Understanding Foreign Trade Policy-Highlights of FTP 2015-20 and Important Ep Schemes

UNDERSTANDING FOREIGN TRADE POLICY OF INDIA
1st April 2015- March 31, 2020
Introduction
The foreign trade policy is also known as commercial policy. It is also
considered as “Gita” “Bible” or “Quran” for an entrepreneur who intends to
venture into a new business or expand and diversify the existing business.
Majority of the information requirements, doubts and clarifications can be
cleared by referring to the Foreign Trade Policy. The following paragraphs
deal with how the foreign trade policy helps an entrepreneur in doing a
business?
Why does a Country Need Foreign Trade Policy?

Every country – be it a developed, developing or an under-developed –
needs a Commercial Policy to achieve the goal of its socio-economic
development. Foreign Trade Policy or Commercial Policy of a country is an
important instrument which governs and monitors the optimum utilization of
country’s natural resources, employment, supply and demand, national
security, and the sovereignty. The primary aim of a nation in framing its
commercial/trade policy is to attain its goals of economic development
keeping in mind its national priorities and international commitments. In
India, the Foreign Trade Policy of India is governed by five Acts, namely (a)
Foreign Trade (Development and Regulation) Act 1992, (b) Indian Customs
Act 1962 and Duty Drawback Rules 1995, (c) The Goods and Services Act
2017 (d) Foreign Exchange Management Act 1999, and (e) Export (Quality
Control and Inspection) Act 1963.
Since the adoption of planned development in 1951 India followed for nearly
four decades a strong inward-oriented policy with a focus on import
substitution industrialization (ISI) strategy. The overemphasis on import
substitution had a very adverse effect on exports. Realising the drawbacks
of the excessively inward-looking trade strategy on the one hand and the
need for modernization and technology up-gradation of the Indian industry
on the other, certain policy measures in the direction of trade liberalization
were initiated in the late seventies and eighties. Besides, to get greater
integration of the Indian economy with the rest of the world a need was felt
to follow the outward-looking trade strategy. Among the number of
Committees set up, the recommendations of the two prominent Committee
namely the Alexander Committee suggested simplification of import licensing
procedure and provided a framework involving a shift in the emphasis from
‘controls’ to ‘development. The Abid Hussain Committee envisaged ‘growth-
led exports’ and stressed upon the need for harmonization of foreign trade
policies with other economic policies arguing for a phased reduction of
effective protection. In line with these recommendations, the Government
© Prepared and compiled by Prof (Dr) R K Wadhwa, Director, Global Business Consultants, and Ex-Prof IIFT & Former 1
Director, IBM, GLA University, Mathura; 2714 Sector 23, Gurgaon-122017; E-mail: rkwadhwa@gmail.com;
www.globalbizconsultants.com
for the first time introduced a three-year long-term import-export policy with
the aim of boosting exports and encouraging efficient import substitution.
In pursuance of its liberalization programme launched in 1991 with the

introduction of New Industrial Policy and other economic/trade reforms, the
Government extended the validity of the Policy from three years to five years
with the announcement of the five-year long term Export Import Policy, on
31 March 1992, coinciding with the Eighth Five Year Plan (1992-97). The
basic objective of a five-year policy was two-fold. It reflects the priorities for
development of the economy as set out in the Five Year Plans.
The current five-year Foreign Trade Policy (2015-20) effective from 1 st April
2015, announced by the NDA Government, is valid till March 31, 2020. The
Policy provides a framework for increasing exports of goods and services as
well as generation of employment and increasing value addition to the
country, in keeping with the ‘Make in India’ vision of Hon’ble Prime Minister
Mr Modi. The focus of the government is to support both the manufacturing
and services sectors, with a special emphasis on improving the ‘ease of doing
business’.
How it Helps?
The foreign trade policy or commercial policy of a country is considered as

“GITA”, “BIBLE” OR “QURAN” for an entrepreneur intending to start an
export-import business. In fact majority of the doubts and clarifications of
an entrepreneur can be solved through the knowledge of the Foreign Trade
Policy.
To cite an example, one of the entrepreneurs got an export order from an

