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Introduction to Foreign Trade
           Policy
            SESSION 1
 LEGAL ENVIRONMENT OF BUSINESS



                                 1
Background
 Waves of change:
   Condition before 90s
   New world economic order
   Globalisation, Liberalisation of trade and investment
   Development of IT & communication
   Rule based multilateral trading systems – Uruguay
    round
   Reduction in M tariffs & removal of non-tariff barriers
WHY EXPORTS?
 Foreign exchange requirement
 Rapid economic development - High growth rates
  have been achieved by many Asian countries
 India – since July 1991            –   liberalisation,
  globalisation, privatisation
 Promotion of exports treated as a national priority
 Trade policy integrated with overall strategy of
  economic development
 Paradigm shift from import substitution –led
  growth to export led-growth
How is it different ?
 International     trading    environment    (trade
  agreements, policies)
 Consumer preferences in different markets
 Terms & conditions of biz
 Communication and negotiations hold the key
 Logistics plays important role
 Realising payment against the shipment
 Claiming incentives/facilities
Foreign Trade Policy
 27 August 2009 - 31 March 2014
   th                     st




        Government of India
Ministry of Commerce and Industry
    Department of Commerce
        Website: http://dgft.gov.in
 FOREIGN TRADE POLICY 2009-14
                                      5
In India,
the legal framework for regulation of international
trade is mainly provided by the Foreign Trade
(Development And Regulation) Act, 1992  which
replaced the earlier law namely, the Imports &
Exports (Control) Act 1947 




                                                      6
The Ministry of Commerce, Government of India,
formulates the Foreign Trade Policy (Export –
Import policy), in terms of section 5 of the
Foreign Trade (Development And Regulation)
Act, 1992




                                                 7
In India, Legal Framework for foreign trade is
provided by:

Foreign Trade (Development And Regulation)
Act, 1992
Export (Quality Control and Inspection) Act, 1963
Customs & Central Excise Duties Drawback Rules,
1995
Foreign Exchange Management Act, 1999
Customs and Central Excise Regulations
                                                     8
Foreign Trade Policy : 2009-14
Main policy provisions are given in Foreign
Trade Policy : 2009-2014
Covers procedures, agencies & docs required to
take advantage of certain provisions of policy




                                                  9
Foreign Trade Policy : 2009-14
 Deals with EXIM of merchandise and services
 Policy has been described in the following:
    Foreign Trade Policy : 2009-14

    Handbook of Procedures - Volume I

    Handbook of Procedures - Volume II

    ITC (HS) Classification of Import-Export Items


                                                      10
Achievements of FTP 2003-2008
                               2003-04   2008
EXPORTS                        USD 63 bn USD 168 bn
Share of global                0.83%     1.45%
merchandise trade
share of global                1.4%          2.8%
commercial services
export
share in goods and             0.92%         1.64%
services trade
14 million jobs were created due to increased exports in
the last 5 years
                                                             11
                                                      *WTO estimates
Objectives of FTP 2009-2014
Short term
to arrest and reverse the declining trend of
exports
to provide additional support to those sectors
which have been hit badly by recession in the
developed world
to achieve 15% annual export growth (US$ 200
bn March 2011)
                                                  12
Objectives of FTP 2009-2014
Short term
to achieve an annual growth of 25% upto 2014
to double India’s exports of goods and services
by 2014
long term
to double India’s share in global trade by 2020



                                                   13
Strategy for implementation of FTP

 fiscal incentives
 institutional changes
 procedural rationalization
 enhanced market access across the world
 diversification of export markets




                                            14
Strategy for implementation of FTP

Neutralising the incidences of all levies, duties
on inputs used in exports
Duties/levies should not be exported
Avoiding skewed duty structure and ensuring
that   India's   domestic     sectors   are   not
disadvantaged in FTA/RTA/PTA that India enters
into

                                                     15
Strategy for implementation of FTP
Identifying and nurturing special focus area for
generating employment in semi-urban and rural
areas
Facilitating technological and infrastructural
upgradation of all sectors of Indian Economy,
especially through import of capital goods & equipment




                                                         16
Strategy for implementation of FTP
Revitalising Board of Trade by redefining its role,
giving it due recognition & inducting experts on
FTP
Activating India's embassies as key players for
trade intelligence and enquiry dissemination by
linking commercial wings of the embassies through
an electronic platform


                                                       17
Strategy for implementation of FTP
under    advance    authorization   scheme,   a
minimum of 15% value addition on imported
inputs has been stipulated
diversification of products and markets through
enhancement of incentive rates in particular
product group and market
Additional resources have been made available
under the Market Development Assistance
Scheme and Market Access Initiative Scheme.
                                                   18
Strategy for implementation of FTP
for market expansion
Comprehensive Economic Partnership Agreement
with South Korea
Trade in Goods Agreement with ASEAN w.e.f. 1.1.10
Mercosur Preferential Trade Agreement
Promotion of Brand India through more than six
‘Made in India’ shows across the world
Technological upgradation : promoting imports of
capital goods under EPCG at 0% duty
                                                    19
Strategy for implementation of FTP
    ‘Towns of Export Excellence’ and units located
         therein have been granted additional focused
         support and incentives.
    high level coordination committee in the
         Department of *Commerce facilitates X’s by
         creating synergies in the line of credit extended
         through EXIM Bank for new & emerging markets

                                                                                                  20
*committee = Ministry of External Affairs + Department of Economic Affairs + EXIM Bank + R.B.I.
Strategy for implementation of FTP
 zero duty EPCG scheme and incentives for
   production and export of ‘green products’
 e-trade project : to reduce transaction cost and
   institutional bottlenecks
 Additional    ports/locations   are   being   EDI
   (Electronic Date Interchange) enabled


                                                      21
Strategy for implementation of FTP
 single window mechanism : Inter-Ministerial
   Committee has been estd. to resolve trade
   related grievances




                                                22
Schemes to Encourage X
 SERVED FROM INDIA SCHEME (SFIS)

 FOCUS MARKET SCHEME (FMS)

 VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY)

 FOCUS PRODUCT SCHEME (FPS)

