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Exim Policy of India
Introduction of Exim Policy
Duration  1.1
In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992), the Central Government hereby notifies the Export and Import Policy for the period 2002-2007. This Policy shall come into force with effect from 1st April, 2002 and shall remain in force upto 31st March, 2007 and will be co-terminus with the Tenth Five Year Plan (2002-2007). However, the Central Government reserves the right in public interest to make any amendments to this Policy in exercise of the powers conferred by Section-5 of the Act. Such amendment shall be made by means of a Notification published in the Gazette of India.

Transitional  Arrangements 1.2

Any Notifications made or Public Notices issued or anything done under the previous Export/ Import policies, and in force immediately before the commencement of this Policy shall, in so far as they are not inconsistent with the provisions of this Policy, continue to be in force and shall be deemed to have been made, issued or done under this Policy. Licence/ certificate/permissions issued before the commencement of this Policy shall continue to be valid for the purpose for which such licence/ certificate/ permission was issued unless otherwise stipulated.
          
Restriction and Regulation1.3
In case an export or import that is permitted freely under this Policy is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that the shipment of the export or import is made within the original validity of the irrevocable letter of credit established before the date of imposition of such restriction

Objectives 1.4
The principal objectives of this Policy are:

  • To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade.
  • To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services.
  • To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities, and to encourage the attainment of internationally accepted standards of quality.
  • To provide consumers with good quality goods and services at internationally competitive prices while at the same time creating a level playing field for the domestic producers.

Effort taken by Goverment1.5
The objectives will be met through the coordinated efforts of the State Governments and all the departments of the Government of India in general and the Ministry of Commerce and Industry and the Directorate General of Foreign Trade and its network of Regional Offices in particular, with a shared vision and commitment and in the best spirit of facilitation, in the interest of promotion of trade in goods and services.

General Provisions
Exports and Imports free  unless regulated 2.1
Exports and Imports shall be free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. The itemwise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time.

Compliance with Laws 2.2
Every exporter or importer shall comply with the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Rules and Orders made thereunder, the provisions of this Policy and the terms and conditions of any licence/certificate/permission granted to him, as well as provisions of any other law for the time being in force. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless the shipment parcel is accompanied by Kimberley Process (KP) Certificate required under the procedure specified by the Gem & Jewellery Export Promotion Council (GJEPC).

Interpretation of Policy 2.3
If any question or doubt arises in respect of the interpretation of any provision contained in this Policy, or regarding the classification of any item in the ITC(HS) or Handbook (Vol.1) or Handbook (Vol.2), or Schedule Of DEPB Rate the said question or doubt shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding.If any question or doubt arises whether a licence/ certificate/permission has been issued in accordance with this Policy or if any question or doubt arises touching upon the scope and content of such documents, the same shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding.

Procedure 2.4

The Director General of Foreign Trade may, in any case or class of cases, specify the procedure to be followed by an exporter or importer or by any licensing or any other competent authority for the purpose of implementing the provisions of the Act, the Rules and the Orders made thereunder and this Policy. Such procedures shall be included in the Handbook (Vol.1), Handbook (Vol.2), Schedule of DEPB Rate and in ITC(HS) and published by means of a Public Notice. Such procedures may, in like manner, be amended from time to time.
The Handbook (Vol.1) is a supplement to the EXIM Policy and contains relevant procedures and other details. The procedure of availing benefits under various schemes of the Policy are given in the Handbook (Vol.1).

Exemption from Policy/ Procedure  2.5
Any request for relaxation of the provisions of this Policy or of any procedure, on the ground that there is genuine hardship to the applicant or that a strict application of the Policy or the procedure is likely to have an adverse impact on trade, may be made to the Director General of Foreign Trade for such relief as may be necessary. The Director General of Foreign Trade may pass such orders or grant such relaxation or relief, as he may deem fit and proper. The Director General of Foreign Trade may, in public interest, exempt any person or class or category of persons from any provision of this Policy or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting ALC if the request is in respect of a provision of Chapter-4 (excluding any provision relating to Gem & Jewellery sector) of the Policy/ Procedure. However, any such request in respect of a provision other than Chapter-4 and Gem & Jewellery sector as given above may be considered only after consulting Policy Relaxation Committee.

Principles of Restriction 2.6

DGFT may, through a notification, adopt and enforce any measure necessary for:-

  • Protection of public morals.
  • Protection of human, animal or plant life or health.
  • Protection of patents, trademarks and copyrights and the prevention of deceptive practices.
  • Prevention of prison labour.
  • Protection of national treasures of artistic, historic or archaeological value.
  • Conservation of exhaustible natural resources.
  • Protection of trade of fissionable material or material from which they are derived; and
  • Prevention of traffic in arms, ammunition and implements of war.

