Talking Points for announcements by CIM on 11-02-2011
I had presented the Foreign Trade Policy 2009-14 on 27 August 2009,
at a time, when the world was passing through the greatest economic crisis
we have seen in recent times. Economies and markets world-wide were in
turmoil, causing a sharp contraction in international trade, adversely
impacting global investment flows and rendering over 50 million people
jobless.
2.
The immediate objective of the policy was to arrest and reverse the
declining trend of exports and to provide additional support, especially to
those sectors, which were hit badly by recession in the developed world. For
this, the Government provided a policy environment through a mix of
measures including fiscal incentives, institutional changes, procedural
rationalization, and efforts for enhanced market access across the world and
diversification of export markets. Towards achieving these objectives, several
steps were announced in the Policy. Some of the important steps included
addition of new markets under the Focus Market Scheme, coverage of Africa,
Latin America and large part of Oceania under FMS and the Market Linked
Focus Product Scheme, increase in incentives available under the Focus
Market Scheme from 2.5% to 3% and for FPS & MLFPS from 1.25% to 2%,
introduction of EPCG Scheme at zero duty for specified sectors, and the grant
of additional duty credit scrip to status holders.
3.
Thereafter, we have maintained a close watch on the performance of
the policy in the field. We have been in a constant dialogue with all our key
stakeholders in industry and the exporting community for a sectoral
assessment of exports. The first review was undertaken in December 2009
and thereafter in February 2010, which demonstrated that some sectors
were still facing difficulties. Need-based additional support measures were
announced in January 2010 and March 2010 for selected product groups /
products.
4.
The regular sectoral reviews continued in current year, and the first
such review for 2010-11 was undertaken in July 2010. Based on these I had
announced annual supplement 2010-11 to the FTP 2009-14, on 23.08.2010.
While we had continued our emphasis on stability of policy regime, certain
additional measures were announced to support exports. In order to
promote technological upgradation, we had expanded and extended the zero
duty EPCG and Status Holder Incentive Schemes. A new facility of Annual
EPCG authorization was introduced. We provided additional benefits to
labour intensive sectors such as handicrafts, handlooms, silk carpets, leather
and leather manufactures, sports goods, toys, and some bicycle parts. In
addition, certain new engineering and electronic items, finished leather,
rubber products, other oil meals, castor oil derivatives, packaged coconut
water, coconut shell worked items, instant tea and CSNL cardanol were
included for benefits under export incentive schemes.
5.
We must, however, take note that the recovery so far has been fragile
and the economies around the world are still emerging out of the shadows of
a grim recessionary period. The IMF projections indicate that the world
economy is recovering at varying speeds for different regions. There has
been marginal improvement in some of the developed economies like US,
UK, Germany, France, Japan etc. However, there is still nervousness in the
markets about the fiscal situation and sovereign indebtedness in several
high-income countries of Europe. In this setting, it is to be expected that the
developed countries would aim at economic recovery through consolidation
and export led growth. This would pose a challenge to our exporters in
accessing overseas markets for their products. The uncertainty surrounding
exporters’ prospects, therefore, continues to linger.
6.
During the annual supplement, I had promised to continue regular
interaction with all stakeholders. We have been true to our word and have
held a sustained dialogue with members of Board of Trade, Open Houses
with exporters and sectoral reviews with EPCs. The second sectoral review
was conducted during December- January in the current year. We find that
while the exports have shown a rising trend during last few months, certain
sectors are still not out of woods. Further, fragile economic recovery and
consequent slower demand growth in the developed markets has
necessitated greater emphasis on improving the competitiveness of our
exports.
7.
To enhance competitiveness for products which are labour intensive,
technology intensive and value added, I am announcing further export
incentives for more than 600 products w.e.f 01.01.2011 for sectors viz.
Agriculture, Chemicals, Carpets, Engineering, electronics and plastics. The
salient features of these incentives are:
7.1
Market Linked Focus Product Scheme (MLFPS):
7.1.1 335 New Products incentivised under MLFPS at 8 digit level,
eligible for benefits @ 2% of FOB value of exports to 15 specified
markets. These markets are Algeria, Egypt, Kenya, Nigeria,
Tanzania, South Africa, Ukraine, Mexico, Brazil, Australia, New
Zealand, Cambodia, Vietnam, China and Japan.
The new products include Agricultural Tractors of more
than1800 cc; all inorganic chemicals and inorganic/organic
compounds of metals of Chapter 28; Flexible Intermediate Bulk
Containers; and Narrow Woven Fabrics.
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7.1.2 71 new products of Chapter 63 – Textile Made ups at 8 digit
level for exports to EU (27 Countries) under MLFPS have also
been incentivised @ 2% of FOB value of exports.
7.2
Focus Product Scheme (FPS):
7.2.1 147 products incentivised for Bonus Benefits (additional 2%)
under FPS at 8 digit level, henceforth eligible for benefits @ 4%
or 7% of FOB value of exports to all markets.
These include Engineering Items like Galvanized Flanges on Iron
and Steel, Threaded Nuts (7%); Ferro & Silico Manganese;
Electronic Items like co-axial cables and other co-axial electric
conductors, Watches; Stationery items like Pencils, Pens; Textile
Items like Silk (of Chapter 50), Grey Rayon Tyre Cord Fabric, and
Handmade Carpets and other Floor Coverings under Chapter 57
(7%).
