paid on the inputs/components. |
Supplies to be made by the main/sub-contractor |
8.6.1 |
In all cases of deemed exports, supplies shall be made directly to
the designated Projects/ Agencies/ Units/ Advance Authorisation / EPCG
Authorisation holders. The sub- contractor may, however, make the
supplies to the main contractor as per paragraph 8.4 of Handbook instead
of designated projects/ agencies. |
|
8.6.2 |
Supplies made by an Indian sub-contractor of an Indian or foreign
main contractor, shall also be eligible for deemed export benefits
provided the name of the sub-contractor is indicated either originally
or subsequently in the contract, and payment certificate is issued by
the project authority in the name of the sub-contractor in the form
given in Appendix 22C of Handbook (Vol.I). |
9.1 |
For the purpose of this Policy, unless the context otherwise
requires, the following words and expressions shall have the following
meanings attached to them. |
9.2 |
“Accessory” or “Attachment” means a part, sub-assembly or assembly
that contributes to the efficiency or effectiveness of a piece of
equipment without changing its basic functions. |
9.3 |
“Act” means the Foreign Trade (Development and Regulation) Act, 1992
(No.22 of 1992). |
9.4 |
“Actual User” means an actual user who may be either industrial or
non-industrial. |
9.5 |
“Actual User (Industrial)” means a person who utilises the imported
goods for manufacturing in his own industrial unit or manufacturing for
his own use in another unit including a jobbing unit. |
9.6 |
“Actual User (Non-Industrial)” means a person who utilises the
imported goods for his own use in
- any commercial establishment carrying on any business, trade or
profession; or
- any laboratory, Scientific or Research and Development (R&D)
institution, university or other educational institution or
hospital; or
- any service industry.
|
9.7 |
“AEZ” means Agricultural Export Zones notified by DGFT in Appendix 8
of Handbook (Vol 1). |
9.8 |
Deleted |
9.9 |
“Applicant” means the person on whose behalf the application is made
and shall, wherever the context so requires, include the person signing
the application. |
9.9.1 |
“Authorisation” means a permission as included in Section 2 (g) of
The Foreign Trade (Development and Regulation) Act, 1992 (No.22 of 1992)
to import or export as per provisions of this policy. |
9.10 |
“BOA” means the Board of Approval as notified by the Department of
Commerce. |
9.11 |
“BTP” means Biotechnology Park as notified by Director General of
Foreign Trade on the recommendation of the Department of Biotechnology. |
9.12 |
“Capital Goods” means any plant, machinery, equipment or accessories
required for manufacture or production, either directly or indirectly,
of goods or for rendering services, including those required for
replacement, modernisation, technological upgradation or expansion.
Capital goods also include packaging machinery and equipment,
refractories for initial lining, refrigeration equipment, power
generating sets, machine tools, catalysts for initial charge, equipment
and instruments for testing, research and development, quality and
pollution control. Capital goods may be for use in manufacturing,
mining, agriculture, aquaculture, animal husbandry, floriculture,
horticulture, pisciculture, poultry, sericulture and viticulture as well
as for use in the services sector. |
9.13 |
“Competent Authority” means an authority competent to exercise any
power or to discharge any duty or function under the Act or the Rules
and Orders made thereunder or under this Policy. |
9.14 |
“Component” means one of the parts of a sub-assembly or assembly of
which a manufactured product is made up and into which it may be
resolved. A component includes an accessory or attachment to the
component. |
9.15 |
“Consumables” means any item, which participates in or is required
for a manufacturing process, but does not necessarily form part of the
end-product. Items, which are substantially or totally consumed during a
manufacturing process will be deemed to be consumables. |
9.16 |
“Consumer Goods” means any consumption goods, which can directly
satisfy human needs without further processing and includes consumer
durables and accessories thereof. |
9.17 |
“Counter Trade” means any arrangement under which exports/ imports
from/to India are balanced either by direct imports/ exports from the
importing/exporting country or through a third country under a Trade
Agreement or otherwise. Exports/ Imports under Counter Trade may be
carried out through Escrow Account, Buy Back arrangements, Barter trade
or any similar arrangement. The balancing of exports and imports could
wholly or partly be in cash, goods and/or services. |
9.18 |
“Developer” means a person or body of persons, company, firm and
such other private or government undertaking, who develops, builds,
designs , organises, promotes, finances, operates, maintain or manages a
part or whole of the infrastructure and other facilities in the Special
Economic Zones as approved by the Central Government. |
9.19 |
“Development Commissioner” means the Development Commissioner of the
Special Economic Zone. |
9.20 |
“DFRC” means Duty Free Replenishment Certificate. |
9.21 |
“Domestic Tariff Area” means area within India which is outside the
Special Economic Zones and EOU/ EHTP/ STP/ BTP. |
9.22 |
“Drawback, “ in relation to any goods manufactured in India and
exported, means the rebate of duty chargeable on any imported material
or excisable material used in the manufacture of such goods in India.