overseas buyer for supply of “Olive green Bags” worth USD 50,000/-. He
was overwhelmed by this order and ignoring the provisions of the home
country’s foreign trade policy he went into procurement of the raw material
and production of the olivegreen bags. When his consignment was ready he
approached the Customs Department for clearance of his goods. As you
know, nothing can be imported or exported from the country without the
customs examination. So when he approached the customs department, the
officials informed him that “Sorry Gentleman, you cannot export ‘olive green
bags’. It is not that the bags cannot be exported but bags of olive green
colour cannot be exported from the country as per policy provision.” When
enquired as to why the olive green bags cannot be exported, he was
informed that the olive green colour is reserved for Indian Military – hence as
per policy provision bags of olive green colour cannot be exported from the
country. The moral of the story is that one must be well conversant with the
provisions of the home country’s policy whether a particular item can be
exported or imported into the country. Had he known this fact he would
have made lot of profits but because of ignorance he could not execute the
export order. That is why it is said “Charity begins at Home”.
Keeping in mind the objective of socio-economic development and the
national priorities, the items of trade are classified into different categories in
the policy. In the Indian context, the items of trade have been put into three
categories viz. (1) Prohibited or Negative List of Items, (2) Restricted Items
or ‘exclusive trading through State Trading Enterprises (STEs)’ as laid down
in Harmonised System of Indian Trade Classification (HSITC) of Exports and
Imports, and (3) the OGL (open general licence or free for export/import but
subject to conditions stipulated in other Acts/Laws for time being in force)
Items. For details of the items placed in each category, please refer to the
Foreign Trade Policy 2015-20 or visit www.dgft.gov.in. and www.ieport.com
Financial and Fiscal Benefits on Exports under the Foreign Trade

Policy
In order to motivate and encourage the entrepreneurs to venture into the

export/import activity, a host of financial and fiscal benefits have been
provided in the Foreign Trade Policy.
Besides, the procedures have been largely simplified. For example:
(a) IEC (Importer-Exporter Code) holders excepting those who

obtained the IEC during 2003-2004 were required to furnish
yearly details of imports/exports made by them in the
preceding year by October 31, 2004. The earlier harsh
provision for making the IEC inoperative in case no
export/import is affected has been dispensed with.
(b) The IEC/e-IEC, e-BRC. In order to reduce transaction cost,
e-IEC, e-BRC can be obtained on line.
(c) Existing Niryat Bandhu Scheme has been galvanized and
repositioned to mentor new and potential exporters as also
to achieve the objectives of ‘Skill India’.
(d) MSME clusters have been identified based on export
potential of products and the density of industries in the
cluster for focused interventions to boost exports
(e) To overcome the challenges being faced by units located in
SEZs – that have witnessed a phenomenal growth in exports
– as also encourage the manufacturing sector in terms of
technology transfer and gainful employment, benefits of
Reward Schemes viz MEIS and SEIS have been extended to
such units located in SEZs.
(f) Trade facilitation and ease of doing business have been the
major focus areas in the current FTP. Major initiatives to
this effect include: (i) reduction in the number of mandatory
documents for exports from and imports into India have
been reduced to three each only; (ii) facility to upload
documents in exporter/importer profile to avoid repeated
submission of such documents; (iii) simplification of Aayat
Niryat Forms to bring in more clarity, remove ambiguities,
and enhance electronic governance, (iv) introduction of an
‘Approved Exporter System’ – wherein manufacturers who
are also status holders will be allowed self-certification of
their manufactured goods in phases to qualify for
preferential treatment under BTAs/RTAs as also faster access
to international markets, and
(g) Fast track clearance facility to manufacturing and exporting
units in 100% EoUs/EHTP/STP/BTPs shall be permitted to
share infrastructural facilities, inter-unit transfer of goods
and services, set-up warehouses near the port of export, and
use duty free equipment for training purposes.
For details of financial, fiscal and export promotion schemes, please refer to
main Foreign Trade Policy and Handbook of Procedures, Vol.I.
HIGHLIGHTS OF FOREIGN TRADE POLICY 2015-20
(Effective from 1st April 2015 valid till 31st March 2020)
A. SIMPLIFICATION & MERGER OF REWARD SCHEMES
Export from India Schemes:
1. Merchandise Exports from India Scheme (MEIS) (a) Earlier

there were 5 different schemes (Focus Product Scheme, Market
Linked Focus Product Scheme, Focus Market Scheme, Agri.
Infrastructure Incentive Scrip, VKGUY) for rewarding
merchandise exports with different kinds of duty scrips with
varying conditions (sector specific or actual user only) attached
to their use. Now all these schemes have been merged into a
single scheme, namely Merchandise Export from India Scheme
(MEIS) and there would be no conditionality attached to the
scrips issued under the scheme.
The main features of MEIS, including details of various groups of

products supported under MEIS and the country groupings are at
Annexure-1. (b) Rewards for export of notified goods to notified
markets under ‘Merchandise Exports from India Scheme (MEIS)
shall be payable as percentage of realized FOB value (in free foreign
exchange).
The debits towards basic customs duty in the transferable reward

duty credit scrips would also be allowed adjustment as duty
drawback. At present, only the additional duty of customs / excise
duty / service tax is allowed adjustment as CENVAT credit or
drawback, as per Department of Revenue rules.
2. Service Exports from India Scheme (SEIS) (a) Served From

