New Trade Policy 1991, 2009-2014

1. Foreign Trade Policy Of India Since 1980
INTRODUCTION
Traditionally, the main objective of the Indian ForeignTrade Policy has been to protect its
market from foreign competition. Up until the 1980s, India was not interested in exporting its
goods and services abroad and not ready to open its economy to foreign investments. The aim
of its economic policy was to ensure the country’s independent development (the swadeshi
principle). At the end of the 1980s, India was one of the most closed economies in the world.
Its bilateral trade policy, heavily skewed toward the former communist countries, was full of
grand statements about technology transfer, mutually advantageous relations and partnership
for development to very little purpose.
Import Policy Prior to 1991
In the pre-reform period Indian import policy had two constituents:
Import Restrictions: In the initial phases of development, India had to import capital
equipment, machinery, spare parts, industrial raw material, etc. From time to time it had to
import food grains too, but because of stagnant exports, government had to decide to import
curtail. High import tariffs were used to control import.
Import Substitution : Import substitution means reducing the dependability on imports, i.e.,
produce goods that we are importing. Two broad objectives of the programme of import
substitution in India were:
(i) To save scarce foreign currency for the import of more important goods,
(ii) To achieve self-reliance in the production of as many goods as possible.
EXPORT - IMPORT POLICY 1992-97
Opening Remarks of Mr.P.Chidambaram Minister of State for Commerce on the New Export -
Import Policy Announced on 31.3.1992 .
The objectives of the trade policy go far beyond mere balancing of imports and exports or a
favorable balance of trade. There is growing interdependence among technology, investment
and production. Trade policy should, therefore, be the spearhead for better technology,
greater investment and more efficient production.
While our goal of a self-reliant and dynamic economy remains the same, we have discarded
some assumptions. We have also shed the mood of export pessimism. We believe that imports

2. and exports, taken together, could account for as much as 20% of GDP and it is our aim to
achieve this level of trade. The trade policy reforms announced so far have, therefore, been in
direction of liberalisation and removal of licensing, quantitative restrictions and other
discretionary controls.
The Export and Import Policy is an integral part of trade policy. Since the direction of economic
reforms is clear, the direction of the new Export and Import Policy is also clear - fewer
restrictions, greater freedom to trade and less administrative controls. The new Export and
Import Policy is a major step forward in the programme of liberalisation. Stability is another
key element in the new policy. As far as possible, changes will be made only once in every
quarter. The highlights of the new Export and Import Policy are contained in the attached
sheets.
The Bill replaces the Import and Export (Control) Act, 1947. The law relating to foreign trade
will comprise the new Act, the Rules and Orders made there under and the new Export and
Import Policy. Violation of the law will attract monetary penalties, confiscation of goods
and/or suspension or cancellation of licence. In introducing the new Bill and making the new
Policy, Government has acted on the principle of trust. We trust that trade, industry and
business will respond positively to the policy initiatives taken by Government. We trust that
their behaviour will be rational and responsible. Government looks forward to working closely
with trade, industry and business in order to achieve the high and ambitious goals that we
have set for ourselves.
HIGHLIGHTS OF NEW EXPORT & IMPORT POLICY
GENERAL
1. Trade is free, subject only to a Negative List of Imports and a Negative List of Exports.
2. Stable policy for five years 1992-97. The aid is simplicity and transparency.
IMPORTS
3. Negative List of Imports is the smallest ever. Consumer goods will continue to be under
restraint.
4. Import of 3 items banned, 68 items restricted, 8 items canalised.
5. Special import facilities for Hotels & Tourism industry and for Sports bodies
EXPORTS

3. 6. Export of 46 items permitted with minimum regulation.
LICENSING
8. Negative Lists to be administered, as far as possible, by general schemes.Case-by-case
licensing will be minimised.
9. Actual User condition eliminated except in a few special cases.
CAPITAL GOODS
10. Import of capital goods liberalised. No longer in Negative List of Imports.
11. Export promotion Capital goods allowed. In some sectors without licence, in others under
licence.
12. Export Promotion Capital Goods (EPCG) scheme liberalised. Two windows opened for
concessional duty imports:
Rate of Period for Concessional Export obligation fulfillment of Customs duty export obligation
25% CIF Value 3 times CIF Value 4 Years 15% CIF Value 4 times CIF Value 5 Years
13. EPCG scheme extended to components of capital goods, with concessional customs duty of
15%.
RAW MATERIALS
14. Imports liberalised. Barring few items, no longer in Negative List of Imports.
ADVANCE LICENCES
15. Value-based Advance licence introduced .
16. Self-certification Advance Licence available for Export Houses, Trading Houses and Star
Trading Houses.
17. All licences under duty exemption schemes transferable.
DIAMONDS, GEMS AND JEWELLERY
18. Existing schemes continued with little modification.EOUs/Units under EPZs.
19. EOU scheme & EPZscheme liberalised.

