|Import Export Policy in Delhi, Delhi Import & Export Policy, Export Policy Delhi, Delhi Import Policy|
Import & Export Policy
Federation of Indian Export Organisations
Highlights of Foreign Trade Policy 2004-2009
Foreign Trade Policy announced on 31st of August, 2004 shall be effected from 1st of September, 2004 to 31st of March, 2009. Basic objectives of the policy are:
a) To double our percentage share of global merchandise trade within the next five years and
b) To act as an effective instrument of economic growth
by giving a thrust to employment generation.
With a view to double our percentage share of global trade within next five years and expand employment opportunities in semi urban and rural areas, certain special focus initiatives have been identified for agriculture, handlooms, handicrafts, gem and jewellery and leather sectors. They are as follows:
(a) A new scheme called the Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme) for promoting the export of fruits, vegetables, flowers, minor forest produce, and their value added products has been introduced.
The objective of the scheme is to promote export of fruits, vegetables, flowers, minor forest produce, and their value added products, by incentivising exporters of such products.
Exporters of such products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licencing year commencing from 1st April, 2004. The scrip and the items imported against it would be freely transferable.
The Duty Credit may be used for import of inputs or goods including capital goods, as may be notified, provided the same is freely importable under ITC(HS).
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.
(b) Funds shall be earmarked under Assistance to States for Infrastructure Development of Exports (ASIDE) for development of Agri Export Zones (AEZ). This will benefit all the 45 agri-export zones. The details which are available in Appendix 15 of the Handbook of Procedures (Vol.I).
(c) Import of capital goods has been permitted at zero duty under the EPCG Scheme
(d) Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.
(e) Capital goods imported under EPCG shall be permitted to be installed anywhere
in the AEZ.
(f) Import of restricted items, such as panels, shall be allowed under the
various export promotion schemes .
(g) Import of inputs such as pesticides shall be permitted under the Advance
Licence for agro exports.
(h) New towns of export excellence with a threshold limit of Rs 250 crore shall
(ii) Handlooms :
(a) Specific funds would be earmarked under MAI/MDA Scheme for promoting handloom
(b) Duty free import entitlement of specified trimmings and embellishments shall be 5% of FOB value of exports during the previous financial year.
(c) Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of exports during the previous financial year.
(d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair shall be permitted.
(e) New towns of export excellence with a threshold limit of Rs 250 crore has been notified at Kanoor (Kerala), Karrur (Tamil Nadu), Madurai, Tamil Nadu, Kekhra (Uttar Pradesh).
(a) New Handicraft SEZs shall be established which would procure products from the cottage sector and do the finishing for exports
(b) Duty free import entitlement of trimmings and embellishments shall be 5% of the FOB value of exports during the previous financial year. The entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers.
(c) The Handicraft Export Promotion Council shall be authorized to import trimmings,
embellishments and consumables on behalf of those exporters for whom directly
importing may not be viable.
(d) Specific funds would be earmarked under MAI & MDA Schemes for promoting
(e) CVD is exempted on duty free import of trimmings, embellishments and consumables.
(f) New towns of export excellence with a reduced threshold limit of Rs 250
crore has been notified at Jodhpur (Raj).
(iv) Gems & Jewellery
(a) Import of gold of 18 carat and above shall be allowed under the replenishment
(b) Duty free import entitlement of consumables for export of jewellery of
metals other than Gold, Platinum shall be 2% of FOB value of exports during
the previous financial year. For gold and platinum, duty free import of consumables
shall continue to be at 1% of FOB value of exports during the previous financial
(c) Duty free import entitlement of commercial samples shall be Rs 100,000
(for other sectors, the same is restricted to Rs. 60,000/-).