Restricted Goods 2.7
Any goods, the export or import of which is restricted under ITC(HS) may be exported or imported only in accordance with a licence/ certificate/ permission or a public notice issued in this behalf.

Terms and Conditions of a Licence/ Certificate/ Permission  2.8

Every licence/certificate/permission shall be valid for the period of validity specified in the licence/ certificate/ permission and shall contain such terms and conditions as may be specified by the licensing authority which may include:

  • The quantity, description and value of the goods;
  • Actual User condition;
  • Export obligation;
  • The value addition to be achieved; and
  • The minimum export price.

Licence/ Certificate/ Permission not a Right 2.9
No person may claim a licence/certificate/ permission as a right and the Director General of Foreign Trade or the licensing authority shall have the power to refuse to grant or renew a licence/certificate/permission in accordance with the provisions of the Act and the Rules made thereunder.

Penalty 2.10
If a licence/certificate/permission holder violates any condition of the licence/certificate/ permission or fails to fulfil the export obligation, he shall be liable for action in accordance with the Act, the Rules and Orders made there under, the Policy and any other law for the time being in force.

State Trading 2.11

Any goods, the import or export of which is governed through exclusive or special privileges granted to State Trading Enterprise(s), may be imported or exported by the State Trading Enterprise(s) as specified in the ITC(HS) Book subject to the conditions specified therein. The Director General of Foreign Trade may, however, grant a licence/certificate/permission to any other person to import or export any of these goods.
In respect of goods the import or export of which is governed through exclusive or special privileges granted to State Trading Enterprise(s), the State Trading Enterprise(s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale. These enterprises shall act in a non discriminatory manner and shall afford the enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales.

Importer-Exporter Code Number  2.12
No export or import shall be made by any person without an Importer-Exporter Code (IEC) number unless specifically exempted. An Importer-Exporter Code (IEC) number shall be granted on application by the competent authority in accordance with the procedure specified in the Handbook (Vol.1). However, if an IEC holder has not imported or exported in the preceding licensing year, such IEC shall be made inoperative by DGFT.

Trade with Neighbouring Countries  2.13

The Director General of Foreign Trade may issue, from time to time, such instructions or frame such schemes as may be required to promote trade and strengthen economic ties with neighbouring countries.

Transit Facility  2.14
Transit of goods through India from or to countries adjacent to India shall be regulated in accordance with the bilateral treaties between India and those countries.

Trade with Russia under Debt- Repayment Agreement  2.15
In the case of trade with Russia under the Debt Repayment Agreement, the Director General of Foreign Trade may issue, from time to time, such instructions or frame such schemes as may be required, and anything contained in this Policy, in so far as it is inconsistent with such instructions or schemes, shall not apply.

Actual User Condition  2.16

Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, which are importable without any restriction, may be imported by any person. However, if such imports require a licence/ certificate/permission, the actual user alone may import such goods unless the actual user condition is specifically dispensed with by the licensing authority.

Second Hand Goods  2.17

All second hand goods shall be restricted for imports and may be imported only in accordance with the provisions of this Policy, ITC(HS), Handbook (Vol.1), Public Notice or a licence/certificate/permission issued in this behalf.

Import of samples  2.18

Import of samples shall be governed by the provisions given in Handbook (Vol.1).

Import of Gifts  2.19

Import of gifts shall be permitted where such goods are otherwise freely importable under this Policy. In other cases, a Customs Clearance Permit (CCP) shall be required from the DGFT.

Passenger Baggage  2.20

Bonafide household goods and personal effects may be imported as part of passenger baggage. Samples of such items that are otherwise freely importable under this Policy may also be imported as part of passenger baggage without a licence/certificate/permission. Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts, trimming and embellishments required for export, as part of their passenger baggage without a licence/certificate/permission.

Import on Export basis  2.21
New or second hand capital goods, equipments, components, parts and accessories, containers meant for packing of goods for exports, jigs, fixtures, dies and moulds
may be imported for export without a licence/certificate/permission on execution of Legal Undertaking/Bank Guarantee with the Customs Authorities provided that the item is freely exportable without any conditionality/requirement of licence/ permission as may be required under ITC(HS) Schedule II.

Re-import of goods repaired abroad  2.22
Capital goods, equipments, components, parts and accessories, whether imported or indigenous, may be sent abroad for repairs, testing, quality improvement or upgradation or standardisation of technology and re-imported without a licence/certificate/permission.

Import of goods used in projects abroad  2.23
After completion of the projects abroad, project contractors may import, without a licence/ certificate/ permission, used goods including capital goods provided they have been used for at least one year.

Sale on High Seas  2.24

Sale of goods on high seas for import into India may be made subject to this Policy or any other law for the time being in force.

Import under Lease Financing  2.25

Permission of licensing authority is not required for import of new capital goods under lease financing.

