Export-Import Policy of Last Five Years Essay Example

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Between 2003 and 2008, our share of global commercial services export increased from 1.4% to 2.8%, according to WTO estimates. At the same time, the percentage of our economy represented by exports rose from 83% to 1.45% within this period.

Between 2003 and 2008, India's goods and services trade share increased from 0.92% to 1.4%. This export growth has resulted in the generation of around 14 million jobs within the past five years, both directly and indirectly.

Our policy has two primary objectives in the short term. The first is to halt and reverse the decline in exports, while the second is to provide additional support to sectors that have been heavily impacted by the recession in developed countries. We are striving for an annual export growth rate of 15%, with a target of reaching US$ 200 billion in exports by March 2011. Furthermore, our goal for the following three years until 2014 is to reestablish a robust export growth pattern of around 25% per year.

The Government of India aims to double the country's exports of goods and services by 2014, while also increasing its share in global trade by 2020. To achieve these goals, the Government plans to implement various measures such as fiscal incentives, institutional changes, streamlined procedures, expanded market access worldwide, and diversified export markets. These efforts include improving export-related infrastructure, reducing transaction costs, and providing full refunds for all indirect taxes. Additionally, the Government will offer extra support and incentives to 'Towns of Export Excellence' and their units to enhance the infrastructure within the export sector.

The policy's objective is to support project exports and facilitate the export of manufactured goods for new and

emerging markets. To achieve this, a coordination committee will be established in the Department of Commerce, consisting of representatives from SPECIAL FOCUS INITIATIVES such as Market Diversification, Technological Upgradation, Support to status holders, Agriculture, Handlooms, Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries, Green products, Exports of products from North-East, Sports Goods, and Toys sectors. The government of India will actively promote exports in these sectors through specific sectoral strategies that will be announced periodically.

India needs to adopt a comprehensive approach to its global trade development in order to establish itself as a major player in international trade. It is crucial not only to focus on increasing exports, but also to facilitate imports that can boost the economy. To maximize their impact on development, it is important to maintain coherence and consistency between trade policies and other economic strategies. Hence, instead of announcing an annual Exim Policy, India should adopt an integrated approach that addresses the country's foreign trade developmental needs. This will form the basis of the new Foreign Trade Policy.

Trade serves as more than just a means of earning foreign exchange; it is also a catalyst for economic activity and national development. Guided by this belief, the Foreign Trade Policy has two main objectives:

1. To double our global merchandise trade share within the next five years.
2. To promote employment generation and drive economic growth effectively.

Achieving these objectives involves implementing various strategies, including:

1. Removing controls and establishing a reliable and transparent environment that fosters the entrepreneurial spirit of our businessmen, industrialists, and traders.
2. Simplifying procedures and reducing transaction costs.

(III) Neutralizing the incidence of all levies and

duties on inputs used in export products is based on the principle that duties and levies should not be exported.

(IV) The aim is to facilitate the development of India as a global hub for manufacturing, trading, and services.

(V) Special focus areas will be identified and nurtured to generate additional employment opportunities, particularly in semi-urban and rural areas. A series of "Initiatives" will be developed for each of these areas.

(VI) The goal is to facilitate technological and infrastructural upgradation in all sectors of the Indian economy, especially through the import of capital goods and equipment. This will increase value addition, productivity, and ensure internationally accepted standards of quality.

(VII) To enhance exports, efforts will be made to avoid inverted duty structures and prevent any disadvantage to domestic sectors in Free Trade Agreements/Regional Trade Agreements/Preferential Trade Agreements entered into by India.

(VIII) Upgrading our infrastructural network, both physical and virtual, related to the entire Foreign Trade chain, to international standards. (IX) Revitalising the Board of Trade by redefining its role, giving it due recognition and inducting experts on Trade Policy. X) Activating our Embassies as key players in our export strategy and linking our Commercial Wings abroad through an electronic platform for real-time trade intelligence and enquiry dissemination. PARTNERSHIP The new Policy envisions merchant exporters and manufacturer exporters, business and industry as partners of the Government in the achievement of its stated objectives and goals.

