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Exim Policy 2002-2007 -
Amended 31-3-2003) ‘Our Goal is to Make India a Significant Player in the World Market’ (Excerpted speech by Mr. Arun Jaitley, Union Minister of Commerce and
Industry and Law & Justice, Government of India - Announcement of Export and Import Policy 2003-2004 - 31st March, 2003, New Delhi) Exactly a year back, we had announced the Export and Import
Policy for the five year period 2002-07 coinciding with the 10th Five year Plan. This Policy recognized that international trade is a vital part of development strategy and that it can be an effective instrument of economic growth,
employment generation and poverty alleviation. In line with the Medium Term Strategy for Exports, the policy adopted the goal for India to reach 1% share of global merchandise trade by the year 2007, up from the level of 0.67%. For
this, Indian exports have to grow at 12% per year and to double in dollar terms from roughly 40 billion U.S. Dollars per annum to 80 billion U.S. Dollars. REVIEW OF EXPORT PERFORMANCE The provisional figures of exports for the period April, 2002
to February, 2003 indicate that exports have grown by as much as 16.76% in dollar terms (and 18.8% in rupee terms) over the same period in the preceding financial year. This has been contributed mainly by Textiles, Gems and
Jewellery, Engineering products particularly Auto and Auto Ancillaries, Drugs and Pharmaceuticals, Chemicals and Agro Products. A significant contribution is by high value-added manufacturing sectors. Sizeable growth is visible in
our exports to major markets such as the United States, the European Union and South East Asia. This has been achieved in the face of global recession, particularly in the US market, following 9/11. It not only shows resilience of
the Indian exporters but also underscores their growing confidence and competitiveness of Indian products. Lest we become complacent, let me caution that this growth has been achieved against the back-drop of near stagnation of
exports in the earlier year. Hence, we have to pursue relentlessly our objective of improving our share of world trade. In specific terms, exports during April, 2002 to February,
2003 amounted to Rs. 2,23,249 crores (Canadian dollars 74,416 million approx.) as compared to Rs. 1,87,876 crores (Canadian dollars 62,625 million approx.)during the same period in the previous year. Textiles contributed
Rs. 45,509 crores (Canadian dollars 15,170 million approx.)as compared to Rs. 41,809 crores (Canadian dollars 13,936 million approx.) during the previous year representing a growth rate of 8.85% accounting for a share of
21.31% in the total exports. Gems and Jewellery contributed Rs.38,032 crores (Canadian dollars 12677 million approx.) as compared to Rs. 30,453 crores (Canadian dollars 10151 million
approx.) in the previous year representing a growth rate of nearly 24.89% accounting for a share of 16.97%. Chemicals and related products contributed Rs. 32,805 crores (Canadian dollars 10935 million approx.) as compared to
Rs.27,518 crores (Canadian dollars 9172 million approx.) with a growth rate of 19.21% and a share of 14.64%. Engineering goods contributed Rs. 31,152 crores
(Canadian dollars 1038 approx.) as compared to Rs. 24,650 crores (Canadian dollars 8216 million approx.) with a growth rate of 26.30% and a share of 13.90%. The exports of
agriculture and allied products contributed Rs. 18,907 crores (Canadian dollars 6302 million approx.) as compared to Rs. 17,320 crores (Canadian
dollars 5773 million approx.) in the previous year with a growth rate of 9.16% and a share of 8.44%. That brings me to the objective of achieving 1% of the world
merchandise trade by 2007. If the present trend continues, we may not only reach the target but also surpass it. It is almost certain that the merchandise exports will cross the US Dollar 50 billion milestone this year. But for the
uncertain conditions in the Middle East, we might even have reviewed our target. We shall strive to sustain the present rate of growth and to accelerate it through the initiatives and strategy in the Exim Policy 2003-04. Exports can
act as the motive power of growth for a rapidly developing Indian economy and in making India a significant player in the world market. THE NEW POLICY I shall now explain our approach in the new Policy. If I have
to summarize this in one sentence, it is identification of engines of growth and provision of extra power to them and building on areas of our core competence. Therefore, the Policy aims to provide an impetus to one important engine
which has not been covered earlier. This is services exports. The other engine that will receive continued attention is Special Economic Zones. An equally important sector namely agriculture and allied products which I believe to be
an area of core competence will come in for some special treatment. This I hope, will enthuse our farming community who constitute the bulk of the country’s population. I also propose to encourage further those exporters who have