Clearance of Goods from Customs  2.26

The goods already imported/shipped/arrived, in advance, but not cleared from Customs may also be cleared against the licence/ certificate/ permission issued subsequently.

Execution of BG/LUT  2.27
Wherever any duty free import is allowed or where otherwise specifically stated, the importer shall execute a Legal Undertaking (LUT)/Bank Guarantee (BG) with the Customs Authority before clearance of goods through the Customs, in the manner as may be prescribed. In case of indigenous sourcing, the licence/ certificate/ permission holder shall furnish BG/LUT to the licensing authority before sourcing the material from the indigenous supplier/nominated agency.

Private/ Public Bonded Warehouses for Imports  2.28
Private/Public bonded warehouses may be set up in the Domestic Tariff Area as per the terms and conditions of notification issued by Department of Revenue. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such private/public bonded warehouses. Such goods may be cleared for home consumption in accordance with the provisions of this Policy and against Licence/certificate/ permission, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods. If such goods are not cleared for home consumption within a period of one year or such extended period as the custom authorities may permit, the importer of such goods shall re-export the goods.

Free Exports  2.29
All goods may be exported without any restriction except to the extent such exports are regulated by ITC(HS) or any other provision of this Policy or any other law for the time being in force. The Director General of Foreign Trade may, however, specify through a public notice such terms and conditions according to which any goods, not included in the ITC(HS), may be exported without a licence/ certificate/ permission.

Export of Samples  2.30
Export of samples and Free of charge goods shall be governed by the provisions given in Handbook (Vol.1).

Export of Passenger Baggage  2.31
Bonafide personal baggage may be exported either along with the passenger or, if unaccompanied, within one year before or after the passenger's departure from India. However, items mentioned as Restricted in ITC(HS) shall require a licence/certificate/permission, except in the case of edible items.

Export of Gifts  2.32

Goods, including edible items, of value not exceeding Rs.1,00,000/- in a licensing year, may be exported as a gift. However, items mentioned as restricted for exports in ITC(HS) shall not be exported as a gift, without a licence/certificate/permission, except in the case of edible items.

Export of Spares  2.33

Warranty spares, whether indigenous or imported, of plant, equipment, machinery, automobiles or any other goods may be exported alongwith the main equipment or subsequently but within the contracted warranty period of such goods subject to approval of RBI.

Third Party Exports  2.34
Third party exports, as defined in paragraph 9.55 shall be allowed under the Policy.

Export of Imported Goods  2.35

Goods imported, in accordance with this Policy, may be exported in the same or substantially the same form without a licence/certificate/permission provided that the item to be imported or exported is not mentioned as restricted for import or export in the ITC(HS). Exports of such goods imported against payment in freely convertible currency would be permitted against payment in freely convertible currency.

Restriction of Imported Goods 2.36
Goods, including those mentioned as restricted item for import (except prohibited items) may be imported under Customs Bond for export in freely convertible currency without a licence/ certificate/ permission provided that the item is freely exportable without any conditionality / requirement of licence/permission as may be required under ITC (HS) Schedule II.

Export of Replacement Goods  2.37

Goods or parts thereof on being exported and found defective/damaged or otherwise unfit for use may be replaced free of charge by the exporter and such goods shall be allowed clearance by the customs authorities provided that the replacement goods are not mentioned as restricted items for exports in ITC(HS).

Export of Repaired Goods  2.38

Goods or parts thereof on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shall be allowed clearance without a licence/ certificate/permission and in accordance with customs notification issued in this behalf.

Private Bonded Warehouses for Exports  2.39

Private bonded warehouse exclusively for exports may be set up in DTA as per the terms and conditions of the notifications issued by Department of Revenue. Such warehouse shall be entitled to procure the goods from domestic manufacturers without payment of duty. The supplies made by the domestic supplier to the notified warehouses shall be treated as physical exports provided the payments for the same are made in free foreign exchange.

Denomination of Export Contracts  2.40
All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but the export proceeds shall be realised in freely convertible currency. Contracts for which payments are received through the Asian Clearing Union (ACU) shall be denominated in ACU Dollar. The Central Government may relax the provisions of this paragraph in appropriate cases. Export contracts and Invoices can be denominated in Indian rupees against EXIM Bank/ Government of India line of credit.

Realisation of Export Proceeds  2.41

If an exporter fails to realise the export proceeds within the time specified by the Reserve Bank of India, he shall, without prejudice to any liability or penalty under any law for the time being in force, be liable to action in accordance with the provisions of the Act, the Rules and Orders made thereunder and the provisions of this Policy.

Free Movement of Export Goods  2.42

Consignments of items meant for exports shall not be withheld /delayed for any reason by any agency of the Central/State Government. In case of any doubt, the authorities concerned may ask for an undertaking from the exporter.