The establishment of a Grievance Redressal Mechanism is essential to avoid unnecessary and prolonged litigation, and to foster a positive and supportive atmosphere for partnership. This mechanism aims to significantly decrease litigation and promote a partnership-based relationship. The dynamics of a liberalized trading system can

lead to harm inflicted on domestic industry through dumping. In such cases, prompt and effective actions will be undertaken to address and rectify this harm.

ROADMAP This Policy serves as a roadmap for India’s foreign trade development. It outlines the fundamental principles and provides a direction for our journey. As trade dynamics constantly evolve, this policy cannot cover every aspect in full detail. Therefore, we plan to continuously update it to adapt to the changing dynamics of international trade. We aim to collaborate with businesses and industries to establish significant milestones on this roadmap.

Special Economic Zones (SEZ) are designated areas aimed at promoting growth through manufacturing, exports, and job creation. The private sector actively participates in their development. To ensure smooth operations with advanced infrastructure and support services, SEZs require special fiscal and regulatory measures. The upcoming legislation on SEZs will address the roles of developers and co-developers, incorporate virtual SEZs, offer tax concessions under Income Tax and Customs Act, and establish provisions for Offshore Banking Units (OBUs). It is important to note that SEZs are duty-free enclaves considered foreign territory for trade operations and customs duties.

(b) Goods and services moving from the Domestic Tariff Area (DTA) to the Special Economic Zone (SEZ) area will be considered as exports, while goods coming from the SEZ area into DTA will be regarded as imports.

(c) SEZ units can be established for manufacturing goods and providing services. They are allowed to export a variety of items, such as agro-products, partially processed goods, sub-assemblies, and components, except for prohibited items listed in the International Trade Classification (ITC) (HS). Additionally, these units have permission to export by-products, rejects, and waste

scrap that are generated during the production process.

The export of Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) must meet the conditions specified in the ITC (HS) Classification of Export and Import Items. SEZ units, excluding trading/service units, can also export to the Russian Federation using Indian Rupees, and the buyer must repay the amount from the State Credit/Escrow Rupee Account, subject to RBI clearance if required. SEZ units have the privilege to import/procure goods and services from the DTA without duty payment. This includes all types of goods and services, including capital goods, whether new or second hand, that are necessary for the unit's activities or related purposes. However, this exemption does not apply to prohibited imports according to the ITC(HS). Nevertheless, any import permissions required under other laws are still applicable. Goods also comprise raw materials used for producing capital goods within the unit.

The units in the Special Economic Zone (SEZ) are allowed to import goods necessary for their approved activity. This includes capital goods, which can be obtained either free of cost or on loan from clients. The SEZ units have the option to procure required goods without paying duty from bonded warehouses located in the Domestic Tariff Area (DTA) as per the Policy or Section 65 of the Customs Act. They can also procure goods duty-free from International Exhibitions held in India. Additionally, SEZ units can import or procure all types of goods from DTA without paying duty for creating a central facility to be used by units in the SEZ. This central facility for software development is accessible to units in both the SEZ and the DTA for exporting software.

Gem and Jewellery units also have the option to obtain gold, silver, and platinum through nominated agencies. Furthermore, SEZ units can import or procure goods and services from DTA without paying duty for the establishment, operation, and maintenance of units in the Zone.

The leasing of capital goods for SEZ units can be done through a firm contract with a domestic or foreign leasing company. Both the SEZ unit and the leasing company must file the necessary documents together to import or procure the capital goods without paying duty. Additionally, SEZ units are required to be positive net foreign exchange earners.