4. 20. Schemes extended to agriculture, horticulture, acquaculture, poultry and animal
husbandry.
21. Inter-unit transfers allowed.
22. Permission to install machinery on lease.
23. EOU/EPZ units may export through Export Houses, Trading Houses and Star Trading
Houses.
DEEMED EXPORTS
24. Definition of Deemed Exports streamlined. Supplies toEOU/EPZ units, supplies against
EPCG licences and supplies against Advance Licences will be deemed exports.
EXPORT PROMOTION COUNCILS, EXPORT HOUSES, TRADING HOUSES AND STAR TRADING
HOUSES.
25. Crucial role of EPCs, Export Houses, Trading Houses and Star
Trading Houses recognised.
26. Importer-Exporter Code Number is basic requirement.
27. Registration-cum-Membership Certificate (RCMC) by EPCs is a basic requirement for
benefits and concessions under new policy.
SPECIAL IMPORT LICENCES
28. Three categories eligible for Special Import Licences. :
1) Deemed Exports
2) Export Houses, Trading Houses and Star Trading Houses
3) Manufacturers with ISO 9000 or BIS 140000 certification.
QUALITY
29. National campaign for quality awareness to be launched.
30. Laboratories/Testing Houses to be upgraded and accredited.
Export- Import (EXIM) Policy 2002-07
In order to maintain the balance of payments and to avoid trade deficit the government of

5. India has announced a trade policy for imports and exports. After every five years the
government of India reviews the import and export policy in view of the changing
international economic situation. The policy relates to promotion of exports and regulation of
imports so as to promote economic growth and overcome trade deficit. Accordingly, the
export-and import policies (EXIM Policy) were announced by the government first in 1985 and
then in 1988 which was again revised in 1990. All these policies made necessary provision for
extension of import liberalisation measures. All these policies made necessary provision for
import of capital goods and raw materials for industrialisation, utilisation and liberalisation of
REP (Registered Exporters Policy) licences, liberal import of technology and policy for export
and trading houses. The government announced its new EXIM policy for 2002-2007 which is
mainly a continuation of the EXIM policy of 1997-2002. The new export-import policy for 2002-
2007 aims at pushing up growth of exports to 12 per cent a year as compared to about 1.56
per cent achieved during the financial year 2001-2002.
The main features of this export- import policy are given below:--
Concessions to exporters
To enable Indian companies to compete effectively in the competitive international markets
and to give a boost to sagging exports various concessions had been given to the exporters in
this new EXIM policy 2002-2007. These concessions are:
 Exporters will now have 360 days to bring in their foreign exchange remittances as compared
to the earlier limit of 180 days.
 Exporters will be allowed to retain the entire amount held in their exchange earner foreign
currency (EEFC) accounts.
 Exporters will now get long-term loans at the prime lending rate for that tenure.
Duty Entitlement Pass Book (DEPB) and Export Promotion Capital Goods (EPCG)
Schemes: DEPB and EPCG are important tools of promoting exports. These schemes have
been made more flexible. In the DEPB and EPCG schemes new initiatives have been granted
to the cottage industries, handicrafts, chemicals and pharmaceuticals, textile and leather
products.
Strengthening Special Export Zones (SEZ): The new long-term EXIM policy has sought to
enable Indian SEZs to be at par with its international rivals. The EXIM policy has given a boost
to the banking sector reforms by permitting Indian banks to set up overseas banking units in
SEZs. This means that exporters operating out of the SEZ units and developers would be
permitted to hold dollar accounts and of overseas banking units operating out of the SEZs
would be able to deal in multiple currencies.
Soft options for computer hardware industry: The export import (EXIM) policy has put the

