ASSIGNMENT

CHANGE
IN
EXPORT IMPORT POLICY
Submitted By:
Ambika Gupta Akanksha
Jain
06417003909
05817003909
Submitted To:
Dr. Ajay Rathore

BUSINESS ENVIRONMENT
 EXIM POLICY
► EXIM stands for export and import.
► EXIM POLICY OR FOREIGN TRADE POLICY is a set of guidelines and
instructions and various policy decision taken by the government in the sphere of
foreign trade i.e. with respect to import and export of the country.
► It is prepared and announced by the central government(Ministry OF Commerce)

Aspect of EXIM Policy:

 Import policy:- which is concerned with regulation and management of imports.
 Export policy:- which is concerned with exports not only promotion but also
regulation.
Legal framework
 Legal framework for foreign trade has provided by Foreign Trade
(Development And Regulation) Act 1992 which replaced the
Imports and Exports (Control) Act 1947.

 Beside this act there are some other laws also which control the
trade in certain items like export of coffee is regulated by Indian
Coffee Act 1942 and export of tea is regulated by Tea Act 1953
etc.

 Section-5 of this act gives power to central government to

announce the Export Import policy for the country.
General objective of EXIM policy:-
 Promoting exports and augmenting foreign exchange earnings.
 Regulating export when ever it is necessary for the purpose of either
avoid competition among the Indian exporters or ensuring domestic
availability of essential items.
 To restrict country’s imports and provide a sheltered market for
domestic industries for rapid growth.

Initially the EXIM Policy was introduced for the period of three years
with main objective to boost the export business in India. After
1992, it is being made for 5 years.
Some change has also been introduced annually in it.
 EXIM Policy 1985
► In the year 1985, the government of India adopted three
year EXIM Policy for first time which was advocated
by Alexandra committee in 1978.

► Its main objectives were:

 To stablize the export and import policy.
 To remove uncertainity so that industries could frame
long term goals.
► Following steps were announced:-
 Strengthening the base of export production.
 Improvement in administration.
 Relaxation in imports to promote exports.
 To provide facility for technological improvements.
 Import substitution method in selected spheres.
 To help Indian products to compete in foreign market.
 Relaxing the process of getting inputs.
 EXIM POLICY 1990
► The government announced on April 30, 1990 a new export import
policy for a 3 year period.

► Objectives:-
 To encourage rapid and sustained growth in export.
 To facilitate availability of necessary imported inputs.
 To simplify and streamline the procedures of import licensing and
export promotion.
 To support research and development institution for building up their
scientific and technological capability.
 To promote efficient import substitution and self reliance.
► Sailent feature of policy are:-
 List of items imported under open general licence(OGL) were
expanded.

 Number of capital goods item permitted under OGL was

increased was increased from 1261 to 1343.

 Import of certain raw materials such as petroleum, products,

fertilizers, seeds etc. were canalised through public sector
agencies.

 An automatic licensing was introduced under which upto some

percent of the value of previous year’s licence can be imported.
 For registered exporters, the concept of net foreign exchange
earning was made a guiding criterion for issue of licences.

 Under the scheme of registration of export house, the average

annual of net foreign exchange earning for base period should not
be less than Rs. 5 crores and for trading houses, it should not be less
than Rs. 20 crores.

 Scheme of Star Trading House was introduced for exported with

average annual of net foreign exchange earning of Rs. 75 crore in
the preceeding three licensing period of the base period.

 Under the Duty Exemption Scheme, Blanket Advance licensing was

introduced for manfacturer exporters having a minimum net foreign
exchange earning of Rs. 10 crore in the preceeding three years.
► Evaluation of policy:-
Critics have noted following points:-
 Adverse effect on the growth of capital goods industry
in india.
 Import policy likely to hit small scale industries.
 Adverse effect on indigeneous industry.
 Technological degrading in the name of technological
upgrading.
► the Government of India for the first time
introduced the Indian Exim Policy on April I,
1992. In order to bring stability and continuity,
the Export Import Policy was made for the
duration of 5 years. However, the Central
Government reserves the right in public interest
to make any amendments to the trade Policy in
exercise of the powers conferred by Section-5 of
the Act.
► Objective:-
 liberalise imports
 boost exports.
► Export Import Policy  is believed to be an
important step towards the economic reforms of
India
Main steps taken are:-
► introduction of the duty-free Export Promotion
Capital Goods (EPCG) scheme
► strengthening of the Advance Licensing System
► waiving of the condition on export proceeds
realisation
► rationalisation of schemes related to Export
Oriented Units and units in the Export Processing
Zones.
 EXIM POLICY(1997 -2002)
► With time the Exim Policy 1992-1997 became old, and a
New Export Import Policy was need for the smooth functioning of
the Indian export import trade. Hence, the Government of India
introduced a new Exim Policy for the year 1997-2002.