The Net Foreign Exchange Earning (NFE) will be calculated for a period of five years from the start of production using the formula in Appendix-14-II of the Handbook (Vol-I), which monitors performance. The Unit Approval Committee will monitor the performance of SEZ units, following the guidelines provided in Appendix 14-II of Handbook (Vol-I). Legal Undertaking 7.

6 The unit must enter into a legal agreement with the relevant Development Commissioner. If it fails to generate positive foreign exchange earnings, it will be subject to penalties as stated in the agreement or any other applicable law. Approvals and Applications 7. 7 (a) Applications for establishing a unit in an SEZ, excluding proposals for units in the services sector (except software and IT enabled services, trading, or any other delegated service activity), will be approved or rejected by the Units Approval Committee within 15 days. The procedure is outlined in the Annexure to Appendix 14-II of Handbook (Vol-I). For other cases, approval may be granted by the Board of Approval. b) Proposals for establishing units in SEZs that require

an Industrial License may be approved by the Development Commissioner after clearance from the SEZ Board of Approval and Department of Industrial Policy and Promotion within 45 days based on merit.

DTA Sales and Supplies 7. 8 (a) An SEZ unit is allowed to sell goods, including by-products, and services in DTA as per the applicable import policy, upon payment of the applicable duty. (b) The DTA sale by a service/trading unit will be subject to the cumulative achievement of positive NFE. Similarly, for units engaging in manufacturing and services/trading activities within a single LOP, the DTA sale will be subject to the cumulative achievement of NFE. (c) For the purpose of fulfilling positive NFE, the following supplies made in DTA by SEZ units will be taken into account: (i) Supplies made in DTA as mentioned in Chapter 8 of the Policy.

(ii) Supplies made to bonded warehouses set up under the Policy and/or under Section 65 of the Customs Act.

(iii) Supplies to other EOU/SEZ/ EHTP/ STP units provided that such goods are permissible for procurement by units.

(iv) Supplies against special entitlement of duty free import of goods.

(v) Supplies of goods and services to such organizations which are entitled for duty free import of such items in terms of general exemption notification issued by the Ministry of Finance.

(vi) Supply of services (by services units) relating to exports paid for in free foreign exchange or for such services rendered in Indian Rupees which are otherwise considered as having been paid for in free foreign exchange by RBI.

(vii) Supplies of Information Technology Agreement (ITA-1) items and notified zero duty telecom/electronic items indicated in the Appendix 14-II of Handbook.

Supplies from

DTA to SEZ shall be entitled for the following:

7. 9 DTA supplier shall be entitled for:

(a) (i) Drawback Or DEPB in lieu of Drawback

(ii) Discharge of Export performance, if any, on the supplier.

(b) SEZ units shall have the following entitlements: (i) Exemption from Central Sales Tax; (ii) Exemption from payment of Central Excise Duty on all goods eligible for procurement by the unit; (iii) Reimbursement of Central Excise Duty paid on bulk tea procured from licensed auction centers by the Development Commissioner of the concerned zone, as long as the levy on bulk tea is in force; (iv) Reimbursement of Duty paid on fuels or any other goods procured from DTA according to the rate of drawback notified by the Directorate General of Foreign Trade from the date of notification.
(c) Suppliers of precious and semi-precious stones, synthetic stones, and processed pearls from the Domestic Tariff Area to units situated in SEZ shall be eligible for grant of Replenishment Licenses at the rates and for the items mentioned in the Handbook (Vol. I).
(d) The entitlements mentioned in paragraphs (a) and (b)(ii) above will be available only if the goods supplied are manufactured in India.

Export Through Status Holder 7. 10 SEZ unit has the option to export goods manufactured/software developed by it through a merchant exporter or a status holder recognized under this Policy, or any other EOU, SEZ, EHTP, or STP unit. Inter-unit Transfer 7. 11 (a) SEZ units are allowed to transfer manufactured goods, including partly processed or semi-finished goods, as well as services from one SEZ unit to another SEZ, EOU, EHTP, or STP unit.