been pillars of strength to us and urge them to attain greater heights. Last but not least, we shall simplify procedures sharply to further reduce transaction costs. EXPORT OF SERVICES India has already emerged as a leading player in software
exports. Apart from software, a host of services now provide unprecedented opportunities in global trade. With abundant skilled manpower, India is uniquely placed to take full advantage of the growing opportunities of services
exports. This is an area which can be an engine for growth referred to by me earlier. We are taking a bold initiative in not only recognizing the importance of service exports but also introducing a scheme for the promotion of
exports of services. Already a strong message for the promotion and development of this sector was given while presenting the Budget for 2003-04. I intend to follow up with some specific steps for boosting services exports. For services exports, we have to recognize that we have made a
good start in software sector. To both facilitate and promote export of services from other sectors, we propose to allow import of consumables, office and professional equipments, spares and furnitures up to 10% of the average
foreign exchange export earning in the previous three years. Since many of the sectors have not yet made a beginning in the direction of exports, we propose to extend the facility even to new comers against Bank Guarantee to the
extent of the revenue sacrificed, subject to actual user condition. We expect this would particularly help the Health Sector for which the Finance Minister has already given a strong signal for India to emerge as a major destination
for health services. In the services sector, Tourism has received some attention over the
years. In this year’s Budget a strong signal has been given for the development of this sector. This sector already enjoys the benefit of the Export Promotion Credit Guarantee (EPCG) Scheme. However, we have been receiving
persistent representations from this industry to extend to it the benefits of advance licence scheme. We have, therefore, decided to allow recognized hotels of the category of three star and above and other registered service
providers in this sector duty free import of consumables and spares upto 5% of their average foreign exchange earnings of the previous three years. This will be subject to actual user condition. The facility will not be available to
certain sensitive items in a negative list to be notified for this purpose. ENTERTAINMENT INDUSTRY We have immense potential for exports in certain services
sectors such as Entertainment and Education. Each sector has its own specific problems such as lack of investment, inadequacy of laws relating to piracy. Nonetheless, we have to leverage India’s obvious advantages in these
sectors. We propose to set up sector-specific Working Groups with representatives of Ministry of Finance, the Administrative Ministries concerned, the State Governments, Financial Institutions and the Industry to work towards a
common goal by framing Action Plans to achieve the potential to be implemented within a specified time schedule. For entertainment services, which is singularly handicapped by lack of investment, but has tremendous opportunities for
exports, it is proposed to promote through suitable tax incentives contributions to venture capital funds which will provide finance to this sector. "Services" as defined in the Exim Policy in Para
9.46 include all the tradable services covered under the General Agreement on Trade in Services and earning free foreign exchange. Similarly, " Service providers" have been defined in Para 9.47. We have to put in place a
system for collecting reliable statistics for export of services. This will engage our attention on a priority basis. Since there is no uniform standard in the world for this, we have decided to set up a Group consisting of
representatives of Department of Commerce, Central Statistical Organization, RBI, DGFT and Director General of Commercial Intelligence and Statistics, Kolkata, to consider all aspects of this issue and recommend to the Government a
system for collection and maintenance of data relating to export of services. Till such a system is finalized and put in operation, we would base the implementation of the Scheme of
promotion of services exports on free foreign exchange earned by any of the service providers listed in the Handbook. AGRI EXPORTS I am convinced that unless we can ensure that the rural sector
and Indian farmers receive visible benefits from economic reforms and the process of globalization, it may not be possible to accelerate economic growth. We had introduced the Scheme of Agro Export Processing Zones (AEZ) in the
2002-2007 Policy for end to end development of export of specific products from a geographically contiguous area. We are gratified that there has been an enthusiastic response to the scheme from the States and the rural community.