► This policy has further simplified the procedures and reduced the
interface between exporters and the Director General of Foreign
Trade (DGFT) by reducing the number of documents required for
export by half
.
► Import has been further liberalized and better efforts have been made
to promote Indian exports in international trade.
► Objectives:-
 To accelerate the economy from low level of economic activities to high level
of economic activities by making it a globally oriented vibrant economy and
to derive maximum benefits from expanding global market opportunities.

 To motivate sustained economic growth by providing access to essential raw

materials, intermediates, components,' consumables and capital goods.

 To improve the technological strength and efficiency of Indian agriculture,

industry and services, thereby, improving their competitiveness.

 To create new employment. Opportunities and encourage the attainment of

internationally accepted standards of quality
.
 To give quality consumer products at practical prices.
Policy were:-
► Liberalization:- A very important feature of the policy is
liberalization. It has substantially eliminated licensing,
quantitative restrictions and other regulatory and discretionary
controls. All goods, except those coming under negative list, may
be freely imported or exported.

► Imports Liberalization:- Of 542 items from the restricted list

150 items have been transferred to Special Import Licence (SIL)
list and remaining 392 items have been transferred to Open
General Licence (OGL) List.
► Export promotion capital goods (EPCG) scheme:- the duty on
imported capital goods under EPCG scheme has been reduced
from 15% to 10%. Under the zero duty EPCG scheme, the
threshold limit has been reduced from rs. 20 crore to rs. 5 crore
for agricultural and allied sectors.

► Advance licence scheme:- under advance license scheme, the

period for export obligation has been extended from 12 months
to 18 months. A further extension for six months can be given on
payment of 1 % of the value of unfulfilled exports.

► Duty entitlement pass book scheme:- under the depb scheme

an exporter may apply for credit, as a specified percentage of fob
value of exports, made in freely convertible currency. Such credit
can be can be utilized for import of raw materials, intermediates,
components, parts, packaging materials, etc for export purpose.
Implications of Exim Policy 1997 –2002
 The Exim Policy 1997-02 proposed with an aim to prepare a
framework for globalizations of Indian economy.

 In the EXIM policy 1997-02, a series of reform measures have been

introduced in order to give boost to India's industrial growth and
generate employment opportunities in non-agricultural sector.

 It encourage foreign investment in India.

 The Exim Policy 1997-2002 successfully fulfills one of the India’s

long terms objective of Self-reliance.

 It encouraged Indian industries to undertake research and development

programmers and upgrade the quality of their products.
 Exim Policy 2002 – 2007
► Mr. Murasoli maran, Former commerce minister announced the exim
policy 2002 - 2007 . it deals with both the export and import of
merchandise and services. It is worth mentioning here that the exim policy:
1997 - 2002 had accorded a status of exporter to the business firm
exporting services with effect from1.4.1999. Such business firms are
known as service providers.

► Objectives:-
o To encourage economic growth of India by providing supply of essential
raw materials, intermediates, components, consumables and capital goods
required for augmenting production and providing services.
o To improve the technological strength and efficiency of Indian agriculture,
industry and services, thereby improving their competitive strength
o To facilitate sustained growth in exports to attain a share of atleast 1% of
global merchandise trade.
o To provide consumers with good quality products and
services at internationally competitive prices while at
the same time creating a level playing field for the
domestic producers.

