Annual Supplement of Foreign Trade Policy
Annual supplement of foreign trade policy
focuses to
reduce imports, technological upgradation and diversification of exports, encouraging
exports of manufacturing, exports from north-east states, reduce transaction
costs, generate employment opportunities, among others.
Snapshot of Annual
Supplement (2013-14) of the Foreign Trade Policy
To revive investors’ interest in SEZs and to
boost exports--In view of the acute difficulties in
aggregating large tracts of uncultivable land for setting up SEZs, while ensuring vacancy and
contiguity, the Minimum Land Area Requirement for multi-product SEZ has been reduced
from 1000 hectares to 500 hectares and for sector-specific SEZ from existing
100 hectares to 50 hectares. To provide greater flexibility in utilizing land
tracts falling between 50-450 hectares, it has been decided to introduce a
Graded Scale for Minimum Land Criteria which would permit a SEZ an additional
sector for each contiguous 50 hectare parcel of land. This will also bring
about more efficient use of the infrastructure facilities created in such an
SEZ. Further flexibility to set up additional units in a sector specific SEZ is
being provided by introducing Sectoral broad-banding
to encompass similar / related areas under the same sector.
IT Exports
constitute a very significant part of
India ’s exports and IT SEZs
have a major contribution in it. Exports from IT SEZs during financial year
2012-13 have exceeded Rs. 1.40 lakh crore registering a growth of over 70% over
the previous year’s exports. In order to boost growth of this very
important sector and also to give a fillip to employment and growth in Tier-II
and Tier-III cities, there would be no minimum land requirement for setting up
an IT/ITES SEZ. Only the minimum built up area criteria would be required to be
met by the SEZ developers. The minimum built up area requirement has also been considerably
relaxed with the requirement of one lakh square meters to be applicable for the
7 major cities viz: Mumbai, Delhi (NCR), Chennai,
Hyderabad , Bangalore , Pune and Kolkata. For the other Category B
cities 50,000 square meters and for remaining cities only 25,000 square meters
built up area norm will be applicable. The present SEZ Framework does not include an Exit Policy
for the units and has now been decided to permit transfer of ownership of SEZ
units, including sale.
Zero Duty Export Promotion Capital
Goods (EPCG) Scheme— Earlier, foreign trade policy has two variants
under this scheme, namely, Zero Duty EPCG for few sectors and 3% Duty EPCG for
all sectors. In the annual supplement of 2013-14, Government has decided to
harmonize Zero Duty EPCG and 3% EPCG Scheme into one scheme which will be a
Zero Duty EPCG Scheme covering all sectors.
The salient features of the
Zero Duty
EPCG Scheme are:
·
Authorization holders will
have export obligation of 6 times the duty saved amount. The export obligation
has to be completed in a period of 6 years.
·
The period for import under
the Scheme would be 18 months.
·
Export obligation discharge
by export of alternate products as well as accounting of exports of group
companies will not be allowed.
·
The exporters who have
availed benefits under Technology Upgradation Fund Scheme (TUFS) administered
by Ministry ofTextiles, can also avail the benefit of Zero
duty EPCG Scheme.
·
The import of motor cars,
SUVs, all purpose vehicles for hotels, travel agents, or tour transport
operators and companies owning/operating golf resorts will not allowed under
the new Zero Duty EPCG Scheme.
Reduced EO for domestic
sourcing of capital goods -- The quantum of specific Export Obligation (EO) in the case of
domestic sourcing of capital goods under EPCG authorizations has been reduced
by 10% which would promote domestic manufacturing of capital goods.
Reduced EO for units in the
State of Jammu & Kashmir-- In order
to encourage manufacturing activity in the State of Jammu & Kashmir, it has
been decided to reduce the specific export obligation (EO) to 25% of the normal
export obligation. Earlier, this benefit was announced in respect of units
located in North Eastern Region and
Sikkim .