(d) Duty free re-import entitlement for rejected jewellery shall be 2% of the
FOB value of exports
(e) Cutting and polishing of gems and jewellery, shall be treated as manufacturing
for the purposes of exemption under Section 10A of the Income Tax Act
(v) Leather and Footwear
(a) Duty free import entitlement of specified items shall be 5% of FOB value
of exports during the preceding financial year (This is likely to be only for
(b) The duty free entitlement for the import of trimmings, embellishments and
footwear components for footwear (leather as well as synthetic), gloves, travel
bags and handbags shall be 3% of FOB value of exports of the previous financial
year. The entitlement shall also cover packing material, such as printed and
non printed shoeboxes, small cartons made of wood, tin or plastic materials
for packing footwear .
(c) Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty.
(d) Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted.
Pragati Maidan in New Delhi to be developed into permanent exhibition mart.
In order to showcase our industrial and trade prowess to its best advantage
and leverage existing facilities to enhance the quantity of space and service,
Pragati Maidan will be transformed into a world-class complex with visitor friendliness
ingress and egress system. The complex utilisation will be improved, increased
and diversified. There shall be brand new, state-of-the-art , environmentally-
controlled, air-conditioned exhibition areas, and Permanent Exhibition Marts.
In addition, a large Convention Centre to accommodate ten thousand delegates
will be developed, with multiple and flexible hall spaces, auditoria and meeting
rooms with hi-tech equipment. A year-round Food and Beverage destination will
be developed, with a large number of outlets covering all cuisines and pricing
levels. There will be a multi- level park to accommodate over nine thousand
vehicles within the envelope of Pragati Maidan.
Board of Trade
A new Board of Trade shall be constituted to advise Government on relevant
issues connected with foreign trade. The board would provide a platform for
continued interaction between the government and trade & industry.
Second Hand Capital goods
Import of second hand capital goods including refurbished/reconditioned spares is now freely permitted (Earlier second hand capital goods only upto 10 years old were permitted freely) (Please see para 2.17 of the Policy)
Exemption from Bank Guarantee
All the exporters who have an export turnover of at least Rupees 5 crore in the current or preceding licencing year and have a good track record of three years of exports will be exempted from furnishing a BG for any of the schemes under this Policy and may furnish a LUT in lieu of BG (This will extend the facility of LUT to merchant exporters who are meeting the laid down criteria but are not status holder).(Details can be found in Paragraph 2.27.1 of the Exim Policy).
De-Nomination of Export Contracts:
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.
However export proceeds against specific exports may also be realized in rupees provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of ACU or Nepal or Bhutan. Additionally, the rupee payment through the Vostro account must be against payment in free foreign currency by the buyer in his non resident bank account. The free foreign exchange remitted by the buyer to his non resident bank (after deducting the bank service charges) on account of this transaction would be taken as the export realization under the export promotion schemes of this Policy. (This will provide relief to the exporters who are willing to invoice in Indian Rupees so that they do not face foreign exchange fluctuation risk. It would be relevant for the exporters when Rupee appreciates). (Details can be seen in Paragraph 2.40 of the Policy).
Regularization of EO default and settlement of customs duty and interest through Settlement Commission
With a view to providing assistance to firms who have defaulted under the Foreign Trade Policy for reasons beyond their control as also facilitating the merger, acquisition and rehabilitation of sick units, it has been decided to empower the Settlement Commission in the Central Board of Excise and Customs to decide such cases also with effect from 01.04.2005.(This would provide relief to the companies/firms who get their cases settled by Settlement Commission without the penalised by DGFT). (Dedtails can be seen in Paragraph 2.46 of the Policy)
Service Tax in DTA
For all goods and services which are exported from units in Domestic Tariff Area (DTA), remission of service tax levied shall be allowed. (Details can be seen at Paragraph 2.48.1 of the Policy).
Exemption from Service Tax in EOU/EHTP/ STP/ SEZ/ BTP
Units in EOU/ EHTP/ STP/ BTP/ SEZ shall be exempted from service tax. (Details can be seen at Paragraph 2.48.2 of the Policy).