7.2.2 57 New products incentivised under FPS at 8 digit level, eligible
for benefits @ 2% of FOB value of exports to all markets.
These include:
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Engineering Items like Industrial Synthetic Foaming Fabric and
Electric Discharge Machine Wire (Brass Wire); Laminated Leaf
Spring; Plastic Extrusion Plant and Machinery; Parts for Plastic
Extrusion machinery; ERW Pipes; Ferro Chrome; Electronic Items
like Connectors- Plugs and Sockets; Permanent Magnets and
Parts of Electro magnetic Couplings etc.;
Chemical Items like Danes Salt of D_Phenyl Glycine; Pigments;
Articles of Paper Board; Permanent Magnets and Parts of Electro
magnetic Couplings etc.; Cobalt unwrought etc.; other cobalt
items;
Paper Products like Articles of Paper Board;
Rubber Products like Pneumatic Tyres and Pneumatic Inner
Tubes;
Plastic Products like Reprographic films, Bags of Polyethylene;
Leather items like Chamois Leather;
Textile Items like Industrial Synthetic Foaming Fabric; Polyester
Oriented Yarn, Polyester Staple Fibre, Made-ups of Man Made /
synthetic material under Chapter 63;
Miscellaneous items like Human Hair.
7.2.3 Special Focus Products:
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1 product (Egg powder) incentivised as Special Focus Product at
8 digit level, eligible for benefits @ 5% of FOB value of exports to
all markets.
7.3
Vishesh Krishi and Gram Udyog Yojana (VKGUY):
6 New products (Castor Oil Meal – Defatted Variety and Instant
Coffee) incentivised under VKGUY at 8 digit level, eligible for
benefits @ 5% of FOB value of exports to all markets.
8.
At the time of the announcement of FTP, I had announced that we
shall take concrete measures for reduction of transaction costs. I had
constituted a Task Force on transaction costs under the guidance of the
Minister of State. The report of the task force has been released by Hon’ble
Finance Minister on the 8th February 2011. The report enlists action taken on
23 issues by different line ministries, which is likely to mitigate transaction
cost to the tune of Rs. 2100 crores in perpetuity. I am of view that procedural
simplification and facilitation is a continuing endeavor on our part.
Therefore, over and above the task force initiatives, I announce following
further measures for procedural simplification and export facilitation:
8.1
In order to make filing and issuance of IE Code hassle free with
minimum human interface between the applicant and the
Regional Offices, an additional facility of filing “on-line”
application for obtaining IEC is being introduced. A
comprehensive “on-line” application filing facility for obtaining
IEC is made available on the DGFT’s website. It includes payment
of application fee through Electronic Fund Transfer (EFT) and
also the provision to attach required documents like photograph
of applicant, copy of PAN and bank certificate “on-line”.
8.2
The scope of Advance authorization for Annual Requirement is
being enlarged to allow a maximum of five authorizations in a
licensing year (instead of only one at present) for the
product(s) falling within the same product group. This facility
shall be helpful for exporters having multiple manufacturing
units, located in one place or having common port of import.
This will be useful for all sectors and particularly so for the
sectors like Engineering, Textiles, Chemicals etc.
8.3
Technical characteristics / quality etc of certain specified items
of imports shall be required to be declared at the time of
clearance of import consignment and not at the time of filing
application (current stipulation) for annual advance
authorization to Regional authority. By this facility, the exporter
shall have the flexibility to import the relevant inputs, without
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the need to approach the Regional authority of DGFT to amend
the authorization for clearance of such consignment.
8.4
The period to fulfill the export obligation under advance
authorization scheme 36 months from the date of issuance of
the authorization. However this period is shorter for products
being manufactured from certain duty free imported inputs,
which are sensitive from domestic angle. In such cases, the
period for fulfillment of export obligation is presently counted
from the date of clearance of first import consignment even
when a number of consignments have been cleared in different
dates. Henceforth, with a view to provide greater flexibility,
Export obligation period in such shorter EO period cases of
advance authorizations shall be counted from the date of
clearance of each consignment and not the first consignment.
This will allow a more reasonable time period for EO fulfillment
to exporters.
9.
For Indian exports to sustain in long run, it is important that we
proceed to build a reputation for the quality of our products and also provide
our exporters the necessary flexibilities to be able to face challenges of
emerging dimensions of international trade. Our pharmaceutical sector has
shown an inherent strength during difficult times. In order that the quality of
our pharma product gets recognized world over and to enable them to
undertake exports while navigating the challenges posed by intellectual
property rights, I announce following initiatives for pharma sector:
9.1
Exporters of pharmaceutical products will be required to affix
barcodes on their export products, with effect from 1st July
2011, as per GS 1 global standards, to facilitate tracing and
tracking of their products. This will provide assurance about the
quality of Indian pharma products to prospective importers.
9.2
We are providing a new facility of Input combination for
pharma products manufactured through Non-Infringing
process, allowing actual quantum of duty free inputs required
for manufacturing such export product. This will facilitate our
pharma manufacturers to work towards getting a major share of
exports of such products to potential regulated markets such as
US or EU.
10. We had set a target for merchandise exports for 2010-11 at US$ 200
billion. Our total merchandise export for 2009-10 was US$176.57 billion.
With the present growth trend, we are on course to achieve export target for
2010-11. In the remaining three years of this Foreign Trade Policy i.e. upto
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2014, the country should be able to come back on the high export growth
path of around 25% per annum. By 2014, we expect to double India’s export
of goods and services.
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