6. Indian computer manufacturers at par with manufacturers in other parts of the world.
Companies manufacturing or assembling computers in the country will be able to import both
capital and raw materials at lower duty rates to sell in the domestic market. The EXIM policy
has also removed the export obligations on these manufacturers against imports being made
by them .This puts the Indian manufacturers at par with manufacturers in China free trade
zone and the Dubai Jebel Ali free trade zone.
As per the information technology agreement which is part of the world trade organisation
zero duty the agreement on I. T. sector, 217 I. T. components would attract a zero duty by
2005. Therefore, foreign companies can import these products into the country while Indian
manufacturers who did the same had to meet export obligations on their imports. Now, the
new EXIM policy states that domestic sales will be considered as a fulfilment of the export
obligation, thereby freeing the domestic manufacturers from exports completely.
Appraisal of the EXIM policy 2002-2007: The Chambers of Commerce of Indian Industry
namely CII and PHDCCI welcomed the new EXIM policy 2002-2007 and described it as positive
and pro-group. They are however pointed out that time bound implementation and
cooperation from the states would be the key to achieving the target of taking India's share of
world trade to 1%.
Foreign Trade Policy 2004-2009: The UPA government announced its foreign trade policy for a
five-year period (2004-2009) on 31st of August 2004. This new trade policy carries further the
process of trade liberalisation .Exemptions and incentives given in the earlier policy of 2002-07
and the Mini EXIM policy 2004, has not been changed and new measures for promotion of
exports have been provided.
The new foreign trade policy aims to double India's share of world merchandise trade in the
next five years. In line with the UPA government's priority to employment generation, foreign
trade policy also focuses on employment generation through an appropriate export strategy.
Employment opportunities will increase as a result of expansion of agricultural exports for
which the new policy provides special incentives .Other sectors identified for employment
generation and export promotion includes handlooms, handicrafts, gems and jewellery, and
leather and footwear, apart from services.
Focus on agro-exports to boost export growth: The new foreign trade policy moots a special
package to boost aggro-exports by offering fiscal incentives to exporters. A special scheme
called Vishesh Krishi Upaj Yojana has been launched to promote the export of fruits,
vegetables, flowers and minor forest produce and permission for duty-free imports of capital
goods for installation anywhere in the agri-export zones (AEZ). The procedures for the import
of sales, bars, tubers and planting material and the export of plant portion, derivatives and
extracts had been liberalised. This will help boost the export of medicinal plants and herbal

7. products.
Exemption of exports from service tax: A significant measure to promote exports is that
export of all goods and services had been exempted from 10% service tax and 2% cess on it.
Export Oriented Units (EOU) has also been given exemption from service tax in proportion of
their exported goods and services.
Promoting exports of services: Recognizing the key role of the service sector in the economy,
the foreign trade policy has announced the “Served from India” scheme to accelerate growth
in service exports. The policy also announced to other major initiatives to boost service
exports .These are promotion of a Common facility centre for home-based service providers
and higher duty-free credit on incremental exports to those exporters who achieved quantum
growth.
New export promotion schemes: In the new foreign trade policy, three new schemes have
been introduced and others had been revamped to boost exports. No existing export
promotion scheme has been withdrawn. The new schemes are “Vishesh Krishi Upaj Yojana”,
“Target Plus” and “Free Trade and Warehousing Zones (FTWZ)”. All these schemes have been
launched to accelerate export growth and they had been provided special incentives such as
duty free credit entitlement if exports grow by 25%. The duty-free entitlement goes up to 15%
of incremental exports if exports grow by hundred percent during the year.
Establishment of biotechnology parts: These parts which have been identified will get all the
facilities of hundred percent export oriented units. In this regard, sectors with significant
export and employment potential in rural areas have been identified.
Restrictions on imports of second-hand capital goods waived: For the first time all capital
goods regardless of age are made freely importable without any actual use, user condition or
requirement of minimum residual life. Free imports of second-hand machinery are expected
to bring down the cost of investment and strengthening the forces of industrial restructuring.
However free imports does not apply to computers and laptops.
Free transferability of Duty Free Entitlement Credit Certificates (DFECC): The main
improvement in the DFECC scheme is that the portion related to agriculture exports is freely
transferable. It will make this incentive attractive and give a push to the agriculture export
zones. (AEZs)
Appraisal of the new foreign trade policy, 2004-09: The Chambers of commerce and industry
(CII) have welcomed the new foreign trade policy. The chamber has appreciated the
government's efforts to make India's exports competitive and to increase the exports from all
sectors of the economy. The new foreign trade policy seeks to double India's share of global
exports from 0.8% to 1.5% in the next five years .The prime driver of exports in a globalising

