Annual Supplement to Foreign Trade Policy for 2007-08

Highlights

The Annual Supplement to the Foreign Trade Policy was released by Hon’ble Commerce & Industry Minister Mr. Kamal Nath on 19th April, 2007 at New Delhi. The main highlights of the Policy are:

 

Handloom, Handicrafts, Cottage and Tiny Industries

  • Handloom and Handicraft industries have been exempted from duty on the machinery and equipment needed for effluent treatment plants, to enable them meet environmental and other international standards.

  • Tools, machinery and equipments for handicrafts have also been covered within the existing duty free entitlement limit.

Gems & Jewellery Sector

  • Duty Free entitlement for consumables for export of rhodium plated silver jewellery has been increased to 3%

  • Testing facility at Dubai has been included in the approved list of certifying agencies. This will facilitate the certification of diamonds as a pre-requisite to ensuring quality and competitiveness of exports.

  • Machinery, equipment & tools have been covered within the present duty free entitlement ceiling.

Force Majeure Clause

 

In cases where exporters suffer on account of unforeseen circumstances/reasons and force majeure, DGFT may consider extension of Export Obligation period and validity of an authorisation for a further appropriate period.

 

Samples for exporters

 

The existing limit of Rs.60,000 for Duty Free import of samples has been raised upto Rs.75,000.

 

Status Holders

 

Categorisation of exporters as One to Five Star Export Houses has been changed to Export House, Star Export House, Trading House, Star Trading House and Premier Trading House with rationalization and change in export performance parameters.

 

Agri-exports

 

Status holders will be incentivised with duty credit scrips equal to 10% of the value of agricultural exports for duty redemption on imports of cold storage, pack houses, reefer vans, etc. This would be over and above the benefits available from the existing schemes of Ministries of Agriculture and Food Processing, etc.

 

Vishesh Krishi and Gram Udyog Yojana (VKGUY)

 

The Scope of Vishesh Krishi and Gram Udyog Yojana (VKGUY) has been expanded to include exports of value-added variants of several agricultural and forest products including coconut oil, soyabean oil, potato flakes, meals and flours, cardamom, food preparations like soups, sauces, artistic wooden furniture, herbal extracts of forest products, malt and minor forest produce, etc.

 

Focus Product & Focus Market Schemes

 

Focus Product and Focus Market schemes have been enlarged. New products Mica and variants, barley, oats, soyabean, cigar/cheroots, bovine fats and copra have been included in the Focus Product Scheme. 16 new countries including 10 CIS countries are included under the Focus Market Scheme (FMS). The 16 countries are: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzsttan, Tajikstan, Turkenistan, Ukraine, Uzbekistan, El Salvador, Dominican Republic, Guatemala, Trinidad & Tobago, Serbia & Montenegro and Uruguay. The allocation for the Scheme has been increased by more than 50% from the existing level of Rs.650 crore to Rs.1000 crore.

 

Promotion of High Tech Products

 

To encourage high technology exports, a new scheme providing 10% duty free benefit on incremental exports subject to a ceiling of Rs.15 core for each firm/company has been announced. The list of products to be covered under high technology exports will be notified.

 

Service Tax

  • All services rendered abroad and charged on exports from India would henceforth be exempted from payment of service tax.

  • Service tax on services rendered in India and utilized by exporter would be exempted/remitted. A remission mechanism, where exemption is not available, would be announced after working out modalities with the Department of Revenue.

DEPB Scheme

  • DEPB Scheme stands extended for another year upto 31.3.2008.

  • Customs duty on ‘fuel’ and the 4% special additional duty on all export related imported goods would be reimbursed to the extent it is not Cenvatable, by notifying Brand Rate of DEPB for such products.

EPCG Scheme

 

  • The Tiny and Cottage Industry Sector has been given 12 years time to complete the export obligation instead of normal period of 8 years.

  • Spares, tools, refractory have been allowed under EPCG scheme for the existing plant & machinery and also for the machinery/plant which may not have been imported under EPCG.

  • With a view to rewarding performers, the average export criteria under EPCG scheme have been rationalized. Wherever more than one EPCG authorizations are issued concurrently, fresh EPCG authorisation would be based upon last required average exports, notwithstanding the actual achievement.

  • Block-wise fulfillment of export obligation has been dispensed with. The export obligation under EPCG, which was hitherto based on the past exports of the products for which EPCG authorisation was being claimed, would now be based on the average exports of the firm/company.

  • Service Sector unit will have to maintain the average to avail new EPCG

  • The EPCG holder will now have the option to submit a certificate either from Chartered Engineer or Jurisdictional Excise Authority regarding installation of capital goods imported under EPCG Scheme

100% EOU and SEZ Units

  • Benefit of Focus Market Scheme, Focus Product Scheme and Vishesh Krishi and Gram Yojana Scheme have been extended to those EOUs, which are not availing Direct Tax benefits.

  • 100% EOUs are entitled to exemption from income tax on the goods manufactured and exported from the EOUs under Section 10B of the Income Tax Act. This benefit was being denied by the Income tax Authorities by raising the doubts whether the activity amounted to manufacturing or not. To bring transparency, definition of manufacturing is being incorporated under the Income Tax Act.

  • The developer and co-developer of the Special Economic Zone (SEZ) would be entitled to the benefit of all duty exemption and remission schemes like advance authorisation scheme, DEPB and Duty Free Import Authorisation (DFIA).

  • Interest on delayed payments of TED/Duty Drawback on deemed exports and CST would be payable in lines of provisions of Customs and Income Tax Acts. This facility would also apply to delayed payments of deemed exports.

  • Supplies of accessories such as buttons and hangers to DTA Units will be counted for NFE calculation.

FIEO signs MoU with NPDC, Mongolia

A Memorandum of Understanding was signed between FIEO and National Productivity and Development Center, Mongolia at New Delhi on April 9, 2007 to promote bilateral trade and investment between India and Mongolia. Mr. Ajay Sahai, Director General, FIEO and Dr. Pagvajav-un Shurchuluu, Chairman & CEO, NPDC signed the MoU on behalf of their respective organizations.

The two parties will encourage and assist their respective enterprises to cooperate with their counterparts in the form of joint-ventures and other arrangements. The two parties have further vowed to organize and exchange visits of investment and trade missions, project study groups and offer all needed assistance. The parties will cooperate in organizing economic and trade exhibitions, buyer-seller meets, symposiums, seminars, workshops and displays of samples of new products and related literature.

As per the memorandum, the two parties will also be developing cooperation in the area of local marketing services, which will include recommendations about price levels and demand for consumer goods.


Federation of Indian Export Organisations
New Delhi, INDIA.