GLOSSARY OF TERMS FOREIGN TRADE POLICY

Date : 19 Apr 2007

Location : New Delhi

FTP

Refers to Foreign Trade Policy, announced by the Commerce & Industry

Minister on 31st August, 2004. It is a 5-year Policy (2004-2009), which
provides a stable policy framework. The Annual Supplements 2005 and
2006 to the Foreign Trade Policy (2004-09) announced by the Commerce &
Industry Minister in April, 2005 and 2006 were effective from 1st April, 2005,
and 1st April, 2006 respectively. Likewise, the Annual Supplement
announced by the Commerce & Industry Minister on 19 April, 2007 will be
effective from 1st April, 2007.

Exim Policy

Refers to Export and Import (Exim) Policy. Exim Policy got incorporated into
the comprehensive Foreign Trade Policy, which was announced by the
Commerce & Industry Minister on 31st August, 2004.

DGFT

Directorate General of Foreign Trade, which is headed by the Director

General of Foreign Trade. The office of the DGFT is responsible for
formulating and execution of Foreign Trade Policy, including licensing.
Formerly (till 1991), was known as the Chief Controller of Imports & Exports
(CCI&E).

EPZs/EOUs

EPZ means Export Processing Zones which are special enclaves,

separated from the Domestic Tariff Area (DTA), to provide an internationally
competitive duty-free environment for export production. EOU means
Export Oriented Units. The EOU scheme is complementary to the EPZ
scheme, except that it is widely dispersed in location, unlike EPZs, which
are set up at specific locations.

SEZ

Refers to Special Economic Zones. Following the SEZ Act 2005 and the
SEZ Rules 2006, the number of SEZs notified has been 63 and number of
formal approvals 234. Investment of Rs.53561 crore and 15,75,452
additional jobs are expected to be generated by the 63 notified SEZs by
December 2009. Incentives and facilities offered to units in SEZs for
promotion of investment, including foreign direct investment, include dutyfree import/domestic procurement of goods for development, operation and
maintenance of SEZ units, 100% income tax exemption for SEZ units under
Section 10-AA of the Income Tax Act for the first 5 years, 50% for next 5
years and 50% of the ploughed back export profit for next 5 years,
exemption from Central Sales Tax, exemption from Service Tax and single
window clearance mechanism for establishment of units etc.

FTWZ

Free Trade and Warehousing Zone, a new scheme announced in the

Foreign Trade Policy.

AEZs

Refers to a scheme of Agricultural Export Zones.

BTP

BTP means Biotechnology Park as notified by Director General of Foreign

Trade on the recommendation of the Department of Biotechnology

STP

STP means Software Technology Park

E-Commerce

Refers to electronic commerce. In the context of Foreign Trade Policy, ecommerce relates to electronic filing and processing of applications etc.

EPCG

EPCG refers to the Export Promotion Capital Goods (EPCG) Scheme,

which gives the manufacturer facility for import of capital goods for export
production at concessional rate of duty (5 per cent) against certain level of
export obligation over a period of time.

Duty Exemption
Allows duty-free import of inputs for exports under Advance Licence, Duty
Scheme/Duty Free Entitlement Pass Book (DEPB) and Duty Free Replenishment Certificate
Import of Inputs
(DFRC) Scheme.
Duty Credit

Refers to import duty credit. For example, under the Focus Market Scheme,
if an exporter exports to an identified country Rs.100 worth of goods, he will
get 2.5% of Rs.100 on export of all products to the notified countries,
which he can either use to pay customs duty on his imported inputs or sell
in the market as these scrips would be freely transferable. Similarly, under
the Focus Product Scheme, duty credit facility at the rate of 2.5% of f.o.b.
value of exports on 50% of export turnover of notified products would be
allowed.

Advance Licence

Advance Licence is granted for import of inputs without payment of customs

duties. It is issued in accordance with the Policy and procedures in force
and subject to fulfilment of time-bound export obligation. Such licences can
be issued for import of inputs for use in the export production as well as for
replenishment of the inputs already used in the export product.

DEPB

Refers to the Duty Entitlement Pass Book to neutralise the incidence of

basic customs duty on the import content of export product. This is provided
by way of grant of duty credit against the export product at specified rates.
The DEPB Scheme which was notified on 1/4/1997 consisted of (a) Postexport DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was
abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued
after exports, the exporter is given a duty entitlement Pass Book at a predetermined credit on the FOB value. The DEPB allows import of any items
except the items which are otherwise restricted for imports.

Input-Output
Norms

The norms which define the amount of input/inputs required to manufacture

a unit of output.

DFRC

Refers to the Duty Free Replenishment Certificate Scheme which was

introduced from 1/4/2000 replacing Transferable Advance Licensing
Scheme. The scheme is available to merchant exporters as well as to
manufacturer exporters. However, it covers only items which are covered
under standard input-output norms notified by DGFT.

DFIA

Duty Free Import Authorisation

Deemed Exports

Refers to those transactions in which the goods supplied do not leave the
country and the payment for the goods is received by the supplier in India.

FoB

FoB means Free on Board -- i.e., when an exporter delivers goods "free on
board", he pays all charges involved in getting them actually onto the ship.

NFE

Refers to Net Foreign Exchange. Net Foreign Exchange earning is

calculated as a percentage of exports (NFEP).

ISO-9000
Manufacturer
Exporter

Refers to international standards, laid down by the International

StandardsOrganisation. Manufacturer-exporter means a person who
exports goods manufactured by him or intends to export such goods.

Merchant Exporter Merchant- Exporter means a person engaged in trading activities and
exporting or intending to export goods.
One to Five Star
Export House

With a view to building marketing infrastructure and expertise required for

export promotion, exporters with certain level of export performance are
conferred the status of One to Five Star Export House.

Status Holders

An exporter recognised as One to Five Star Export House by

DGFT/Development Commissioner for the purpose of benefits and
facilitation.

Registration-cumMembership

Registration-cum-Membership Certificate (RCMC) means a certification of

registration and membership granted to an exporter by an Export Promotion
Council (EPC) or other competent authority.

Certificate Value
addition

Value- addition refers to the increment added in the process of manufacture

of a particular item, which also becomes part of its price.

QRs

QRs mean Quantitative Restrictions. QRs refer to specific limits imposed by

countries on the quantity or value of goods that can be imported or
exported. QRs are non-tariff measures which are taken to regulate or
prohibit international trade. QRs specifically refer to measures such as
licensing requirements for exports/imports; quotas, ceilings etc.

ITC (HS)

Refers to Indian Trade Classification (Harmonised System). It is a system of

classification of products for the purposes of export and import.

VKUJ

Vishesh Krishi Upaj Yojana, a new scheme introduced in the Foreign Trade
Policy (2004-2009) as part of the package for agriculture.

SEPC

An exclusive Services Export Promotion Council announced in the Foreign

Trade Policy to map opportunities for key services in key markets.

ICDs and

Inland Container Depots

CFS

Container Freight Stations

EDI

Electronic Data Interchange -- basically a trade facilitation measure. DGFT

is committed to simplifying procedures relating to international trade and put
in place an exporter friendly regime for obtaining import authorisations and
disbursement of export-linked incentives.
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SB/NR/MRS