The office of the Director General of Foreign Trade has opened a chat window on its website: (http://dgft.delhi.nic.in) for interacting with the trade and industry to reply to queries on the Foreign Trade Policy. This web based interface would be held from 3.00 pm to 5.00 pm on the second Wednesday of every month.
Marketing Development Assistance (MDA)
The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.
As per the revised MDA guidelines with effect from 1st April,2004 assistance under MDA is available for exporters with annual export turnover upto Rs 5 crores.
These include participation in Trade Fairs and Buyer Seller meets abroad or in India, export promotion seminars, etc
Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as , Latin America, Africa, CIS Region, ASEAN countries, Australia and New Zealand.
For participation in trade fairs, etc, in other areas financial assistance without travel grant is available.
Financial assistance would be provided to deserving exporters on the recommendation of Export Promotion Councils for meeting the cost of legal expenses relating to trade related matters (Hitherto the financial assistance was only available to Eport Promotion Councils. However, now individual exporters could also obtain the same on the recommendation of EPCs). (Details can be seen at Paragraph 3.2.1 of the Policy).
Status Holder Scheme:
The scheme of status holders continues but the categorisation of status holders from Export House, Trading House, Star Trading House and Super Star Trading House has been changed to one Star Export House, two Star Export House, three Star Export House, four Star Export House and five Star Export House. The revised threshold limit for the recognition has also been lowered as can be seen from the Table below:
Category Performance (in rupees)
One Star Export House 15 crore
Two Star Export House 100 crore
Three Star Export House 500 crore
Four Star Export House 1500 crore
Five Star Export House 5000 crore
1. Units in Small Scale Industry/Tiny Sector/Cottage Sector, Units registered with KVICs/KVIBs, Units located in North Eastern States, Sikkim and J&K, Units exporting handloom/ handicrafts/hand knotted or silk carpets, exporters exporting to countries in Latin America/CIS/sub-Saharan Africa as listed in Appendix-17C, units having ISO 9000 (series)/ ISO 14000 (series) /WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-28A, exports of services and exports of agro products shall be entitled for double weightage of exports made for grant of Star Export House status. (Details can be seen at Paragraph 3.5.2 of the Policy).
The status holder shall be entitled for all the earlier facilities. In addition, they would be eligible for Target Plus Scheme subject to condition of the scheme.
TARGET PLUS SCHEME
The objective of the scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth in exports. High performing Star Export Houses shall be entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed (Since the target fixed for 2004-05 is 16 %, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year.).
All Star Export Houses (including Status Holders as defined in para 22.214.171.124 of Exim Policy 2002-07) which have achieved a minimum export turnover in free foreign exchange of Rs 10 crores in the previous licencing year are eligible for consideration under the Target Plus Scheme .
The entitlement under this scheme would be contingent on the percentage incremental growth in FOB value of exports in the current licencing year over the previous licencing year, as under:
|Percentage incremental growth 20% and above but below 25%||Duty Credit|
|25% or above but below 100% 100% and above||10%|
(1) Incremental growth beyond 100% will not qualify for computation of duty credit entitlement.
(2) For the purpose of this scheme, the export performance shall not be transferred to or transferred from any other exporter. In the case of third party exports, the name of the supporting manufacturer/ manufacturer exporter shall be declared.
(3) Exporters shall have the option to apply for benefit either under the Target Plus Scheme or under the Vishesh Krishi Upaj Yojana, but not both in respect of the same exported product/s. Provided that in calculating the entitlement under Para 3.7.3 the total eligible exports shall be taken into account for computing the percentage incremental growth but the duty credit entitlement shall be arrived at on the eligible exports reduced by the amount on which the benefit is claimed under para 3.8.2.
(4) All exports including exports under free shipping bill verified and authenticated by Customs and Gems& Jewellery shipping bills but excluding exports specified under para 3.7.5, shall be eligible for benefits under the Target Plus Scheme. (Details can be seen at Paragraph3.7.1 to 3.7.3 of the Policy).
Paragraph 3.7.5 reads as follows:
The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the scheme:
(a) Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment.