No Seizure of Stock  2.42.1
No seizure of stock shall be made by any agency so as to disrupt the manufacturing activity and delivery schedule of export goods. In exceptional cases, the concerned agency may seize the stock on the basis of prima facie evidence. However, such seizure should be lifted within 7 days.

Export Promotion Council  2.43

The basic objective of export promotion councils is to promote and develop the exports of the country. Each Council is responsible for the promotion of a particular group of products, projects and services. The list of the councils, and their main functions are given in Handbook (Vol.1).

Registration -cum-Membership Certificate  2.44

Any person, applying for (i) a licence/ certificate/ permission to import/ export, [except items listed as restricted items in ITC(HS)] or (ii) any other benefit or concession under this policy shall be required to furnish Registration-cum-Membership Certificate (RCMC) granted by the competent authority in accordance with the procedure specified in the Handbook (Vol.1) unless specifically exempted under the Policy.

Central Assistance to States  3.1
In furtherance to the methodology outlined in Paragraph 1.5 the State Governments shall be encouraged to fully participate in encouraging exports from their respective states. For this purpose, suitable provisions has been made in the Annual Plan of the Department of Commerce for allocation of funds to the states on the twin criteria of gross exports and the rate of growth of exports from different states. The States shall utilise this amount for developing complementary and critical infrastructure such as roads connecting production centres with the ports, setting up of Inland Container Depots and Container Freight Stations, creation of new State level export promotion industrial parks/zones, augmenting common facilities in the existing zones, equity participation in infrastructure projects and any other activities as may be notified by DGFT from time to time.

Market Access Initiative  3.2
Financial assistance shall be available under the scheme to the export promotion councils, industry and trade associations and other eligible entities, as may be notified from time to time, on the basis of the competitive merits of proposals received in this regard for the following purposes which inter-alia includes:-

  • Marketing studies on country product focus approach basis.
  • Setting up of common showrooms under one roof and warehousing facility in the identified centres on the basis of marketing studies in important cities abroad.
  • Participation in sales promotion campaigns through international departmental stores.
  • Publicity campaign for launching identified products in selected markets.
  • Participation in international trade fairs, seminars, buyers sellers meet.
  • Promotion of select brands.
  • Transport subsidies for select agriculture products.
  • Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro chemicals and testing charges for engineering products
  • Inland freight subsidies for units located in North East, Sikkim and Jammu &Kashmir.
  • Setting up of "business centre" in Indian missions abroad for visiting Indian exporters/ businessmen. .

Towns of Export Excellence  3.3
A number of towns in specific geographical locations have emerged as dynamic industrial locations handsomely contributing to India’s exports. These "Industrial Clusters" rooted in history symbolise the bursting forth of the free market spirit and are essentially collective response to common problems of competitiveness. Some have become globally renowned manufacturing bases.
   
Tradehub Gallery

Product:Foundation stick
Source:Taiwan
Price:USD $ 5 Per Unit
Company:Chase Era Enterprise Co.,Ltd

Product
:Knapsack Power Sprayer
Source:Taiwan
Price:USD $ 100 Per Unit
Company:Tanong Group

Product:Diamond Lip Color (MAGE-3-04)
Source:Taiwan
Price:USD $ 5 Per Unit
Company:CHING SENG TONG COSMETIC CO., LTD

It is necessary to grant recognition to these industrial cluster items with a view to maximize their export profiles and help in upgrading them to move up in the higher value markets.
A number of towns in specific geographical locations have emerged as dynamic industrial locations handsomely contributing to India’s exports. These "Industrial Clusters" rooted in history symbolise the bursting forth of the free market spirit and are essentially collective response to common problems of competitiveness. Some have become globally renowned manufacturing bases. It is necessary to grant recognition to these industrial cluster items with a view to maximize their export profiles and help in upgrading them to move up in the higher value markets.

A number of such industrial cluster towns are exporting a substantial portion of their products, which are world class. For example, Tirupur is exporting 80% of its production of hosiery. A beginning has been made to consider industrial cluster towns such as Tirupur for hosiery, woollen blanket in Panipat, woollen knitwear in Ludhiana to be eligible for the following benefits:-

Common service providers in these areas shall be entitled for facility of EPCG scheme. The recognised associations of units will be able to access the funds under the Market Access Initiative scheme in Paragraph 3.2 for creating focused technological services. Further such areas will receive priority for assistance for identified critical infrastructure gaps from the scheme on Central Assistance to States mentioned in paragraph 3.1. The units in these notified areas would be eligible for availing all the EXIM policy schemes as per their choice and the provisions of those schemes shall stand relaxed to the extent provided in this paragraph in respect of such units.