 Scheme for Assistance to States for Developing
  Export Infrastructure and Allied Activities (ASIDE)
Policy initiative
 SPECIAL FOCUS INITIATIVES
   Market Diversification
     26 new countries have been included within the ambit
      of Focus Market Scheme.
     The incentives provided under Focus Market Scheme
      have been increased from 2.5 % to 3 %.
Policy initiative
 Support to status holders
  additional duty credit scrip @ 1 % of the FOB of
   past export shall be granted for specified product
   groups including leather, specific sub sectors in
   engineering, textiles, plastics, handicrafts and jute
 Handlooms
  Duty free import entitlement of specified trimmings
   and embellishments is 5% of FOB value of exports
   during previous financial year
  No custom duty on Machinery & equipment for ETP
  Duty free import of old pieces of hand knotted
   carpets on consignment basis for re-export after
   repair is permitted
Policy initiative
 Handicrafts
  Duty free import entitlement of tools, trimmings and
   embellishments is 5 %of FOB value of exports during
   previous financial year.
  No custom duty on Machinery and equipment for ETP
  All handicraft exports would be treated as special Focus
   products and entitled to higher incentives.
 Leather and Footwear
  Duty free import entitlement of specified items is 3 % of
   FOB value of exports of leather garments during preceding
   financial year.
  Re-export of unsuitable imported materials such as raw
   hides & skins and wet blue leathers is permitted.
  Re-export of unsold hides, skins and semi finished leather
   shall be allowed from Public Bonded warehouse at 0% of
   the applicable export duty.
General Provisions Regarding EXIM
 Free EXIM unless regulated

 Can X gifts of value < Rs. 5L in a licensing year

 All   X    contracts   and    invoices    shall     be
   denominated       either in freely convertible
   currency or Indian rupees but X proceeds shall
   be realised in freely convertible currency

 Units in SEZ shall be exempted from service tax
General Provisions Regarding EXIM
 For all goods and services exported from India,
  services received / rendered abroad, where ever
  possible, shall be exempted from service tax

 new grievance redressal mechanism has been
  put in place to facilitate speedy redressal of
  grievances of trade and industry
Main Provisions : FTP 2004-09
1. *Stability of Policy
2. Liberalised Exports & Imports
3. Imports of capital goods
4. Export Promotion Capital Goods scheme
5. Duty Exemption/Remission Scheme
6. *Import of Replacement of Goods
7. *Export and Import of Free Trade Samples
8. *Replacement of Defective Goods
9. *Export of Goods after Repairs
10. *Export of Imported Goods                 29
Main provisions : FTP 2004-09
2. Liberalised Exports & Imports
   Provides for liberalised EXIM
   Also provides for Restrictions based on
     protection of
     a. Public morals
     b. Human, Animal or Plant life or health
     c. Patents, Trademarks, Copyrights
     d. National Treasures (art, history, etc.)
     e. Prevention of use of prison labour
     f. Conservation of exhaustible natural resources
                                                        30
Main provisions : FTP 2004-09
2. Liberalised Exports & Imports
   EXPORT of various items can be classified into
   four categories
      A. Prohibited
      B. Restricted
      C. State Trading Enterprise
      D. Free with terms and conditions


                                                    31
Prohibited

 Can’t be exported!!!




                            32
Restricted
       Can be exported only against a valid export
            licence or subject to such conditions as may be
            specified for a particular item in *ITC(HS)
            Classification
       Export Licence is granted against confirmed
            export order only



                                                                   33
*Indian Trade Clarification based on Harmonized System of Coding
State Trading Enterprise
 Items can be exported by designated agencies
   of Central/State govt.
   E.g. STC (State Trading Corporation), IOC,
   MMTC (Metals and Minerals Trading
   Corporation of India), etc.




                                                 34
Free with terms & conditions
 Certain items are free to export
 No licence is required.*
*Subject to conditions like
a) Minimum export price
b) Registration with export promotion council
c) Registration of export contracts, etc.



                                                35
 Items which don’t fall in any category can
   be exported without any restriction!!!




                                               36
Import policy has also divided the various
items of IMPORT into 4 categories
  a. Prohibited
  b. Restricted
  c. Canalised
  d. STE



                                             37
Prohibited
 Can’t be imported
 BEEF, IVORY, etc.




                             38
Prohibited items
•   All forms of wild life including their parts and products except Peacock Tail
    Feathers, including handicrafts made thereof and manufactured articles,
    and shavings of Shed Antlers of Chital and Sambhar subject to conditions.
•   Exotic birds
•    wild orchids, as well as plants as specified
•   Beef
•   Human skeletons
•   Tallow, fat and/or oils of any animal origin excluding fish oil
•   Wood and wood products in the form of logs, timber, stumps, roots, barks,
    chips, powder, flakes, dust, pulp and charcoal except sawn timber made
    exclusively out of imported teak logs/timber subject to conditions
•   Chemicals included in Schedule 1 of the Chemicals Weapons Convention
    of the United Nations
•   Sandalwood in any form, but excluding fully finished handicrafts made out
    of sandalwood and machine finished sandalwood products
•   Red Sanders wood in any form, whether raw, processed or unprocessed as
    well as any product made thereof.
Restricted
 Can be imported only against a valid import
   licence




                                                40
Restricted items
• Cattle, Camel
• Chemical fertilizers
• Dress materials/readymade garments fabrics/textile
  items with imprints of excerpts or verses of the Holy
  Quran
• Hides and skins
• Viscose staple fibre (Regular), excluding high
  performance viscose staple fibre
• Silk worms, silkworm seeds and silk worm cocoons
• And the list goes on and on …
Canalised
 Items   can   be   imported   only   through
  designated agencies of GOI




                                                 42
Canalised items
 Petroleum products

 Mica waste

 Mineral ores , concentrates and compounds

 Niger seeds

 Onions
State Trading Enterprise
 Import of items is permitted by STE
 Solely    in     accordance     with     commercial
   considerations     including   PRICE,     QUALITY,
   AVAILABILITY,                    MARKETABILITY,
   TRANSPORTATION, ETC.
 Items – wheat, rice, urea, petrol, diesel, etc.



                                                        44
 Exporter is required to obtain export
  licence for each order in case of export of
  restricted item
 Exporter should take into account the
  impact on delivery schedule before
  agreeing on delivery dates.


                                                45
Main provisions : FTP 2004-09
3. Imports of capital goods

    Today, no licence required, just pay import duty
    a firm can import second hand capital goods
      w/o any import licence, no age restriction
    Minm value of 2nd hand plant & m/c = 25 cr.




                                                        46
Main provisions : FTP 2004-09
4. Export Promotion Capital Goods scheme
   To enable cost competitiveness, GOI introduced
       EPCG scheme
   Firms now pay only *5% custom duty
   Capital goods includes :
            a)    New as well as second hand capital goods
            b)    Computer software systems
            c)    Spares, jigs, dies, fixtures & moulds
            d)    Components of capital goods
            e)    Spares of existing plant & machinery

                                                             47
   *subject to fulfillment of export obligation
Main features of EPCG scheme
   Eligibility of import

   Following firms can import at 5% duty
      1 Manufacturer   Exporters, 2 Merchant Exporters
       and 3 Service providers
    Common service providers in towns of export
       excellence, e.g. Tirupur, Panipat, Ludhyana
    Retailers having minimum area of 1000 sq.mt.
    Project imports notified by the Central Board of
       Excise & Customs wherein basic customs duty
       on imports is 10% with a CVD of 16%
                                                          48
Main features of EPCG scheme
   Amount of Export Obligation

   8 times the amount of duty saved on import of
    capital goods under this scheme
   6 times the amount of duty saved in case of
     SSI units provided the landed CIF value of
       capital goods < 25 lakhs and after inclusion of
       goods should be < SSI limit of investment (1Cr.)



