Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the

import and export of goods in India. The Foreign Trade Policy of India is guided by the Export Import in known as in short E I! Policy of the Indian Go"ernment and is regulated by the Foreign Trade De"elopment and #egulation $ct% &''(. DGFT )Directorate General of Foreign Trade* is the main go"erning body in matters related to Exim Policy. The main ob+ecti"e of the Foreign Trade )De"elopment and #egulation* $ct is to pro"ide the de"elopment and regulation of foreign trade by facilitating imports into% and augmenting exports from India. Foreign Trade $ct has replaced the earlier law known as the imports and Exports ),ontrol* $ct &'-.. E I! Policy Indian E I! Policy contains "arious policy related decisions taken by the go"ernment in the sphere of Foreign Trade% i.e.% with respect to imports and exports from the country and more especially export promotion measures% policies and procedures related thereto. Trade Policy is prepared and announced by the ,entral Go"ernment )!inistry of ,ommerce*. India/s Export Import Policy also know as Foreign Trade Policy% in general% aims at de"eloping export potential% impro"ing export performance% encouraging foreign trade and creating fa"orable balance of payments position. 0istory of Exim Policy of India In the year &'1(% the Go"ernment of India appointed a special Exim Policy ,ommittee to re"iew the go"ernment pre"ious export import policies. The committee was later on appro"ed by the Go"ernment of India. !r. 2. P. 3ingh% the then ,ommerce !inister and announced the Exim Policy on the &(th of $pril% &'45. Initially the E I! Policy was introduced for the period of three years with main ob+ecti"e to boost the export business in India Exim Policy Documents The Exim Policy of India has been described in the following documents6 Interim 7ew Exim Policy (88' 9 (8&8 Exim Policy6 (88-9 (88' 0andbook of Procedures 2olume I 0andbook of Procedures 2olume II IT,)03* ,lassification of Export9 Import Items The ma+or information in matters related to export and import is gi"en in the document named :Exim Policy (88(9(88.:. $n exporter uses the 0andbook of Procedures 2olume9I to know the procedures% the agencies and the documentation re;uired to take ad"antage of a certain pro"isions of the Indian E I! Policy. For example% if an exporter or importer finds out that paragraph 1.1 of the Exim Policy is important for his export business then the exporter must also check out the same paragraph in the 0andbook of Procedures 2olume9 I for further details. The 0andbook of Procedures 2olume9II pro"ides "ery crucial information in matters related to the 3tandard Input9<utput 7orms )3I<7*. 3uch Input output norms are applicable for the products such as electronics%engineering% chemical% food products including fish and marine products% handicraft% plastic and leatherproducts etc. =ased on 3I<7% exporters are pro"ided the facility to make duty9free import of inputs re;uired for manufacture of export products under the Duty Exemption 3cheme or Duty #emission 3cheme. The Export Import Policy regarding import or export of a specific item is gi"en in the IT,9 03 ,odes or better known as

Indian Trade ,larification ,ode based on 0armoni>ed 3ystem of ,oding was adopted in India for import9 export operations. Indian ,ustom uses an eight digit IT,903 ,odes to suit the national trade re;uirements. IT,903 codes are di"ided into two schedules. 3chedule I describe the rules and exim guidelines related to import policies where as Export Policy 3chedule II describe the rules and regulation related to export policies. 3chedule I of the IT,903 code is di"ided into (& sections and each section is further di"ided into chapters. The total number of chapters in the schedule I is '4. The chapters are further di"ided into sub9heading under which different 03 codes are mentioned. IT,)0s* 3chedule II of the code contain '. Export Import Guidelines related to the export policies. <b+ecti"es <f The Exim Policy 6 9 Go"ernment control import of chapters gi"ing non9essential all the details about the the