(b) Goods imported/procured by a

SEZ unit can be transferred or loaned to another unit within the same SEZ. These transfers should be accounted for, but they will not be considered towards meeting export performance requirements.

(c) Capital goods imported/procured can be transferred or loaned to another SEZ/EOU/EHTP/STP unit, but prior permission from the Development Commissioner and Customs authorities is required.

(d) Transfers of goods within the same SEZ as mentioned in paragraphs (a) and (b) do not require permission, but proper records of the transactions must be maintained by the units.

Other entitlements for SEZ units can be found in Appendix 14-II of the Handbook (Vol-1).

Sub-Contracting 7.

12 (a)   SEZ units have the option to subcontract a portion of their production or production process through units located in the Domestic Tariff Area (DTA) or through other SEZ/EOU/ EHTP/ STP units, as long as they obtain annual permission from the Customs authorities. Additionally, with the approval of the Development Commissioner, subcontracting of a portion of the production process can also take place abroad.
(b)   Subcontracting by SEZ units in the gems and jewellery industry can be done through other SEZ units or EOUs or units in DTA, but it is subject to certain conditions. These conditions include:
- Goods, whether finished or semifinished, including studded jewellery, that are taken outside the SEZ for subcontracting must be brought back to the unit within 30 days.
- Cut and polished diamonds, precious and semi-precious stones (except for those with zero duty), cannot be taken outside the SEZ for subcontracting.
- The SEZ unit can receive plain gold/silver/platinum jewellery from the DTA in exchange for an equivalent quantity of gold/silver/platinum contained in the received

jewellery.

iii) SEZ units can have wastage allowances as applicable for sub-contracting and against exchange.
iv) DTA units that engage in job work or supply jewelry against exchange of gold/silver/platinum are not entitled to export benefits.
(c) All units, including gem and jewelry units, can subcontract part of the production or production process to other units within the same SEZ without permission from Customs authorities, as long as both the supplying and receiving units keep records.
(d) SEZ units other than gem and jewelry units may be permitted to undertake job work for export on behalf of DTA exporters, but the finished goods must be exported directly from the SEZ units. DTA units will be eligible for duty refund on the inputs via Brand Rate of duty drawback.
(e) Scrap/waste/remnants produced through job work can either be cleared from the job worker's premises with applicable duty payment or returned to the unit.
(f) SEZ units involved in production/processing of agriculture/horticulture products may take out inputs and equipment to the DTA farm with annual permission from Customs authorities, following the procedure outlined in Appendix 14-II of the Handbook (Vol-I) Exit from SEZ Scheme 7.

13 (a)   With the approval of the Development Commissioner, a SEZ unit has the option to withdraw from the scheme. However, if the unit chooses to exit, they must pay applicable Customs and Excise duties on imported and domestic capital goods, raw materials, and finished goods in stock. If the unit has not achieved positive NFE (Net Foreign Exchange), they may face penalties imposed by the adjudicating authority under the Foreign Trade (Development and Regulation) Act, 1992.

(b) The Development Commissioner may also

permit a SEZ unit to exit from the SEZ scheme through the prevailing EPCG Scheme by paying duty on capital goods. However, the unit must meet the eligibility criteria of the EPCG Scheme and comply with standard conditions for exit outlined in Appendix 14-II of Handbook (Vol-I).

Export activities conducted through exhibitions, export promotion tours, showrooms abroad, and duty-free shops are also covered within this scheme.

14 (a) SEZ, units are allowed to:
(i)   Export goods for holding/participating in exhibitions abroad with the permission of the Development Commissioner.
(ii)   Carry personal gold/silver/platinum jewellery, precious and semi-precious stones, beads, and articles.
(iii)   Export jewellery for display/sale in permitted shops established abroad.
(iv)   Display/sell in permitted shops established abroad or in the showrooms of their distributors/agents.