                                                          49
Main features of EPCG scheme
   Period of Discharge of Export Obligation

   Within 8 years from date of issuance of licence.
   Up to 12 years in the following cases:
      Amount of duty saved is > 100 crores
      EPCG licence holder is a unit under the revival plan of
         BIFR   (Banking    for   Industrial   and   Financial
         Restructuring)
      Licence holder is in Agri-export zone



                                                                 50
Main features of EPCG scheme
   Discharge of Export Obligation


  1. Export obligation can be fulfilled by export of
     goods which can be manufactured by imported
     capital goods.
  2. If the licence holder fulfills > 75% of export
     obligation (including avg. level of export) in half
     the period of export obligation, the remaining
     obligation is condoned and licence is redeemed
                                                           51
Main features of EPCG scheme
    Discharge of Export Obligation

  3. Licence holder shall fulfill export obligation over the
       specified period in the following proportions
             Period of export obligation Minimum export obligation to
             (8 years)                   be fulfilled
             1 to 6th year                               50 %
             7th and 8th year                            50 %
             Period of export obligation
             (12 years)
             1 to 10th year                              50 %
             11th and 12th year                          50 %


   Export obligation of a particular block of years may be set off by the excess of
                                                                                      52
   export made in the preceding block of year
Main features of EPCG scheme
   Leasing of Capital Goods

   Licence holder may source new capital goods
     from    domestic    leasing   company/domestic
     manufacturer.
   No permission of licensing authority is required
     under leasing financial arrangement
   Licence holder alone shall be responsible for
     fulfillment of export obligation

                                                       53
Main provisions : FTP 2004-09
5. Duty Exemption/Duty Remission Scheme
   FTP provides for duty exemption/ remission
     scheme + EPCG scheme to augment Indian
     export
   Exporters can import duty free inputs required
     for manufacture of products for export




                                                     54
Main features of EPCG scheme
   Period of Export Obligation


   Should be fulfilled within 24 months from date
     of licence
   Can be extended by 6 months to composition fee
     of 2% of duty saved on unutilised imported
     items
   Can be extended further by 6 months : pay 5%


                                                     55
SEZ, EOU, STP & EHTP
      Schemes



                       56
Schemes For Encouraging Exports

All nations encourage exports…..
  ….to counter adverse Balance of Trade
Various schemes to encourage exports
Mainly    supported   and    supervised   by
Ministry of Commerce
EPC for various categories


                                                57
Export Incentives for Manufacturer
Indigenous inputs w/o payment of excise duty
No excise charged on final product
Imported inputs w/o payment of customs duty
No export duty on export of final product
Fast finance at concessional interest rates
Exemption from income tax
Exemption from SALES TAX on final product
(refund of CST paid on inputs in certain cases)
                                                  58
WTO STIPULATION
‘No country can give export incentives’
However….goods can be made tax free for export
purpose
All export promotion schemes ensure that inputs
as well as final products are made ‘TAX FREE’




                                                   59
Input Duty Relief Scheme
Various schemes – to obtain duty free inputs OR
get refund later
1. Some schemes – unit has to be isolated from
   domestic production units
   E.g. EOU, STP, EHTP and SEZ




                                                   60
Input Duty Relief Scheme
2. Other schemes –domestic producers are also
   entitled to get inputs/capital goods free of taxes
E.g.   a) Advance Licence scheme
       b) Duty Entitlement Pass Book scheme (DEPB)
       c) Duty Free Replenishment Certificate
          scheme (DFRC)
       d) EPCG scheme (Export Promotion Capital
          Goods scheme)
                                                        61
Input Duty Relief Scheme
e. Rebate of duty on inputs if final product is
   exempt from duty
f. Under duty drawback scheme, excise duty paid
   on inputs is returned as rebate




                                                  62
Highlights of EOU/SEZ scheme
   SEZ unit has to be located within the specified
   zones developed, 114 operational, another 500
   formally approved
   EOU unit can be set up at any of over 300 places
   all over India


Currently there are 114 SEZs (as of October 2010) operating throughout India in the following states[8]: Karnataka - 18; Kerala - 6;
Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan - 1; Tamil Nadu - 16; Uttar Pradesh - 4; West Bengal - 2: Orissa -
1.
Additionally, more than 500 SEZs are formally approved (as on October 2010) by the Government of India in the following states[9]:
Andhra Pradesh - 109; Chandigarh - 2; Chattisgarh - 2; Dadra and Nagar Haveli - 4; Delhi - 3; Goa - 7; Gujarat - 45; Haryana - 45;
Jharkhand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14; Maharashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1;
Punjab - 8; Rajasthan - 8; Tamil Nadu - 70; Uttarkhand - 3; Uttar Pradesh - 33; West Bengal - 22.                                    63
Highlights of EOU/SEZ scheme

Similarly, STP/EHTP unit can be situated
within SEZ or at any place where EOU can
be set up




                                        64
Highlights of EOU/SEZ scheme
No custom duty on import of capital
goods, raw materials, consumables,
packing material, spares etc.
No excise duty on indigenous inputs

*Second hand capital goods can also be imported.


                                                   65
Highlights of EOU/SEZ scheme
Have to achieve +ve NFE (Net Foreign
Exchange Earnings).        NFE = A – B
A= FOB value of exports
B = CIF Value of all imported inputs and
capital goods and all payments made in
foreign exchange.
                                            66
Requirements of +ve NFE
calculated cumulatively for 5 yrs from
commencement of commercial production
All foreign exchange outgo is included*




                                           67
Foreign exchange outgo includes…

Capital goods
Raw materials
Consumables and spares
Dividend payable in foreign exchange
Royalty to collaborators
Design and know-how fee


                                        68
Foreign exchange outgo includes…

Payment to foreign technicians
Training to Indian technicians abroad
Foreign travel
Interest paid on ECB / deferred payment credit
Any other payment in foreign exchange.