As many as 45 AEZs have been notified so far in different parts of the country. We want to further accelerate this process. Agriculture and allied products is our core competence. Not only is it diversified with a large variety of
crops, fruits, vegetables and flourishing dairy sector, but we are among the world leaders in output of many products. One of the limiting factors in the increase in agricultural
productivity and quality and for protecting it from the vagaries of monsoon is the inadequate investment in this sector for bringing to the farmer the latest technology and knowledge and for setting up critical infrastructure in the
form of water harvesting and soil management, better quality of seeds and optimal use of inputs, adoption of scientific pre and post harvest treatment and storage and establishment of linkage with international marketing. In spite
of the enthusiasm shown by many of the State Governments, availability of investible resources in creation of such critical infrastructure even in the AEZs has been a constraint. In view of this, we propose to also facilitate and
promote association of corporates with proven credentials in the implementation of AEZs in order to give a boost to productivity and quality of specified agro products leading to accelerated exports. For this
we are having consultations with Ministry of Finance to provide appropriate incentives to enable investments by these corporates to infrastructure, agricultural extension, processing packing, storage, R&D and other
facilities relating to exports in the AEZs. SEZs Let me now turn to the next engine for growth i.e. the SEZ
scheme. We have great hope for attracting Foreign Direct Investment and increasing our export through this scheme. SEZs are required to provide a congenial and investment friendly environment where units, both Indian and foreign can
manufacture their products at internationally competitive prices for exports or sale to domestic tariff area. The Indore SEZ is very close to coming into operation. It is important to realize that unless we convince the potential
investors that location in these SEZs can give them competitive edge over similar units in other countries, we shall not be able to attract any worthwhile investment. Therefore, our endeavor will be to provide our SEZs with
facilities comparable to those obtaining elsewhere in the world. To enable exporters to access funds at international rates, we are in consultation with RBI and Finance Ministry for a suitable fiscal package for off-shore banking
units (OBUs) set up in SEZs. While we shall continue our efforts including bringing in a
comprehensive legislation, we will simultaneously explore the possibility of developing a scheme with features similar to the SEZ regime, for Export Oriented Units in selected sectors with capital investment in plant and machinery
over Rs. 25 crores (Canadian dollar 8.33 million approx.). EPCG SCHEME Our growth in exports in the recent past has taken place in
the background of a somewhat slow down at home. Since we are aiming to be a significant player in the world trade, we have to build up deliberately and quickly the manufacturing base in order to sustain a high rate of growth of
exports. The EPCG Scheme has contributed significantly to exports by facilitating expansion of the manufacturing base with limited gestation period and at a comparatively lower capital investment. We recognize that the long term
solution for the building up of a competitive manufacturing base would be to bring down the levels of import tariff on capital goods comparable to those prevailing in the countries which are considered as our competitors. Till that
happens, EPCG Scheme will have to be continued. At the same time, we have to make it more flexible and attractive so that even the small scale sector is able to set up and expand its manufacturing base for exports. We have,
therefore, decided to take the following steps :- i) The Scheme will now be more flexible and allow import of capital goods for pre-production and post production facilities
also. ii) Export obligation will be rationalized by linking it to duty saved. The export obligation would now be 8 times the duty
saved. All other conditions will remain unchanged. iii) In order to facilitate upgradation of existing plant and machinery, import of spares will be allowed under the Scheme
subject to the same conditions. Consequently, the condition of allowing only 20% of spares along with the import of capital goods becomes redundant. iv) In order to facilitate higher value addition in exports, the existing condition of increase in Export Obligation by 50% in
case of export of a product higher up in the value chain is being done away with. v) To give flexibility in fulfillment of Export Obligation, a manufacturer exporter would now be permitted flexibility to
fulfill his obligation through any other product being manufactured by him. This would allow for changing conditions in the international market in which the export of a particular product may not be remunerative or feasible at a
particular point of time. This facility will be subject to the condition that average export of the substitute product will be taken into account in fixing the revised export obligation. The facility will be confined to the products
being manufactured by the same company/ legal person. vi) In line with the general policy, capital goods upto to 10 years old will be allowed under this scheme. vii) To facilitate diversification into software sector, existing manufacturer-exporters will be allowed to fulfill export
obligation arising out of import of CG under EPCG Scheme for setting up of Software units through export of manufactured goods of the same company. EXPORT OF ELECTRONIC HARDWARE Export of electronic hardware is going to be one of our major
thrusts. In order to give a boost to the export of electronic hardware, we are modifying the EHTP Scheme to allow counting of all 217 ITA-I items by EHTP units to DTA units for fulfillment of their export obligation. Similarly, in
the software sector, procedure and formalities applicable to status holders amongst STP units will be greatly simplified. This should facilitate free movement of laptop, computer and other professional equipments and provide
required flexibility to the software professionals. To promote the growth of software exports in the area of
embedded programs, procedure for the import and re-export of the hardware including automobiles in which such programmes are embedded for testing and development will be greatly simplified in consultation with Ministry of Finance.