Existing industrial clusters need upgradation of services and simplification of procedures. To achieve that purpose, it is proposed to bring about synergy and convergence of various schemes for development of cluster to improve the competitiveness of the units located there.Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. Proposal for strengthening infrastructure, simplifying rules & procedures and developing production infrastructure relating to design, R&D packaging , logistic support as well as to provide awareness and information about international marketing will be considered under the scheme.

Special Focus on Cottage and Handicraft Sector  3.4

The small scale sector alongwith the cottage and handicraft sector has been contributing to more than half of the total exports of the country. The cottage and handicrafts sector, which mostly employs artisan and rural people, contributes significantly to this effort. In recognition of the export performance of this sector and to further increase its competitiveness, the following facilities shall be extended to this sector.

  • The unit in this sector shall be eligible for funds from Market Access Initiative (MAI) scheme as given in paragraph 3.2 of this Policy. Funds shall be earmarked for this sector in the MAI scheme. The funds shall be utilised for developing their website for virtual exhibition, among other activities,
  • Under the EPCG scheme, these units will not be required to maintain average level of exports as given in paragraph 5.5(ii) of this Policy;
  • These units shall be entitled to the benefit of export house status on achieving lower total export/deemed export performance of Rs.15.crore during the preceding three licensing years. However, for new entrants, having exports of less than three years, such status may be granted on achieving the total exports of Rs. 15 crore in the current or preceding one/two licensing years as given in paragraph 3.7.2 of this Policy; and
  • The units in handicraft sector shall be entitled to duty free imports of specified items upto 3% of FOB value of their exports.

Agri Export Zones (AEZ)  3.5.1
With a view to promoting agricultural export from the country and remunerative returns to the farming community in a sustained manner, AEZ as announced earlier would be set up for end to end development for export of specific products from a geographically contiguous area.

3.5.2
AEZ would be identified by the State Government, who may evolve a comprehensive package of services provided by all State Government agencies, State agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector with proven credentials will be encouraged to sponsor new agri export zone or take over already notified agri export zone or part of such zones for boosting agri exports from the zones.

3.5.3
Services which would be managed and co-ordinated by State Government/corporate sector would include provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related research & development etc. APEDA will supplement, within its schemes and provisions, efforts of State Governments for facilitating such exports.

3.5.4
Units in AEZ would be entitled for all the facilities available for exports of goods in terms of provisions of the respective schemes.

Brand Promotion and Quality  3.6.1
The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and assistance to trade and industry to launch a nationwide programme on quality awareness and to promote the concept of total quality management.

State Programmes  3.6.2

The Central Government will encourage and assist State Governments in launching similar programmes in their respective States, particularly for the small scale and handicraft sectors.

Test Houses  3.6.3

The Central Government will assist in the modernisation and upgradation of test houses and laboratories in order to bring them at par with international standards.

Quality Complaints/ Disputes  3.6.4
The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers. The guidelines for settlement of quality complaints, in particular, and such other complaints, in general, is given in Appendix- 37 of Handbook (Vol.1).

Trade disputes affecting trade relations  3.6.5

If it comes to the notice of the Director General of Foreign Trade or he has reason to believe that an export or import has been made in a manner gravely prejudicial

  • To the trade relations of India with any foreign country;
  • To the interest of other persons engaged in exports or imports;
  • Has brought disrepute to the credit or the goods of the country;
  • The Director General Foreign Trade may take action against the exporter or importer concerned in accordance with the provisions of the Act, the Rules and Orders made thereunder and this Policy.

Status Certificate  3.7.1
Merchant As Well As Manufacturer Exporters, Service Providers, Export Oriented Units (EOU’s)/ Units Located in Special Economic Zones (SEZ’s) / Agri Export Zone (AEZ’s)/ Electronic Hardware Technology Parks (EHTPs)/ Software Technology Parks (STPs) shall be eligible for such recognition.

Export Performance Level  3.7.2

The applicant is required to achieve the prescribed average export performance level:

  • Category
  • Total FOB/FOR during the current licencing year or during the preceding 1/2/3 licensing years. (in Rupees)
  • Export House  45 crore
  • Trading House  300 crore
  • Star Trading House  1500 crore
  • Super Star Trading House  6000 crore

Note

  • Units in Small Scale Industry/Tiny Sector/Cottage Sector/Units registered with KVICs or KVIBs/ Units located in North Eastern States, Sikkim and J&K/ Units exporting handloom, handicrafts, hand knotted carpets, silk carpets/ exporters holding golden status/exporters exporting to countries in Latin America and CIS/ sub Saharan Africa as listed in Appendix-17C, units having ISO 9000 (series) /WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-28A, shall be entitled for export house status on achieving Rs.15 crore FOB/FOR during the current licencing year or during the preceding 1/2/3 licensing years. The same threshold limit shall be applicable to the service exporters and agri exporters (other than grains) for obtaining Export house status.
  • Export made on re-export basis shall not be counted for the purpose of recognition.
  • The exports made by a subsidiary of a limited company shall be counted towards export performance of the limited company for the purpose of recognition. For this purpose, the company shall have the majority share holding in the subsidiary company.