                                                  69
If NFE is not achieved, duty and
interest in proportion to default will
be payable




                                         70
Highlights of EOU/SEZ scheme

EOU Minimum investment in plant and
machinery and building = Rs 1 crore. This
should be before commencement of
commercial production
SEZ No such limit

                                            71
Highlights of EOU/SEZ scheme
A bond in prescribed form has to be executed.
EOU B-17
SEZ  Form prescribed in SEZ Rules, 2003
*There is NO physical supervision of customs / excise
authorities over production and clearances, BUT
prescribed records are required to be maintained.


                                                    72
Highlights of EOU/SEZ scheme
EOU Fast Track Clearance Scheme (FTCS) for
clearances of imported consignments
SEZ  customs clearance for export and import is
obtained within the zone itself




                                                   73
Highlights of EOU/SEZ scheme
Generally, all final production should be exported,
EXCEPT rejects up to prescribed limit.




                                                      74
Highlights of EOU/SEZ scheme

Sale within India should be on payment of excise
duty = normal customs duty (If imported)
Exceptions In certain cases, excise duty payable
= 50%/30% of normal customs duty applicable if
goods are imported into India




                                                     75
Highlights of EOU/SEZ scheme
SUB-CONTRACTING       is    allowed   subject   to
permission on annual basis
JOB WORK for exports is permitted
SAMPLES can be sold / given free within
prescribed limit
UNUTILISED RAW MATERIAL can be disposed of
on payment of applicable duties

                                                      76
Highlights of EOU/SEZ scheme

The unit can EXIT (DE-BOND) with
permission of Development Commissioner,
on payment of applicable duties.




                                          77
Highlights of EOU/SEZ scheme
EOU Central Sales Tax (CST) paid on
purchases is refundable. Refund is obtained
from Development Commissioner
SEZ  Supplier DOES NOT have to pay CST




                                              78
Highlights of EOU/SEZ scheme
Prescribed %age of foreign exchange
earnings can be retained in *EEFC account in
foreign exchange
100% foreign equity is permissible, except
in a few cases*

*EEFC A/C – Exchange Earners Foreign Currency Account
                                                        79
Highlights of EOU/SEZ scheme
Supplies made to EOU by Indian supplier are
‘deemed exports’ and supplier is entitled to
benefits of ‘deemed export’
Supplies to SEZ are ‘exports’ and all export
benefits are available




                                                80
Highlights of EOU/SEZ scheme
Restrictions under Companies Act on
*managerial       remuneration   are   not
applicable
No restrictions on External Commercial
Borrowings

*20 lakhs/month

                                             81
STP / EHTP UNIT
Concept of STP/EHTP is similar to EOU/SEZ.
Administered     by   Ministry   of   Information
Technology.
STP/EHTP unit can be set up as an EOU unit
anywhere in India or as a SEZ unit at specified
developed locations in India.


                                                     82
STP / EHTP UNIT
A software development firm qualifies as
STP/EHTP unit.
Can import goods on loan from clients for
specific period.
Can export software electronically or through
physical transport.


                                                 83
STP / EHTP UNIT
Activities allowed…..
exports of professional services
development of computer software
data entry and conversion
data processing, analysis and control
data management
call centre services.

                                         84
Which Scheme to Choose?
If your major production is towards sale in DTA
(Domestic Tariff Area), schemes like DEPB* or
DFRC* or Advance License are suitable.




* Duty Entitlement Passbook scheme (DEPB)
* Duty Free Replenishment Certificate scheme (DFRC)
                                                      85
Schemes like EOU/SEZ are suitable
when the undertaking is predominantly
export oriented
Requirement of imported capital goods
and raw material is high




                                         86
EOU vs. SEZ
‘EOU is more flexible than SEZ’
Wide choice of location (EOU unit can be
set up at any place declared as ‘warehousing
station’ under Customs Act) [300 places]
EOU can be set up even within a part of
the factory, thus saving considerable costs.
Even use of common utilities is possible.
                                               87
EOU vs. SEZ
EOU is more flexible than SEZ
If export orders dry up, conversion of EOU
to DTA unit by exit (de-bonding) is
comparatively very easy.
In case of SEZ, the unit has to be physically
moved out of the zone after exit (de-
bonding).
                                                 88
EOU vs. SEZ
On the other hand
infrastructure available at SEZ unit is much
better than EOU units.
Customs clearance for exports is obtained
within the zone itself, which is convenient.




                                                89
Overview of EOU/SEZ scheme
EOU/SEZ schemes are under Ministry of
Commerce
Basic Policy of EOU : Chapter 6 of Export
and Import Policy 2009-2014
Procedural Aspects : Chapter 6 of
Handbook of Procedures Volume I

                                             90
Overview of EOU/SEZ Scheme
Prescribed Forms : Appendices to the
Handbook of Procedures
EOU units are closely connected with
Customs Law, Excise Law, Income Tax Act and
Foreign Exchange Management Act



                                              91
Power
Power generation/distribution can be set
up in EOU/STP unit.
can supply surplus power to another
EOU/STP/EHTP/SEZ unit.
Can supply surplus power to DTA unit on
payment of duty on consumables and raw
materials used for power generation
                                            92
Service Sector
Duty free imports will be permitted ONLY
to units exporting services and NOT to
domestic service providers
Further, NO trading units are permitted
Each EOU must have its website and e-mail
address.


                                             93
EOU/SEZ/STP/EHTP unit can be set up with
100% foreign investment, except few
*restricted sectors
SEZ unit can manufacture articles reserved
for SSI even if foreign equity exceeds 24%
No license is required


                                              94
PERMISSIBLE CAPITAL GOODS
material handling equipments, captive power
plants, office equipment, tools, prototypes, AC
system, computers, laptops can be brought as

'capital goods' IF these are essential in
manufacture of goods
should be located in regd./administrative
office
                                                  95
ANTI-DUMPING DUTY or SAFEGUARD DUTY
Not applicable for imports by EOU or SEZ
units, UNLESS it is specifically made
applicable




                                           96
CT-3 CERTIFICATE
The EOU/EHTP/STP unit can procure
indigenous material w/o payment of excise
duty.




                                            97
EXPORT/IMPORT OF DEFECTIVE
  INPUTS/FINAL PRODUCTS




                             98
RETURN OF REJECTED GOODS TO
    INDIGENOUS SUPPLIER




                              99
INTER UNIT TRANSFER
Inter unit transfers of manufactured goods
and capital goods from one EOU/SEZ unit
to another EOU/SEZ unit w/o payment of
duty is permitted.


                                             100
EOU : Allowed Activities
Besides manufacturing,
(a) Import of goods for service activities
(b) Reconditioning, repairs of imported goods and
   return to foreign suppliers
(c) Destruction   of   waste     and   rejects   with
   permission of Asstt. Commissioner even outside
   the premises

                                                    101
EOU – Allowed Activities

SERVICE has also been included as 'export
product' as per EXIM Policy.