8. economy is competitiveness and competitiveness is created by a range of factors, very few of
which are in the hands of the government.
NEW TRADE POLICY 1991
1. Free Import and Export :
Import of OGL capital goods, non-OGL capital goods and restricted goods would be allowed
without a specific license, provided clearance was given by the RBI and foreign exchange,
because their imports are fully covered by foreign equity.
2. Rationalisation Of Tariff Structure
On the recommendation of Chelliah Committee, import duty was drastically reduced to
establish parity in prices of goods produced domestically and internationally. The 1993-94
Budget reduced the maximum rate of duty on all goods from 110% to 85%, except for few
goods, which was further reduced to 40% in 1998-99 and further to 35% in 2000-01
3. Decanalisation
The new trade policy aimed at progressive decanalisation. The government decontrolled 116
items allowing their exports without any licensing formalities.
Another 29 items were shifted to OGL. It also decanalised 16 export items and 20 import
items including new print, non ferrous metals, natural rubber, intermediate and raw material
for fertilizers. However, eight items (petroleum products, fertilisers, etc.) remained canalised.
4. Devaluation and Convertibility of Rupee on Current Account
The government made a two- step downward adjustment of 18-19 per cent in the exchange
rate of the rupee on July 1 and July 3, 1991. This was followed by the introduction of LERMS
i.e., partial convertibility of rupee in 1992-93, full convertibility on the trade account in 1993-
94 and full convertibility on the current account in August 1994.
Substantial capital account liberalisation measures have also been announced. The exchange
rate of the rupee is now market-determined. Thus, exchange rate policy in India has evolved
from the rupee being pegged to a market related system (since March 1993).
5. Trading Houses
The 1991 policy allowed export houses and trading houses to import a wide range of items.
The government also permitted the setting up of trading houses with 51 per cent foreign
equity for the purpose of promoting exports.

9. 6. Phased Manufacturing Programme
PMP, according to which organisations were required to substitute all the imported parts with
Indian parts in a specified period, was abolished
7. Export Oriented Units, (EOUs), Electronic Hardware Parks (EHTP), Software Technology
Parks (STPs) and Bio-Technology Parks (BTPs)
The units undertaking to export their entire production of goods and services may be set up
under the Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP)
Scheme, Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) Scheme for
manufacture of goods, including repair, re-making, reconditioning, reengineering and
rendering of services. Trading units are not covered under these schemes.
8. Free Trade & Warehousing Zones
The Free Trade & Warehousing Zones (FTWZ) shall be a special category of Special Economic
Zones with a focus on trading and warehousing. The objective of FTWZ is to create trade-related
infrastructure to facilitate the import and export of goods and services with freedom
to carry out trade transactions in free currency. These Zones would be established in the
nearby areas to seaports, airports or dry ports so as to offer easy access by rail and road.
9. Deemed Exports
Deemed Exports refer to those transactions in which goods supplied do not leave country, and
payment for such supplies is received either in Indian rupees or in free foreign exchange.
Following categories of supply of goods by main/subcontractors shall be regarded as Deemed
Exports under FTP, provided goods are manufactured in India:
1) Supply of goods against Advance Authorisation /Advance Authorisation for annual
requrrement/DFIA;
2) Supply of goods to EOU/STP/EHTP/BTP;
3) Supply of captial goods to EPCG Authorisation holders
4) Supply to projects funded by UN Agencies
Besides all these, various concessions and exemptions were granted during the nineties to
liberalise imports and promote exports. Liberalisation also allowed FDI in many sectors.
Foreign companies are allowed to open branch offices, foreign technology agreements were
allowed, and the Foreign Investment Promotion Board (FIPB) was established to process and