items

through

E I! Policy. $t the same time% all9out efforts are made to promote exports. Thus% there are two aspects of Exim Policy? the import policy which is concerned with regulation and management of imports and the export policy which is concerned with exports not only promotion but also regulation. The main ob+ecti"e of the Go"ernment/s E I! Policy is to promote exports to the maximum extent. Exports should be promoted in such a manner that the economy of the country is not affected by unregulated exportable items specially needed within the country. Export control is% therefore% exercised in respect of a limited number of items whose supply position demands that their exports should be regulated in the larger interests of the country. In other words% the main ob+ecti"e of the Exim Policy is6 To accelerate the economy from low le"el of economic acti"ities to high le"el of economic acti"ities by making it a globally oriented "ibrant economy and to deri"e maximum benefits from expanding global market opportunities. To stimulate sustained economic growth by pro"iding access to essential raw materials% intermediates% components%/ consumables and capital goods re;uired for augmenting production. To enhance the techno local strength and efficiency of Indian agriculture% industry and ser"ices% thereby% impro"ing their competiti"eness. To generate new employment. <pportunities and encourage the attainment of internationally accepted standards of ;uality. To pro"ide ;uality consumer products at reasonable prices. Go"erning =ody of Exim Policy The Go"ernment of India notifies the Exim Policy for a period of fi"e years )&''.9(88(* under 3ection 5 of theForeign Trade )De"elopment and #egulation $ct*% &''(. The current Export Import Policy co"ers the period (88(9(88.. The Exim Policy is updated e"ery year on the @&st of !arch and the modifications% impro"ements and new schemes became effecti"e from &st $pril of e"ery year. $ll types of changes or modifications related to the E I! Policy is normally announced by the Anion !inister of ,ommerce and Industry who co9ordinates with the !inistry of Finance% the Directorate General of Foreign Trade and network of Dgft #egional <ffices. Exim Policy &''( 9&''. In order to liberali>e imports and boost exports% the Go"ernment of India for the first time introduced the Indian Exim Policy on $pril I% &''(. In order to bring stability and continuity% the Export Import Policy was made for the duration of 5 years. 0owe"er% the ,entral Go"ernment reser"es the right in public interest to make any

amendments to the trade Policy in exercise of the powers conferred by 3ection95 of the $ct. 3uch amendment shall be made by means of a 7otification published in the Ga>ette of India. Export Import Policy is belie"ed to be an important step towards the economic reforms of India. Exim Policy &''. 9(88( Bith time the Exim Policy &''(9&''. became old% and a 7ew Export Import Policy was need for the smooth functioning of the Indian export import trade. 0ence% the Go"ernment of India introduced a new Exim Policy for the year &''.9(88(. This policy has further simplified the procedures and educed the interface between exporters and the Director General of Foreign Trade )DGFT* by reducing the number of documents re;uired for export by half. Import has been further liberali>ed and better efforts ha"e been made to promote Indian exports in international trade. <b+ecti"es of the Exim Policy &''. 9(88( The principal ob+ecti"es of the Export Import Policy &''. 9(88( are as under6 To accelerate the economy from low le"el of economic acti"ities to high le"el of economic acti"ities by making it a globally oriented "ibrant economy and to deri"e maximum benefits from expanding global market opportunities. To moti"ate sustained economic growth by pro"iding access to essential raw materials% intermediates% components%/ consumables and capital goods re;uired for augmenting production. To impro"e the technological strength and efficiency of Indian agriculture% industry and ser"ices% thereby% impro"ing their competiti"eness. To create new employment. <pportunities and encourage the attainment of internationally accepted standards of ;uality. To gi"e ;uality consumer products at practical prices. 0ighlights of the Exim Policy &''.9(88( &. Period of the Exim Policy C This policy is "alid for fi"e years instead of three years as in the case of earlier policies. It is effecti"e from &st $pril &''. to @&st !arch (88(. (. Diberali>ation C $ "ery important feature of the policy is liberali>ation. C It has substantially eliminated licensing% ;uantitati"e restrictions and other regulatory and discretionary controls. $ll goods% except those coming under negati"e list% may be freely imported or exported. @. Imports Diberali>ation C <f 5-( items from the restricted list &58 items ha"e been transferred to 3pecial Import Dicence )3ID* list and remaining @'( items ha"e been transferred to <pen General Dicence )<GD* Dist. -. Export Promotion ,apital Goods )EP,G* 3cheme C The duty on imported capital goods under EP,G 3cheme has been reduced from &5E to &8E. C Ander the >ero duty EP,G 3cheme% the threshold limit has been reduced from #s. (8 crore to #s. 5 crore for agricultural and allied 3ectors 5. $d"ance Dicence 3cheme C Ander $d"ance Dicense 3cheme% the period for export obligation has been extended from &( months to &4 months. C $ further extension for six months can be gi"en on payment of & E of the "alue of unfulfilled exports. 1. Duty Entitlement Pass =ook )DEP=* 3cheme C Ander the DEP= 3cheme an exporter may apply for credit% as a specified percentage of F<= "alue of exports% made in freely con"ertible currency. C 3uch credit can be can be utili>ed for import of raw materials% intermediates% components% parts% packaging materials% etc. for export purpose. Impact of Exim Policy &''. F(88( )a* Globali>ation of Indian Economy6