(b) Export turnover of units operating under SEZ/EOU/EHTP/STPI/ BTP Schemes or products manufactured by them and exported through DTA units
(c) Deemed exports (even when payments are received in Free Foreign Exchange and payment is made from EEFC account).
(d) Service exports
(e) Rough, uncut and semi polished diamonds and other precious stones
(f) Gold, silver, platinum and other precious metals in any form, including plain jewellery thereof. However exports of studded jewellery and any item as may be notified from time to time will be counted for the entitlement under the scheme.
(g) Export performance made by one exporter on behalf of another exporter
The Duty Credit may be used for import of any inputs, capital goods including spares, office equipment, professional equipment and office furniture provided the same is freely importable under ITC (HS), for their own use or that of supporting manufacturers as declared in Appendix 17 D.
Agricultural products listed in Chapter 1 to 24 of ITC (HS) except as may be notified from time to time, shall not be permissible for imports under this scheme.
Companies which are Star Export Houses as well as part of a Group company shall have an option to either apply as an individual company or as a Group based on the growth in the Groups turnover as a whole. (For the purpose of this scheme the definition of Group Company as given in Chapter 9 will be applicable. Furthermore , only such companies of the Group as are Star Export Houses will be considered).
If a Group company chooses to apply based on the export of one or more of its individual Star Export House companies, the entitlement would be calculated considering the export performance of the applicant company during the previous licencing year and current licencing year. It shall be necessary that the adjusted export performance of all the Star Export House companies of the Group during the current licencing year does not fall below the combined performance of all Star Export House companies of the Group in the previous licencing year.
In case the Group chooses to apply based on the overall growth in Groups turnover (i.e the turnover of all the Star Export House companies) , any one of the Star Export House companies of the Group may file an application on behalf of all the Star Export House companies of the Group. (Details can be seen at Paragraph 3.7.4 of the Policy).
Export Promotion Council for Services
In order to give proper direction, guidance and encouragement to the Services Sector, an exclusive Export Promotion Council for Services shall be set up.
The Services Export Promotion Council shall:
(i) Map opportunities for key services in key markets and develop strategic market access programmes for each component of the matrix.
(ii) Co-ordinate with sectoral players in undertaking intensive brand building and marketing programmes in target markets.
(iii) Make necessary interventions with regard to policies, procedures and bilateral/ multilateral issues, in co-ordination with recognised nodal bodies of the services industry
Hotels & Restaurants
Stand-alone restaurants will be entitled to duty credit equivalent to 20% of the foreign exchange earned by them in the preceding financial year.
Import of fuel was allowed with actual user condition under DFRC. However, since the direct import of fuel was sometimes not viable, the import entitlement for fuel has been allowed to be transferred to the Government notified canalising agency. (Details can be seen at Paragraph 4.2.3 of the Policy).
The DEPB scheme will continue to be operative until it is replaced by a new scheme which will be drawn up in consultation with exporters . (Details can be seen at Paragraph 4.3 of the Policy).
The DEPB shall be valid for a period of 24 months from the date of issue. (Earlier the validity of DEPB was 12 months).
Gems and Jewellery
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 authorized 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 Diamond, Antwerp, (HRD), World Diamond Centre of Diamonds High Council,
Antwerp, Belgium, Central Gem Laboratory, Miyagi Building, 5-15-14 Ueno Taito-Ku,
Tokyo, Japan may be permitted to export cut & polished diamonds each weighing
0.25 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. (Details can be seen at Paragraph 4.4.2
of the Policy).
Five Star Export House have been allowed to act as nominating agencies. Exporters (excepting EOU/SEZ) 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, Handicraft and Handloom Export Corporation (HHEC), State Trading Corporation (STC), the Project and Equipment Corporation of India Ltd (PEC) , and any agency or Five Star Export House authorised by Reserve Bank of India (RBI). (Details can be seen at Paragraph 4.4.4 of the Policy).