The goods include imported spares, if supplied with capital goods
manufactured in India. |
9.23 |
“EHTP “ means Electronic Hardware Technology Park. |
9.24 |
“EOU” means Export Oriented Unit for which an LOP has been issued by
the Development Commissioner. |
9.25 |
“Excisable goods” means any goods produced or manufactured in India
and subject to a duty of excise under the Central Excise and Salt Act
1944 (1 of 1944). |
9.26 |
“Exporter” means a person who exports or intends to export and holds
an Importer-Exporter Code number unless otherwise specifically exempted. |
9.27 |
“Export Obligation” means the obligation to export the product or
products covered by the Authorisation or permission in terms of
quantity, value or both, as may be prescribed or specified by the
licensing or competent authority. |
9.28 |
Group Company” means two or more enterprises which, directly or
indirectly, are in a position to —
- exercise twenty-six per cent. or more of the voting rights in
the other enterprise; or
- appoint more than fifty percent, of the members of the board of
directors in the other enterprise.
For the group companies to claim benefits or have their exports
counted for benefits to be claimed by another member of the group,
the group company should have been in existence atleast 2 years
prior to the date of application under any of the export promotion
schemes notified in the Policy.
|
9.29 |
“Handbook (Vol.1)”means the Handbook of Procedures (Vol.1) and
“Handbook (Vol.2)” means Handbook of Procedures (Vol.2) published under
the provisions of paragraph 2.4 of the Policy. |
9.30 |
“Importer” means a person who imports or intends to import and holds
an Importer-Exporter Code number unless otherwise specifically exempted. |
9.31 |
“Infrastructure facilities” means industrial, commercial and social
infrastructure or any other facility for the development of the Special
Economic Zone as notified. |
9.32 |
“ITC(HS)” means ITC(HS) Classifications of Export and Import Items
Book. |
9.33 |
“Jobbing” means processing or working upon of raw materials or
semi-finished goods supplied to the job worker so as to complete a part
of the process resulting in the manufacture or finishing of an article
or any operation which is essential for the aforesaid process. |
9.34 |
“Licensing Authority” means the authority competent to grant an
Authorisation under the Act/Order. |
9.35 |
“Licensing Year” means the period beginning on the 1st April of a
year and ending on the 31st March of the following year. |
9.36 |
“Managed Hotel” means hotels managed by a three star or above hotel/
hotel chain under an operating management contract for a duration of
atleast three years between the operating hotel/ hotel chain and the
hotel being managed. The management contract must necessarily cover the
entire gamut of operations/ management of the managed hotel. |
9.37 |
“Manufacture” means to make, produce, fabricate, assemble, process
or bring into existence, by hand or by machine, a new product having a
distinctive name, character or use and shall include processes such as
refrigeration, re-packing, polishing, labelling. Re - conditioning
repair, remaking, refurbishing, testing, calibration, re-engineering.