India Scheme (SFIS) has been replaced with Service Exports
from India Scheme (SEIS). SEIS shall apply to ‘Service Providers
located in India’ instead of ‘Indian Service Providers’. Thus SEIS
provides for rewards to all Service providers of notified services,
who are providing services from India, regardless of the
constitution or profile of the service provider.
The list of services and the rates of rewards under SEIS are at
Annexure-2. (b) The rate of reward under SEIS would be based on
net foreign exchange earned. The reward issued as duty credit
scrip, would no longer be with actual user condition and will no
longer be restricted to usage for specified types of goods but be
freely transferable and usable for all types of goods and service tax
debits on procurement of services / goods. Debits would be eligible
for CENVAT credit or drawback.
3. Chapter -3 Incentives (MEIS & SEIS) to be available for SEZs It is

now proposed to extend Chapter -3 Incentives (MEIS & SEIS) to
units located in SEZs also. 4. Duty credit scrips to be freely
transferable and usable for payment of custom duty, excise duty
and service tax. (a) All scrips issued under MEIS and SEIS and the
goods imported against these scrips would be fully transferable.
(b) Scrips issued under Exports from India Schemes can be

used for the following:-
(i) Payment of customs duty for import of inputs / goods including

capital goods, except items listed in Appendix 3A. (ii) Payment of
excise duty on domestic procurement of inputs or goods, including
capital goods as per DoR notification. (iii) Payment of service tax on
procurement of services as per DoR notification. (c) Basic Customs
Duty paid in cash or through debit under Duty Credit Scrip can be
taken back as Duty Drawback as per DoR Rules, if inputs so
imported are used for exports.
4. Status Holders (a) Business leaders who have excelled in

international trade and have successfully contributed to country’s
foreign trade are proposed to be recognized as Status Holders and
given special treatment and privileges to facilitate their trade
transactions, in order to reduce their transaction costs and time. (b)
The nomenclature of Export House, Star Export House, Trading
House, Star Trading House, Premier Trading House certificate has
been changed to One, Two, Three, Four, Five Star Export House. (c)
The criteria for export performance for recognition of status holder
have been changed from Rupees to US dollar earnings.
The new criteria for Status Holder recognition is as under:-

New Criteria
Category EP FOB/FOR (as converted) Value in USD
million during current and previous two years
One Star 3
Two Star 25
Three Star 100
Four Star 500
Five Star 2000
© Prepared and compiled by Prof (Dr) R K Wadhwa, Director, Global Business Consultants, and Ex-Prof IIFT & Former Director, 1
IBM, GLA University, Mathura; 2714 Sector 23, Gurgaon-122017; E-mail: rkwadhwa@gmail.com;
(d) Approved Exporter Scheme - Self certification by Status
Holders Manufacturers who are also Status Holders will be enabled to
self-certify their manufactured goods as originating from India with a
view to qualify for preferential treatment under different Preferential
Trading Agreements [PTAs], Free Trade Agreements [FTAs],
Comprehensive Economic Cooperation Agreements [CECAs] and
Comprehensive Economic Partnerships Agreements [CEPAs] which
are in operation. They shall be permitted to self-certify the goods as
manufactured as per their Industrial Entrepreneur Memorandum
(IEM) / Industrial Licence (IL)/ Letter of Intent (LOI).
B. BOOST TO "MAKE IN INDIA"
5. Reduced Export Obligation (EO) for domestic procurement under

EPCG scheme: Specific Export Obligation under EPCG scheme, in
case capital goods are procured from indigenous manufacturers,
which is currently 90% of the normal export obligation (6 times at
the duty saved amount) has been reduced to 75%, in order to
promote domestic capital goods manufacturing industry.
6. Higher level of rewards under MEIS for export items with high
domestic content and value addition. It is proposed to give higher
level of rewards to products with high domestic content and value
addition, as compared to products with high import content and less
value addition.
C. TRADE FACILITATION & EASE OF DOING BUSINESS
7. Online filing of documents/ applications and Paperless

trade in 24x7 environment:
(a) DGFT already provides facility of Online filing of various

