June 5, 2012
Members of the Council.
Sub : Annual Supplement 2012-13 to the Foreign Trade Policy 2009-14
The Hon’ble Union Minister for Commerce, Industry and Textiles announced the Annual Supplement 2012-13 to the Foreign Trade Policy 2009-14 on June 5, 2012. The following are the highlights. According to DGFT Notification No. 1 9RE-2012)/2009-14 dated 5th June 2012, the revised edition of the Foreign Trade Policy will come into effect from 5th June 2012.
1 2 % INTEREST SUBVENTION SCHEME: Continuation
Two per cent Interest Subvention Scheme on Rupee Export Credit was available only to Handlooms, Handicrafts, Carpets and SMEs till 31st March 2012. Now this would be continued till 31st March 2013. It is also being extended to labour intensive sectors, namely, Toys, Sports Goods, Processed Agricultural Products and Ready-Made Garments, in addition to four sectors benefitting from the scheme earlier.
As far as leather sector is concerned, Small and Medium Enterprises (SMEs) in the leather sector can avail this scheme during the year 2012-13.
2 TECHNOLOGICAL UPGRADATION
2.1 EPCG Scheme
The Zero Duty Export Promotion Capital Goods Scheme (EPCG) allows import of capital goods for the leather sector without any import duty subject to export obligation. Zero Duty EPCG Scheme had come to an end on 31st of March 2012. For continued technological up-gradation of export sectors, this Scheme has now been extended up to 31st March 2013. There is no change in the coverage of the sectors benefiting from this scheme.
2.2 Status Holders Incentive Scrip (SHIS) Scheme
Status holders are issued Status Holders Incentive Scrip (SHIS) to import Capital Goods for promoting investment in up-gradation of technology of some specified labour intensive sectors like Leather, Textile & Jute, Handicrafts, Engineering, Plastics and Basic Chemicals. It is now decided that up to 10% of the value of these scrips will be allowed to be utilized to import components and spares of capital goods imported earlier. Such a dispensation was not available earlier.
It is now decided that if such SHIS benefit already availed is surrendered subsequently with applicable interest to the concerned RA, and then the benefit of Zero Duty EPCG Scheme would be extended.
At present the SHIS scrips are subject to Actual User Condition and are not transferable. Since a status holder may or may not have manufacturing facility, it is now decided to allow limited transferability of SHIS scrip.However, such Transferee shall have to (a) be a status holder and (b) have manufacturing facility.
2.3 Introduction of a new Post-Export EPCG Scheme
Exporters if they choose to, may import Capital Goods on payment of duty in cash and subsequently receive duty credit scrip on completion of export obligation. Thus there would be no duty remission / duty exemption at the time of import of the Capital Good (CG). Applicant will have to inform the Regional Office of DGFT (RA) about the import of CG and based on which RA will fix export obligation. Since the duties have been paid upfront at the time of import of CG, the EO would be 85 % of normal EO. On the basis of export performance, a Duty Credit Scrip will be issued subsequently, by RA, in proportion to export obligation so fixed. This would obviate the monitoring and reporting requirements, as the scheme would be self-monitored. Reduced transaction cost coupled with comparatively reduced EO would make this scheme attractive.
3 SUPPORT FOR EXPORT OF PRODUCTS FROM NORTH EASTERN REGION.
To promote manufacturing activity and employment in the North Eastern Region of the country, export obligation under the EPCG Scheme shall be 25% of the normal export obligation. This would be applicable to the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim.
Export of specified products through notified Land Customs Stations of North Eastern Region shall be provided additional incentive to the extent of 1% of FOB value of exports. This benefit shall be in addition to any other benefit that may be available under Foreign Trade Policy in respect of these exports.
4 ENCOURAGEMENT FOR MANUFACTURING SECTOR IN DOMESTIC MARKET
The present Policy allows scrips under different schemes of Chapter 3 of Foreign Trade Policy, namely, Focus Product Scheme (FPS), Focus Market Scheme (FMS), Vishesh Krishi and Gram Udyog Yojana (VKGUY) Scheme, Status Holder Incentive Scrip (SHIS) Scheme, Market Linked Focused Product (MLFPS) Scheme, Served From India Scheme (SFIS) and Agri. Infrastructure Incentive Scrip (AIIS) Scheme, for import of goods as per conditions of these Schemes. Now these scrips shall be permitted to be utilized for payment of Excise Duty for domestic procurement. Earlier only scrips under SFIS were so permitted for procurement of goods from domestic market. Now all scrips would be permitted to source from domestic market so as to encourage manufacturing, value addition and employment. This will be an important measure for import substitution and will help in saving of foreign exchange in addition to creating additional employment.
5 SIMPLIFICATION OF PROCEDURES
Import under Advance Authorisation (AA) will henceforth be permitted at any of the EDI ports, irrespective of EDI port in which the AA has been registered. There would be no requirement of Transfer Release Advice (TRA). This would facilitate imports under AA and would significantly bring down transaction costs of the exporters.
Exports shipments from Delhi & Mumbai through Post, through Courier or through e-Commerce shall be entitled for export benefits under FTP. An Inter-Ministerial Task Force constituted by the Ministry of Finance would expeditiously look into various aspects to the feasibility of enabling shipments through all postal locations.
Exporters will be henceforth permitted to give single revolving Bank Guarantee for different transactions.
6 NEW “e-BRC” INITIATIVE: A MAJOR EDI INITIATIVE
An extremely challenging and significant EDI initiative, “e-BRC” has been launched by DGFT. “e-BRC” would herald electronic transmission of Foreign Exchange Realization from the respective Banks to the DGFT’s server on a daily basis. Exporter will not be required to make any request to bank for issuance of Bank Export and Realization Certificate (BRC). This will establish a seamless EDI connectivity amongst DGFT, Banks and Exporters. “e-BRC” would facilitate early settlement and release of FTP incentives / entitlements. This is a significant step to reduce transaction cost to the exporters.
7 SEARCH BASED “ITC (HS)” ON DGFT WEBSITE
DGFT has published a new, updated, ITC (HS) classification of Export and Import items. On the DGFT website (http://dgft.gov.in), a facility has been provided to search / enquire about the current Import Policy of an itemby entering either ITC (HS) Code of that item or brief description of that item. This would be of major help to trade and industry as well to academicians and researchers.
8 MARKET & PRODUCT DIVERSIFICATION
7 new markets are being added to Focus Market Scheme (FMS). These countries are Algeria, Aruba, Austria, Cambodia, Myanmar, Netherland Antilles, and Ukraine
7 new markets are being added to the Special Focus Market Scheme (Special FMS). These countries are Belize, Chile, El Salvador, Guatemala, Honduras, Morocco, and Uruguay.
110 new items are being added to the Focus Product Scheme (FPS) list. The details of new products notified under FPS will be known once the Public Notice is issued by DGFT.
9 VISAKHAPATNAM AIRPORT RECOGNISED UNDER EXPORT PROMOTION SCHEMES
Visakhapatnam Airport has been identified as a new Port for the purpose of benefits under Export Promotion Schemes.
Members may please note the above. The detailed highlights notified by DGFT is enclosed herewith.
D. Saalai Maraan
COUNCIL FOR LEATHER EXPORTS