Council for Leather Exports
Highlights of annual supplement to the National Foreign Trade Policy 2004-09

The Hon-ble Union Minister for Commerce & Industry Shri Kamal Nath unveiled the supplement to the National Foreign Trade Policy on April 8, 2005. The major highlights of the announcements made are given below:

1. INTER-STATE TRADE COUNCIL

In order to achieve our Foreign Trade Policy objective of becoming a major player in world trade, a comprehensive view needs to be taken for the overall development of the country-s foreign trade. Coherence and consistency among trade and other economic policies of both the Union and the State Governments is important for maximizing the contribution of such policies to development. State Governments are increasingly required to partner with the Union Government in the process.

Some States have formulated export policies recognizing the need to focus on the removal of impediments in promoting trade, employment and economic activity. But a lot needs to be done to coordinate this.

It is therefore proposed to engage the State Governments in providing an enabling environment for boosting international trade, by setting up an Inter State Trade Council. It is hoped that the Council would provide an appropriate institutionalized dialogue mechanism on the subject.

2. EXPORT PROMOTION CAPITAL GOODS SCHEME

To promote capacity expansion and quality up-gradation in the SSI sector, import of capital goods at 5% Customs duty shall now be allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved on capital goods imported under the EPCG Scheme over a period of 8 years. (At present the export obligation under the EPCG Scheme is 8 times the duty saved and reducing the export obligation for small manufacturing units to 6 times shall provide an impetus to industries to modernise their plant and machinery which will enhance our overall export competitiveness in the medium term).

With a view to accelerate exports under the Scheme and to incentivise fast track companies, firms making 75% or more of the exports under the EPCG Scheme (including average level of exports) in half or less than half the original export obligation period, shall be freed from the balance export obligation.

The present requirement of submitting an Installation Certificate for machinery imported under EPCG Scheme will now not be required for units which are not registered with Central Excise. In lieu of a Central Excise Certificate, a Chartered Engineer Certificate will now suffice. Firms importing spares under EPCG shall also be required to submit a Chartered Engineer certificate only instead of a certificate from Central Excise authorities.

The facility of clubbing of EPCG licences has been further liberalized and restrictive conditions relating to same licensing year and same products/services have been deleted. Henceforth, all EPCG licences issued under the same Customs Notification can be clubbed. This will considerably reduce paperwork both for the exporter and the licensing authorities and lead to easier monitoring.

3. ADVANCE LICENSING SCHEME

The scope of Advance Licence for Annual requirement has been extended to all categories of exporters having past export performance. Earlier, the option was limited to Status Holders only. The earlier limit of obtaining Advance Licence for Annual requirement has also been enhanced to 300% of FOB/FOR value of exports made in the previous year from 200%.

Clubbing of advance licences for export regularization purpose has been allowed even for licences pertaining to 1992-97 period.

Transfer of Duty Free material imported or procured under Advance Licence from one unit of the company to another unit of the same company to be allowed with prior intimation to the jurisdictional central excise authority. Earlier prior permission of the jurisdictional central excise authority was required

In cases the Bank Guarantee/LUT has been redeemed under the Advance licence, the Licensee may be allowed to get duty free inputs processed from any manufacturer under actual user condition subject to central excise procedures relating to job work.

Removal of requirement of Advance Release Order (ARO) for taking supplies from EOU/EHTP/STP/BTP units and allowing direct debit of the advance licence by the Bond Officer of these units. A detailed procedure in this regard shall be prescribed by the CBEC.

4. DUTY FREE REPLENISHMENT CERTIFICATE

Provision for re-credit on account of rejections of items imported under DFRC shall be similar to the facility available to DEPB and Advance Licence. While allowing re-credit, 95% of the value of the DFRC shall be credited.

5. DEPB

DEPB benefits shall be available for supply of goods from DTA to SEZs for the period 1.04.2003 to 11.05.2004

6. EXPORT ORIENTED UNITS

The de-bonding procedure for EOUs has been simplified. A self-assessment procedure along with time bound disposal of applications of such exiting EOUs will be put in place.

Capital Goods will be allowed to be transferred or given on loan basis to other units under intimation to both Excise and Development Commissioner

Transfer of samples to other EOUs on returnable basis within a period of 30 days to be allowed
EOUs to be permitted to claim IT exemption in respect of income on export proceeds realized within a period of 12 months from date of export.

7. TARGET PLUS SCHEME

The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.

8. BANK GUARANTEE

Quantum of Bank Guarantee in respect of “Other Manufacturer Exporters” category is being reduced from 25% to 15%.

9. PROCEDURAL SIMPLIFICATION & REDUCTION OF TRANSACTION COSTS

Importers and exporters have to fill multiple application forms at various stages of their business activity to meet the procedural requirements of different Departments/Ministries under different Acts. It is our endeavor to simplify procedures and reduce the documentation requirements so as to reduce the transaction costs of the exporters and thereby increase their competitiveness in the international markets. With this in mind, a Committee to look into procedural simplification and reduction of transaction costs was set up under the Chairmanship of Director General of Foreign Trade.

The Committee has submitted its report and some of the key recommendations made are:

a. Internal process re-engineering to enable greater delegation and simplification of forms and documents;

b. EDI linkage of all community trade partners like DGFT, Customs, Banks, Export Promotion Councils etc to facilitate web based filing, retrieval and verification of documents;

c. A fast track mechanism for clearances, examination, testing, quarantine, packaging etc. to be set up by all agencies to facilitate import/export of perishable cargo;

d. Laying down time limits for giving approvals/sanctions for different import and export activities by different agencies to ensure a transparent system of working in Government Departments and ensure continuous improvement in quality of services rendered.

As a first step towards this exercise, the DGFT has devised a single common application form called -Aayaat Niryaat- Form. This 50 page set of forms, as against the 120 page set currently in existence, provides availability of information on DGFT related documentation at a single place and has a web interface for on-line filing by the exporter and retrieval of documents by the licensing authorities.

10. EDI INITIATIVES

DGFT shall strive to move towards an automated electronic environment for filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community trade partners including Customs and Banks. Increased use of information technology for interacting with the trade through video conferencing, doing away with manual filing of documents by using digital signature and introducing a Special Purpose Vehicle for electronic license utilization and transfer mechanism is also envisaged. In addition, online web based information shall be made available for all Export and Import related policies and procedures on the DGFT website to enable the international trading community to access information from a single source.

A time frame of six months for complete EDI linkage between Customs and DGFT has been specified. After completion of this project the manual submission of shipping bills and related documents will be done away with and verification of licences shall be done online which shall considerably reduce transaction costs.

Facility of issuing Importer Exporter Code number (IEC) online is also being provided by linking the DGFT database with the Income Tax PAN database and use of digital signature technology. To add transparency in the system, other e-governance initiatives are also being planned to provide delivery of services to the user community without any human interface with the DGFT offices.

11. TRADE FACILITATION

To enable the users to make commercial decisions in a more professional manner, DGCI&S trade data shall be made available with minimum time lag in a query based structured format on commercial criteria.

All DGFT offices shall continue 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 strategise their import and export decisions in an internationally dynamic environment.

All EPCs shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.