Special Strategic Package for Status Holders  3.7.2.1

  • Licence/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis.
  • Fixation of Input-Output norms on priority within 60 days;
  • Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;
  • 100% retention of foreign exchange in EEFC account;
  • Enhancement in normal repatriation period from 180 days to 360 days.
  • Duty free import entitlement for status holders having incremental growth of more than 25% in FOB value of exports (in free foreign exchange) subject to a minimum export turnover of Rs. 25 crore (in free foreign exchange). The duty free entitlement shall be 10% of the incremental growth in exports. Such entitlement can be used for import of capital goods, office equipment and inputs for their own factory or the factory of the associate/supporting manufacturer/job worker. The entitlement/ goods shall not be transferable.

Validity Period  3.7.3
All status certificates issued or renewed on or after 1.4.2002 shall be valid from 1st April of the licensing year during which the application for the grant of such recognition is made upto 31st March, 2007, unless otherwise specified. On the expiry of such certificate, application for renewal of status certificate shall be required to be made within a period as prescribed in the Handbook (Vol.1). During the said period, the status holder shall be eligible to claim the usual facilities and benefits.

Transitional Arrangement  3.7.4

The status certificates expired/expiring on 31st March, 2002/ 31st March, 2003 along with the erstwhile Golden Status Certificates shall be deemed to have been extended upto 31st March, 2004. However, further renewal shall be granted on achieving the threshold limit prescribed in the Policy.

Service Exports  3.8
"Services" include all the 161 tradable services covered under the General Agreement on Trade in Services where payment for such services is received in free foreign exchange. A list of services is given in Appendix-36 of Handbook (Vol.1). Service exporters are required to register themselves with Federation of Indian Exporters Organisation. However, software exporter shall register themselves with Electronic and Software Export Promotion Council.
The service providers as defined in paragraph 9.47, rendering services listed in Appendix–36 shall be entitled for all the facilities mentioned in the Policy. All provisions of the Policy shall apply mutatis-mutandis to such export of services as they apply to goods.
Service provider (other than hotels) shall be entitled to duty free imports equivalent to 10% of the average foreign exchange earned by them in preceding three years. Hotels shall be entitled for duty free imports equivalent to 5% of the average foreign exchange earned by them in preceding three years. The duty free entitlement shall be used for import of spares, office equipment and furniture, professional equipment and consumables other than agriculture and dairy products. The entitlement and the goods shall be non-transferable and would be available only to those service providers who have an average foreign exchange earning of over Rs. 10 lakhs in the preceding three licencing years.

Electronic Data Interchange  3.9
In an attempt to speed up the transactions, reduce physical interface and to bring about transparency in various activities related to exports, electronic data interchange would be encouraged. Applications received electronically shall be cleared within 24 hours. Such applicant shall be required to furnish fee equivalent to 50% of the fee mentioned in Appendix- 29 of Handbook (Vol.1).

Thrust sector  3.10
With a view to achieve the share of 1% of global trade and accelerated growth in exports, the following shall be the thrust sectors:

  • Electronic hardware
  • Textile including garments
  • Auto components /ancilliary
  • Gem & Jewellery
  • Agriculture
  • Service sector.

Department of Commerce shall take concerted efforts to promote exports of these sectors by specific sectoral strategy.

Duty Exemption/ Remission Scheme  4.1

The Duty Exemption Scheme enables duty free import of inputs required for export production. An Advance Licence is issued under Duty Exemption Scheme. The Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export product. Duty Remission scheme consist of (a) DFRC and (b) DEPB. DFRC permits duty free replenishment of inputs used in the export product. The DEPB scheme allows drawback of import charges on inputs used in the export product.

Advance Licence  4.1.1
An Advance Licence is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed in the course of their use to obtain the export product, may also be allowed under the scheme. Duty free import of mandatory spares upto 10% of the CIF value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under Advance Licence. Advance Licence can be issued for:-

  • Physical exports:- Advance Licence may be issued for physical exports to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product.
  • Intermediate supplies:- Advance Licence may be issued for intermediate supply to a manufacturer-exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance Licence.
  • Deemed exports:- Advance Licence can be issued for deemed export to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in paragraph 8.2 (b), (c), (d) (e) (f),(g) (i) and (j) of the Policy.

In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d) (e) (f), (g) and (j) of the Policy. An Advance Licence for deemed export can also be availed by the sub-contractor of the main contractor to such project provided the name of the sub contractor(s) appears in the main contract. Such licence for deemed export can also be issued for supplies made to United Nations Organisations or under the Aid Programme of the United Nations or other multilateral agencies and paid for in foreign exchange.
    