► Policy are:-
 Special economic zones (sezs):- offshore banking
units shall be permitted in sezs to indian banks. Units
in SEZ would be permitted to undertake hedging of
commodity price risks, provided such transactions are
undertaken by the units on stand-alone basis. It has
also been decided to permit external commercial
borrowings for a tenure of less than three years in sezs.
It is exempted from CRR and SLR.
 Employment-Oriented
a) Agriculture: Export restrictions like registration and packaging
requirement are removed. Quantitative and packaging restrictions
have been removed. Restrictions on export of all cultivated varieties
of seed, except jute and onion, removed. To promote export of agro
and agro based products, 20 agri export zones have been notified. In
order to promote diversification of agriculture, transport subsidy shall
be available.

b) Cottage Sector and Handicrafts: An amount of Rs. 5 crore under

Market Access Initiative (MAI) has been earmarked for promoting
cottage industry. These units shall be entitled to the benefit of Export
House status on achieving lower average export performance of Rs.5
crore as against Rs. 15 crore for others. The units in handicraft sector
shall be entitled to duty free imports of an enlarged list of items as
embellishments upto 3% of FOB value of their exports.
c) Small Scale Industry: Common service providers in these areas
shall be entitled for facility of EPCG scheme. Such areas will
receive priority for assistance for identified critical infrastructure
gaps from the scheme on Central Assistance to States.
Entitlement for Export House status at Rs. 5 crore.

d) Textiles: Sample fabrics permitted duty free within the 3% limit

for trimmings and embellishments. Duty Entitlement Passbook
(DEPB) rates for all kinds of blended fabrics permitted. Such
blended fabrics to have the lowest rate as applicable to different
constituent fabrics.

e) Gem & Jewellery : Customs duty on import of rough diamonds

is being reduced to 0%. Licensing regime for rough diamond is
being abolished. This should help the country emerge as a major
international centre for diamonds
 Technology-oriented
Electronic Hardware: The electronic hardware technology park
(EHTP) scheme is being modified to enable the sector to face the
zero duty regime under ita(information technology agreement).
Projects: Free import of equipment and other goods used abroad
for more than one year.

 Growth-Oriented
Strategic Package for Status Holders:-The status holders shall
be eligible for the following new/ special facilities:
Licence/Certificate/Permissions and Customs clearances for both
imports and exports on self-declaration basis. Fixation of Input-
Output norms on priority. Priority Finance for medium and long
term capital requirement as per conditions notified by RBI.
Exemption from compulsory negotiation of documents through
banks.
Implications:
► This policy focused on all round development of India
whather it was technology oriented or growth oriented.
► The contribution of agriculture and allied sector was also
increased to exports with the help of certain privilleges and
incentives.
► The cottage industry has also started to contribute to
exports.
► It also focused on small and medium sector enterprises.
► It also helped in developing the industrial sector by
importing capital and raw material goods duty free.
 EXIM POLICY(2004-2009)
► Mr. Kamal Nath, Union Commerce Minister announced the
foreign trade policy for 5 years on 31 august 2004.

► Objectives:-
 To double India’s percentage share of global merchandise
trade from 0.7% in 2003 to 1.5% in 2009.

 To act as an effective instrument of economic growth by

giving a thrust to employment generation especially in semi-
urban or rural areas.
► Strategies to achieve these objective are:-
 Unshackling of control.
 Creating an atmosphere of trust and transparency.
 Simplifying procedures and bringing down transaction costs.
 Adopting fundamental principle that duties and levies should not
be exported.
 Facilitating development of India as a global hub for
manufacturing, trading and services
 Identifying and nuturing special focus areas to facilitate
development.
 Facilitating technological and infrastructural upgradation of all the
sectors of Indian Economy.
► Policy are:-
 Special Focus Initiatives:- With a view to doubling percentage share of
global trade within 5 years and expanding employment opportunities,
especially in semi urban and rural areas, certain special focus initiatives
have been identified for the agriculture, handlooms, handicraft, gems &
jewellery and leather sectors.

Agriculture:- A new scheme called the Vishesh Krishi Upaj Yojana

(Special Agricultural Produce Scheme) for promoting the export of fruits,
vegetables, flowers, minor forest produce, and their value added products
has been introduced. Import of capital goods shall be permitted duty free
under the EPCG Scheme.
 Handlooms and Handicraft:- specific funds would be earmarked
for promoting handloom and handicraft exports. Duty free import
entitlement of specified trimmings and embellishments shall be 5%
of FOB value of exports during the previous financial year. New
towns of export excellence with a threshold limit of Rs 250 crore
shall be notified.