Capital goods would be allowed at 0% duty for exports of agricultural products and their value added variants. For other sectors EPCG scheme at 5% duty continues.
In case CVD is paid in cash on imports under EPCG, the incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated .
Second hand capital goods without any restriction on age may also be imported under the EPCG scheme.
However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators whose total foreign exchange earning in current and preceding three licencing years is Rs 1.5 crores. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc cannot be imported under the EPCG Scheme. (Details can be seen at Paragraph 5.1 of the Policy).
The import of capital goods for creating storage and distribution facilities for products manufactured or services rendered by the EPCG licence holder would be permitted under the EPCG Scheme(Details can be seen at Paragraph 5.4 of the Policy).
EPCG for Projects
An EPCG licence can also be issued for import of capital goods for supply to projects notified by the Central Board of Excise and Customs under S.No 441 of Customs Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic customs duty on imports is 10% with a CVD of 16%.
The export obligation for such EPCG licences would be eight times the duty saved. The duty saved would be the difference between the effective duty under the aforesaid Customs Notification and the concessional duty under the EPCG Scheme. (Details can be seen at Paragraph 5.1B of the Policy).
When Capital Goods are imported for pre/ post- production or license is taken for import of spares, the license holder shall fulfill the export obligation by export of products manufactured from the plant / project to which the pre/ post- production capital goods/ spares are related. (Details can be seen at Paragraph 5.4 of the Policy).
The licencee can also opt for the re-fixation of the balance export obligation based on 8 times of the duty saved amount for the CIF value in proportion to the balance Export obligation under the scheme. The guidelines for the re-fixation of export obligation is given in para 5.19 of the Handbook (Vol 1). (Details can be seen at Paragraph 5.4 of the Policy).
The aforesaid facilities shall only be available to manufacturer exporters/ service provider on all the licences where export obligation period including extended export obligation period is valid on the date of application . In this regard, exports made only on or after submission of application for alternate item and/ or re-fixation of the export obligation based on duty saved amount will be taken into account for fulfillment of export obligation. (Details can be seen at Paragraph 5.4 of the Policy).
As per the provisions of para 5.4(i) , the EPCG licence holder would have to maintain the average level of exports equivalent to the average of the exports in the preceding three licencing years for the same and similar products except for exempted categories given in Handbook (Vol 1) during the entire period of export obligation.
Notwithstanding the above, the licence holder shall maintain at least 75% of the average exports in any particular year (s) provided the same is offset by excess exports to fulfill the average in other year (s). (Details can be seen at Paragraph 5.9 of the Policy).
EPCG for agro units
The agro units in the agri export zones would also have the facility of moving the capital good (s) imported under the EPCG within the agri export zone. (Details can be seen at Paragraph 5.5.2 of the Policy).
Service provider in Agri export zone shall have the facility to move or shift the capital goods within the zone provided he maintains accurate record of such movements. However, such equipments shall not be sold or leased by the licence holder.
(Details can be seen at Paragraph 5.8 of the Policy).
Technological Upgradation of existing EPCG machinery
EPCG licence holders can opt for Technological Upgradation of the existing capital good imported under the EPCG licence.
The conditions governing the Technological Upgradation of the existing capital good are as under:
(i) The minimum time period for applying for Technological Upgradation of the existing capital good imported under EPCG is 5 years from the date of issuance of the licence
(ii) The minimum exports made under the old capital good must be 40% of the total export obligation imposed on the first EPCG licence
(iii) The export obligation would be refixed such that the total export obligation mandated for both the capital goods would be the sum total of 6 times the duty saved on both the capital goods.
(iv) The procedure governing the replacement of capital good is given in para 5.20 of the Handbook (Vol1). (Details can be seen at Paragraph 5.10 of the Policy).
Units undertaking to export their entire production of goods and services (except permissible sales in the DTA), may be set up under the Export Oriented Unit (EOU) Scheme, Electronic Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering, and rendering of services. Trading units, however, are not covered under these schemes. (Details can be seen at Paragraph 6.1 of the Policy).