10. give speedy approvals for foreign investment proposals. Automatic approval was allowed for
technical collaboration and foreign equity participation up to 51% in Indian companies in 34%
high priority industries.
The Highlights of the India’s Foreign Trade Policy 2004-2009
The new United Progressive Alliance (UPA) Government at the Centre changed the name of
EXIM Policy and called it Foreign Trade Policy (FTP). Consequently, on August 31, 2004, the
Commerce and Industry Minister, Mr. Kamal Nath, announced the five year (2004-09) FTP.
The policy aims at doubling India’s percentage share of global merchandise trade to 1.5 per
cent by 2009 from 0.7 per cent in 2003, besides serving as an effective tool to generate
employment, especially in semi-urban and rural areas.
Exporters of all goods and services, including those from Domestic Tariff Area (DTA), were
exempted from service tax. Also exporters with minimum turnover of Rs. 5 crore and a sound
track record have been exempted from furnishing bank guarantees in any of the export
schemes. So as to reduce their high transaction cost and tax burden.
NEW FOREIGN TRADE POLICY 2009-2014 – HIGHLIGHTS
NEW FOREIGN TRADE POLICY 2009-2014
The Hon’ble Union Commerce & Industry Minister Mr.Anand Sharma announced the new
Foreign Trade Policy 2009 - 2014 in New Delhi on 27th August, 2009.Mr.Jyothiraditya
Madhavrao Scindia, Minister of State for Commerce; Dr. Rahul Khullar, Commerce Secretary,
Ministry of Commerce & Industry and other dignitaries were present on the occasion.
Various Suggestions of the Federation have been considered in the New Foreign Trade Policy
like - Continuation of DEPB scheme; Enhancement of incentives under promotional
schemes; Benefits to Status Holders; Zero duty EPCG Scheme; Rationalization of additional
export obligation under EPCG; Additional markets under focus market scheme; Additional
products under Focus Product Scheme; Transferability of Duty Scrip under Para 3.8.6 of FTP;
Flexibility in import of items against Duty Credit Scrips issued under earstwhile in Target
Plus/DFCE Schemes; Removal of Handloom Mark under Focus Product Scheme; Issues relating
to transaction costs; Tangible benefits to town of export excellence; MDA Scheme; Technology
Fund, etc
HIGHLIGHTS OF THE NEW FOREIGN TRADE POLICY ARE AS UNDER:

11. Higher Support for Market and Product Diversification
 Incentive schemes under Chapter 3 have been expanded by way of addition of new
products and markets.
 26 new markets have been added under Focus Market Scheme. These include 16 new
markets in Latin America and 10 in Asia-Oceania.
 The incentive available under Focus Market Scheme(FMS) has been raised from 2.5% to
3%.
 The incentive available under Focus Product Scheme (FPS) has been raised from 1.25%
to 2%.
 A large number of products from various sectors have been included for benefits under
FPS. These include, Engineering products (agricultural machinery, parts of trailers,
sewing machines, hand tools, garden tools, musical instruments, clocks and watches,
railway locomotives etc.), Plastic (value added products), Jute and Sisal products,
Technical Textiles, Green Technology products (wind mills, wind turbines, electric
operated vehicles etc.), Project goods, vegetable textiles and certain Electronic items.
 Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by inclusion
of products classified under as many as 153 ITC(HS) Codes at 4 digit level. Some major
products include; Pharmaceuticals, Synthetic textile fabrics, value added rubber
products, value added plastic goods, textile madeups, knitted and crocheted fabrics,
glass products, certain iron and steel products and certain articles of aluminium among
others. Benefits to these products will be provided, if exports are made to 13 identified
markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine,
Vietnam, Cambodia, Australia and New Zealand).
 MLFPS benefits also extended for export to additional new markets for certain products.
These products include auto components, motor cars, bicycle and its parts, and apparels
among others.
 A common simplified application form has been introduced for taking benefits under
FPS, FMS, MLFPS and VKGUY.
 Higher allocation for Market Development Assistance (MDA) and Market Access
Initiative (MAI) schemes is being provided.
Technological Upgradation
 To aid technological upgradation of our export sector, EPCG Scheme at Zero Duty has
been introduced. This Scheme will be available for engineering & electronic products,
basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals
& allied products and leather & leather products (subject to exclusions of current
beneficiaries under Technological Upgradation Fund Schemes (TUFS), administered by
Ministry of Textiles and beneficiaries of Status Holder Incentive Scheme in that
particular year). The scheme shall be in operation till 31.3.2011.