Gems & Jewellery:- Import of gold of 18 carat and above shall be

allowed under the replenishment scheme. Duty free import
entitlement of consumables for metals other than Gold, Platinum
shall be 2% of FOB value of exports during the previous financial
year. Duty free re-import entitlement for rejected jewellery shall be
2% of the FOB value of exports
 Board of Trade: The Board of Trade shall be revamped and given a
clear and dynamic role in advising government on relevant issues
connected with Foreign Trade Policy. There would be a process of
continuous interaction between the Board of Trade and Government
in order to achieve the desired objective of boosting India

 Export promotion scheme: A new scheme called “ target plus” has

been introduced. Duty free credit would be entitled to exporters on
incremental exports. For incremental growth of over 20%, 25% and
100%, the duty free credit would be 5%, 10% and 15% respectively,
of fob value of incremental export.

 Service export: Scheme called “served from india” as a brand

instantly recognized abroad in which individual service providers
earning foreign exchange of Rs. 10 lakh would be elligible for 10% of
total foreign exchange earning.
 Duty free import under EPGC (Export promotion Capital
goods): The scheme allows import of capital goods for pre
production, production and post production at 5% Customs duty.
Capital goods would be allowed at 0% duty for exports of
agricultural products.

 Export Oriented unit(EOUs):- EOUs shall be exempted from

service tax in proportion to their exported goods and services.

 New stautus hoder categorization:- One star export house: Rs. 25

crore, two star export house: Rs. 100 crore, three star export house:
Rs. 500 crore, four star export house: Rs. 1500 crore and five star
export house: Rs. 5000 crore
It will be entitled to a number of privileges including fast track
clearance procedure, exemption from furnishing back guarantees
etc.
 Import of second hand capital goods shall be permitted without
any age restriction

 Bio technology park is setup.

 Duty Drawback: The Duty Drawback Scheme is administered

by the Directorate of Drawback, Ministry of Finance. Under Duty
Drawback scheme, an exporter is entitled to claim. Indian
Customs Duty paid on the imported goods and Central Excise
Duty paid on indigenous raw materials or components.

 Excise Duty Refund: Excise Duty is a tax imposed by the Central

Government on goods manufactured in India. Excise duty is
collected at source, i.e., before removal of goods from the factory
premises. Export goods are totally exempted from central excise
duty.
 Neutralising high fuel costs: Fuel costs to be rebated
by it in Standard Input Output Norms (SIONs) for all
export products. This would enhance the cost
competitiveness of our export products.

Re-location of industries: To encourage re-location of

industries to India, plant and machineries would be
permitted to be imported without a licence, where the
depreciated value of such relocating plants exceeds Rs.
50 crores.
► Foreign Trade Warehousing Zones: Proposals for setting up of FTWZs may
be made by public sector undertakings or public limited companies or by joint
ventures in technical collaboration with experienced infrastructure developers.
The proposals shall be considered by the Board of Approval in the
Department of Commerce. On approval, the developer will be issued a letter
of permission for the development, operation and maintenance of such
FTWZ. Foreign Direct Investment would be permitted up to 100% in the
development and establishment of the zones and their infrastructural facilities.
The proposal must entail a minimum outlay of Rs.100 crores for the creation
and development of the infrastructure facilities, with a minimum built up area
of five lakh sq.mts.

► DFIA: Effective from 1st May, 2006, Duty Free Import Authorisation
or DFIA in short is issued to allow duty free import of inputs which are used
in the manufacture of the export product (making normal allowance for
wastage), and fuel, energy, catalyst etc. which are consumed or utilised in the
course of their use to obtain the export product. Duty Free Import
Authorisation is issued on the basis of inputs and export items given under
Standard Input and Output Norms(SION).
► Deemed Export is a special type of
transaction in the Indian Exim policy in
which the payment is received before the
goods are delivered. The payment can be
done in Indian Rupees or in Foreign
Exchange. As the deemed export is also a
source of foreign exchange, so the
Government of India has given the benefit
duty free import of inputs
► Implication of policy:-
 It is claimed that first time the nation has presented such a comprehensive
policy. But in it there is not anything significant about import development.