applications under FTP by the exporters/importers. However, certain
documents like Certificates issued by Chartered Accountants/
Company Secretary / Cost Accountant etc. have to be filed in
physical forms only. In order to move further towards paperless
processing of reward schemes, it has been decided to develop an
online procedure to upload digitally signed documents by Chartered
Accountant / Company Secretary / Cost Accountant. In the new
system, it will be possible to upload online documents like annexure
attached to ANF 3B, ANF 3C and ANF 3D, which are at present
signed by these signatories and submitted physically.
(b) Henceforth, hardcopies of applications and specified documents

would not be required to be submitted to RA, saving paper as well as
cost and time for the exporters. To start with, applications under
Chapter 3 & 4 of FTP are being covered (which account for nearly
70% of total applications in DGFT). Applications under Chapter-5
would be taken up in the next phase. (c) As a measure of ease of
doing business, landing documents of export consignment as proofs
for notified market can be digitally uploaded in the following
manner:- (i) Any exporter may upload the scanned copy of Bill of
Entry under his digital signature. (ii) Status holders falling in the
category of Three Star, Four Star or Five Star Export House may
upload scanned copies of documents.
8. Online inter-ministerial consultations: It is proposed to have

Online inter-ministerial consultations for approval of export of
SCOMET items, Norms fixation, Import Authorisations, Export
Authorisation, in a phased manner, with the objective to reduce time
for approval. As a result, there would not be any need to submit
hard copies of documents for these purposes by the exporters.
9. Simplification of procedures/processes, digitisation and e-

governance (a) Under EPCG scheme, obtaining and submitting a
certificate from an independent Chartered Engineer, confirming the
use of spares, tools, refractory and catalysts imported for final
redemption of EPCG authorizations has been dispensed with. (b) At
present, the EPCG Authorisation holders are required to maintain
records for 3 years after redemption of Authorisations. Now the
EPCG Authorization Holders shall be required to maintain records for
a period of two years only. Government’s endeavour is to gradually
phase out this requirement as the relevant records such as Shipping
Bills, e-BRC are likely to be available in electronic mode which can be
archived and retrieved whenever required. (c) Exporter Importer
Profile: Facility has been created to upload documents in
Exporter/Importer Profile. There will be no need to submit copies of
permanent records/ documents (e.g. IEC, Manufacturing licence,
RCMC, PAN etc.) repeatedly with each application, once uploaded.
(d) Communication with Exporters/Importers: Certain information,
like mobile number, e-mail address etc. has been added as
mandatory fields, in IEC data base. This information once provided
by exporters, would help in better communication with exporters.
SMS/ email would be sent to exporters to inform them about
issuance of authorisations or status of their applications. (e) Online
message exchange with CBDT and MCA: It has been decided to have
on line message exchange with CBDT for PAN data and with Ministry
of Corporate Affairs for CIN and DIN data. This integration would
obviate the need for seeking information from IEC holders for
subsequent amendments/ updation of data in IEC data base. (e)
Communication with Committees of DGFT: For faster and paperless
communication with various committees of DGFT, dedicated email
addresses have been provided to each Norms Committee, Import
Committee and Pre-Shipment Inspection Agency for faster
communication. (f) Online applications for refunds: Online filing of
application for refund of TED is being 11 introduced for which a new
ANF has been created.
10. Forthcoming e-Governance Initiatives (a) DGFT is currently