The Exim Policy &''.98( proposed with an aim to prepare a framework for globali>ations of Indian economy. This is e"ident from the "ery first ob+ecti"e of the policy% which states. :To accelerate the economy from low le"el of economic acti"ities to9 high le"el of economic acti"ities by making it a globally oriented "ibrant economy and to deri"e maximum benefits from expanding global market opportunities.: )b* Impact on the Indian Industry6 In the E I! policy &''.98(% a series of reform measures ha"e been introduced in order to gi"e boost to India/s industrial growth and generate employment opportunities in non9agricultural sector. These include the reduction of duty from &5E to &8E under EP,G scheme that enables Indian firms to import capital goods and is an important step in impro"ing the ;uality and producti"ity of the Indian industry. )c* Impact on $griculture6 !any encouraging steps ha"e been taken in the Exim Policy &''.9(88( in order to gi"e a boost to Indian agricultural sector. These steps includes pro"ision of additional 3ID of & E for export of agro products% allowingE<AGs and other units in EPHs in agriculture sectors to 58E of their output in the domestic tariff area )DT$* on payment of duty. )d* Impact on Foreign In"estment. In order to encourage foreign in"estment in India% the Exim Policy &''.98( has permitted &88E foreign e;uity participation in the case of &88E E<As% and units set up in EPHs. )e* Impact on Iuality up gradation6 The 3ID entitlement of exporters holding I3< '888 certification has been increased from (E to 5E of the F<= "alue of exports% which has encouraged Indian industries to undertake research and de"elopment programmers and upgrade the ;uality of their products. )f* Impact on 3elf9#eliance69 The Exim Policy &''.9(88( successfully fulfills one of the IndiaGs long terms ob+ecti"e of 3elf9reliance. The Exim Policy has achie"ed this by encouraging domestic sourcing of raw materials% in order to build up a strong domestic production base. 7ew incenti"es added in the Exim Policy ha"e also added benefits to the exporters. Exim Policy (88( F (88. The Exim Policy (88( 9 (88. deals with both the export and import of merchandise and ser"ices. It is worth mentioning here that the Exim Policy6 &''. 9 (88( had accorded a status of exporter to the business firm exporting ser"ices with effect from&.-.&'''. 3uch business firms are known as 3er"ice Pro"iders. <b+ecti"es of the Exim Policy6 (88( 9 (88. The main ob+ecti"es of the Export Import Policy (88(9(88. are as follows6 &. To encourage economic growth of India by pro"iding supply of essential raw materials% intermediates% components% consumables and capital goods re;uired for augmenting production and pro"iding ser"ices. (. To impro"e the technological strength and efficiency of Indian agriculture% industry and ser"ices% thereby impro"ing their competiti"e strength while generating new employment opportunities and encourage the attainment of internationally accepted standards of ;uality? and @. To pro"ide consumers with good ;uality products and ser"ices at internationally competiti"e prices while at the same time creating a le"el playing field for the domestic producers. !ain Elements of Exim Policy (88-9(88' The new Exim Policy (88-9(88' has the following main elements6 Preamble Degal Framework 3pecial Focus Initiati"es =oard <f Trade General Pro"isions #egarding Imports $nd Exports Promotional !easures

Duty Exemption J #emission 3chemes Export Promotion ,apital Goods 3cheme Export <riented Anits )E<As*%Electronics 0ardware Technology Parks )E0TP3*% 3oftware Technology Parks )3TPs* and =io9Technology Parks )=TPs* 3pecial Economic Hones Free Trade K Barehousing Hones Deemed Exports Permeable of Exim Policy (88-9(88'6 It is a speech gi"en by the !inistry of ,ommerce and Industries. The speech for the Exim Policy (88-9(88' was gi"en by Lamal 7ath% on @&3T $AGA3T% (88-. Degal Framework of Exim Policy (88-9(88'

