Overview of

Foreign Trade Policy

 World merchandise trade
Exports in 2007 Imports in 2007
• World - $12,083 billion • World - $ 12,413 billion
• Germany - $1327 billion • USA - $2017 billion
9.5% (1st place) 14.2% (1st place)
• China - $1218 billion • Germany - $1059 billion
8.8% (2nd place) 7.5% (2nd place)
• USA $ 1163 billion • China $ 956 billion
8.4% (3rd place) 6.7% (3rd place)
• India $ 145 billion • India $ 217 billion
1% (26th place) 1.5% (18th place)
World trade in commercial services
Exports in 2007 Imports in 2007
• World - $3260 billion • World - $ 3060 billion
• USA - $454 billion 13.9% • USA - $336 billion
(1st place) 11% (1st place)
• UK - $263 billion 8.1% • Germany - $245 billion
(2nd place) 8% (2nd place)
• Germany $ 197 billion • UK $ 193 billion
6.1% (3rd place) 6.3% (3rd place)
• India $ 86 billion • India $ 78 billion
2.7% (11th place) (13th place)
 Understanding Foreign Trade
Policy
• Drafted by the DGFT under the Foreign
Trade Development & Regulation Act
1992 and rules framed thereunder
• Implemented with the help of various other
Depts mainly Customs, Excise and RBI
• In order to understand the co-relation, one
must get familiar with the various laws and
functions of various depts
 Study the following Acts, Laws &
Regulations
• Customs Act 1962 • Industrial Policy
• Customs Tariff Act Resolution 1956
1975 • Industries
• FEMA 1999 Development and
• Central Excise Act Regulation Act 1951
1944 • Laws of Weights and
• Central Excise Tariff Measures
Act 1985
 Ministry of Finance
Dept of Revenue
• Customs-Coverage
• Validity of imports and exports
• Assessment and valuation
• Determination of import/export
duty applicable
• Collection of duty
• Inspection and supervision of
cargo
• Examining co-relation and
compliance with other laws
• Excise-Coverage
Export
• Under bond – clearance of
excisable goods for export
under bond
• Rebate of excise duty post
exports where exports have
been effected after payment of
excise duty
• Monitoring factory stuffed
containers in certain cases
Import
• Monitoring CENVAT
 Understanding Foreign Trade
Policy
• Export or import involves movement of
goods as well as receipt/remittance of
foreign exchange
• Though foreign exchange regulations are
relaxed, monitoring of forex operations is
still being carried out by RBI
Understanding Policy provisions
 Promotional Measures
(Chapter – 3)
• Assistance to States for Infrastructure Development of
Exports [ASIDE]
• Market Access Initiative [MAI]
• Marketing Development Assistance [MDA]
• Towns of Export Excellence [TEE]
• Export and Trading Houses [Status certificate]
• Served from India Scheme [SFIS]
• Vishesh Krishi and Gram Udyog Yojana [VKGUY]
• Focus Market Scheme [FMS]
• Focus Products Scheme [FPS]
• High-Tech Products Export Promotion Schemes
 Duty Exemption / Remission
Scheme [Chapter 4]
I. Duty Exemption Scheme
•Advance Authorisation
•Advance Authorisation for Annual Requirement
•Duty Free import Assistance [DFIA]

II. Duty Remission Scheme

•Duty Entitlement Passbook Scheme [DEPB]
•Duty Drawback
 EPCG Scheme (Chapter 5)
• Import of capital goods and spares at
concessional rate of duty [@3% of
Customs Duty] coupled with export
obligation equivalent to 8 times the duty
saved amount to be completed in 8 years.
[as per Annual Supplement to FTP 2008-
09]
 EOU / EHTP/ STP/ BTP
Scheme (Chapter 6)
• Units undertaking to export their entire
production of goods and services except
permissible sales in Domestic Tariff Area
(DTA) are known as Export Oriented Units
(EOUs).
• Permits import of capital goods and inputs
without payment of duty
 Deemed Exports (Chapter 8)
• Goods supplied do not leave country and
payment is received in Indian Rupees or in
Free Foreign Exchange.
 Vishesh Krishi and Gram Udyog Yojana
[VKGUY]
5% Duty credit entitlement to promote export of
• (i) Agricultural Produce and their value added products;
• (ii) Minor Forest Produce and their value added variants;
for exports w.e.f 1.4.2004;
• (iii) Gram Udyog Products, for exports w.e.f 01.04.2006;
• (iv) Forest Based Products, for exports w.e.f 01.04.2007;
and
• (v) Other products, as notified from time to time.

List of eligible products is given in App 37A of HBP V1.

 Focus Market Scheme [FMS]
• Export of all products to the notified countries.
• Entitlement – 2.5% of the FOB value of exports
[ w.e.f. 1.04.2006].
• List of Countries eligible for benefit under this
scheme is given in Appendix 37C of HBPv1.
• Exports made by EOUs/EHTPs/BTPs who do
not avail direct tax benefits/exemptions, will be
eligible to get benefits under this scheme.
 Focus Product Scheme (FPS)
• Eligibility: Exports of notified products to
all countries (including SEZ units). List of
notified products is given in Appendix 37D
of HBPv1.
• Entitlement:
• Duty Credit scrip equivalent to 1.25% of
FOB value of exports for each licensing
year commencing from 1st April, 2006.
Duty Exemption/Remission Scheme
 Duty Exemption/
Remission Scheme
• Exemption from • Remission of duty on
payment of duty on inputs-
inputs-prior or after to Post-Exports by way of
Exports/ Deemed Duty Credit Entitlement
Exports • DEPB Scheme
• Adv. Autho./DFIA for
• Duty Drawback
1) Phy. Exports
2) Deemed Exports
• Annual Adv. Autho.
1) Phy. Exports
2) Deemed Exports
Export Promotion Capital Goods
[EPCG] Scheme
Export Promotion Capital Goods
Scheme [EPCG]
• This scheme allows import of capital goods and spares
at concessional rate of duty [@3% of Customs Duty]
coupled with export obligation equivalent to 8 times the
duty saved amount to be completed in 8 years.

• In case CVD is paid in cash on imports under EPCG,

incidence of CVD would not be taken for computation of
net duty saved provided the same is not Cenvated.
Export Oriented Units [EOUs]
 Export Oriented Units [EOUs]
• Units undertaking to export their entire production of
goods and services except permissible sales in Domestic
Tariff Area (DTA) are known as Export Oriented Units
(EOUs).
• Electronic Hardware Technology Parks (EHTPs),
Software Technology Parks (STPs) or Bio-Technology
Parks (BTPs) are also covered under EOU scheme.
These are product specific units availing the same
benefits as EOUs.
• EOUs/EHTPs/STPs/BTPs are allowed to manufacture
goods including repair, re-making, reconditioning,
reengineering, and rendering of services wherever
applicable.
Deemed Exports
 Deemed Exports
• This is a special facility provided for
supplies of indigenous products which can
be consumed ultimately in the production
of goods to be exported. The conditions
are that supplied goods as it is do not
leave the country but get consumed in the
process of manufacture, payment for
which is received in Indian Rupees or in
foreign exchange.
 Deemed Exports
• Supplies to Authorisation Holder [Adv.
Autho./AAA/DFIA/EPCG]
• Supplies to EOUS/EHTPs/STPs/BTPs
• Supplies to Projects
• Supplies to Fertilizer Plant
• Marine Freight Containers by 100% EOUs
(Domestic Freight Containers Manufacturers)
Thank you