working on the following EDI initiatives: (i) Message exchange for
transmission of export reward scrips from DGFT to Customs. (ii)
Message exchange for transmission of Bills of Entry (import details)
from Customs to DGFT. (iii) Online issuance of Export Obligation
Discharge Certificate (EODC). (iv) Message exchange with Ministry of
Corporate Affairs for CIN & DIN. (v) Message exchange with CBDT
for PAN. (vi) Facility to pay application fee using debit card / credit
card. (vii) Open API for submission of IEC application. (viii) Mobile
applications for FTP 12 D. Other new Initiatives
11. New initiatives for EOUs, EHTPs and STPs (a) EOUs, EHTPs,
STPs have been allowed to share infrastructural facilities among
themselves. This will enable units to utilize their infrastructural
facilities in an optimum way and avoid duplication of efforts and cost
to create separate infrastructural facilities in different units. (b) Inter
unit transfer of goods and services have been allowed among EOUs,
EHTPs, STPs, and BTPs. This will facilitate group of those units which
source inputs centrally in order to obtain bulk discount. This will
reduce cost of transportation, other logistic costs and result in
maintaining effective supply chain. (c) EOUs have been allowed
facility to set up Warehouses near the port of export. This will help in
reducing lead time for delivery of goods and will also address the
issue of unpredictability of supply orders. (d) STP units, EHTP units,
software EOUs have been allowed the facility to use all duty free
equipment/goods for training purposes. This will help these units in
developing skills of their employees. (e) 100% EOU units have been
allowed facility of supply of spares/ components up to 2% of the
value of the manufactured articles to a buyer in domestic market for
the purpose of after sale services. (f) At present, in a period of 5
years EOU units have to achieve Positive Net Foreign Exchange
Earning (NEE) cumulatively. Because of adverse market condition or
any ground of genuine hardship, then such period of 5 years for NFE
completion can be extended by one year. (f) Time period for validity
of Letter of Permission (LOP) for EOUs/EHTP/ STPI/BTP Units has
been revised for faster implementation and monitoring of projects.
Now, LOP will have an initial validity of 2 years to enable the unit to
construct the plant and install the machinery. Further extension can
be granted by the Development Commissioner up to one year.
Extension beyond 3 years of the validity of LOP, can be granted, in
case unit has completed 2/3rd of activities, including the
construction activities. (g) At present, EOUs/EHTP/STPI units are
permitted to transfer capital goods to other EOUs, EHTPs, STPs, SEZ
units. Now a facility has been provided that if such 14 transferred
capital goods are rejected by the recipient, then the same can be
returned to the supplying unit, without payment of duty. (h) A
simplified procedure will be provided to fast track the de-bonding /
exit of the STP/ EHTP units. This will save time for these units and
help in reduction of transaction cost. (i) EOUs having physical export
turnover of Rs.10 crore and above, have been allowed the facility of
fast track clearances of import and domestic procurement. They will
be allowed fast tract clearances of goods, for export production, on
the basis of preauthenticated procurement certificate, issued by
customs / central excise authorities. They will not have to seek
procurement permission for every import consignment.
12. Facilitating & Encouraging Export of dual use items

(SCOMET). (a) Validity of SCOMET export authorisation has been
extended from the present 12 months to 24 months. It will help
industry to plan their activity in an orderly manner and obviate the
need to seek revalidation or relaxation from DGFT. (b) Authorisation
for repeat orders will be considered on automatic basis subject to
certain conditions. (c) Verification of End User Certificate (EUC) is
being simplified if SCOMET item is being exported under Defence
Export Offset Policy. (c) Outreach programmes will be conducted at
different locations to raise awareness among various stakeholders.
13 Facilitating & Encouraging Export of Defence Exports (a)

Normal export obligation period under advance authorization is 18
months. Export obligation period for export items falling in the
category of defence, military store, aerospace and nuclear energy
shall be 24 months from the date of issue of authorization or co-
terminus with contracted duration of the export order, whichever is
later. This provision will help export of defence items and other high
technology items. (b) A list of military stores requiring NOC of
Department of Defence Production has been notified by DGFT
recently. A committee has been formed to create ITC (HS) codes for
defence and security items for which industrial licenses are issued by
DIPP.
14. e-Commerce Exports (a) Goods falling in the category of

handloom products, books / periodicals, leather footwear, toys and
customized fashion garments, having FOB value up to Rs.25000 per
consignment (finalized using eCommerce platform) shall be eligible
for benefits under FTP. Such goods can be exported in manual mode
through Foreign Post Offices at New Delhi, Mumbai and Chennai. (b)
Export of such goods under Courier Regulations shall be allowed
manually on pilot basis through Airports at Delhi, Mumbai and
Chennai as per appropriate amendments in regulations to be made
by Department of Revenue. Department of Revenue shall fast track
the implementation of EDI mode at courier terminals.
15. Duty Exemption (a) Imports against Advance Authorization

shall also be eligible for exemption from Transitional Product Specific
Safeguard Duty. (b) In order to encourage manufacturing of capital
goods in India, import under EPCG Authorisation Scheme shall not be
eligible for exemption from payment of anti-dumping duty, safeguard
duty and transitional product specific safeguard duty.
16. Additional Ports allowed for Export and import Calicut Airport,
Kerala and Arakonam ICD, Tamil Nadu have been notified as
registered ports for import and export.
17. Duty Free Tariff Preference (DFTP) Scheme India has

already extended duty free tariff preference to 33 Least Developed
Countries (LDCs) across the globe. This is being notified under FTP.
18. Quality complaints and Trade Disputes (a) In an endeavour

to resolve quality complaints and trade disputes, between exporters
and importers, a new chapter, namely, Chapter on Quality
Complaints and Trade Disputes has been incorporated in the Foreign
Trade Policy. (b) For resolving such disputes at a faster pace, a
Committee on Quality Complaints and Trade Disputes (CQCTD) is
being constituted in 22 offices and would have members from
EPCs/FIEOs/APEDA/EICs.
19. Vishakhapatnam and Bhimavaram added as Towns of