Facility for Gem & Jewllery EOUs
Gems and jewellery EOUs may source gold/silver/platinum through the nominated agencies also. Units obtaining gold/silver/platinum from the nominated agencies shall export gold/silver/platinum jewellery within 60 days from the date of release. This shall not, however, apply to outright purchase of precious metal from the nominated agencies. (Details can be seen at Paragraph 6.2(f) of the Policy).
Other Supplies in DTA
Supplies effected in DTA to holders of advance licence, advance licence for annual requirement/DFRC /EPCG scheme. (Earlier supplies effected in DTA under deemed export category as defined in Chpater 8 of Exim Policy were eligible for fulfillment of positive NFE, but now only supplies against advance licnese/DFRC/EPCG are eligible for the benefits). (Details can be seen at Paragraph 6.9(a)of the Policy).
Other entitlements of EOU/EHTP/STP/BTP units are as under:
(a) Exemption from payment of Income Tax as per the provisions of Section 10A and 10B of Income Tax Act.
(b) Exemption from industrial licensing for manufacture of items reserved for SSI sector.
(c) An Offshore Banking Unit will extend credit on the same terms and condition as extended to units to SEZ.
(d) Export proceeds will be realized within 12 Months.
(e) Will be allowed to retain 100% of its export earning in the EEFC account.
(f) The Units will not be required to furnish bank guarantee at the time of import or going for job work in DTA, where the unit has (i) a turnover of rupees one crore or above, (ii) the unit is in existence for at least three years and (iii) unit having an unblemished track record.
(g) 100% FDI investment permitted through Automatic Route similar to SEZ units. (Details can be seen at Paragraph 6.12 of the Policy).
Existing DTA units, may also apply for conversion into an EOU/EHTP/STP/BTP unit, and Income Tax benefits under Section 10B will be available under the scheme for plant, machinery and equipment already installed. (Details can be seen at Paragraph 6.19(a) of the Policy).
SPECIAL ECONOMIC ZONES
Special Economic Zones (SEZ) are growth engines that can boost manufacturing, augment exports and generate employment. The private sector has been actively associated with the development of SEZs. The SEZs require special fiscal and regulatory regime in order to impart a hassle free operational regime encompassing the state of the art infrastructure and support services. The proposed legislation on SEZs to be enacted in the near future would cover the concepts of the developer and co- developer , incorporate the provision of virtual SEZs, have fiscal concessions under the Income Tax and Customs Act, provide for Offshore Banking Units (OBUs) etc . (Details can be seen in chapter7 of the Policy).
FREE TRADE & WAREHOUSING ZONES
The objective is to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. The scheme envisages creation of world-class infrastructure for warehousing of various products, state-of-the-art equipment, transportation and handling facilities, commercial office-space, water, power, communications and connectivity, with one-stop clearance of import and export formality, to support the integrated Zones as international trading hubs. These Zones would be established in areas proximate to seaports, airports or dry ports so as to offer easy access by rail and road. (Details can be seen at Paragraph 7A.1 of the Policy).
The Free Trade & Warehousing Zones (FTWZ) shall be a special category of Special Economic Zones with a focus on trading and warehousing. (Details can be seen at Paragraph 7A.2 of the Policy).
Establishment of Zone
(i) Proposals for setting up of FTWZs may be made by public sector undertakings or public limited companies or by joint ventures in technical collaboration with experienced infrastructure developers. The proposals shall be considered by the Board of Approval in the Department of Commerce. On approval, the developer will be issued a letter of permission for the development, operation and maintenance of such FTWZ.
(ii) Foreign Direct Investment would be permitted up to 100% in the development and establishment of the zones and their infrastructural facilities.
(iii) The proposal must entail a minimum outlay of Rs.100 crores for the creation and development of the infrastructure facilities, with a minimum built up area of five lakh sq.mts.