                                             102
Routine procedures by EOU unit
QUARTERLY AND ANNUAL REPORT
Submit in prescribed form to
Development Commissioner.




                                  103
Routine procedures by EOU unit

Maintenance of Separate Accounts
separate accounts and balance sheet of
EOU and Domestic Unit is required to claim
Income tax benefits.


XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxXXXXXXXXXXXXXXXXXXXXXxxxxxxXXXXXXXXXXXXXXXXX




                                                                                                                       104

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Session 1 foreign trade policy

  • 1. Introduction to Foreign Trade Policy SESSION 1 LEGAL ENVIRONMENT OF BUSINESS 1
  • 2. Background  Waves of change:  Condition before 90s  New world economic order  Globalisation, Liberalisation of trade and investment  Development of IT & communication  Rule based multilateral trading systems – Uruguay round  Reduction in M tariffs & removal of non-tariff barriers
  • 3. WHY EXPORTS?  Foreign exchange requirement  Rapid economic development - High growth rates have been achieved by many Asian countries  India – since July 1991 – liberalisation, globalisation, privatisation  Promotion of exports treated as a national priority  Trade policy integrated with overall strategy of economic development  Paradigm shift from import substitution –led growth to export led-growth
  • 4. How is it different ?  International trading environment (trade agreements, policies)  Consumer preferences in different markets  Terms & conditions of biz  Communication and negotiations hold the key  Logistics plays important role  Realising payment against the shipment  Claiming incentives/facilities
  • 5. Foreign Trade Policy 27 August 2009 - 31 March 2014 th st Government of India Ministry of Commerce and Industry Department of Commerce Website: http://dgft.gov.in FOREIGN TRADE POLICY 2009-14 5
  • 6. In India, the legal framework for regulation of international trade is mainly provided by the Foreign Trade (Development And Regulation) Act, 1992  which replaced the earlier law namely, the Imports & Exports (Control) Act 1947  6
  • 7. The Ministry of Commerce, Government of India, formulates the Foreign Trade Policy (Export – Import policy), in terms of section 5 of the Foreign Trade (Development And Regulation) Act, 1992 7
  • 8. In India, Legal Framework for foreign trade is provided by: Foreign Trade (Development And Regulation) Act, 1992 Export (Quality Control and Inspection) Act, 1963 Customs & Central Excise Duties Drawback Rules, 1995 Foreign Exchange Management Act, 1999 Customs and Central Excise Regulations 8
  • 9. Foreign Trade Policy : 2009-14 Main policy provisions are given in Foreign Trade Policy : 2009-2014 Covers procedures, agencies & docs required to take advantage of certain provisions of policy 9
  • 10. Foreign Trade Policy : 2009-14  Deals with EXIM of merchandise and services  Policy has been described in the following:  Foreign Trade Policy : 2009-14  Handbook of Procedures - Volume I  Handbook of Procedures - Volume II  ITC (HS) Classification of Import-Export Items 10
  • 11. Achievements of FTP 2003-2008 2003-04 2008 EXPORTS USD 63 bn USD 168 bn Share of global 0.83% 1.45% merchandise trade share of global 1.4% 2.8% commercial services export share in goods and 0.92% 1.64% services trade 14 million jobs were created due to increased exports in the last 5 years 11 *WTO estimates
  • 12. Objectives of FTP 2009-2014 Short term to arrest and reverse the declining trend of exports to provide additional support to those sectors which have been hit badly by recession in the developed world to achieve 15% annual export growth (US$ 200 bn March 2011) 12
  • 13. Objectives of FTP 2009-2014 Short term to achieve an annual growth of 25% upto 2014 to double India’s exports of goods and services by 2014 long term to double India’s share in global trade by 2020 13
  • 14. Strategy for implementation of FTP fiscal incentives institutional changes procedural rationalization enhanced market access across the world diversification of export markets 14
  • 15. Strategy for implementation of FTP Neutralising the incidences of all levies, duties on inputs used in exports Duties/levies should not be exported Avoiding skewed duty structure and ensuring that India's domestic sectors are not disadvantaged in FTA/RTA/PTA that India enters into 15
  • 16. Strategy for implementation of FTP Identifying and nurturing special focus area for generating employment in semi-urban and rural areas Facilitating technological and infrastructural upgradation of all sectors of Indian Economy, especially through import of capital goods & equipment 16
  • 17. Strategy for implementation of FTP Revitalising Board of Trade by redefining its role, giving it due recognition & inducting experts on FTP Activating India's embassies as key players for trade intelligence and enquiry dissemination by linking commercial wings of the embassies through an electronic platform 17
  • 18. Strategy for implementation of FTP under advance authorization scheme, a minimum of 15% value addition on imported inputs has been stipulated diversification of products and markets through enhancement of incentive rates in particular product group and market Additional resources have been made available under the Market Development Assistance Scheme and Market Access Initiative Scheme. 18
  • 19. Strategy for implementation of FTP for market expansion Comprehensive Economic Partnership Agreement with South Korea Trade in Goods Agreement with ASEAN w.e.f. 1.1.10 Mercosur Preferential Trade Agreement Promotion of Brand India through more than six ‘Made in India’ shows across the world Technological upgradation : promoting imports of capital goods under EPCG at 0% duty 19
  • 20. Strategy for implementation of FTP  ‘Towns of Export Excellence’ and units located therein have been granted additional focused support and incentives.  high level coordination committee in the Department of *Commerce facilitates X’s by creating synergies in the line of credit extended through EXIM Bank for new & emerging markets 20 *committee = Ministry of External Affairs + Department of Economic Affairs + EXIM Bank + R.B.I.
  • 21. Strategy for implementation of FTP  zero duty EPCG scheme and incentives for production and export of ‘green products’  e-trade project : to reduce transaction cost and institutional bottlenecks  Additional ports/locations are being EDI (Electronic Date Interchange) enabled 21
  • 22. Strategy for implementation of FTP  single window mechanism : Inter-Ministerial Committee has been estd. to resolve trade related grievances 22
  • 23. Schemes to Encourage X  SERVED FROM INDIA SCHEME (SFIS)  FOCUS MARKET SCHEME (FMS)  VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY)  FOCUS PRODUCT SCHEME (FPS)  Scheme for Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE)