Henceforth such hardware for embedding upto the value of U.S. Dollar 10,000 will be allowed to be imported duty free and permitted to be disposed of after testing subject to certification by Software Technology Parks India (STPI).
In order to allow both hardware and software sectors to remain up-to-date in sectors with high rate of obsolescence, accelerated rate of depreciation will be allowed in conformity with accepted international practice. Similarly,
procedural formalities governing donation and destruction of obsolete hardware and inventory will be simplified. INCENTIVE FOR FAST GROWING STATUS HOLDERS The status holders have been a pillar of strength in
increasing exports. There is a feeling among them that under the Exim Policy, substantive benefits are no longer available to them since the earlier benefits such as fast track clearance and relaxation from certain procedures, are
now universally applicable in the liberalized environment. We recognize that the status holders will continue to play a significant and increasing role in boosting exports, particularly from the small scale sector, as most of the
small scale units will not be in a position to directly access the international markets. Moreover, it will be our endeavor to facilitate India emerging as a major base for outsourcing products and services for the rest of the
world. They are also critical to our strategy for accelerating the rate of incremental growth of exports. Therefore, we intend to give a premium to the status holders who achieve high growth rate in their exports. It is proposed to
give a duty free entitlement to them for import of capital goods, spares, office equipments and consumables. This will be available to status holders who achieve a growth rate of 25% or more in the current year with a minimum export
performance of Rs. 25 crore. They would be entitled to a duty free entitlement of 10% of the incremental growth in exports during the current financial year. This entitlement would be subject to actual user condition which can be
passed on to associate manufacturers. DEVELOPMENT OF EXPORT CLUSTERS Regarding specific initiatives, the 2002-07 Policy had
recognized three major industrial clusters at Tirupur, Panipat and Ludhiana as Towns of Export Excellence with a view to maximizing their export profile. It is also recognized that steps need to be taken to enhance the productivity,
quality, cost effectiveness by providing back up support of common facilities such as design centres, training for essential skills in the workforce, testing facilities to upgrade quality and market linkages etc. This will increase
the overall competi-tiveness of the selected industrial locations which are predominantly export oriented. The Department of Industrial Policy & Promotion (DIPP) as a nodal department has formulated Industrial Infra-structure
Upgradation Scheme which is in final stage of approval. This scheme envisages upgra-dation of infrastructure in existing clusters/ industrial locations that have developed on account of local skills, market and resources. Efforts
under the scheme will be supplemented by the ASIDE Scheme of this Ministry and similar schemes being implemented by other departments. To start with ten clusters/ locations with high growth potential would be supported to bridge
technology and productivity gaps. Areas of intervention in the selected clusters / locations would include, inter-alia Technology & Skill Upgradation, Physical infrastru-cture, environmental mitigation facilities etc. The user
industry would identify the needs and implementation would be based on a participatory approach. EXTENSION OF EO FOR REHABILITATION OF SICK UNITS India
is a capital scarce country. We can not afford the luxury of dragging on indefinitely the process of either rehabilitation or winding- up of a sick unit. We have to ensure that a sick unit is quickly rehabilitated in case it is
possible to do so. To facilitate this, we already have a provision for extension of the period of fulfillment export obligation (eo) in case a sick unit is taken over. However, there is
no such provision for the existing management bringing a unit back to health on the basis of an approved rehabilitation programme. To remove this lacunae, we propose to allow extension of the period of export obligation of sick
units on the basis of the draft rehabilitation schemes prepared by operating agencies appointed by BIFR. Similar facility would be available for units outside the scope of BIFR and under the scheme of rehabilitation of the concerned
states. OUR APPROACH In keeping with our policy to do away with unnecessary
restrictions which increase transaction costs, there will be further simplification of procedures in order to reduce these costs to a minimum. A study by Exim Bank in October 2002 indicates a significant reduction in the transaction