 This policy provide benefit to some thrust areas which are agriculture,
handicrafts, handlooms etc. which are dominated by small and medium
enterprises so it helped in boosting export and generating employment.

 By rationalizing star export houses into five star export house, it helped in
encouraging small export house.

 It also focussed on service industry.

 Target plus scheme act as an incentive to exporter.

 All goods and services were exempted from service tax.

 No additional custom duty on import of capital goods
for marine and electronic sector.
 In an attempt to encourage small scale sector, they
are given triple weightage to include in export house
or trade house.
 All goods and services were exempted from service
tax
 Uneffective implementation make difficult to achieve
the real objective of the policy.
 EXIM POLICY 1999-2000
► Failure to increase exports and facilitate imports as well as to
keep the trade balance gap within reasonable limits during 1996-
97 and 1998-99 forced Mr. Ramkrishna Hedge, former commerce
minister to announce on 31ST March 1999 the exim policy for
1999-2000.

► Main highlights:
 894 items were added to free list of imports and an additional 414
items put on special import licence route.
 The concept of free trade zones without customs intervention and
with “greater operational freedom in export activity” would be
implemented. All export promotion zone is converted into Free
Trade Zone.
 Under the EPCG Scheme the threshold limit for zero duty capital
goods was reduced from Rs. 20 crore to Rs. 1 crore for chemicals,
plastic and textile.
 EXIM POLICY 2000-2001
The policy highlighted two important measures:
► Setting up of special economic zone
This unit would be able to import raw material and capital goods
duty free. It deemed to be foreign territory for the purpose of trade
and tarrifs and goods going to it treated as deemed export. It would
be able to obtain products from the domestic tariff area(DTA)
without paying terminal excise duty.
► Alligning EXIM procedures with WTO norms.
India did not remove quantitative restrictions on its import fully
with respect to consumer products and certain agriculture products.
India negotiated with many countries and aggreed to phase out it
by 2003. EXIM Policy-2000 removed it on 714 items out of 1429
items.
 EXIM POLICY 2001-02
It highlighted:
► Removal of quntitative restrictions from all remainig items.
► Import restriction of the remaining 715 items were removed.
► Imports of the second hand good, meat and primary agriculture
product were allowed.
► Import of farm products were permitted only through state
trading agencies.
► EPCG Scheme and DES eas extended to agriculture export as
well.
► Agri economic zones were formed.
 EXIM Policy 2003-2004
► Poicy suggested:-
► Promotional measures
To promote export related infrastructure, rupee payments received for Port
handling services admissible for discharge of export obligation under EPCG
To boost R &D activity, import of Prototypes shall be allowed to Actual Users
without any limit (presently restricted to 10 nos. per annum)

► Boost to Tourism
Heritage Hotels, 1 and 2 star hotels and Stand Alone Restaurants extended the
benefits of duty free imports admissible to Tourism Sector.
Import of all kinds of Capital Goods including office and professional
equipment allowed under the Duty Free Entitlement scheme. However, import
of agriculture/dairy products and cars shall not be permitted.
Duty Free Entitlement Certificate scheme liberalized
► Duty Exemption Scheme
To offset the high power costs faced by the manufacturing industry,
duty free Fuel shall be allowed.
► Project Exports
Equity base of ECGC being raised from Rs 500 crores to Rs 800
crores for a better risk management of Indian exporters.
National Export Insurance Account being created for ECGC to
underwrite high value projects implemented by Indian Companies
abroad. Details will be worked out in consultation with Ministry of
Finance.
Gold Card Scheme for credit worthy exporters with good track
record for easy availability of export credit on best terms being
worked out by RBI.
► Deemed Exports
Deemed export facility extended for items having Zero% basic
Customs duty.
Deemed export facility extended to Fertiliser & Refinery projects
spilled over from 8th and 9th Plan periods.
► Removal of Quantitative Restrictions
Imports allowed freely for Gold and Silver
► Technical Regulations on Imports
Technical regulations applicable on imports for export production
rationalised for food & textile items.
BIS Mandatory Quality Certification scheme on imports amended for
importers having captive consumption and in-house testing facilities.
 EXIM POLICY 2005-06
► The main focus of this policy is not only to increase export earning
but the creation of more job also.