&.& Preamble The Preamble spells out the broad framework and is an integral part of the Foreign Trade Policy. &.( Duration In exercise of the powers conferred under 3ection 5 of The Foreign Trade )De"elopment and #egulation $ct*% &''( )7o. (( of &''(*% the ,entral Go"ernment hereby notifies the Exim Policy for the period (88-9(88' incorporating the Export Import Policy for the period (88(9(88.% as modified. This Policy shall come into force with effect from &st 3eptember% (88- and shall remain in force up to @&st !arch% (88'% unless as otherwise specified. &.@ $mendments The ,entral Go"ernment reser"es the right in public interest to make any amendments to this Policy in exercise of the powers conferred by 3ection95 of the $ct. 3uch amendment shall be made by means of a 7otification published in the Ga>ette of India. &.Transitional $rrangements 7otifications made or Public 7otices issued or anything done under the pre"ious Export J Import policies and in force immediately before the commencement of this Policy shall% in so far as they are not inconsistent with the pro"isions of this Policy% continue to be in force and shall be deemed to ha"e been made% issued or done under this Policy. Dicenses% certificates and permissions issued before the commencement of this Policy shall continue to be "alid for the purpose and duration for which such licence? certificate or permission was issued unless otherwise stipulated. &.5 Free Export Import In case an export or import that is permitted freely under Export Import Policy is subse;uently sub+ected to any restriction or regulation% such export or import will ordinarily be permitted notwithstanding such restriction or regulation% unless otherwise stipulated% pro"ided that the shipment of the export or import is made within the original "alidity of an irre"ocable letter of credit established before the date of imposition of such restriction. 3pecial Focus Initiati"e of Exim Policy (88-9(88' Bith a "iew to doubling our percentage share of global trade within 5 years and expanding employment opportunities% especially in semi urban and rural areas% certain special focus initiati"es ha"e been identified for agriculture% handlooms% handicraft% gems K +ewellery% leather and !arine sectors. Go"ernment of India shall make concerted efforts to promote exports in these sectors by specific sectoral strategies that shall be notified from time to time. =oard of Trade of Exim Policy (88-9(88' =<T has a clear and dynamic role in ad"ising go"ernment on rele"ant issues connected with foreign trade.

To ad"ise Go"ernment on Policy measures for preparation and implementation of both short and long term plans for increasing exports in the light of emerging national and international economic scenarios? To re"iew export performance of "arious sectors% identify constraints and suggest industry specific measures to optimi>e export earnings? To examine existing institutional framework for imports and exports and suggest practical measures for further streamlining to achie"e desired ob+ecti"es? To re"iew policy instruments and procedures for imports and exports and suggest steps to rationali>e and channeli>e such schemes for optimum use? To examine issues which are considered rele"ant for promotion of IndiaGs foreign trade% and to strengthen international competiti"eness of Indian goods and ser"ices? and To commission studies for furtherance of abo"e ob+ecti"es. General Pro"isions #egarding Exports and Imports of Exim Policy (88-9(88' The Export Import Policy relating to the general pro"isions regarding exports and Imports is gi"en in ,hapter9( of the Exim Policy. ,ountries of ImportsJExports 9 Anless otherwise specifically pro"ided% importJ export will be "alid fromJto any country. 0owe"er% importJexports of arms and related material fromJto Ira; shall be prohibited. The abo"e pro"isions shall% howe"er% be sub+ect to all conditionality% or re;uirement of licence% or permission% as may be re;uired under 3chedule II of IT, )03*. Promotional !easures of Exim Policy (88-9(88' The Go"ernment of India has set up se"eral institutions whose main functions are to help an exporter in his work. It would be ad"isable for an exporter to ac;uaint him with these institutions and the nature of help that they can pro"ide so that he can initially contact them and ha"e a clear picture of what help he can expect of the organi>ed sources in his export effort. 3ome of these institution are as follows. Export Promotion ,ouncils ,ommodity =oards !arine Products Export De"elopment $uthority $gricultural K Processed Food Products Export De"elopment $uthority Indian Institute of Foreign Trade India Trade Promotion <rgani>ation )ITP<* 7ational ,entre for Trade Information )7,TI* Export ,redit Guarantee ,orporation )E,G,* Export9Import =ank Export Inspection ,ouncil Indian ,ouncil of $rbitration Federation of Indian Export <rgani>ations Department of ,ommercial Intelligence and 3tatistics Directorate General of 3hipping Freight In"estigation =ureau Duty Exemption J #emission 3chemes of Exim Policy (88-9(88' The Duty Exemption 3cheme enables import of inputs re;uired for export production. It includes the following exemptions9 Duty Drawback6 9 The Duty Drawback 3cheme is administered by the Directorate of Drawback% !inistry of Finance. Ander Duty Drawback scheme% an exporter is entitled to claim Indian ,ustoms Duty paid on the imported goods and ,entral Excise Duty paid on indigenous raw materials or components. Excise Duty #efund6 9 Excise Duty is a tax imposed by the ,entral Go"ernment on goods manufactured in

India. Excise duty is collected at source% i.e.% before remo"al of goods from the factory premises. Export goods are totally exempted from central excise duty. <ctroi Exemption6 9 <ctroi is a duty paid on manufactured goods% when they enter the municipal limits of a city or a town. 0owe"er% export goods are exempted from <ctroi. The Duty #emission 3cheme enables post export replenishmentJ remission of duty on inputs used in the export product. DEP=6 Duty Entitlement Pass =ook in short DEP= #ate is basically an export incenti"e scheme. The ob+ecti"e of DEP= 3cheme is to neutrali>e the incidence of basic custom duty on the import content of the exported products. DF#, Ander the Duty Free #eplenishment ,ertificate )DF#,* schemes% import incenti"es are gi"en to the exporter for the import of inputs used in the manufacture of goods without payment of basic customs duty. Duty Free #eplenishment ,ertificate )DF#,* shall be a"ailable for exports only up to @8.8-.(881 and from 8&.85.(881 this scheme is being replaced by the Duty Free Import $uthorisation )DFI$*.

