The Ministry of Commerce and Industry announced the Annual Supplement 2010-11 to the Foreign Trade Policy 2009-14 (‘FTP’) on 23 August 2010. The objective of the Annual Supplement is to reverse the trend of declining exports and assist sectors badly hit by recession. It has adopted a multi-pronged strategy that includes providing additional support to the affected sectors, promoting technological upgradation and taking measures to reduce transaction costs of exports.
Apart from enhancing the quantum of export incentives, steps have also been taken to broaden the reach of export products under the various schemes. These measures, taken together, are expected to bring back export growth to around 25% per annum in the remaining three years of the current FTP.
Further, effort has been made to encourage technological up-gradation, and undertake simplification of procedures under the FTP to reduce transaction costs for exporters.
The FTP 2009-14 incorporating the current Annual Supplement is effective from 23 August 2010. Highlights of the Supplement are summarised below:
Amendments in existing schemes
Duty Entitlement Passbook (‘DEPB’) Scheme
Export Promotion Capital Goods (‘EPCG’) Scheme
Status Holder Incentive Scheme (‘SHIS’)
Focus Product Scheme (‘FPS’)
Market Linked Focus Product (‘MLFP’) Scheme
Served From India Scheme (‘SFIS’)
Vishesh Krishi and Gram Udyog Yojna (‘VKGUY’)
Towns of Export Excellence (‘TEE’)
Additional TEE shave been announced for handicrafts, textiles and leather products.
Interest subvention scheme
Interest subvention of 2% for pre-shipment credit for certain export sectors now extended to a number of additional products of the sectors like engineering, textiles and leather etc.
Facility of a data preparation module for Advance Authorization and EPCG provided on an offline mode.
Additional licensed certifying authorities for digital signatures and banks for electronic fund transfer (EFT) operations have been included in the EDI operations.
The online message exchange for Annual Advance Authorization and Duty Free Import Authorization (DFIA) proposed to be made operational with Customs w.e.f. 1 December 2010.
Specific sector based initiatives
Re-export of unsold imported raw hides and skins and semi-finished leather from public bonded warehouses shall be allowed without payment of any export duty.
Machinery and equipment for effluent treatment plants exempt from Customs Duty.
CVD exempted on lining, interlining material, raw, tanned and dressed fur skins.
Export of handloom made-ups to be included for duty free import entitlement of specified trimmings, embellishments etc. @ 5% of FOB value of exports during previous financial year.
Duty free import entitlement of tools, trimmings and embellishments is 5% of FOB value of exports during previous financial year.
CVD exempted on duty free import of trimmings, embellishments and consumables.
Electronic and IT Hardware sector
Export of electronic goods to be brought under Focus Product Scheme.
Benefits under SHIS scheme extended to this sector.
The Government had set a target for exports at USD 200 billion for 2010-11, which seems achievable given last year’s export of USD 178.7 billion. This perhaps shows that the industry is moving in the right direction. The Supplement has continued with existing schemes thereby ensuring a stable environment for industry to perform.