► The main area for boosting export and job creation are: agriculture,
diary, polutory, marine etc.

► A package of incentives and strategy has been put.

► For jems and jewellery sector, duty free imports of samples upto Rs.
3 lakh are allowed.
 EXIM POLICY 2007-2008
It highlighted:
► Encouragement to agro exports and employment generation in the
agriculture sector.

► New initiative for infrastructure development namely cold storage

units, pack houses, reefer vans/containers, etc.,For agro sector, is
being launched.

► In line with the government objective of having all inclusive

growth, vishesh krishi and gram udyog yojana scheme expanded
further to include forest based and agricultural products.

► A new scheme to give impetus to exports of high tech products, is

being launched. Exports of specified high tech products are
proposed to be rewarded.
► Long standing major grievance of trade is being addressed by
providing service tax exemption/remission on services rendered
in India and utilised by exporters. This should bring cheers to the
exporting fraternity.

► In line with the government approach to address genuine

grievances, services rendered abroad and charged on exports
from India to be exempted from service tax.

► For effectively ensuring all inclusive growth for farmers and

tribals, focus products scheme expanded further to include new
agro and forest products.

► Exports and employment in handloom and handicraft sectors

provided further push through duty free access to machinery and
equipment for effluent treatment plants.
► To sharpen core strength of promising gems and jewellery sectors
and handicraft sector, duty free access to tools, machinery and
equipment proposed to be provided to give them competitive
edge.

► Export of rhodium polished silver jewellery to be encouraged

further.

► Rationalisation in the threshold criteria and reclassification of

status holder scheme.
 EXIM POLICY 2008-2009
Policy highlighted:-
 DEPB scheme has been extended till May 2009.

 Refund of service tax on almost all the services.

 Income tax benefit to 100% EOUs has been extended by

Government.

 Coverage of FMS has been increased and additional 10 countries

have been included. These are Mongolia, Bosnia-Herzegovina,
Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana
and Colombia.

 Split-up facility under DFIA Scheme introduced.

 EOUs shall be allowed to pay excise duty on monthly basis, instead
of the present system of paying duty on consignment basis.

 Customs duty payable under EPCG Scheme has been reduced from
5% to 3%.

 Setting up a new Export Promotion Council for Telecom Sector.

 Value of jeweler parcels, through Foreign Post Office is raised to

US$ 75,000. Earlier it was from US$ 50,000.

 Duty free import of samples has been increased from Rs.75 000 to
Rs. 1, 00,000.
 EXIM POLICY 2009-2010
IT HIGHLIGHT
► Rupees 325 Crores would be provided under Promotional Schemes
for Leather, Textile etc. for exports made with effect from 1.4.09.

► Technical textiles and stapling machine have been added under

Focus Product Scheme.

► STCL Limited, Diamond India Limited, MSTC Limited, Gem &

Jewellery Export Promotion Council and Star Trading Houses (for
gem and jewellery sector) have been added under the list of
nominated agencies notified under Para 4A.4 of Foreign Trade
Policy for the purpose of import of precious metals.The procedure
and monitoring provisions for implementation of these additional
agencies would be notified separately in line with RBI guidelines.
► Export obligation period against advance authorizations has been
extended upto 36 months in view of the present global economic
slowdown.
► At present, DEPB/Duty Credit Scrip can be used for payment of
duty only on items which are under free category. The utilization
is now extended for payment of duty for import of restricted
items also.
► Value cap applicable under DEPB have been revised upwards for
products.
► Under EPCG scheme, in case of decline in exports of a
product(s) by more than 5%, the export obligation for all
exporters of that product(s) is to be reduced proportionately. This
provision has been extended for the year 2009-10, for exports
during 2008-09.
► In view of the prevailing global slowdown, the threshold limit for
recognition as Premier Trading House has now been reduced to
Rs.7500 crores.

► Bhilwara in Rajasthan and Surat in Gujarat have been recognized

as Towns of Export Excellence, for textiles and diamonds
respectively.

► Export of blood samples is now permitted without license after

obtaining ‘no objection certificate’ from Director General of
Health Services (DGHS).

► Independent office of DGFT being opened at Srinagar.