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4.1.2

Advance Licence is issued for duty free import of inputs, as defined in paragraph 4.1.1 subject to actual user condition. Such licences (other than Advance Licence for deemed exports) are exempted from payment of basic customs duty, additional customs duty, anti dumping duty and safeguard duty, if any. Advance Licence for deemed export shall be exempted from basic customs duty and additional customs duty only. However in case of supplies to EOU/SEZ/ EHTP/ STP under such licences, anti-dumping duty and safeguard duty shall also be exempted.

4.1.3
Advance Licence and/or materials imported thereunder shall not be transferable even after completion of export obligation.

4.1.4

Advance Licences (including Advance Licence for deemed exports and intermediate supply) shall be issued with a positive value addition. However, for exports for which payments are not received in freely convertible currency, the same shall be subject to value addition as specified in Appendix-32 of Handbook (Vol.1).

4.1.5
Advance Licence shall be issued in accordance with the Policy and procedure in force on the date of issue of licence and shall be subject to the fulfilment of a time bound export obligation as may be specified.

4.1.6
The facility of Advance Licence shall also be available where some of the inputs are supplied free of cost to the exporter. In such cases, for calculation of value addition, the notional value of free of cost inputs alongwith value of other duty-free inputs shall be taken into consideration. However, if all the inputs are supplied free of cost, such shall be covered under paragraph 4.2.7 of the Policy.

Export Obligation  4.1.7

The period for fulfilment of the export obligation under Advance Licence shall be as prescribed in the Handbook (Vol.1).

Advance Licence for annual requirement  4.1.7a

Advance licence can also be issued on the basis of annual requirement for physical exports.
Export House, Trading House, Star Trading Houses and Super Star Trading Houses shall be entitled for the Advance Licence for annual requirement. However, if the status holders are holding the certificate as merchant exporter, they are also entitled to the Advance Licence for Annual Requirement provided they agree to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant licence.
The entitlement under this scheme shall be upto 200% of the FOB value of export in the preceding licensing year. Such licence shall have positive value addition.

Advance Release Orders  4.1.8

An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC intending to source the inputs from indigenous sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP units in lieu of direct import has the option to source them against Advance Release Orders denominated in foreign exchange/ Indian rupees. The transferee of a DFRC shall also be eligible for ARO facility. However, supplies may be obtained against the licence from EOU/ EHTP/ STP/SEZ units, without conversion into ARO.

Back-to-Back Inland Letter of Credit  4.1.9

An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC may, instead of applying for an Advance Release Order, avail of the facility of Back-to-Back Inland Letter of Credit in accordance with the procedure specified in Handbook (Vol.1).

Prohibited Items  4.1.10

Prohibited items of imports mentioned in ITC(HS) shall not be imported under the licence issued under the scheme.

4.1.11
Deleted

Re-import of exported goods under Duty Exemption/ Remission Scheme  4.1.12
Goods exported under Advance Licence/ DFRC/ DEPB may be re-imported in the same or substantially the same form subject to such conditions as may be specified by the Department of Revenue from time to time.

Admissibility of Drawback  4.1.13

In the case of an Advance Licence, the drawback shall be available in respect of any of the duty paid materials, whether imported or indigenous, used in the goods exported, as per the drawback rate fixed by Ministry of Finance (Directorate of Drawback). The Drawback shall however be restricted to the duty paid materials as mentioned in the licence.

Value Addition  4.1.14

The value addition for the purposes of this chapter shall be:-
V.A    A - B
= ------------ x 100,
where   V.A  is Value Addition
              A is the FOB value of the export realised /FOR value of supply received.
              B is the CIF value of the imported inputs covered by the licence, plus any other imported materials used on which the benefit of duty drawback is being claimed.

Duty Free Replenishment Certificate (DFRC)  4.2
DFRC is issued to a merchant-exporter or manufacturer-exporter for the import of inputs used in the manufacture of goods without payment of basic customs duty, and special additional duty. However, such inputs shall be subject to the payment of additional customs duty equal to the excise duty at the time of import.

4.2.1
DFRC shall be issued on minimum value addition of 25% except for items in gems and jewellery sector for which value addition as given in paragraph 4.56.1 of the Handbook (Vol.1) shall be applicable.

4.2.2

DFRC may be issued in respect of exports for which payments are received in non-convertible currency. Such exports shall, however, be subject to value addition and conditions as specified in Appendix-32 of Handbook (Vol.1).
DFRC may also be issued for supplies effected under paragraph 8.2 of the Policy.

