EXIM Policy

EXIM Policy
• Export Import Policy is two fold, one within the
organization and the second is the larger EXIM policy
adopted for the nation
• EXIM Policy of a nation is not of recent origin but dates
back to 1970
• Govt accorded exports and its due importance by
formulating the policy
• Its is known as Export Policy Resolution, 1970
Making Indian products competitive
Modernizing machinery
Improving quality control
Providing marketing support
Providing adequate and timely finance
Providing adequate shipping facilities at
reasonable freight rates
EXIM Policy
• The primary objective of the EXIM Policy or FTP
is not only to regulate the exports and imports,
but to spur economic growth
• The Handbook of Procedures is published as a
supplement to the Import/ Export Policy of the
• EXIM Policy 1985-88, tenure of 3 years followed
by the next policy period of 1988-199. This
policy concentrated on steps to liberalize
international trade
• Policy to expire by 31st March, 1991. However
was revised one year earlier due to political
• New EXIM Policy 1990-93 announced which
was then changed to be a policy with a tenure of
5 years. Hence the New EXIM Policy 1992 1997 was formulated and announced.
• Tremendous changes in the EXIM Policy from
1991 onwards with the issues of Devaluation,
Trade Policy Reforms
• To strengthen the base for export production
and thereby to create sound and favorable
situation for export promotion through
• To facilitate technological up gradation and
modernization of domestic production
• To reduce imports to conserve foreign exchange
• To simplify and streamline foreign trade
• To impart stability and continuity to enable
exporters to draw long term export plans and
• To provide institutional support to export
• To offer different types of export incentives,
concessions and facilities to encourage
India’s Foreign Trade since 1951
• Increased imports since independence
caused due to the demand after 2nd World
• Increased consumption
• Five year plans implemented
• Focused on import substitution
• Each plan period concentrated on
individual sector growth.
• Control of foreign trade initiated after second
world war
• Concentrate on restricting imports initially in
the Defence
• Sep 1946, Emergency
Provisions(Continuance) Ordinance Act for
import control
• Replaced by Imports & Exports Control 1947
• Fluctuations in the tenure of EXIM policy
• Finalized in 1992(1992-1997) to have 5 year
• Foreign Trade (Dvpt & Regn)Act,1992
Inspite of the turmoil in the world capital market, the global mkt kept growing
since 1997
Growth of world trade and GDP was high in 1997 than ever in 90s
Indicator of this economic expansion is the per capita income growth
recorded by most of the developed countries
126, out of 153 WTO member countries, have registered increase in per
capita income
The year 2001 witnessed an unexpected decline in world trade which fell
down by 1.5% ever since 1987. but this got reversed by 2001
A good yardstick for the measurement of World economy is GDP which can
be defined as “ Sum total of the value of all goods and services produced in
the country”.
• Goods or services provided are expected to be of
international quality and price
• Service sector has grown and is now 20% of the world
• Imports are allowed for certain Commodities
• Explosion in the visual and written media made people
demand high quality goods and as per convenience
• The growth of Information technology industry has
touched the life at all levels
Dismantling of industrial license which enabled most of the entrepreneurs to
decide on the productive ventures
Allowing foreign investment without setting limit
Allowing NRI and FII to invest in industries
Free flow of technology for modernizing and upgrading industries
Removal of certain restrictions on imports with reduction in tariff rates
Full convertibility of Indian rupee on the trade account
Allowing the retention of forex earnings by exporters for meeting their
Allowing private ventures in the field of banking, civil aviation and telecom
Private sector investment in Oil, Refining, exploration, marketing and in
other infrastructural dvpt’s
Reasons for increase in imports
• Shortage of food grains
• Import of capital goods & technical knowhow, plant & machinery.
• War with neighboring countries increased
defence needs.
Reasons for slower growth of
Failure of crops
Synthetic substitute
Fierce competition
Policy of protection followed by developed and
developing countries
Reduction in export prices
Reduction in exportable surplus
Increased consumption of manufactured goods
Composition of India’s Foreign Trade
Import structure
- capital goods
- raw materials and intermediate goods
- consumer goods and food grains
2. Major items of imports
- food grains
- machinery & transport equipments
- mineral oil
- metals
- medicines and chemicals
- fertilizers
3. Export structure
- food, beverages and tobacco
- raw materials
- manufactured goods
4. Major export items
- jute
- cotton
- leather
- iron ores
- engineering goods
- handlooms and handicrafts
- chemical products
- fruits, vegetables, sugar, unmanufactured tobacco, mica, etc.
EXIM Policy 1992-1997
• Main trust of the policy was to remove unnecessary
controls and restrictions on imports and exports
• Making the export trade procedures simple, transparent
and easy to understand and administer
Policy Aims:
• To accelerate country’s transition to an internationally
oriented economy with a view of securing maximum
benefits from expanding global market opportunities
• To augment the productivity, modernization and
competitiveness of Indian industry to enhance the
potentialities and capabilities
• To stimulate India’s exports by facilitating access
to required raw material, components, etc
• To encourage the attainment of internationally
accepted standards of quality
• To encourage import substitution
• To minimize quantitative restrictions
• To strengthen country’s Research &
development capabilities.