cost in all the sectors covered from levels prevailing as per an earlier survey in 1998. Doubtless simplifications and liberalization in earlier Exim Policies contributed substantially to this reduction. However, the fact remains
that transaction cost levels in India still remain at unacceptably high levels. This seriously detracts from the competitiveness of our exports. Recognizing this, we have taken on board the specific suggestions received from the
exporters in the Open Houses to effect further simplification. As part of these efforts, we are now giving high priority to the implementation of the EDI programme covering all the major community partners in the export process in
order to minimize transaction time and to reduce discretion. We are now aiming at providing on-line approvals. This can be possible only with the full implementation of the EDI programme by all the community partners as per the
agreed schedule. We shall try to ensure that this takes place. CODIFICATION OF
SEZ/EOU RULES In recognition of the importance of SEZ Scheme to our strategy
for accelerated export growth and the contribution of 100% EOUs, to the export performance of the country, we are taking a major step in the simplification and codification of rules, regulations and procedures applicable to SEZ and
EOU units. All these rules and regulations are being put in one place. This should greatly facilitate both potential investors as well as existing units in these sectors. ANNUAL ADVANCE LICENSE FOR STATUS HOLDERS There are certain procedural simplification and flexibility
which are being introduced in the new Policy. As part of our efforts at reduction of transaction cost, we are introducing annual advance licence facility for status holders so that they can plan for their imports of raw material and
components on an annual basis and take advantage of bulk purchases. Similarly, we are introducing diamond dollar account for the convenience of gem and jewellery exporters. Along with the promotion of agro and service exports, which I
have already covered, we intend to give special focus to certain sectors of merchandise export which hold the potential for accelerated growth. These sectors are textiles, particularly garments, auto components, gems and jewellery,
drugs and pharmaceuticals and chemicals. We will work closely with the concerned administrative ministries and the industry not only to remove any possible hurdles in the way of accelerated growth of exports but also undertake
measures for vigorous trade promotion to boost export of these items. "Focus: Latin American countries" and "Focus:
Africa" both Initiatives for the diversification of markets for Indian goods and services led to creation of awareness of the members of the non traditional market for the Indian goods amongst Indian exporters and consequently
led to increase in Indian exports in these regions. The "Focus: Africa" programme was launched on 1st April, 2002 to cover countries in Sub-Saharan African Region covering the first phase of seven countries mainly Nigeria,
South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana. India’s trade with Sub-Saharan Region was US$ 3.63 Billion in 1996-97 which grew to US$ 4.2 Billion in 2001-02 with a growth rate of 16%. In view of this, I am happy to
announce that in addition to the seven countries included in "Focus: Africa", we are extending the Programme to the remaining 11 countries of the Region where India has diplomatic Missions. These are Angola, Botswana,
Ivory-Coast, Zambia, Zimbabwe and six countries of North Africa namely Egypt, Sudan, Algeria, Libya, Morocco and Tunisia. The "Focus: Africa" Programme will now cover 24 countries of the African continent with effect from
1.4.2003. My predecessor had proposed to launch a "Focus CIS"
Programme in view of our traditional ties with CIS countries. I am happy to announce that we are launching "Focus: CIS" Programme with effect from 1st April, 2003. I shall end here by stating that our Approach would be to
relentlessly pursue the goal of making India a significant player in the world market by leveraging India’s undoubted strength viz. intelligence, innovation and entrepreneurship of every Indian. This will be our national
objective. The Ministry of Commerce and Industry shall play the lead role in co-ordinating with other Ministries of Government of India and the State Governments as well as the exporters to succeed in this national
endeavour. HIGHLIGHTS OF EXIM POLICY 2002-07 Amended upto 31.3.2003 1 Service Exports Duty free import facility for service sector having a minimum
foreign exchange earning of Rs.10 lakhs. The duty free entitlement shall be 10% of the average foreign