Export Excellence Government has already recognized 33 towns as
export excellence towns. It has been decided to add Vishakhapatnam
and Bhimavaram in Andhra Pradesh as towns of export excellence
(Product Category– Seafood)
I. Merchandise Exports from India Scheme(MEIS)
(i) Merchandise Exports from India Scheme has replaced 5 different

schemes of earlier FTP (Focus Product Scheme, Market Linked Focus
Product Scheme, Focus Market Scheme, Agri. Infrastructure
Incentive Scrip, VKGUY) for rewarding merchandise exports which
had varying conditions (sector specific or actual user only) attached
to their use. (ii) Now all these schemes have been merged into a
single scheme, namely Merchandise Export from India Scheme
(MEIS) and there would be no conditionality attached to the scrips
issued under the scheme. Notified goods exported to notified
markets would be rewarded on realised FOB value of exports.
A. Country Groups:
Category A: Traditional Markets (30) - European Union (28), USA,

Canada.
Category B: Emerging & Focus Markets (139), Africa (55), Latin

America and Mexico (45), CIS countries (12), Turkey and West Asian
countries (13), ASEAN countries (10), Japan, South Korea, China,
Taiwan,
Category C: Other Markets (70).
B. Products supported under MEIS Level of Support: Higher

rewards have been granted for the following category of products:
Agricultural and Village industry products, presently covered under
VKGUY. Value added and packaged products. Eco-friendly and
green products that create wealth out of waste from agricultural
and other waste products that generate additional income for the
farmers, while improving the environment. Labour intensive
Products with large employment potential and Products with large
number of producers and /or exporters. Industrial Products from
potential winning sectors. Hi-tech products with high export
earning potential.
C. Markets Supported Most Agricultural products supported

across the Globe. Industrial and other products supported in
Traditional and/or Emerging markets only.
D. High potential products not supported earlier: Support to

852 Tariff lines that fit in the product criteria but not provided
support in the earlier FTP. Includes lines from Fruits, Vegetables,
Dairy products, Oils meals, Ayush & Herbal Products, Paper, Paper
Board Products.
E. Global support has been granted to the following category:

Fruits, Flowers, vegetables Tea Coffee, Spices Cereals
preparation, shellac, Essential oils Processed foods, Eco Friendly
products that add value to waste Marine Products Handloom,
Coir, Jute, products and Technical Textiles, Carpets Handmade.
Other Textile and Readymade garments have been supported for
European Union, USA, Canada and Japan. Handicraft, Sports
Goods Furniture, wood articles
F. Support to major markets have been given to the following

product categories Pharmaceuticals, Herbals, Surgicals 22
Industrial Machinery, IC Engine, Machine tools, Parts, Auto
Components/Parts Hand Tools, Pumps of All Types Automobiles,
Two wheelers, Bicycles, Ships, Planes Chemicals, Plastics
Rubber, Ceramic and Glass Leather garments, saddlery items,
footwear Steel furniture, Prefabs, Lighters Wood , Paper,
Stationary iron, steel, and base metals, products
G. Other sectors supported under MEIS 352 Defence related

Product with export of US$ 17.7B consisting of Core Products (20),
Dual Use products (60) ,General Purpose products (272). 283
Pharmaceutical products of Bulk Drugs & Drug Intermediates, Drug
Formulations Biologicals, Herbal, Surgicals, and Vaccines. 96 lines of
Environment related Goods, Machinery, Equipment’s. 49 lines
where mandatory BIS standards are prescribed. 7 lines of
Technical Textiles.
H. Participation in global value chain of the items falling

under the scheme: 1725 lines of Intermediate Goods - These
goods become inputs in the manufacturing 23 of other countries and
will strengthen backward manufacturing linkages which is vital for
India’s participation in Global Value Chains. 1109 lines of Capital
Goods sector- will also strengthen Manufacturing Base in India.
1730 lines of Consumer Goods sector- We hope a quantum jump in
export from this sector with strengthening of Make in India Brand in
near future.
I. Technology based analysis: 572 lines-Low skill Technology-

intensive manufacturing. 1010 lines-Medium skill
Technologyintensive manufacturing. 1309 lines-High Skill
Technology-intensive manufacturing.
J. Women Centric Products supported under MEIS
(a) Women workers constitute 52% of plantation workers-203 lines

of Tea Coffee, Spices, Cashew.
(b) 69% of the aggregate female employment is concentrated in the
following sectors: (i) Manufacture of other food products - Jelly
Confectionery, tomato ketchup, cooked stuffed pasta, pawa, mudi
and the like, gingerbread , papad, pastries and cakes. (ii)
Manufacture of wearing apparel-396 lines of Readymade Garments
(c) Sectors that have a significant proportion of female employment