(v) Establish showrooms/retail outlets at International Airports for personal carriage of export/import parcels. 7. 15 (a) Importing/exporting gem and jewelry items through personal carriage can be done following the procedure specified by Customs.

Import and export can be done through personal carriage for units other than gem and jewellery units. This is allowed as long as the goods are not in commercial quantity. Export and import can also be done through post, courier, airfreight, Foreign Post Office, or courier. The procedure prescribed by Customs must be followed for exporting/importing goods, including free samples. Rejects, scrap, waste, and remnants arising from the production process or in connection with it can be sold in the DTA by paying the applicable duty.

The duty exemption applies if scrap, waste, remnants, or rejects are destroyed within the Zone after notifying the Custom authorities or destroyed outside the SEZ with Custom authorities' permission. However, this exemption does not apply to gold,

silver, platinum, diamond, precious and semi-precious stones. The general provisions of Policy regarding export of replacement/repaired goods also apply to SEZ units. Cases not covered by these provisions will be evaluated on a case-by-case basis by the Development Commissioner. Defective goods sold in the DTA can be returned for repair/replacement with notification to the Development Commissioner. Imported or domestically procured goods, including gem stones and precious metal components for jewelry making, that are found to be defective or unfit for use after import/procurement can be returned for replacement or destroyed.

In the event of replacement, the goods may be returned from foreign suppliers or their authorized agents in India or indigenous suppliers. However, gem stones and precious metals are exempt from destruction. Goods may also be transferred to DTA/abroad for repair/replacement, testing or calibration, quality testing, and R purposes. This should be communicated to Customs authorities and records should be maintained. Management of SEZ 7.

19 (a) The Development Commissioner will have administrative control over SEZ. (b) All activities of SEZ units within the Zone, unless stated otherwise, including export and re-import of goods, will be carried out through a self-certification procedure. Setting up of SEZ in Private/Joint/State Sector 7.
20 (a) A SEZ may be established in the public, private, joint sector, or by the state Government as specified in Appendix 14-II of the Handbook(Vol-I). Samples 7.

21 (a) SEZ units have the ability to supply or sell samples in the DTA for display/market promotion by paying the applicable duties. They can also remove samples without paying duty by providing an undertaking to Customs authorities to bring the goods back within a certain period. Additionally,

they can export free samples, including those made in wax moulds, silver moulds, and rubber moulds, through any permissible mode of export, including courier agencies and post.

22 (a) If an SEZ unit is unable to utilize goods, including capital goods and spares, for valid reasons, they have the option to dispose of them in the DTA according to the current import policy and by paying the applicable duties, or export them. Capital goods and spares that have become obsolete or surplus can be exported or disposed of in the DTA by paying the applicable duties.

The benefit of depreciation, as applicable, will be available in case of disposal in DTA. (c) No duty shall be payable in case capital goods, raw material, consumables, spares, goods manufactured, processed or packaged and scrap/waste/ remnants/rejects are destroyed within the Zone after intimation to the Custom authorities or destroyed outside the Zone with the permission of Custom authorities. However destruction shall not apply to precious and semi precious and precious metals (d) SEZ unit may be allowed by Customs authorities concerned to donate imported/ indigenously procured computer and computer peripherals without payment of duty, two years after their import/procurement and use by the units, to recognized non-commercial educational institutions, registered charitable hospitals etc as per the details given in Appendix 14-II in Handbook (Vol-I). Entitlement for SEZ Developer 7. 3 (a) For development, operation and maintenance of infrastructure facilities in SEZs, the developer shall be eligible for the following entitlements (b) Income tax exemption as per 80 IA of the Income Tax Act. (c) Import/ procure goods without payment of Customs/Excise duty.

(d) Exemption from Service tax. (e) Exemption from CST.

3. Analyze the quantitative significance of development banks.

Development Banks, also known as Development Finance Institutions (DFI’s), emerged after World War II in Africa, Asia, and other developing countries, often following their independence. Their primary goal is to aid in the development process in alignment with national priorities and the aspirations of the population. DFI's can be categorized into two main groups, and they serve both quantitative and qualitative roles.