DFI$6 Effecti"e from &st !ay% (881% Duty Free Import $uthorisation or DFI$ 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 $uthorisation is issued on the basis of inputs and export items gi"en under 3tandard Input and <utput 7orms)3I<7*. Export <riented Anits )E<As*% Electronics 0ardware Technology Parks )E0TPs*% 3oftware TechnologyParks)3TPs* $nd =io9 Technology Parks )=TPs* of Exim Policy (88-9(88' The Export Import Policies relating to Export <riented Anits )E<As* Electronics 0ardware Technology Parks)E0TPs*% 3oftware Technology Parks )3TPs* and =io9 technology parks )=TPs* 3cheme is gi"en in ,hapter 1 of the Foreign Trade Policy. 3oftware Technology Park)3TP*JElectronics 0ardware Technology Park )E0TP* complexes can be set up by the ,entral Go"ernment% 3tate Go"ernment% Public or Pri"ate 3ector Andertakings. Export Promotion ,apital Goods 3cheme )EP,G* of Exim Policy (88-9(88' Introduced in the E I! policy of &''(9'.% Export Promotion ,apital Goods 3cheme )EP,G* enable exporters to import machinery and other capital goods for export production at concessional or no customs duties at all. This facility is sub+ect to export obligation% i.e.% the exporter is re;uired to guarantee exports of certain minimum "alue% which is in multiple of total "alue of capital goods imported. ,apital goods imported under EP,G 3cheme are sub+ect to actual user condition and the same cannot be transferred Jsold till the fulfillment of export obligation specified in the licence. In order to ensure that the capital goods imported under EP,G 3cheme% the licence holder is re;uired to produce certificate from the +urisdictional ,entral Excise $uthority ),E$* or ,hartered Engineer ),E* confirming installation of such capital goods in the declared premises. 3pecial Economic Hone )3EH* under the Exim Policy (88-9(88' $ 3pecial Economic Hone in short 3EH is a geographically distributed area or >ones where the economic laws are more liberal as compared to other parts of the country. 3EHs are proposed to be specially delineated duty

free encla"es for the purpose of trade% operations% duty and tariffs. 3EHs are self9contained and integrated ha"ing their own infrastructure and support ser"ices. The area under /3EH/ co"ers a broad range of >one types% including Export Processing Hones )EPH*% Free Hones )FH*% Industrial Estates )IE*% Free Trade Hones )FTH*% Free Ports% Arban Enterprise Hones and others. In Indian% at present there are eight functional 3pecial Economic Hones located at 3anta ,ru> )!aharashtra*% ,ochin )Lerala*% Landla and 3urat )Gu+arat*% ,hennai )Tamil 7adu*% 2isakhapatnam )$ndhra Pradesh*% Falta )Best =engal* and 7oida )Attar Pradesh* in India. Further a 3pecial Economic Hone at Indore ) !adhya Pradesh * is also ready for operation. Free Trade K Barehousing Hones of Exim Policy (88-9(88' Free Trade K Barehousing Hones )FTBH* shall be a special category of 3pecial Economic Hones with a focus on trading and warehousing. The concept of FTBH is new and has been recently introduced in the fi"e9year foreign trade policy (88-98'. Its main ob+ecti"e is to pro"ide infrastructure for growth of the economy and foreign trade. Free Trade K Barehousing Hones )FTBH* plays an important role in achie"ing global standard warehousing facilities as free trade >ones. Free Trade K Barehousing Hones is a widely accepted model with a history of pro"iding 3ubstantial encouragement to foreign trade and warehousing acti"ity. Deemed Exports under the Exim Policy (88-9(88' Deemed Export is a special type of transaction in the Indian Exim policy in which the payment is recei"ed before the goods are deli"ered. The payment can be done in Indian #upees or in Foreign Exchange. $s thedeemed export is also a source of foreign exchange% so the Go"ernment of India has gi"en the benefit duty free import of inputs.