  • 24. Policy initiative  SPECIAL FOCUS INITIATIVES  Market Diversification  26 new countries have been included within the ambit of Focus Market Scheme.  The incentives provided under Focus Market Scheme have been increased from 2.5 % to 3 %.
  • 25. Policy initiative  Support to status holders  additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute  Handlooms  Duty free import entitlement of specified trimmings and embellishments is 5% of FOB value of exports during previous financial year  No custom duty on Machinery & equipment for ETP  Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted
  • 26. Policy initiative  Handicrafts  Duty free import entitlement of tools, trimmings and embellishments is 5 %of FOB value of exports during previous financial year.  No custom duty on Machinery and equipment for ETP  All handicraft exports would be treated as special Focus products and entitled to higher incentives.  Leather and Footwear  Duty free import entitlement of specified items is 3 % of FOB value of exports of leather garments during preceding financial year.  Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted.  Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 0% of the applicable export duty.
  • 27. General Provisions Regarding EXIM  Free EXIM unless regulated  Can X gifts of value < Rs. 5L in a licensing year  All X contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but X proceeds shall be realised in freely convertible currency  Units in SEZ shall be exempted from service tax
  • 28. General Provisions Regarding EXIM  For all goods and services exported from India, services received / rendered abroad, where ever possible, shall be exempted from service tax  new grievance redressal mechanism has been put in place to facilitate speedy redressal of grievances of trade and industry
  • 29. Main Provisions : FTP 2004-09 1. *Stability of Policy 2. Liberalised Exports & Imports 3. Imports of capital goods 4. Export Promotion Capital Goods scheme 5. Duty Exemption/Remission Scheme 6. *Import of Replacement of Goods 7. *Export and Import of Free Trade Samples 8. *Replacement of Defective Goods 9. *Export of Goods after Repairs 10. *Export of Imported Goods 29
  • 30. Main provisions : FTP 2004-09 2. Liberalised Exports & Imports  Provides for liberalised EXIM  Also provides for Restrictions based on protection of a. Public morals b. Human, Animal or Plant life or health c. Patents, Trademarks, Copyrights d. National Treasures (art, history, etc.) e. Prevention of use of prison labour f. Conservation of exhaustible natural resources 30
  • 31. Main provisions : FTP 2004-09 2. Liberalised Exports & Imports EXPORT of various items can be classified into four categories A. Prohibited B. Restricted C. State Trading Enterprise D. Free with terms and conditions 31
  • 32. Prohibited  Can’t be exported!!! 32
  • 33. Restricted  Can be exported only against a valid export licence or subject to such conditions as may be specified for a particular item in *ITC(HS) Classification  Export Licence is granted against confirmed export order only 33 *Indian Trade Clarification based on Harmonized System of Coding
  • 34. State Trading Enterprise  Items can be exported by designated agencies of Central/State govt. E.g. STC (State Trading Corporation), IOC, MMTC (Metals and Minerals Trading Corporation of India), etc. 34
  • 35. Free with terms & conditions  Certain items are free to export  No licence is required.* *Subject to conditions like a) Minimum export price b) Registration with export promotion council c) Registration of export contracts, etc. 35
  • 36.  Items which don’t fall in any category can be exported without any restriction!!! 36
  • 37. Import policy has also divided the various items of IMPORT into 4 categories a. Prohibited b. Restricted c. Canalised d. STE 37
  • 38. Prohibited  Can’t be imported  BEEF, IVORY, etc. 38
  • 39. Prohibited items • All forms of wild life including their parts and products except Peacock Tail Feathers, including handicrafts made thereof and manufactured articles, and shavings of Shed Antlers of Chital and Sambhar subject to conditions. • Exotic birds • wild orchids, as well as plants as specified • Beef • Human skeletons • Tallow, fat and/or oils of any animal origin excluding fish oil • Wood and wood products in the form of logs, timber, stumps, roots, barks, chips, powder, flakes, dust, pulp and charcoal except sawn timber made exclusively out of imported teak logs/timber subject to conditions • Chemicals included in Schedule 1 of the Chemicals Weapons Convention of the United Nations • Sandalwood in any form, but excluding fully finished handicrafts made out of sandalwood and machine finished sandalwood products • Red Sanders wood in any form, whether raw, processed or unprocessed as well as any product made thereof.
  • 40. Restricted  Can be imported only against a valid import licence 40
  • 41. Restricted items • Cattle, Camel • Chemical fertilizers • Dress materials/readymade garments fabrics/textile items with imprints of excerpts or verses of the Holy Quran • Hides and skins • Viscose staple fibre (Regular), excluding high performance viscose staple fibre • Silk worms, silkworm seeds and silk worm cocoons • And the list goes on and on …
  • 42. Canalised  Items can be imported only through designated agencies of GOI 42
  • 43. Canalised items  Petroleum products  Mica waste  Mineral ores , concentrates and compounds  Niger seeds  Onions
  • 44. State Trading Enterprise  Import of items is permitted by STE  Solely in accordance with commercial considerations including PRICE, QUALITY, AVAILABILITY, MARKETABILITY, TRANSPORTATION, ETC.  Items – wheat, rice, urea, petrol, diesel, etc. 44
  • 45.  Exporter is required to obtain export licence for each order in case of export of restricted item  Exporter should take into account the impact on delivery schedule before agreeing on delivery dates. 45
  • 46. Main provisions : FTP 2004-09 3. Imports of capital goods  Today, no licence required, just pay import duty  a firm can import second hand capital goods w/o any import licence, no age restriction  Minm value of 2nd hand plant & m/c = 25 cr. 46
  • 47. Main provisions : FTP 2004-09 4. Export Promotion Capital Goods scheme  To enable cost competitiveness, GOI introduced EPCG scheme  Firms now pay only *5% custom duty  Capital goods includes : a) New as well as second hand capital goods b) Computer software systems c) Spares, jigs, dies, fixtures & moulds d) Components of capital goods e) Spares of existing plant & machinery 47 *subject to fulfillment of export obligation
  • 48. Main features of EPCG scheme Eligibility of import Following firms can import at 5% duty  1 Manufacturer Exporters, 2 Merchant Exporters and 3 Service providers  Common service providers in towns of export excellence, e.g. Tirupur, Panipat, Ludhyana  Retailers having minimum area of 1000 sq.mt.  Project imports notified by the Central Board of Excise & Customs wherein basic customs duty on imports is 10% with a CVD of 16% 48