There are both national and regional development finance institutions (DFI's) in the developing world. These national DFI's have been in operation for about two to three decades and were created to support the governments in implementing their development plans. In countries like India, the majority of applicants for financial aid from DFI's in the beginning were established large industrial houses or managing agency firms. These entities had ample resources and were able to successfully conceive, plan, and execute new projects or expansions without facing any issues of overdue payments.

In the aftermath of socialist policies implemented by newly independent states, the expansion of large industrial houses and managing agency firms with the help of DFI assistance was seen as monopolistic and exploitative by the majority. These institutions were seen as reminiscent of the former British regime. This perspective resulted in increased state intervention in the regulation and functioning of state-owned DFIs. Embracing a new approach, there was a requirement to redefine the criteria for credit extension to clients by DFIs in line with socialist policies.

The new guidelines focused on fostering various groups, such as new entrepreneurs, technocrats, educated unemployed individuals, professionals, and small-scale enterprises. Furthermore, it emphasized the importance of balanced regional development, aiming to achieve socially

beneficial goals. This marked the onset of a new era for Development Financial Institutions (DFIs) and necessitated a renewed approach. This involved easing certain requirements, including sponsors' contribution, security margin, and extending the gestation period.

Inadequate resources and lack of backup reserves among the new category of sponsors, along with their insufficient managerial skills, became evident quickly. The pursuit of new guidelines exposed Development Financial Institutions (DFIs) to higher risks, resulting in widespread sickness among the enterprises. Although the problem started at a moderate level, it grew significantly over time, but it did lead to the emergence of a new group of successful entrepreneurs. The Development Bank is responsible for coordinating the operations of institutions involved in financing, promoting, and developing industries. It has established an appropriate mechanism for this purpose.

The Development Bank also supports a variety of promotional activities, such as entrepreneurship development programs for new entrepreneurs, consultancy services for small and medium enterprises, and technology upgrades. They also offer programs to uplift the underprivileged. The Bank's role as a catalyst for industrial development covers a wide range of activities and they can provide financing for all types of industrial concerns. Over the years, the Bank has grown in size and portfolio size, with more than thirty years of service to the Indian industry. In fulfilling its developmental role, the Bank engages in promotional activities related to developmental programs for new entrepreneurs, consultancy services for small and medium enterprises, and programs for the upliftment of the underprivileged undertaken by accredited voluntary agencies.

DFI supports various initiatives aimed at promoting entrepreneurship and employment opportunities for the weaker sections of society. These initiatives include entrepreneurship development, self-employment, and

wage employment in the industrial sector. Voluntary agencies play a crucial role in implementing these programs.

DFI also provides support to Science and Technology Entrepreneurs' Parks, Energy Conservation, and Common Quality Testing Centres for small industries. These facilities help entrepreneurs in enhancing their technological capabilities and ensuring quality standards.

To provide affordable consultancy and advisory services to entrepreneurs, especially new and small entrepreneurs, DFI collaborates with other All-India Financial Institutions to establish a network of Technical Consultancy Organisations (TCOs) across the country. TCOs offer a wide range of services to small and medium enterprises, including project selection, formulation, appraisal, implementation, and review.

Recognizing the importance of entrepreneurship development for industrial growth, DFI played a significant role in establishing the Entrepreneurship Development Institute of India. Additionally, similar institutes have been set up by DFI in Bihar, Orissa, Madhya Pradesh, and Uttar Pradesh to foster entrepreneurship in these regions.

DFI provides financial support to organizations conducting studies or surveys related to industrial development. A Development Bank is a multilateral development finance institution focused on enhancing the social and economic development of its member nations. Its main priority is the well-being of the people. For instance, the Asian Development Bank aims to alleviate poverty in Asia and the Pacific.