Widening of Interest
Subvention Scheme to 134 sub-sectors of engineering sector.-- At present, 2% interest subvention scheme is available to certain
specific sectors like Handicrafts, Handlooms, Carpets, Readymade Garments,
Processed Agricultural Products, Sports Goods and Toys. The scheme had been
further widened to include 134 sub-sectors of engineering sector. Government
had also announced that the benefit of this scheme of 2% interest subvention
could be available upto 31st March 2014.
Widening the Scope of
Utilization of Duty Credit Scrip—Duty Credit Scrips issued under Focus Market Schemes,
Focus Product Scheme
and Vishesh Krishi Gramin Udyog Yojana(VKGUY) can be
used for payment of service tax on procurement of services within the legal
framework of service tax exemption notifications under the Finance Act, 1994.
Holder of the scrip shall be entitled to avail drawback or CENVAT credit of the
service tax debited in the scrips as per Department of Revenue rules.
Market and Product Diversification— Norway has
been added under Focus Market Scheme and
Venezuela has been added under
Special Focus Market Scheme. The total number of countries under Focus Market
Scheme and Special Focus Market Scheme becomes 125 and 50 respectively.
Approximately, 126 new products have been added under Focus Product Scheme.
These products include items from engineering, electronics, chemicals,
pharmaceuticals and textiles sector and about 47 new products have been added
under Market Linked Focus Product Scheme (MLFPS). These products are from
engineering, auto components and textiles sector. Two new countries i.e.,
Brunei and
Yemen have been added as new
markets under MLFPS.
Incremental Exports Incentivisation Scheme- Government has announced Incremental
Export Incentivisation Scheme for the exports made during
January 2013 to March 2013. This scheme is available for exports made to
USA , EU and Asia
and has been decided to extend for the year 2013-14. Countries of Latin America
and Africa have been added with the objective to increase
India ’s share in these
markets. The present export to each of these markets is less than US $ 100 million.
Served from India
Scheme (SFIS)-- Service providers are
entitled to duty credit scrips under Served
from India Scheme at the rate of 10% of free foreign exchange earned during a
financial year. The entitlement shall now be calculated on the basis of net
free foreign exchange earned (i.e., after deducting foreign exchange spent from
the total foreign exchange earned during the financial year).
Service exporters who are also engaged in
manufacturing activity are permitted to use SFIS duty credit scrip for
importing/domestically procuring capital goods. Hotels, travel agents, tour
operators or tour transport operators and companies owning/operating golf
resorts having SFIS scrip can import or domestically procure motor cars, SUVs
and all purpose vehicles using SFIS scrips for
payment of duties. Such vehicles need to be registered for “tourist
purpose” only.
Recredit of 4% SAD as a trade facilitation
measure --Utilization of recredited 4% SAD scrips shall be allowed upto 30th September 2013 as a
trade facilitation measure.
Duty
Free Import Authorization Scheme (DFIA) --Anti Dumping Duty and Safeguard Duty was exempted under DFIA
Scheme. Exemption from payment of Anti Dumping Duty and Safeguard Duty shall
henceforth not be available after endorsement of transferability of such
authorizations
Import
of Cars--Import of cars/vehicles is permitted through designated ports
only. Now import of cars/vehicles would also be allowed at ICD Faridabad
and
Ennore Port
(TN).
Widening of items eligible
for import for Handloom/Made ups and Sports Goods-- Additional items (embroidery/sewing threads/poly/quilted bedding materials
and printed bags) are included in the list of items which are allowed duty free
within the existing limits upto 5% FOB
value of exports of handloom made ups in preceding year or within the existing
limit of upto 1% of FOB value of exports of cotton/man-made
ups in preceding year. Similarly, five additional items have been added
pertaining to sports goods exports.
Warm regards,
Dr. S P Sharma
Chief Economist
_________________________________
PHD Research Bureau
PHD Chamber of Commerce and Industry
August Kranti Marg, New
Delhi – 110016
Tel 91 11 49545454, Fax 91 11 26855450,
E mail – research@phdcci.in
Website www.phdcci.in
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