12.  Jaipur, Srinagar and Anantnag have been recognised as ‘Towns of Export Excellence’ for
handicrafts; Kanpur, Dewas and Ambur have been recognised as ‘Towns of Export
Excellence’ for leather products; and Malihabad for horticultural products.
EPCG Scheme Relaxations
 To increase the life of existing plant and machinery, export obligation on import of
spares, moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific
export obligation.
 Taking into account the decline in exports, the facility of Re-fixation of Annual Average
Export Obligation for a particular financial year in which there is decline in exports from
the country, has been extended for the 5 year Policy period 2009-14.
Support for Green products and products from North East
 Focus Product Scheme benefit extended for export of ‘green products’; and for
exports of some products originating from the North East.
Status Holders
 To accelerate exports and encourage technological upgradation, additional Duty
Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports.
The duty credit scrips can be used for procurement of capital goods with Actual User
condition. This facility shall be available for sectors of leather (excluding finished
leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous
metals in primary and intermediate form, automobiles & two wheelers,
nuclear reactors & parts, and ships, boats and floating structures), plastics and basic
chemicals (excluding pharma products) [subject to exclusions of current beneficiaries
under Technological Upgradation Fund Schemes (TUFS)]. This facility shall be
available upto 31.3.2011.
 Transferability for the Duty Credit scrips being issued to Status Holders under
paragraph 3.8.6 of FTP under VKGUY Scheme has been permitted. This is subject to
the condition that transfer would be only to Status Holders and Scrips would be
utilized for the procurement of Cold Chain equipment(s) only.
Stability/ continuity of the Foreign Trade Policy
 To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme is
extended beyond 31-12-2009 till 31.12.2010.
 Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been
extended till 31.3.2010 in the Budget 2009-10.

13.  Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of
Income Tax Act, has been extended for the financial year 2010-11 in the Budget
2009-10.
 The adjustment assistance scheme initiated in December, 2008 to provide enhanced
ECGC cover at 95%, to the adversely affected sectors, is continued till March, 2010.
Marine sector
 Fisheries have been included in the sectors which are exempted from maintenance
of average EO under EPCG Scheme, subject to the condition that Fishing Trawlers,
boats, ships and other similar items shall not be allowed to be imported under this
provision. This would provide a fillip to the marine sector which has been affected by
the present downturn in exports.
 Additional flexibility under Target Plus Scheme (TPS) /Duty Free Certificate of
Entitlement (DFCE) Scheme for Status Holders has been given to Marine sector.
Gems & Jewellery Sector
 To neutralize duty incidence on gold Jewellery exports, it has now been decided to
allow Duty Drawback on such exports.
 In an endeavour to make India a diamond international trading hub, it is planned to
establish “Diamond Bourse (s)”.
 A new facility to allow import on consignment basis of cut & polished diamonds for
the purpose of grading/certification purposes has been introduced.
 To promote export of Gems & Jewellery products, the value limits of personal
carriage have been increased from US$ 2 million to US$ 5 million in case of
participation in overseas exhibitions. The limit in case of personal carriage, as
samples, for export promotion tours, has also been increased from US$ 0.1 million to
US$ 1 million.
Agriculture Sector
 To reduce transaction and handling costs, a single window system to facilitate export
of perishable agricultural produce has been introduced. The system will involve
creation of multi-functional nodal agencies to be accredited by APEDA.
Leather Sector
 Leather sector shall be allowed re-export of unsold imported raw hides and skins and
semi finished leather from public bonded ware houses, subject to payment of 50% of
the applicable export duty.

14.  Enhancement of FPS rate to 2%, would also significantly benefit the leather sector.
Tea
 Minimum value addition under advance authorisation scheme for export of tea has
been reduced from the existing 100% to 50%.
 DTA sale limit of instant tea by EOU units has been increased from the existing 30%
to 50%.
 Export of tea has been covered under VKGUY Scheme benefits.
Pharmaceutical Sector
 Export Obligation Period for advance authorizations issued with 6-APA as input has been
increased from the existing 6 months to 36 months, as is available for other products.
 Pharma sector extensively covered under MLFPS for countries in Africa and Latin
America; some countries in Oceania and Far East.
Handloom Sector
 To simplify claims under FPS, requirement of ‘HandloomMark’ for availing benefits
under FPS has been removed.
EOUs
 EOUs have been allowed to sell products manufactured by them in DTA upto a limit of
90% instead of existing 75%, without changing the criteria of ‘similar goods’, within the
overall entitlement of 50% for DTA sale.
 To provide clarity to the customs field formations, DOR shall issue a clarification to
enable procurement of spares beyond 5% by granite sector EOUs.
 EOUs will now be allowed to procure finished goods for consolidation along with their
manufactured goods, subject to certain safeguards.
 During this period of downturn, Board of Approvals (BOA) to consider, extension of
block period by one year for calculation of Net Foreign Exchange earning of EOUs.
 EOUs will now be allowed CENVAT Credit facility for the component of SAD and
Education Cess on DTA sale.
Thrust to Value Added Manufacturing
 To encourage Value Added Manufactured export, a minimum 15% value addition on
imported inputs under Advance Authorization Scheme has now been prescribed.
 Coverage of Project Exports and a large number of manufactured goods under FPS and
MLFPS.

