Foreign Trade Policy 2015-20 Unveiled: Aiming to nearly double India’s exports of goods and services to USD 900 billion by 2020
Commerce and Industry Minister Mrs. Nirmala Sitharaman unveiled the Prime Minister Mr. Narendra Modi-led government’s new Foreign Trade Policy, 2015-2020 (“FTP”) on April 1, 2015 at the Vigyan Bhawan, Delhi, thus laying down a road map for India’s global trade engagement in the coming years. The new 5 year FTP provides a framework for increasing exports of goods and services, generation of employment and increasing value addition in the Country, in congruence with the “Make in India” vision of the Hon’ble Prime Minister. The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the ‘ease of doing business’. Amongst many, Digital India concept is one such step initiated in this regard.
Here are the key takeaways of the FTP:
A. SIMPLIFICATION & MERGER OF REWARD SCHEMES
- Five different schemes (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri Infrastructure Incentive Scrip, VKGUY) merged into single unconditional scheme named as Merchandise Export from India Scheme (“MEIS”). Further, Rewards for export of notified goods to notified markets under MEIS shall be payable as percentage of realized FOB value (in free foreign exchange). The debits towards Basic Customs duty along with existing additional duty of customs / excise duty / service tax is also allowed adjustment as duty drawback;
- Serve from India Scheme (SFIS) has been replaced by Service Exports from India Scheme (“SEIS”) so as to allow benefits to all services providers located in India, instead of Indian Service Providers. Further, the rate of reward under SEIS would be based on net foreign exchange earned.
- For grant of rewards under MEIS, the countries have been categorized into 3 Groups, whereas the rates of rewards under MEIS range from 2% to 5%. Under SEIS the selected services would be rewarded at the rates of 3% and 5%;
- There would be no conditionality attached to any scrips issued under these schemes. Duty credit scrips issued under MEIS and SEIS and the goods imported against these scrips are fully transferable and usable for payment of Custom duty, Excise duty and Service tax.
- In order to give a boost to exports from SEZs, Government has now decided to extend benefits of both the reward schemes (MEIS and SEIS) to units located in SEZs;
- Business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade are proposed to be recognized as ‘Status Holders’ and given special treatment and privileges to facilitate their trade transactions, in order to reduce their transaction costs and time.
- The nomenclature of Export House, Star Export House, Trading House, Star Trading House, Premier Trading House certificate has been changed to One, Two, Three, Four, Five Star Export House. Further, the criteria for export performance for recognition of status holder have been changed from Rupees to US dollar earnings.
B. BOOST TO “MAKE IN INDIA”
- To incentivise ‘Make in India’ theme the FTP proposes to reduce export obligations if Capital goods under EPCG Scheme are procured from indigenous manufacturers (only 75% in place of 90%);
- Higher level of rewards under MEIS for export items with high domestic content and value addition.
C. TRADE FACILITATION & EASE OF DOING BUSINESS
♠ Online filing of documents/ applications and Paperless trade in 24×7 environment:
- It has been decided to develop an online procedure to upload digitally signed documents by Chartered Accountant / Company Secretary / Cost Accountant to do away with present physical forms like annexure attached to ANF 3B, ANF 3C and ANF 3D etc;
- Hardcopies of certain applications and specified documents would not be required to be submitted to Regional Authorities (RA), saving paper as well as cost and time for the exporters. In this regard, to start with, applications under Chapter 3 & 4 of FTP are being covered. Applications under Chapter-5 would be taken up in the next phase;
- Landing documents of export consignment as proofs for notified market will be digitally uploaded;
- Online inter-ministerial consultations for approval of export of SCOMET items, Norms fixation, Import Authorisations, Export Authorisation, in a phased manner is proposed.
- Simplification of procedures/processes, digitisation and e-governance:
- Under EPCG scheme, obtaining and submitting a certificate from an independent Chartered Engineer, confirming the use of spares, tools, refractory and catalysts imported for final redemption of EPCG authorizations has been dispensed with;
- EPCG Authorisation holders are required to maintain records for 2 years rather than 3 years after redemption of Authorisations;
- Facility has been created to upload documents in Exporter/Importer Profile, Online applications for refunds, Online message exchange with CBDT and MCA etc.,
♠Forthcoming e-Governance Initiatives:
- In this context, Directorate General of Foreign Trade (DGFT) is currently working on various Electronic Data Interchange initiatives like Message exchange with CBDT for PAN, Message exchange with Ministry of Corporate Affairs for CIN & DIN etc,.
D. OTHER NEW INITIATIVES
♠ Some of the new initiatives for EOUs, EHTPs and STPs are:
- EOUs, EHTPs, STPs have been allowed to share infrastructural facilities among themselves;
- Inter unit transfer of goods and services have been allowed among EOUs, EHTPs, STPs, and BTPs;
- Time period for validity of Letter of Permission (LOP) for EOUs/EHTP/ STPI/BTP Units has been revised for faster implementation and monitoring of projects;
- EOUs have been allowed facility to set up Warehouses near the port of export;
- STP units, EHTP units, software EOUs have been allowed the facility to use all duty free equipment/goods for training purposes;
- 100% EOU units have been allowed facility of supply of spares/ components up to 2% of the value of the manufactured articles to a buyer in domestic market for the purpose of after sale services;
- Export obligation period for export items falling in the category of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co-terminus with contracted duration of the export order, whichever is later;
- Simplified procedure will be provided to fast track the de-bonding / exit of the STP/ EHTP units;
- EOUs having physical export turnover of ₹ 10 crore and above, have been allowed the facility of fast track clearances of import and domestic procurement.
♠ Facilitating & Encouraging Export of dual use items (SCOMET):
- Validity of SCOMET export authorisation has been extended from the present 12 months to 24 months;
- Verification of End User Certificate (EUC) is being simplified if SCOMET item is being exported under Defence Export Offset Policy;
- Outreach programmes will be conducted at different locations to raise awareness among various stakeholders.
♠ E-Commerce Exports: E-Commerce exports of handloom products, books/periodicals, leather footwear, toys and customized fashion garments through courier or foreign post office would also be able to get benefit of MEIS (for values upto 25,000 INR). These measures would not only capitalize on India’s strength in these areas and increase exports but also provide employment.
♠ Duty Exemption- Imports against Advance Authorization shall be eligible for exemption from Transitional Product Specific Safeguard Duty.
♠ Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been notified as registered ports for import and export.
♠ Duty Free Tariff Preference (DFTP) Scheme- FTP has notified already extended duty free tariff preference to 33 Least Developed Countries (LDCs) across the globe
♠ Quality complaints and Trade Disputes- A Chapter on Quality Complaints and Trade Disputes has been incorporated in the FTP and a Committee on Quality Complaints and Trade Disputes (CQCTD) is being constituted in 22 offices.
♠ Vishakhapatnam and Bhimavaram added as Towns of Export Excellence.
Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: [email protected])