  • 49. Main features of EPCG scheme Amount of Export Obligation  8 times the amount of duty saved on import of capital goods under this scheme  6 times the amount of duty saved in case of  SSI units provided the landed CIF value of capital goods < 25 lakhs and after inclusion of goods should be < SSI limit of investment (1Cr.) 49
  • 50. Main features of EPCG scheme Period of Discharge of Export Obligation  Within 8 years from date of issuance of licence.  Up to 12 years in the following cases:  Amount of duty saved is > 100 crores  EPCG licence holder is a unit under the revival plan of BIFR (Banking for Industrial and Financial Restructuring)  Licence holder is in Agri-export zone 50
  • 51. Main features of EPCG scheme Discharge of Export Obligation 1. Export obligation can be fulfilled by export of goods which can be manufactured by imported capital goods. 2. If the licence holder fulfills > 75% of export obligation (including avg. level of export) in half the period of export obligation, the remaining obligation is condoned and licence is redeemed 51
  • 52. Main features of EPCG scheme Discharge of Export Obligation 3. Licence holder shall fulfill export obligation over the specified period in the following proportions Period of export obligation Minimum export obligation to (8 years) be fulfilled 1 to 6th year 50 % 7th and 8th year 50 % Period of export obligation (12 years) 1 to 10th year 50 % 11th and 12th year 50 % Export obligation of a particular block of years may be set off by the excess of 52 export made in the preceding block of year
  • 53. Main features of EPCG scheme Leasing of Capital Goods  Licence holder may source new capital goods from domestic leasing company/domestic manufacturer.  No permission of licensing authority is required under leasing financial arrangement  Licence holder alone shall be responsible for fulfillment of export obligation 53
  • 54. Main provisions : FTP 2004-09 5. Duty Exemption/Duty Remission Scheme  FTP provides for duty exemption/ remission scheme + EPCG scheme to augment Indian export  Exporters can import duty free inputs required for manufacture of products for export 54
  • 55. Main features of EPCG scheme Period of Export Obligation  Should be fulfilled within 24 months from date of licence  Can be extended by 6 months to composition fee of 2% of duty saved on unutilised imported items  Can be extended further by 6 months : pay 5% 55
  • 56. SEZ, EOU, STP & EHTP Schemes 56
  • 57. Schemes For Encouraging Exports All nations encourage exports….. ….to counter adverse Balance of Trade Various schemes to encourage exports Mainly supported and supervised by Ministry of Commerce EPC for various categories 57
  • 58. Export Incentives for Manufacturer Indigenous inputs w/o payment of excise duty No excise charged on final product Imported inputs w/o payment of customs duty No export duty on export of final product Fast finance at concessional interest rates Exemption from income tax Exemption from SALES TAX on final product (refund of CST paid on inputs in certain cases) 58
  • 59. WTO STIPULATION ‘No country can give export incentives’ However….goods can be made tax free for export purpose All export promotion schemes ensure that inputs as well as final products are made ‘TAX FREE’ 59
  • 60. Input Duty Relief Scheme Various schemes – to obtain duty free inputs OR get refund later 1. Some schemes – unit has to be isolated from domestic production units E.g. EOU, STP, EHTP and SEZ 60
  • 61. Input Duty Relief Scheme 2. Other schemes –domestic producers are also entitled to get inputs/capital goods free of taxes E.g. a) Advance Licence scheme b) Duty Entitlement Pass Book scheme (DEPB) c) Duty Free Replenishment Certificate scheme (DFRC) d) EPCG scheme (Export Promotion Capital Goods scheme) 61
  • 62. Input Duty Relief Scheme e. Rebate of duty on inputs if final product is exempt from duty f. Under duty drawback scheme, excise duty paid on inputs is returned as rebate 62
  • 63. Highlights of EOU/SEZ scheme SEZ unit has to be located within the specified zones developed, 114 operational, another 500 formally approved EOU unit can be set up at any of over 300 places all over India Currently there are 114 SEZs (as of October 2010) operating throughout India in the following states[8]: Karnataka - 18; Kerala - 6; Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan - 1; Tamil Nadu - 16; Uttar Pradesh - 4; West Bengal - 2: Orissa - 1. Additionally, more than 500 SEZs are formally approved (as on October 2010) by the Government of India in the following states[9]: Andhra Pradesh - 109; Chandigarh - 2; Chattisgarh - 2; Dadra and Nagar Haveli - 4; Delhi - 3; Goa - 7; Gujarat - 45; Haryana - 45; Jharkhand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14; Maharashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1; Punjab - 8; Rajasthan - 8; Tamil Nadu - 70; Uttarkhand - 3; Uttar Pradesh - 33; West Bengal - 22. 63
  • 64. Highlights of EOU/SEZ scheme Similarly, STP/EHTP unit can be situated within SEZ or at any place where EOU can be set up 64
  • 65. Highlights of EOU/SEZ scheme No custom duty on import of capital goods, raw materials, consumables, packing material, spares etc. No excise duty on indigenous inputs *Second hand capital goods can also be imported. 65
  • 66. Highlights of EOU/SEZ scheme Have to achieve +ve NFE (Net Foreign Exchange Earnings). NFE = A – B A= FOB value of exports B = CIF Value of all imported inputs and capital goods and all payments made in foreign exchange. 66
  • 67. Requirements of +ve NFE calculated cumulatively for 5 yrs from commencement of commercial production All foreign exchange outgo is included* 67
  • 68. Foreign exchange outgo includes… Capital goods Raw materials Consumables and spares Dividend payable in foreign exchange Royalty to collaborators Design and know-how fee 68
  • 69. Foreign exchange outgo includes… Payment to foreign technicians Training to Indian technicians abroad Foreign travel Interest paid on ECB / deferred payment credit Any other payment in foreign exchange. 69
  • 70. If NFE is not achieved, duty and interest in proportion to default will be payable 70
  • 71. Highlights of EOU/SEZ scheme EOU Minimum investment in plant and machinery and building = Rs 1 crore. This should be before commencement of commercial production SEZ No such limit 71
  • 72. Highlights of EOU/SEZ scheme A bond in prescribed form has to be executed. EOU B-17 SEZ  Form prescribed in SEZ Rules, 2003 *There is NO physical supervision of customs / excise authorities over production and clearances, BUT prescribed records are required to be maintained. 72
  • 73. Highlights of EOU/SEZ scheme EOU Fast Track Clearance Scheme (FTCS) for clearances of imported consignments SEZ  customs clearance for export and import is obtained within the zone itself 73
  • 74. Highlights of EOU/SEZ scheme Generally, all final production should be exported, EXCEPT rejects up to prescribed limit. 74