15. DEPB
 DEPB rate shall also include factoring of custom duty component on fuel where fuel is
allowed as a consumable in Standard Input-Output Norms.
Flexibility provided to exporters
 Payment of customs duty for Export Obligation (EO) shortfall under Advance
Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of Duty
Credit scrips. Earlier the payment was allowed in cash only.
 Import of restricted items, as replenishment, shall now be allowed against transferred
DFIAs, in line with the erstwhile DFRC scheme.
 Time limit of 60 days for re-import of exported gems and jewellery items, for
participation in exhibitions has been extended to 90 days in case of USA.
 Transit loss claims received from private approved insurance companies in India will
now be allowed for the purpose of EO fulfillment under Export Promotion schemes. At
present, the facility has been limited to public sector general insurance companies only.
Waiver of Incentives Recovery, On RBI Specific Write off
 In cases, where RBI specifically writes off the export proceeds realization, the incentives
under the FTP shall now not be recovered from the exporters subject to certain
conditions.
Simplification of Procedures
 To facilitate duty free import of samples by exporters, number of samples/pieces has
been increased from the existing 15 to 50. Customs clearance of such samples shall be
based on declarations given by the importers with regard to the limit of value and
quantity of samples.
 Greater flexibility has been permitted to allow conversion of Shipping Bills from one
Export Promotion scheme to other scheme. Customs shall now permit this conversion
within three months, instead of the present limited period of only one month.
 To reduce transaction costs, dispatch of imported goods directly from the Port to the
site has been allowed under Advance Authorisation scheme for deemed supplies. At
present, the duty free imported goods could be taken only to the manufacturing unit of
the authorisation holder or its supporting manufacturer.
 Disposal of manufacturing wastes / scrap will now be allowed after payment of
applicable excise duty, even before fulfillment of export obligation under Advance
Authorisation and EPCG Scheme.

16.  Automobile industry, having their own R&D establishment, would be allowed free
import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which
are not manufactured in India.
Reduction of Transaction Costs
No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP.
Further, for all other Authorisations/ licence applications, maximum applicable fee is being
reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000
from the existing Rs.75,000 (for EDI applications).
Directorate of Trade Remedy Measures
 To enable support to Indian industry and exporters, especially the MSMEs, in availing
their rights through trade remedy instruments, a Directorate of Trade Remedy
Measures shall be set up.
SEZ In India
Export-led economic growth has been an important part of the economic strategy prescribed
to developing countries for their progress and development especially since the 1970s. The
first Export Processing Zone(EPZ) was set up in Ireland in 1959 and the first EPZ in Asia was
established in India at Kandla in 1965.In later years, the concept EPZ has gradually been
replaced by SEZ. Between 1975 and 2006, the number of Free Zones has shot up from 79 in 25
countries to 3500 in 130 countries. Over the last decade, many new zones have been
developed in Africa. Eastern Europe and transitional economies. The idea behind SEZs was to
promote and create hassle-free territorial production complexes that could be established to
secure regional balance in development opportunities.
The major contributions of SEZs for the development of the economy are briefly accounted as
follows;
1. The SEZs attract foreign and domestic investment in enclaves. Because of the provision of
facilities and amenities on the one hand and incentives on the other, the capital flows in.
2. The SEZs stimulate exports. This is the major purpose of the SEZs.
3. The SEZs cannot be counted as a solution to the unemployment problem, for they are a
viable source of employment creation.

17. 4. The creation of SEZ leads to balanced development of the region. Though it is good to
develop all the regions simultaneously, such balanced development requires a lot of resources
at a time. the regional development can be undertaken in stages. Thus, to develop certain
areas as leading areas, SEZs is a solution.
Conclusion
International Business plays a crucial role in the economic development of a nation as it leads
to industrialization, employment and reduction of scarcity of consumer goods. Our share of
world trade has significantly increased over the years. At present, International Business
opportunity in India exists in areas like IT, Telecom, R&D, Infrastructure, Retailing, etc. Sectors
like health, education, housing, water resources, SMEs are untapped and offer huge scope.