4.2.3
DFRC shall be issued only in respect of products covered under the SIONs as notified by DGFT. However, DFRC shall not be issued in respect of SIONs which are subject to "actual user" condition or where the input is allowed with prior import condition or where the norms allow import of Acetic Anhydride, Ephedrine and Pseudo Ephedrine in the Handbook (Vol-II).
However DFRC may be issued for SIONs allowing import of Acetic Anhydride, Ephedrine and Pseudo Ephedrine provided these items are specifically deleted from the list of import items.

4.2.4

DFRC shall be issued for import of inputs as per SION as indicated in the shipping bills. The validity of such licences shall be 18 months. DFRC and or the material(s) imported against it shall be freely transferable.

4.2.5

The export products, which are eligible for modified VAT, shall be eligible for CENVAT credit. However, non excisable, non dutiable or non CENVAT products, shall be eligible for drawback at the time of exports in lieu of additional customs duty to be paid at the time of imports under the scheme.

4.2.6

The exporter shall be entitled for drawback benefits in respect of any of the duty paid materials, whether imported or indigenous, used in the export product as per the drawback rate fixed by Directorate of Drawback (Ministry of Finance). The drawback shall however be restricted to the duty paid materials not covered under SION.

Jobbing, repairing etc. for re-export  4.2.7
Import of goods, including those mentioned as restricted in ITC(HS) but excluding prohibited items, in terms of paragraph 4.1.1 supplied free of cost, may be permitted for the purpose of jobbing without a licence/certificate/ permission as per the terms of notification issued by Department of Revenue from time to time.
Similarly import of goods for carrying out repairs, re-conditioning, re-engineering, testing etc. shall be allowed as per the terms and conditions of the Customs notification even though the goods may be restricted for imports under the Exim Policy/ITC(HS) Classification of Imports and Exports Book.

Duty Entitlement Passbook Scheme  4.3
The objective of DEPB is to neutralise the incidence of Customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product.

4.3.1
Under the DEPB, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of public notice issued in this behalf, for import of raw materials, intermediates, components, parts, packaging material etc.

4.3.2

The holder of DEPB shall have the option to pay additional customs duty, if any, in cash as well.

Validity  4.3.3
The DEPB shall be valid for a period of 12 months from the date of issue.

Transferability  4.3.4

The DEPB and/or the items imported against it are freely transferable. The transfer of DEPB shall however be for import at the port specified in the DEPB, which shall be the port from where exports have been made. Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.

Applicability of Drawback  4.3.5
Normally, the exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty/excise duty paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue. In cases, where the additional customs duty is adjusted from DEPB, no benefit of CENVAT/ Drawback shall be admissible.

Scheme for Gem and Jewellery  4.4

Exporters of gem and jewellery are eligible to import their inputs by obtaining Replenishment (REP) Licences from the licensing authorities in accordance with the procedure specified in this behalf.

Replenishment Licence  4.4.1

The exporters of gem and jewellery products listed in Appendix-26 of the Handbook (Vol.1) shall be eligible for grant of Replenishment Licences at the rate and for the items mentioned in the said Appendix to import and replenish their inputs. Replenishment licence may also be issued for import of consumables as per the details given in paragraph 4.80 of Handbook (Vol.1).

E
xport of Cut & Polished Diamonds for Certification/ Grading  4.4.2
Gems and Jewellery exporters with a track record of at least three years and having an annual average turnover of Rs.5 crores and above during the preceding three licensing years or the authorised offices /agencies in India of Gemological Institute of America (GIA), The Robert Mouawad Campus, International Gemological Institute (IGI) and European Gemological Laboratory (EGL) in USA, Hoge Road Voor Diamand, Antwerp, (HRD), World Diamond Centre of Diamonds High Council, Antwerp, Belgium may be permitted to export cut & polished diamonds each weighing 0.50 of a carat and above to the said laboratories/agencies, for the purpose of certification/grading reports by them with a condition that the same should be re-imported with the certificate/grading reports issued by them without any import duty at the time of re-import.

4.4.2.1
At the time of export of cut and polished diamonds for certification/grading, exporter should give an undertaking to the customs that the cut and polished diamonds will be re-imported within three months of exports for certification/ grading. The export invoice should clearly indicate the estimated value, height, circumference, weight of each diamond to be exported for certification/ grading so that at the time of their import, the above specification could be compared with the original ones to establish their identity. Subsequently these cut and polished diamonds would be exported as per the provisions of the Policy.

Schemes for Gold/ Silver/ Platinum Jewellery  4.4.3

Exporters of gold/silver/platinum jewellery and articles thereof may import their essential inputs such as gold, silver, platinum, mountings, findings, rough gems, precious and semi-precious stones, synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf.

Nominated Agencies  4.4.4
The exporter availing the schemes of gold/ silver/platinum jewellery and articles thereof may obtain gold/silver/platinum from the nominated agencies. The nominated agencies are MMTC Ltd, Hand


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