Valid for 5 years and not for 3 yrs
Linked with 8th five yr plan
Govt has made the procedure simple, transparent and easy to administer
Main thrust was to remove unnecessary controls and restrictions on imports and
Contains a number of new incentives for export growth
80% of old restrictions have been removed indicating the extent of liberalization
Import duty on capital goods has been reduced with an increased export obligation
Deemed exports have been accorded a special import license
Substantially eliminates licensing and discretionary controls by introducing negative
list of items, imports and exports of which is either prohibited or restricted
Reducing negative list means encouraging exporters and importers to
undertake trading activities freely in the case of large number of
Thrust of the policy is a drastic reduction in import control
Manufacturers of export oriented goods can import machines, technology,
etc. without procedural delays.
Scope of Duty Exemption Scheme has been enlarged by introducing value
based advance licence besides the quality based advance licence.
EOUs and units under EPZs are given
(i) special treatment and incentives,
(ii) greater autonomy and flexibility,
(iii) can install any machinery, own or leased,
(iv) allows inter unit transfer
Deemed exports have been defined and benefits such as duty exemption schemes,
duty drawback schemes and exemption from terminal excise duty have been
extended to deemed exports.
Certain categories of exports and exporters are eligible to receive special import
Two windows are opened for concessional duty imports under EPCG scheme.
(i) The 1st window provides concessional customs duty of 25% with export
obligation 3 times the value of CIF for a period of 4 yrs
(ii) The 2nd provides for 15 % duty with export obligation 4 times the CIF value
to be met in 5 yrs
Partial convertibility of the rupee provides that all imports, barring those of canalised
items are to be funded by foreign exchange obtained at a market determined rate.
• Decline in protectionist measures
- import tariff reduction and liberalised
- Declining protectionist measures for
domestic industry
• Emerging buying markets
- entry of MNC, stiff competition
- shift from sellers market to the buyer’s market
- domestic marketers facing growing challenges
• Added thrust to exports providing higher
efficiency on part of Indian firms.
Globalisation of Indian Foreign trade
Technological upgradation
Implication of liberalised imports
Implication of decanalisation
International competitive import sustitutiton
Procedural simplification
Foreign investment policy
Private bonded warehouse
Implication of Zero duty under EPCG scheme
Expansion of Deemed exports
• To facilitate sustained growth in exports to attain a share of at least
1% of global merchandise trade
• To stimulate sustained economic growth by providing access to
essential raw materials, intermediates, components, consumables
and capital goods required for augmenting production and providing
• To enhance technological strength and efficiency of Indian
Agriculture sector
• Improving competitive strength while generating employment
• Attain internationally accepted quality standards
• Providing consumers good quality goods and services
i. Exports and imports
Shall be free unless restricted
ii. Procedure
As per Handbook of procedures
iii. Restricted Goods
May be traded on obtaining Special licence/ certificate/ permission
iv. State Trading
Canalised items to be traded through exclusive or special privileges
v. IEC No
vi. Actual user condition
vii. Second hand goods
viii. Realisation of export proceeds
ix. RCMC
Units undertaking to export their entire production of goods and services, expect
permissible sales in DTAs
Second hand Capital goods
Imported duty free without age limit
Sale in DTA
50% of FOB value of goods can be sold on fulfilling the export obligation
Entitlement of supplies from DTA
Supply from DTA to EOU/ EHTP/ STP units will be treated as Deemed Exports.
Concessions to DTA units on such transfer are:
i) Reimbursement of CST
ii) Exemption from payment of Central Excise Duty on all goods
iii) Reimbursement of duty paid on fuels procured from domestic oil companies
iv) Eligible for grant of Replenishment licence
• Other entitlements of EOU/ EHTP/STP units
i) Exemption from payment of Income Tax
ii) Clubbing of FOB value of export of an EOU/ EHT/ STP with FOB
value of export of its parent company in the DTA or vice versa for
the purpose of according Registered exporters and status
iii) 100% FDI in manufacturing sector
iv) Software units allowed to use system for training purpose but not
to be installed outside the bonded premises
v) Exemption from industrial licensing for SSI sector
• Inter unit transfer
i) permitted
ii) Capital goods may be transferred or given on loan to other units
on prior permission of concerned Development Commissioner
• Sub- Contracting
i) Through job work to other EOU/EHTP/STP
ii) May also be permitted abroad
iii) Permission from the concerned Development Commissioner
iv) Scrap/ waste/ remnants generated through job work to be cleared
from the job work premise on payment of applicable duty or
destroyed in the presence of the authorities.
• Sale of unutilized Material
i) Transferred to other EOU/EHTP/STP or
disposed in DTA on payment of applicable
duties and submission of the licence
ii) Capital goods and spares will be
allowed depreciation
iii) No duty applicable for goods destroyed with
customs concurrence
• Reconditioning, Repair and Re-engineering
i) Activities carried out in freely convertible
foreign currency
ii) Few concessions not available to these units
• Exit from EOU scheme
i) Subject to payment of duties
ii) If export obligation not attained, penalty may
be imposed by the competent authority
• Conversion
i) Existing DTA may apply for cinversion but no
concessions for plants and machineries already installed
ii) Can be merged
• Definition: Specifically delineated duty free enclave and shall be
deemed to be foreign territory for the trade operations and tariffs
• Status: Goods and services going from SEZ to DTA or vice versa
treated as exports or imports as the case may be
Positive NFE= A-B>0
A is the FOB value of exports of SEZ
B is the CIF value of the imported inputs, capital goods and value of
payments made in foreign currency for commission, royalty, fees,
dividends, interest on external borrowings, etc