exchange earned in the preceding three licensing years. However, for hotels, the same shall be 5% of the average foreign exchange earned in the preceding three licensing years. This entitlement can be used for import of office
equipment, professional equipment, spares and consumables. However, imports of agriculture and dairy products shall not be allowed for import against the entitlement. The entitlement and the goods imported against such entitlement
shall be non-transferable. 2 Agro Exports a) Corporate sector with proven credential will be encouraged
to sponsor Agri Export Zone for boosting agro exports. The corporates to provide services such as provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related R&D. b) DEPB rate for selected agro products to factor in the cost of
pre-production inputs such as fertiliser, pesticides and seeds. 3 Status Holders a) Duty-free import entitlement for status holders having
incremental growth of more than 25% in FOB value of exports (in free foreign exchange). This facility shall however be available to status holders having 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 and 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. This facility shall be available on the exports made from 1.4.2003. b) Annual Advance Licence facility for status holders to be
introduced to enable them to plan for their imports of raw material and components on an annual basis and take advantage of bulk purchases. c) The Input-Output norms for status holders to be fixed on
priority basis within a period of 60 days. d) Status holders in STPI shall be permitted free movement of
professional equipment like laptop/computer. 4 Hardware/Software a) To give a boost to electronic hardware industry, supplies
of all 217 ITA-1 items from EHTP units to DTA shall qualify for fulfillment of export obligation. b) To promote growth of exports in embedded software, hardware
shall be admissible for duty free import for testing and development purposes. Hardware upto a value of US$ 10,000 shall be allowed to be disposed off subject to STPI certification. c) 100% depreciation to be available over a period of 3 years
to computer and computer peripherals for units in EOU/EHTP/STP/SEZ. 5 Gem & Jewellery Sector a) Diamond & Jewellery Dollar Account for exporters
dealing in purchase/sale of diamonds and diamond studded jewellery. b) Nominated agencies to accept payment in dollars for cost of
import of precious metals from EEFC account of exporter. c) Gem & Jewellery units in SEZ and EOUs can receive
precious metal i.e Gold/silver/platinum prior to exports or post exports equivalent to value of jewellery exported. This means that they can bring export proceeds in kind against the present provision of bringing in cash only. 6 Export Clusters a) Upgradation of infrastructure in existing
clusters/industrial locations under the Department of Industrial Policy & Promotion (DIPP) scheme to increase overall competitiveness of the export clusters. b) Supplemental efforts to be made
under the ASIDE scheme and similar schemes of other Ministries to bridge technology and productivity gaps in identified clusters. c) 10 such clusters with high growth potential to be
reinvigorated based on a participatory approach. 7 Rehabilitation of Sick Units For revival of sick units, extension of export obligation
period to be allowed to such units based on BIFR rehabilitation schemes. This facility shall also be available to units outside the purview of BIFR but operating under the State rehabilitation
programme. 8 Removal of Quantitative Restrictions a) Import of 69 items covering animal products, vegetables
and spices, antibiotics and films removed from restricted list. b) Export of 5 items namely paddy except basmati, cotton linters,
rare earth, silk cocoons, family planning devices except condoms removed from restricted list. 9 Special Economic Zones Scheme a) Sales from Domestic Tariff Area (DTA) to SEZs to be
treated as export. This would now entitle domestic suppliers to Drawback/ DEPB benefits, CST exemption and Service Tax exemption. b) Agriculture/Horticulture
processing SEZ units will now be allowed to provide inputs and equipment to contract farmers in DTA to promote production of goods as per the requirement of importing countries. This is expected to integrate the production and
processing and help in promoting SEZs specialising in agro exports. c) Foreign bound passengers will now be allowed to take goods
from SEZs to promote trade, tourism and exports. d) Domestic sales by SEZ units will now be exempt from SAD. e) Restriction of one year period for remittance of export
proceeds removed for SEZ units. f) Netting of export permitted for SEZ unit provided it is
between same exporter and importer over a period of 12 months. g) SEZ units permitted to take job-work abroad and exports
goods from there only. h) SEZ units can capitalise import payables. i) Wastage for subcontracting/exchange by gem and