(more than 25%): (i) Agricultural and animal husbandry service
activities, except veterinary activities– 263 lines of basic Agriculture
products. (ii) Manufacture of footwear – 28 Footwear and Leather
products. (iii) Consumer Electronics and Electronic Components,
watches and clocks -483 lines.
Services Exports from India Scheme (SEIS)
(i) Served from India Scheme (SFIS) has been replaced with Service
Exports from India Scheme (SEIS). SEIS shall apply to `Service
Providers’ located in India’ instead of `Indian Service Providers’.
Thus SEIS provides for rewards to all Service providers of notified
services, who are providing services from India, regardless of the
constitution or profile of the service provider. (ii) The rate of reward
under SEIS would be based on net foreign exchange earned. The
reward issued as duty credit scrip, would no longer be with actual
user condition and will no longer be restricted to usage for specified
types of goods but be freely transferable and usable for all types of
goods and service tax debits on procurement of services/goods.
Debits would be eligible for CENVAT credit or drawback. (iii) The
present rates of reward are 3% and 5%. The list of services and the
rates of rewards would be reviewed after 30.9.2015. Sl No SECTORS
Admissible rate
1. BUSINESS SERVICES
A Professional services Legal services, Accounting, auditing and

bookkeeping services, Taxation services, Architectural services ,
Engineering services, Integrated engineering services, Urban
planning and landscape architectural services, Medical and dental
services, Veterinary services, Services provided by midwives, nurses,
physiotherapists and paramedical personnel. 5%
B Research and development services R&D services on natural

sciences, R&D services on social sciences and humanities,
Interdisciplinary R&D services 5%
C. Rental/Leasing services without operators Relating to ships,
Relating to aircraft, Relating to other transport equipment, Relating
to other machinery and equipment 5% D Other business services
Advertising services, Market research and public opinion polling
services Management consulting service, Services related to
management consulting, Technical testing and analysis services,
Services incidental to agricultural, hunting and forestry, Services
incidental to fishing, Services incidental to mining, Services 3%
incidental to manufacturing, Services incidental to energy
distribution, Placement and supply services of personnel,
Investigation and security, Related scientific and technical consulting
services, Maintenance and repair of equipment (not including
maritime vessels, aircraft or other transport equipment),
Buildingcleaning services, Photographic services, Packaging services,
Printing, publishing and Convention services
2 COMMUNICATION SERVICES Audiovisual services Motion picture

and video tape production and distribution service, Motion picture
projection service, Radio and television services, Radio and television
transmission services, Sound recording 5%
3 CONSTRUCTION AND RELATED ENGINEERING SERVICES General

Construction work for building, General Construction work for Civil
Engineering, Installation and assembly work , Building completion
and finishing work 5%
4 EDUCATIONAL SERVICES (Please refer Note 1) Primary education

services, Secondary education services, Higher education services,
Adult education 5%
5 ENVIRONMENTAL SERVICES Sewage services, Refuse disposal

services, Sanitation and similar services 5%
6 HEALTH-RELATED AND SOCIAL SERVICES Hospital services 5%
7 TOURISM AND TRAVEL-RELATED SERVICES A. Hotels and

Restaurants (including catering) a. Hotel 3% b. Restaurants
(including catering) 3% B. Travel agencies and tour operators
services 5% C. Tourist guides services 5%
8 RECREATIONAL, CULTURAL AND SPORTING SERVICES (other than

audiovisual services) Entertainment services (including theatre, live
bands and circus services), News agency services, Libraries,
archives, museums and other cultural services, Sporting and other
recreational services 5% 9 TRANSPORT SERVICES (Please refer Note
2)
A. Maritime Transport Services Passenger transportation*, Freight

transportation* , Rental of vessels with crew *, Maintenance and
repair of vessels, Pushing and towing services, Supporting services
for maritime transport 5%
B. Air transport services Rental of aircraft with crew, Maintenance

and repair of aircraft, Airport Operations and ground handling 5%
C Road Transport Services Passenger transportation, Freight

transportation, Rental of Commercial vehicles with operator,
Maintenance and repair of road transport equipment, Supporting
services for road transport services 5% D. Services Auxiliary To All
Modes Of Transport. Cargo-handling services, Storage and
warehouse services, Freight transport agency services 5% Note: (1)
Under education services, SEIS shall not be available on Capitation
fee. (2) *Operations from India by Indian Flag Carriers only is
allowed under Maritime transport services.
MAJOR SCHEMES ANNOUNCED BY DEPARTMENT OF COMMERCE, GOI
TO BENEFIT EXPORTERS
I. MARKET DEVELOPMENT ASSISTANCE (MDA) SCHEME