Manufacture, for the purpose of this Policy, shall also include
agriculture, aquaculture, animal husbandry, floriculture, horticulture,
pisciculture, poultry, sericulture, viticulture and mining. |
9.38 |
“Manufacturer Exporter” means a person who export goods manufactured
by him or intends to export such goods. |
9.39 |
“MAI” means Market Access Initiative Scheme notified by the
Department of Commerce |
9.40 |
“Merchant Exporter” means a person engaged in trading activity and
exporting or intending to export goods. |
9.40.1 |
“NC” means the Norms Committee in the Directorate General of Foreign
Trade for recommending grant of Authorisations under Duty Exemption
Scheme and for recommending Input Output norms and value addition norms
to be notified by Director General of Foreign Trade. |
9.41 |
“NFE” means Net Foreign Exchange Earning. |
9.42 |
“Notification” means a notification published in the Official
Gazette. |
9.43 |
“Order” means an Order made by the Central Government under the Act. |
9.44 |
“Part” means an element of a sub-assembly or assembly not normally
useful by itself and not amenable to further disassembly for maintenance
purposes. A part may be a component, spare or an accessory. |
9.45 |
“Person” includes an individual, firm, society, company, corporation
or any other legal person. |
9.46 |
“Policy” means the Foreign Trade Policy 2004-2009 as amended from
time to time. |
9.47 |
“Prescribed” means prescribed under the Foreign Trade (Development
and Regulation) Act, 1992 (No. 22 of 1992) or the Rules or Orders made
thereunder or under this Policy. |
9.48 |
“Public Notice” means a notice published under the provisions of
paragraph 2.4 of the Policy. |
9.49 |
“Raw material” means:
- basic materials which are needed for the manufacture of goods,
but which are still in a raw, natural, unrefined or unmanufactured
state; and
- for a manufacturer, any materials or goods which are required
for his manufacturing process, whether they have actually been
previously manufactured or are processed or are still in a raw or
natural state.
|
9.50 |
“Registration-Cum-Membership Certificate” (RCMC) means the
certificate of registration and membership granted by an Export
Promotion Council/ Commodity Board/ Development Authority or other
competent authority as prescribed in the Policy or Handbook (Vol.1). |
9.51 |
“Rules” means Rules made by the Central Government under Section 19
of the Act. |
9.52 |
“Services” include all the tradable services covered under General
Agreement on Trade in Services and earning free foreign exchange. |
9.53 |
“Service Provider” means a person providing
- Supply of a ‘service’ from India to any other country;
- Supply of a ‘service’ from India to the service consumer of any
other country in India; and
- Supply of a ‘service’ from India through commercial or physical
presence in the territory of any other country.
- Supply of a ‘service’ in India relating to exports paid in free
foreign exchange or in Indian Rupees which are otherwise considered
as having being paid for in free foreign exchange by RBI.
|
9.54 |
“SEZ” means Special Economic Zone notified by the Ministry of
Commerce & Industry, Department of Commerce. |
9.55 |
“Ships” mean all types of vessels used for sea borne trade or
coastal trade and shall include second hand vessels. |
9.56 |
“SION” means Standard Input Output Norms notified by DGFT in the
Handbook (Vol.2), 2002-07/approved by Board of Approval. |
9.57 |
“Spares” means a part or a sub-assembly or assembly for
substitution, that is ready to replace an identical or similar part or
sub-assembly or assembly. Spares include a component or an accessory. |
9.58 |
“Specified” means specified by or under the provisions of this
Policy. |
9.59 |
“Status holder” means an exporter recognized as One to Five Star
Export House by DGFT/ Development Commissioner. |
9.60 |
“STP” means Software Technology Park |
9.61 |
“Supporting Manufacturer” means any person who manufactures any
product or part/ accessories/ components of that product. The name of
the supporting manufacturer as well as the exporter must be endorsed on
the export documents. |
9.62 |
“Third-party exports” means exports made by an exporter or
manufacturer on behalf of another exporter(s). In such cases, export
documents such as shipping bills etc shall indicate the name of both the
manufacturing exporter/manufacturer and third party exporter(s). The
BRC, GR declaration, export order and the invoice should be in the name
of the third party exporter. |
9.63 |
“Transaction Value” as defined in the Customs Valuation Rules of the
Department of Revenue. |
9.64 |
“Unit Approval Committee” means the Committee notified for Special
Economic Zones to consider proposals on matters relating to Special
Economic Zone unit under its jurisdiction. |
9.65 |
“Wild Animal” means any wild animal as defined in Section 2(36) of
the Wildlife (Protection) Act, 1972. |