jewellery units in transactions between SEZ and DTA will now be allowed. j) Export/import of all products
through post parcel/courier by SEZ units will now be allowed. k) The value of capital goods imported by SEZ units will now
be amortised uniformly over 10 years. l) SEZ units will now be allowed to sell all products
including gems and jewellery through exhibitions and duty free shops or shops set up abroad. m) Goods required for operation and maintenance of SEZ units will
now be allowed duty free. 10 EOU Scheme a) Agriculture/Horticulture
processing EOUs will now be allowed to provide inputs and equipment to contract farmers in DTA to promote production of goods as per the requirement of importing countries. This is expected to integrate the production and processing
and help in promoting agro exports. b) EOUs are now required to be only net positive foreign exchange
earners and there will now be no export performance requirement. c) Foreign bound passengers will now be allowed to take goods
from EOUs to promote trade, tourism and exports. d) The value of capital goods imported by EOUs will now be
amortized uniformly over 10 years. e) Period of utilisation of raw materials prescribed for EOUs
increased from 1 year to 3 years. f) Gems and jewellery EOUs are now being permitted
sub-contracting in DTA. g) Wastage for subcontracting/exchange by gem and jewellery
units in transactions between EOUs and DTA will now be allowed as per norms. h) Export/import of all products
through post parcel/courier by EOUs will now be allowed. i) EOUs will now be allowed to sell all products
including gems and jewellery through exhibitions and duty free shops or shops set up abroad j) Gems and jewellery EOUs will now be entitled to
advance domestic sales. 11 EPCG scheme a) The scheme shall now allow import of capital goods for
pre-production and post-production facilities also. b) The Export Obligation under the scheme shall now be linked to
the duty saved and shall be 8 times the duty saved. c) To facilitate upgradation of existing plant and machinery,
import of spares shall also be allowed under the scheme. d) To promote higher value addition in exports, the existing
condition of imposing an additional Export Obligation of 50% for products in the higher product chain to be done away with. e) Greater flexibility for fulfillment of export obligation
under the scheme by allowing export of any other product manufactured by the exporter. This shall take care of the dynamics of international market. f) Capital goods upto 10 years old shall also be allowed
under the scheme. g) To facilitate diversification into the software sector,
existing manufacturer exporters will be allowed to fulfill export obligation arising out of import of capital goods under the scheme for setting up of software units through export of manufactured goods of the same company. h) Royalty payments received from abroad and testing charges
received in free foreign exchange to be counted for discharge of export obligation under EPCG scheme. 12 DEPB Scheme a) Facility for provisional DEPB rate introduced to encourage
diversification and promote export of new products. b) DEPB rates rationalised in line with general reduction in
Customs duty. 13 Advance Licence a) Standard Input Output Norms for 403 new products
notified. b) Anti-dumping and safeguard duty exemption to advance licence for
deemed exports for supplies to EOU/SEZ/EHTP/STP. 14 DFRC Scheme a) Duty Free Replenishment Certificate scheme extended to
deemed exports to provide a boost to domestic manufacture b) Value addition under DFRC scheme reduced from 33% to 25%. 15 Reduction of Transaction Cost a) High priority being accorded to the EDI implementation
programme covering all major community partners in order to minimise transaction cost, time and discretion. We are now gearing ourselves to provide online approvals to exporters where exports have been effected from 23 EDI ports. b) Online issuance of Importer-Exporter Code(IEC) number by linking
the DGFT EDI network with the Income Tax PAN database is under progress. c) Applications filed electronically (through our website
www.nic.in/eximpol shall have a 50% lower processing fee as compared to manual applications. 16 Miscellaneous a) Actual user condition for import of second hand capital
goods upto 10 years old dispensed with. b) Reduction in penal interest rate from 24% to 15% for all old
cases of default under Exim Policy. c) Restriction on export of warranty spares removed. d) IEC holder to furnish online return of imports/exports made on
yearly basis. e) Export of "free of cost" goods for export
promotion @ 2% of average annual exports in preceding three years subject to ceiling of Rs.5 lakh permitted. ********
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