To take an integrated view of the overall development of India's foreign trade, a comprehensive Foreign Trade Policy (FTP) for 2004-09 was announced on 31st August, 2004 and its Annual Supplement was released for the year 2006-07 on 7th April, 2006. The basic objective of this policy is to double our percentage share of global merchandise trade in next five years and to make exports an effective instrument of economic growth by giving thrust to employment generation particularly in semi urban and rural areas through a number of policy initiatives. These include simplification of procedures, reduction in transaction costneutralization of incidence of levies and duties on inputs used for exports and development of global hubs for manufacturing, trading and services. Keeping in view the interest of domestic entrepreneur, farmers, traders as well as India's international commitments and bilateral treaties, amendments/changes in policy are made from time to time as and when these become necessary in public interest.

Some of the major initiatives taken recently including measures announced in the Annual Supplement to the FTP in April, 2006 are given below:

Hon'ble Commerce & Industry Minister addressing a Press Conference to Announcethe Annual Supplement to the FTP 2004-09 in New Delhi on 7th April 2006)

Focus Market Scheme

The Scheme has been introduced w.e.f 1-4-2006. The Scheme aims at offsetting the high freight cost and other disabilities faced in accessing select international markets. The initiative will enhance India's export competitiveness in these regions. The Scheme allows duty credit facility @ 2.5 per cent of the FOB value of exports of all products to the notified countries.

Focus Product Scheme

The Scheme has been introduced w.e.f 1-4-2006. It provides incentives to export of products which have high employment potential in rural and semi urban areas in order to offset the inherent infrastructure bottlenecks and other associated costs involved in marketing of such products.

The Scheme allows duty credit facility @ 2.5 per cent of the FOB value of exports to 50 per cent of the export turnover of notified products such as value added fish and leather products, stationery items, fireworks, sports goods, handloom products bearing handloom mark and handicraft items.

The scrip and the items imported against both the above mentioned schemes would be freely transferable. The Duty Credit, thus obtained may be used for import of inputs or goods including capital goods, provided the same is freely importable under ITC (HS).

Exporters will have the option to avail of the benefits in respect of the same exported product/s under only one of the three schemes i.e. the Focus Market Scheme, the Focus Product Scheme or the Vishesh Krishi and Gram Udyog Yojana.

Vishesh Krishi and Gram Udyog Yojana (Special Agriculture and Village Industry Scheme)

Keeping in view the objective of Foreign Trade Policy to promote employment generation in rural and semi urban areas, it has been decided to incentivise the export of Gram Udyog products i.e. village and cottage industry products by awarding a duty free scrip @ 5 per cent of FOB value of exports under the expanded Vishesh Krishi Upaj Yojana, which has been renamed as Vishesh Krishi and Gram Udyog Yojana.

However, the duty credit scrip shall be granted only at a reduced rate of 3.5 per cent of the FOB value of exports in such cases where the exporter has availed the benefits under Chapter 4 of this Policy for import of Agriculture Inputs (other than catalysts, consumable and packing materials) relating to export item under this scheme. The certificate can be used for import of all freely importable items except capital goods or other such items as have been notified by DGFT. The scrip and the items imported against it shall be freely transferable.

In terms of number of applications received during April to December, 2006, a growth rate of 394 per cent has been recorded over the number of applications during April-December 2005. Similarly, in terms of value of Duty Credit issued, a growth rate of 296 per cent was recorded.

Service Exports

A number of trade friendly features have been included in the Served from India Scheme to meet the requirements of Service Exporters:

• Service exports in Indian Rupees, which are otherwise considered as having been paid for in free foreign exchange by RBI, will now qualify for benefits under the Served from India Scheme. In addition, the foreign exchange earned through International Credit Cards and other instruments as permitted by RBI for rendering of service by the service providers shall be taken into account for the purposes of computation of entitlement under the Scheme.
• Benefits of the Scheme earned by one service provider of a Group company can now be utilized by other service provider of the same Group Company including managed hotels. The measure aims to supporting the Group service companies not earning foreign exchange in getting access to the international quality products at competitive prices and providing services of international standards. This new initiative allows transfer of both the scrip and the imported input to the Group Service Company, whereas the earlier provision allowed transfer of imported material only.
• Stand-alone restaurants will now be eligible for benefits under Served from India Scheme @ 10 per cent of FOB value of exports (instead of the earlier 20 per cent).

Package for Marine Sector

• List of specialized inputs used in the marine sector has been expanded to include additional items of chemicals and additives within the present duty free entitlement of 1 per cent.
• Self removal procedure for clearance of seafood waste to be applicable subject to prescribed wastage norms.

Gems & Jewellery Sector

• Re-import of rejected Jewellery on payment of Customs Duty on the inputs and not the Jewellery exported earlier under Export Promotion Scheme.
• Import of Precious Metal Scrap/Used Jewellery for melting and re-export of Jewellery/Bullion etc., thereby increasing the capacity utilisation of the refineries in India.
• Export of Jewellery on Consignment Basis allowed.
• Extension of the facility of legal undertaking in lieu of Bank Guarantee to reduce transaction cost.
• Export of cut and Polished Precious and Semi-precious Stones for treatment and re-import for further value addition within the country.
• Export of Gems & Jewellery for Export Promotion Tours, thereby reducing the transaction cost and time.
• Procedural simplification introduced relating to:

1. Inclusion of New Research Center of DTC in U.K. for the facility of Testing and Certification of Cut and Polished Diamonds.
2. Inclusion of Customs Ports of Cochin and Coimbatore for personal carriage of Gems and Jewellery.

