We will target new emerging markets, informed Minister of Commerce and Industry, Anand Sharma, while announcing the new foreign trade policy for 2009-14. Current 70% of the export flow is to countries badly hit by recession.
Indian Exporters can now heave a sigh of relief. The government of India, in an ambitious bid to turnaround declining exports and to boost exporter’s morale, has relaxed and extended two important schemes, Export Promotion Capital Goods Scheme and the Duty Entitlement Passbook, and has even introduced other stimulus packages.
Commerce and Industry Minister, Anand Sharma, declaring the foreign policy for 2009-14, said he expected exports to touch $200 billion by the end of current financial year.
The new export policy looks forward to expand Indian operations in emerging markets like Latin America, Africa, Oceania and other CIS countries.
In addition, the policy emphasis on continuity of the existing schemes for another two years.
In 2008-09, exports were worth $168.7 billion, but since then Indian export steadily declined with global credit squeeze, which was then followed by meltdown. Exports went down by 31.3% in the quarter that ended on June 30, as compared to the last year.
Exports comprise just 17% of country’s gross domestic product, which is comparatively less than many Asian Countries.
The new policy focuses on 26 new countries, to offset the demand crunch in the traditional markets.
Nearly 36% of India’s exports in 2008-09 were meant for US, Japanese and European markets.
Apart from the damage the recession has been causing, protectionist measures introduced by several countries have only contributed to India’s Exports decline.
However, by 2015 we would like to achieve an annual growth rate of 15 percent, Sharma further added
The effect of new Foreign Trade Policy on different sectors
• The manpower centered Gems and Jewelry sector will probably get a bigger boost from the Foreign Trade Policy announced by Commerce and Industry Minister Anand Sharma.
• The government has declared duty draw backs on gold Jewelry exports, in case the yellow metal has been imported independently by Jewelry makers.
• This stimulating move will inspire Jewelry exporters to import more raw materials like gold and then export it after value-addition.
• To establish India on the global map as a ‘diamond trading hub’ a plan to set up a ‘Diamond Bourses’ is on the cards. The first one has already been set up in Mumbai.
• A new facility to facilitate import on consignment basis of cut & polished diamonds meant for grading/certification purposes have been introduced.
• Exporters participating in overseas exhibitions will be permitted to carry merchandise worth $5 million with them, as opposed to 2 million allowed now. Even the limit of personal carriage-samples for export promotion tours- has been increased by US$ 1 million.
Leather Sector
Re-exporting of unsold imported hides and skins and semi-finished leather have been permitted from public bonded warehouses, on payment of 50% export duty. Increase of FPS rate to 2% will reportedly benefit this sector.
Pharmaceuticals
• Export obligation period (EOP) has been extended from 6 months to 36 months for advance authorizations for Pharmaceutical Products.
• Domestic drug exporters will hugely benefit from the extension of export obligation period. This will encourage exporters to import raw materials and enjoy tax benefits for a period of three years for exporting finished goods.
• Pharmaceuticals have also been part of Market Linked Focus Product Scheme (MLFPS), which will introduce exporters to 13 different markets, like, Australia, New Zealand, Brazil, Nigeria, and Kenya. This inclusion of this scheme will give a significant boost to pharmaceutical exports.
Tea
• Exports of tea have been brought under Videsh Krishi and Gram Udyog Yojana (VKGUY), which provides 5% incentive. This exporter-friendly policy is expected to offset some of the soaring costs, like transportation.
• However, exporters getting benefits of Duty Entitlement Passbook (DEPB), in excess of 1%, this benefit will get limited to 3%. The incentive will lead to Rs.50 to Rs. 120 crore worth of tea exports.
To bring down the transactions costs and handling costs in agricultural sector, a single-window system has been put in place to facilitate export of perishable agricultural produce. The system will include, setting up of multi-functional nodal agencies to be accredited by APEDA.
Export-Oriented
Units EOUs have been permitted to sell products produced by them in Domestic Traffic Area (DTA) unit from the existing 75% to 90%.
EOUs will be permitted to obtain finished goods for consolidation purposes. However, they will be subject to certain safeguards. Previously, only manufacturing activity was allowed here, procurement and trading was disallowed.
Board of Approvals will mull over the extension of block period by one year for calculation of Net Foreign Exchange earnings of EOUs. EOUs will also be permitted CENVAT Credit facility for the component of SAD and education cess on DTA sale.
Flexibility Offered to Exporters
Payment of custom duty for export obligation shortfall under Advance Authorization/DFIA/EPCG Authorization has been permitted by way of debit of Duty Credit scrips. Previously the payment was permitted in cash only.
Import of controlled items, as refill, will be permitted against transferred DFIAs. Re-import of exported gems and jewelry items, after participation in Exhibitions has been extended to 90 days from current 60 days in case of USA
Procedures simplified, Transaction Costs reduced
• To assist duty free import of samples by Exporters, the number of sample/pieces has been increased from the current 15 to 50. Custom clearance of such samples will be based on the importers declaration on value and quantity of samples.
• To allow non-payment of excise duties for up to two stages, in case of supplying to an advance authorization holder, by the domestic Indian Manufacturers.
• Fees will be exempt for grant of incentives under Chapter 3. For rest of the authorizations, maximum fee is being cut down to RS.10, 000 from Rs.1, 50,000 and Rs. 50,000 from the existing Rs.75, 000 (for EDI applications)
