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Government has implemented Changes in FTP 2009-14 to Enhance Trade and SEZs

Apr 19, 2013 17:30 IST

Union Minister for Commerce, Industry and Textiles, Anand Sharma released the Annual Supplement 2013-14 to Foreign Trade Policy (FTP) 2009-14 18 April 2013 at Vigyan Bhawan, New Delhi. During the fiscal year 2012-13, the export of India grew to 300.60 US Billion Dollar from 300 US Billion Dollar, but it fell by 1.76 percent previous year. The trade deficit which was 183.4 US Billion Dollar last year has increased to 190.91 US Billion Dollar.

On this occasion of releasing the Annual Supplement 2013-14 to Foreign Trade Policy 2009-14 the government introduced many strategic Changes to policies to revive the interest of the investors in Social Economic Zones (SEZs) as well as to boost exports.

Few of the important changes introduced
Changes in SEZs
• Size of total area of land required for development of SEZs have been reduced
• Graded Scale for Minimum Land Criteria has been introduced
• Flexibilities are introduced to set up additional units sector specific SEZs
• Policy to provide duty benefits to pre-existing structures and activities being undertaken after notification have been introduced
• In IT SEZs, the criterion of minimum land area of 10 hectares has been done away

Zero Duty Export Promotion Capital Goods (EPCG) Scheme
Foreign Trade Policy has two variants under this scheme, Zero Duty EPCG for few sectors and 3% Duty EPCG for all sectors. On 5 June 2012, a new Post Export EPCG Scheme was also announced which was notified on 18 February 2013 by the CBEC. Now the Union Government has decided to merge the Zero Duty EPCG and 3% EPCG Scheme into one scheme and make it a Zero Duty EPCG Scheme covering all sectors.

Salient Features of the Zero Duty EPCG includes
• Authorization holders will have export obligation of 6 times the duty saved amount. The export obligation has to be completed in a period of 6 years
• The period for import under the Scheme would be 18 months
• The discharge of Export Obligation by export of alternate products and the accounting of group companies has been barred
• The benefits of the Zero Duty EPCG Scheme can be availed by the exporters who have availed benefits under Technology Upgradation Fund Scheme (TUFS) administered by Ministry of Textiles
• Under the new Zero Duty EPCG Scheme, import of motor cars, SUVs, all purpose vehicles for hotels, travel agents, or tour transport operators and companies owning/operating golf resorts will not allowed

Reduced EO for Domestic Sourcing of Capital Goods
• The quantum of specific Export Obligation (EO) in the case of domestic sourcing of capital goods under EPCG authorizations has been reduced by 10%. This would promote domestic manufacturing of capital goods.

Reduced EO for units in the State of Jammu & Kashmir
• To encourage manufacturing activity in the State of Jammu & Kashmir the specific export obligation (EO) is reduced to 25% of the normal export obligation. Earlier, this benefit was announced on 5 June 2012 in respect of units located in North Eastern Region and Sikkim and the same provision is now being extended to J&K.

Widening of Interest Subvention Scheme

• Presently there exists availability of 2% interest subvention scheme to certain specific sectors like Handicrafts, Handlooms, Carpets, Readymade Garments, Processed Agricultural Products, Sports Goods and Toys. The scheme had been further widened to include 134 sub-sectors of engineering sector. Government had also announced that the benefit of this scheme of 2% interest subvention could be available up to 31 March 2014
• Items covered under the Chapter 63 of ITC (HS) (other made up textile articles, sets, rags) and additional specified tariff lines of engineering sector items under the scheme have also been included in the scheme by widening its provisions


Widening the Scope of Utilization of Duty Credit Scrip
• Duty Credit Scrips issued under Focus Market Schemes, Focus Product Scheme and Vishesh Krishi Gramin Udyog Yojana (VKGUY) can be used for payment of service tax on procurement of services within the legal framework of service tax exemption notifications under the Finance Act, 1994. Holder of the scrip shall be entitled to avail drawback or CENVAT credit of the service tax debited in the scrips as per Department of Revenue rules.
• All duty credit scrips issued under Chapter 3 can be utilized for payment of application fee to DGFT for obtaining any authorization under Foreign Trade Policy. This benefit shall be available only to the original duty credit scrip holders. Duty credit scrip can also be paid for payment of composition fee and for payment of value shortfalls in EO under para 4.28 (b) of Hand Book of Procedure Vol. 1.
Market and Product Diversification
• Norway has been added under Focus Market Scheme and Venezuela has been added under Special Focus Market Scheme. The total number of countries under Focus Market Scheme and Special Focus Market Scheme becomes 125 and 50 respectively.
• Approximately, 126 new products have been added under Focus Product Scheme. These products include items from engineering, electronics, chemicals, pharmaceuticals and textiles sector.
• About 47 new products have been added under Market Linked Focus Product Scheme (MLFPS). These products are from engineering, auto components and textiles sector. 2 new countries i.e., Brunei and Yemen have been added as new markets under MLFPS.
• MLFPS is being extended from 01.04.2013 to 31.03.2014 for exports to USA and EU in respect of items falling in Chapter 61 and Chapter 62 of ITC (HS).
• Exports of High Tech products would be incentived and it would be separately notified by 30th June, 2013.
• The towns of Morbi (Gujarat) and Gurgaon (Haryana) have been added to the existing list of towns of export excellence for ceramic tiles and apparel exports respectively. These towns shall be eligible to get benefit under ASIDE Scheme.

Incremental Exports Incentivisation Scheme
• Government has announced Incremental Export Incentivisation Scheme on 26 December 2012 for the exports made during January 2013 to March 2013. This scheme is available for exports made to USA, EU and Asia. It has been agreed to extend this scheme for the year 2013-14. The calculation of the benefit shall be on annual basis under the extended scheme.
• The Government has also agreed to include additional countries under Incremental Exports Incentivisation Scheme. 53 countries of Latin America and Africa have been added with the objective to increase India’s share in these markets. The present exports to each of these markets are less than US $ 100 million.

Changes have been introduced in many other schemes and they are
• Facility to close cases of default in Export Obligation
• Served from India Scheme (SFIS)
• VKGUY Scheme
• Status Holder Incentive Scheme (SHIS)
• Re-credit of 4% SAD
• Duty Free Import Authorization Scheme (DFIA)
• Import of Cars
• Improvement in quality and timeliness of Foreign Trade Data
• Second Task Force on Transaction Cost in International Trade
• Electronic Data Interchange Initiatives
• Ease of Documentation and procedural simplification
• Widening of items eligible for import for Handloom/Made ups and Sports Goods

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