(iv) The developer shall be permitted to import duty free such building materials and equipment as may be required for the development and infrastructure of the zone. Such equipment and materials as are sourced from the DTA shall be considered as physical exports for the DTA suppliers.
(v) Once it has developed the FTWZ, the developer shall also be permitted to sale/lease/rent out warehouses/workshops/office-space and other facilities in the FTWZ to traders/exporters. (Details can be seen at Paragraph 7A.3 of the Policy).
Maintenance of Zone
The developer shall itself or through suitable special purpose arrangements, ensure a reliable mechanism for the proper maintenance of the common facilities and security of the FTWZ. (Details can be seen at Paragraph 7A.4 of the Policy).
(i) The scheme envisages duty free import of all goods (except prohibited items, arms and ammunitions, hazardous wastes and SCOMET items) for ware housing. As far as bond towards customs duty on import is concerned, the units would be subject to similar provisions as are applicable to units in SEZs.
(ii) Such goods shall be permitted to be re-sold/re-invoiced or re-exported. Re-export shall be permitted without any restrictions. However export of SCOMET items shall not be permitted except with the permission of Inter-Ministerial Committee.
(iii) These goods shall also be permitted to be sold in the DTA on payment of customs duties as applicable on the date of such sale. Payment of duty will become due only when goods are sold/delivered to DTA and no interest will be charged as in the case of bonded warehouses.
(iv) Packing or re-packing without processing, and labeling as per customer or marketing requirements could be undertaken within the FTWZ.
(v) The maximum period that goods shall be permitted to be warehoused within the FTWZ will be two years, after which they shall necessarily have to be re-exported or sold in the DTA. On expiry of the two year period, customs duties as applicable would automatically become due unless the goods are re-exported within such grace period, not exceeding three months, as may be permitted. (Details can be seen at Paragraph 7A.5 of the Policy).
Entitlement of units
(i) Income Tax exemption as per 80 IA of the Income Tax Act.
(ii) Exemption from Service Tax.
(iii) Free foreign exchange currency transactions would be permitted.
(iv) Other benefits mutatis mutandi as applicable to units in SEZs. (Details can be seen at Paragraph 7A.6 of the Policy).
Units in FTWZs shall be net foreign exchange earners. Net foreign exchange earning shall be calculated cumulatively for every block of five years from the commencement of warehousing and/or trading operations as per formula. applicable for SEZ units. (Details can be seen at Paragraph 7A.7 of the Policy).
Exemption from terminal excise duty where supplies are made against International Competitive Bidding . In other cases , refund of terminal excise duty will be given. (Earlier there was provision for terminal excise duty refund for supplies to projects under ICB. The exemption would provide relief to domestic manufacturers supplying to project through ICB procedures. The ab-initio exemption of terminal excise duty will reduce transaction costs to a great extent). (Details can be seen at Paragraph 8.3(c) of the Policy).
The following definitions have been added/amended in the Foreign Trade Policy:
I. Group Company" means two or more enterprises which, directly or indirectly, are in a position to -
(i) exercise twenty-six per cent. or more of the voting rights in the other enterprise; or
(ii) appoint more than fifty percent, of the members of the board of directors in the other enterprise; or
For the group companies to claim benefits or have their exports counted for benefits to be claimed by another member of the group, the group company should have been in existence atleast 2 years prior to the date of application under any of the export promotion schemes notified in the Policy. (Details can be seen at Paragraph 9.28 of the Policy).
II. "Supporting Manufacturer" means any person who manufactures any product or part/ accessories/ components of that product. The name of the supporting manufacturer as well as the exporter must be endorsed on the export documents. (Details can be seen at Paragraph 9.61 of the Policy).
III. "Third-party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, export documents such as shipping bills etc shall indicate the name of both the manufacturing exporter/manufacturer and third party exporter(s). The BRC, GR declaration , export order and the invoice should be in the name of the third party exporter. (Details can be seen at Paragraph 9.62 of the Policy).
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