Duty Free Import Authorization (DFIA)

A new Scheme called DFIA was launched w.e.f.1.5.2006. It offers the facility of duty free imports for exports and allows the facility of transferability of scrip or the imported inputs once the export obligation is completed.

Advance Authorization Scheme (AA)

In addition to the existing facility under the scheme, supply of stores to out-going vessels/aircrafts is now entitlement for duty free import of inputs under the scheme. This will enable India to offer competitive fuel prices and will attract mid-route stops of the international flights. Hence, it will promote India as a re-fuelling center.

A total of 1,23,863 applications were received during the period April-December 2006 compared to 71,706 applications received during the corresponding period in the year 2005, thus recording a growth rate of 72.7 per cent.

Duty Free Replenishment Certificate (DFRC)

DFRC Scheme has been withdrawn w.e.f. 1.5.2006.

Duty Entitlement Pass Book (DEPB)

DEPB Scheme shall continue till the same is replaced by a new Scheme, which is under consideration by an Expert Group constituted for the purpose.

EPCG Scheme

With a view to accelerate exports under this scheme, the EPCG authorization holders, who fulfill 75 per cent or more of Export Obligation (E.O.) within half or less than half of the specified E.O. period, are exempted from fulfilling the balance E.O. and the authorization can be redeemed by the licensing authority concerned. Further, the norms for maintenance of average export obligation under the Scheme are being re-visited for streamlining it as per current requirement.

Export Oriented Units (EOUs)/Electronic Hardware Technology Park (EHTP)/Software Technology Part (STP)/Biotechnology Part (BTP)

EOUs have been allowed to effect supplies in the Domestic Tariff Area (DTA) against Foreign exchange remittance received from overseas and such supplies will be counted for the purpose of fulfillment of Export Obligation. Similarly, in addition to supplies to holders of advance authorization, EOUs are allowed to make supplies under duty free import authorization scheme. The IT enabled services / business process outsourcing units have been made eligible for reimbursement of Central sales tax, even without a 'C' form.

Deemed Exports

In addition to Advance authorization, supply of goods against duty free replenishment certificate and duty free import authorization have been treated as deemed export for grant of benefits under chapter-8 of Foreign Trade Policy.

A comparative status on Export and Import Licences issued during the year 2005 and 2006 is in shown the graph below:

Graph 3.1 & 3.2 depict the growth in number and value of export under top four categories of licences issued during April-Dec 2006 Vs April-Dec 2005. Graph 3.3 and 3.4 depict percentage share of number and value of exports of major licences issued under export promotion schemes.

Trade Facilitation

To enable the users to make commercial decisions in a more professional manner,

DGCI&S trade data is being made available with minimum time lag in a query based structured format on commercial criteria.

• All DGFT offices continued to provide facilitation to exporters in regard to developments in international trade i.e. WTO agreements, Rules of Origin and SPS requirements, Anti-Dumping issues, etc. to help the exporters to strategise their import and export decisions in an internationally dynamic environment.
• To promote export of 'Minor Forest Products', Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.
• All EPCs have opened a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.
• It has also been decided to develop a Trademark for Handloom on lines similar to 'Woolmark' and 'Silkmark'.
• In order to maintain quality and retain the brand equity of Indian Teas, a new Tea (Distribution and Export) Control Order, 2005 was issued which prescribes strict norms for tea. Tea has been classified for the purpose of issue of non-preferential Certificate of Origin into three categories. A minimum value addition norm of 50 per cent on export of all imported tea and a time period of 6 months from the date of import for the export of imported tea have been prescribed.
• Keeping in view the need to serve the exporting community and providing them requisite services at the door step, a new office was opened at Dehradun to cater to the exporters and importers of State of Uttranchal.

EDI Initiatives

DGFT is also committed to simplify procedures relating to International Trade and to put in place an exporter friendly regime for obtaining import authorizations under various Export Promotion Schemes administered by it. The following EDI initiatives are being taken: -

• Bring all the community partners dealing with international trade on an EDI enabled platform to reduce transaction costs;
• Extend the online web enabled application procedure for issue of licence / authorization to other categories of licences / authorization;
• Consolidate the message exchange system with Customs and extend its scope to cover all categories of Shipping Bills relating to different export promotion schemes;
• Doing away with the manual double verification of the authorisation system by way of online validation with the Customs Authority initially atleast for the ports having EDI facility.

Important Notifications during the Year 2006-07

• Import policy of Cellular Telephone, Narcotic Drugs and Psychotropic Substances under the NDPS Act and NDPS Rules, Human Blood, Boric Acid, Fish Lipid Oil, PVC Scrap, and 6-APA (Exim Code 2941 1050) has been amended.
• Import of Kuth Roots, Cactus, Agar Wood, Serpentina Roots, and Agar Oil, Trichloroethance a Sandal Wood (Santalum Alvurm) has been restricted.
• Due to the reporting of the outbreak of Highly Pathogenic Avial Influenza (Fowl Plague), imports of certain livestock and livestock products have been prohibited.
• Chloroform has been made freely importable.
• Units in the Special Economic Zone will be allowed to sell Worn Clothing in the Domestic Tariff Area to the extent of 15 per cent of the CIF value of imports made in the previous year.
• Condition No.18 of Chapter 1A (General Notes Regarding Import Policy) will not apply to import of Soyabean Oil till 31.3.2007.
• Export of sugar was banned during July 2006 to 31st March 2007. However, the Government has allowed export of sugar with quantitative saving from January 2007 onwards.
• Export of pulses has been prohibited from end of June 2006 till 31.3.2007.
• Export of wheat, which has been prohibited up to 31.12.2007 shall remain in abeyance till 28 February 2007. During this period import of wheat is allowed freely.
• Import of maize is freely allowed up to 31 December 2007.