  • 75. Highlights of EOU/SEZ scheme Sale within India should be on payment of excise duty = normal customs duty (If imported) Exceptions In certain cases, excise duty payable = 50%/30% of normal customs duty applicable if goods are imported into India 75
  • 76. Highlights of EOU/SEZ scheme SUB-CONTRACTING is allowed subject to permission on annual basis JOB WORK for exports is permitted SAMPLES can be sold / given free within prescribed limit UNUTILISED RAW MATERIAL can be disposed of on payment of applicable duties 76
  • 77. Highlights of EOU/SEZ scheme The unit can EXIT (DE-BOND) with permission of Development Commissioner, on payment of applicable duties. 77
  • 78. Highlights of EOU/SEZ scheme EOU Central Sales Tax (CST) paid on purchases is refundable. Refund is obtained from Development Commissioner SEZ  Supplier DOES NOT have to pay CST 78
  • 79. Highlights of EOU/SEZ scheme Prescribed %age of foreign exchange earnings can be retained in *EEFC account in foreign exchange 100% foreign equity is permissible, except in a few cases* *EEFC A/C – Exchange Earners Foreign Currency Account 79
  • 80. Highlights of EOU/SEZ scheme Supplies made to EOU by Indian supplier are ‘deemed exports’ and supplier is entitled to benefits of ‘deemed export’ Supplies to SEZ are ‘exports’ and all export benefits are available 80
  • 81. Highlights of EOU/SEZ scheme Restrictions under Companies Act on *managerial remuneration are not applicable No restrictions on External Commercial Borrowings *20 lakhs/month 81
  • 82. STP / EHTP UNIT Concept of STP/EHTP is similar to EOU/SEZ. Administered by Ministry of Information Technology. STP/EHTP unit can be set up as an EOU unit anywhere in India or as a SEZ unit at specified developed locations in India. 82
  • 83. STP / EHTP UNIT A software development firm qualifies as STP/EHTP unit. Can import goods on loan from clients for specific period. Can export software electronically or through physical transport. 83
  • 84. STP / EHTP UNIT Activities allowed….. exports of professional services development of computer software data entry and conversion data processing, analysis and control data management call centre services. 84
  • 85. Which Scheme to Choose? If your major production is towards sale in DTA (Domestic Tariff Area), schemes like DEPB* or DFRC* or Advance License are suitable. * Duty Entitlement Passbook scheme (DEPB) * Duty Free Replenishment Certificate scheme (DFRC) 85
  • 86. Schemes like EOU/SEZ are suitable when the undertaking is predominantly export oriented Requirement of imported capital goods and raw material is high 86
  • 87. EOU vs. SEZ ‘EOU is more flexible than SEZ’ Wide choice of location (EOU unit can be set up at any place declared as ‘warehousing station’ under Customs Act) [300 places] EOU can be set up even within a part of the factory, thus saving considerable costs. Even use of common utilities is possible. 87
  • 88. EOU vs. SEZ EOU is more flexible than SEZ If export orders dry up, conversion of EOU to DTA unit by exit (de-bonding) is comparatively very easy. In case of SEZ, the unit has to be physically moved out of the zone after exit (de- bonding). 88
  • 89. EOU vs. SEZ On the other hand infrastructure available at SEZ unit is much better than EOU units. Customs clearance for exports is obtained within the zone itself, which is convenient. 89
  • 90. Overview of EOU/SEZ scheme EOU/SEZ schemes are under Ministry of Commerce Basic Policy of EOU : Chapter 6 of Export and Import Policy 2009-2014 Procedural Aspects : Chapter 6 of Handbook of Procedures Volume I 90
  • 91. Overview of EOU/SEZ Scheme Prescribed Forms : Appendices to the Handbook of Procedures EOU units are closely connected with Customs Law, Excise Law, Income Tax Act and Foreign Exchange Management Act 91
  • 92. Power Power generation/distribution can be set up in EOU/STP unit. can supply surplus power to another EOU/STP/EHTP/SEZ unit. Can supply surplus power to DTA unit on payment of duty on consumables and raw materials used for power generation 92
  • 93. Service Sector Duty free imports will be permitted ONLY to units exporting services and NOT to domestic service providers Further, NO trading units are permitted Each EOU must have its website and e-mail address. 93
  • 94. EOU/SEZ/STP/EHTP unit can be set up with 100% foreign investment, except few *restricted sectors SEZ unit can manufacture articles reserved for SSI even if foreign equity exceeds 24% No license is required 94
  • 95. PERMISSIBLE CAPITAL GOODS material handling equipments, captive power plants, office equipment, tools, prototypes, AC system, computers, laptops can be brought as 'capital goods' IF these are essential in manufacture of goods should be located in regd./administrative office 95
  • 96. ANTI-DUMPING DUTY or SAFEGUARD DUTY Not applicable for imports by EOU or SEZ units, UNLESS it is specifically made applicable 96
  • 97. CT-3 CERTIFICATE The EOU/EHTP/STP unit can procure indigenous material w/o payment of excise duty. 97
  • 98. EXPORT/IMPORT OF DEFECTIVE INPUTS/FINAL PRODUCTS 98
  • 99. RETURN OF REJECTED GOODS TO INDIGENOUS SUPPLIER 99
  • 100. INTER UNIT TRANSFER Inter unit transfers of manufactured goods and capital goods from one EOU/SEZ unit to another EOU/SEZ unit w/o payment of duty is permitted. 100
  • 101. EOU : Allowed Activities Besides manufacturing, (a) Import of goods for service activities (b) Reconditioning, repairs of imported goods and return to foreign suppliers (c) Destruction of waste and rejects with permission of Asstt. Commissioner even outside the premises 101
  • 102. EOU – Allowed Activities SERVICE has also been included as 'export product' as per EXIM Policy. 102
  • 103. Routine procedures by EOU unit QUARTERLY AND ANNUAL REPORT Submit in prescribed form to Development Commissioner. 103
  • 104. Routine procedures by EOU unit Maintenance of Separate Accounts separate accounts and balance sheet of EOU and Domestic Unit is required to claim Income tax benefits. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxXXXXXXXXXXXXXXXXXXXXXxxxxxxXXXXXXXXXXXXXXXXX 104

Hinweis der Redaktion

  1. SEZ = Special economic zone, EOU = Export Oriented Unit, STP = Software Technology Park, EHTP = Electronic Hardware Technology Park
  2. Currently there are 114 SEZs (as of October 2010) operating throughout India in the following states[8]: Karnataka - 18; Kerala - 6; Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan - 1; Tamil Nadu - 16; Uttar Pradesh - 4; West Bengal - 2: Orissa - 1.Additionally, more than 500 SEZs are formally approved (as on October 2010) by the Government of India in the following states[9]: Andhra Pradesh - 109; Chandigarh - 2; Chattisgarh - 2; Dadra and Nagar Haveli - 4; Delhi - 3; Goa - 7; Gujarat - 45; Haryana - 45; Jharkhand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14; Maharashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1; Punjab - 8; Rajasthan - 8; Tamil Nadu - 70; Uttarkhand - 3; Uttar Pradesh - 33; West Bengal - 22.