Annual Supplement 2010-11 to Foreign Trade Policy 2009-14

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Aug. 23, 2010

Members of the Council.


Sub : Annual Supplement 2010-11 to Foreign Trade Policy 2009-14
Dear Member
Shri Anand Sharma, Hon’ble Union Minister for Commerce & Industry announced the Annual Supplement 2010-11 to the Foreign Trade Policy 2009-14 today afternoon. We are pleased to inform you that the Hon’ble Minister has made the following announcements for the Leather Sector in this Annual Supplement.

Duty Credit Scrip benefit under Focus Product Scheme (FPS) notified under Chapter 3 of the Foreign Trade Policy has been enhanced from 2% to 4% for leather products and footwear notified in table 7 of Appendix 37 D the Handbook of Procedures (HBP) – Vol. 1.

The DGFT has issued a Public Notice No. 2/(RE 2010)/2009-14 dated 23rd August 2010 in this regard thereby adding the leather products & footwear previously notified in Table 1 of Appendix 37 D of HBP in Table 7, thereby providing the enhanced duty credit scrip of 4%. As per this Public Notice, the enhanced benefit will be applicable for exports from 1.4.2010 onwards.

In speech of the Hon’ble Union Minister for Commerce and Industry, the following announcements have also been made. However, the Notifications on these announcements are expected to be issued in due course.

Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi-finished leather from Public bonded warehouses, without payment of any export duty. This will facilitate the logistics for establishment of such warehouses and easy access to raw material for the leather sector.

Finished Leather export shall be entitled for Duty Credit Scrip @ 2% under Focus Product Scheme (FPS).

Agra has been notified as a Town of Export Excellence for Leather Products vide the DGFT Public Notice No. 2/(RE 2010)/2009-14 dated 23.8.2010.

Zero duty EPCG scheme, introduced in August 2009 and valid for only two years upto 31.3.2011, has been extended by one more year till 31.3.2012. The Leather Sector is one of the sectors eligible for availing this scheme.

The Status Holders Incentive Scrip Scheme (SHIS) was announced in the Foreign Trade Policy 2009-14 . SHIS provided additional Duty Credit Scrips to Status Holders @ 1% of the FOB value of past exports, which can be used for procurement of capital goods with Actual User condition. This facility was available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals ) etc., This scheme which was valid for exports only during two years 2009-10 and 2010-11, has now been extended by one more year for 2011-12 exports also.

Duty Entitlement Passbook (DEPB) scheme has been extended beyond 31.12.2010 till 30.06.2011.

Interest subvention of 2% for pre-shipment credit for export sectors namely, Handloom, Handicraft, Carpet and SMEs for all export sectors, have been allowed till 31.3.2011 in the budget 2010-11. This facility has now been extended to a number of additional products pertaining to sectors like Engineering, leather, textiles, Jute. The Reserve Bank of India has already issued a Circular No. RBI/2010-11/165 dated August 9, 2010 in this regard, which has been circulated by the Council earlier.

The Hon’ble Minister also announced the following procedural simplification and transaction cost reduction measures and also EDI initiatives in the aforesaid Annual Supplement.

Procedural Simplification and Reduction of Transaction Cost:

Exporters shall now have the flexibility to get a high value EPCG authorisation by filing their EPCG application on Annual basis, without the need to file the application for individual capital goods from time to time. It will reduce transaction time and cost.

Exporters shall now have the flexibility to Club Advance authorisation with Advance Authorisation for Annual Requirement for the purpose of account closure.

To impart flexibility to exporters and to facilitate smooth clearance of consignments, a Single customs notification for the two variants of Advance Authorization scheme namely advance authorisation for physical exports & deemed exports shall be issued. It will also eliminate the ambiguity in clubbing of such exports.

Adhoc Norms ratified under Advance Authorisation scheme shall henceforth apply to all cases for the same export product upto one year not only prospectively but also retrospectively.

Chartered Engineer Certificate for Advance Authorisation on self declared basis, has been dispensed with. This will reduce documentation and the transaction cost. The DGFT has issued a Public Notice No. 3/RE :2010/2009-14 dated 23.8.2010 in this regard, which is enclosed herewith.

EDI Initiatives:

To reduce the transaction cost and time, the scope and domain of EDI is endeavoured to be continuously broadened. To remove redundancy of repeated submissions of RCMC, an ‘e-RCMC’ initiative has been commenced. Under this, the Export Promotion Councils would upload the RCMC data of their members on DGFT’s website only once, thus reducing the procedural burden of repeated submissions and associated cost and time.

Facility of a data preparation module for Advance Authorization and Export Promotion Capital Good (EPCG) has been provided on an offline mode, which would reduce the need of continuous online interaction for long and address the connectivity and server response issues significantly.

In order to provide wider choice to the users and enlarge access for online filing, additional licenced certifying authorities for digital signatures and banks for electronic fund transfer (EFT) operations have been included in the gamut of EDI operations.

The online message exchange for Annual Advance Authorization and Duty Free Import Authorization (DFIA) shall also be made operational with Customs w.e.f. 1.12.2010.

The Annual Supplement 2010-11 to the Foreign Trade Policy 2009-14 has also been hosted in the website of DGFT which members may refer.

Members may kindly note the above. In the event of any further clarification, members may approach the Council.

With regards

Ali Ahmed Khan
Executive Director

Circular I

Circular II