(Revised upto 2013)
Objectives:
(i) Assist exporters for export promotion activities abroad

(ii) Assist Export Promotion Councils (EPCs) to undertake export promotion
activities for their product(s) and commodities
(iii) Assist approved organizations/trade bodies in undertaking exclusive
nonrecurring innovative activities connected with export promotion
efforts for their members
(iv) Assist Focus export promotion programmes in specific regions abroad
like FOCUS (LAC), Focus (Africa), Focus (CIS) and Focus (ASEAN + 2)
programmes.
(v) Residual essential activities connected with marketing promotion
efforts abroad.
Who is Eligible?
• Exporting companies with an f.o.b. value of exports of upto Rs. 30

crore in the preceding year will be eligible for MDA assistance for
participation in trade delegations/BSMs/fairs/ exhibitions abroad to
explore new markets for export of their specific product(s) and
commodities from India in the initial phase.
• This will be subject to the condition that the exporter is having complete
12 months membership with concerned EPC etc. and filing of returns
with concerned EPC/organisation regularly.
• However, this condition would not apply in case of a new EPC for a
period of 5 years from the date of its creation.
• No such ceiling is applicable for participation in Focus LAC
region.
Financial Assistance to Exporters for participation in Overseas Trade Fairs and Exhibitions
under MDA Scheme
S.No. Area/Sector No. ofMaximum Financial ceiling per event
Visits
(1) (2) (4)
(3)
1. Focus LAC 1 Rs 2,50,000
2. Focus Africa (incl1 Rs. 2,00,000

WANA Countries)
3. Focus CIS 1 Rs. 2,00,000

4. Focus ASEAN + 2 1 Rs. 2,00,000
5 General Areas 1 Rs. 1,50,000
The participation of individual companies in the above activities shall

be subject to the following conditions:
(1) For EPC etc. led Trade Delegations/BSMs only air-fare by Economy
Excursion class upto a maximum of Rs. 70,000 (Rs. 1,00,000 in case of
Focus LAC) shall be permissible. For participation in Trade Fairs/ Exhibitions
reimbursement shall be permissible subject to ceilings mentioned in the
column 4 in the above table.
(2) Maximum number of permissible participations shall be five in a financial

year as indicated in above table (No travel grant is permissible for visit to
General Areas).
However, for priority sectors, having large employment generation potential,

viz. Agriculture including food items, Handicrafts, Handlooms, Carpets, Leather
& Minor Forest Produce including LAC, 2 (two) participations in General Areas
would be admissible with the assistance of Rs. 1,50,000 for each participation.
The exporters availing of assistance under this provision would, however, be in
addition to these participations, eligible for only any 2 Focus Area
participations.
(c) Assistance shall be permissible to one regular employee/director/
partner/proprietor of the company. Assistance would not be available to
exporter of foreign nationality or holding foreign passport.
(d) Intimation application must be received in the concerned EPC etc. with a
minimum of 14 days clear advance notice excluding the date of receipt of
application in the office of the concerned organization and the date of
departure from the country.
(e) The company shall not be under investigation/charged/prosecuted/
debarred/black listed under the Foreign Trade Policy of India or any other law
relating to export and import business.
(f) Member exporters of EPCs etc. would also be eligible for MDA assistance for
participation in events organized by ITPO abroad. Their applications / claims
would by routed/reimbursed through concerned EPC etc.
(g) Maximum MDA assistance shall be inclusive of MDA assistance received
from all Govt. bodies/FIEO/EPCs/Commodity Boards/Export Development
Authorities/ITPO etc.,
(h) A Maximum of three participations in a particular trade fair/exhibition
would be eligible for MDA assistance and exporting companies after availing
assistance three times including past cases for a particular fair/exhibition,
have to participate in that fair, if any, on self-financing basis.
(i) EPCs shall display the details of participants in each fairs/events
organized/participated by them and their year-wise export status on
their website.
Funds for reimbursement to individual exporters shall be released

only when 90% of the first installment has been utilized and a
utilisation certificate to this effect has been submitted by the
concerned organisation.
Settlement of Claims
• Claim forms duly filled in and complete in all respects be submitted to

concerned EPC/FIEO within 90 days of return from the fair
• 10% deduction in the claim would be done if claim submitted within 30
days after expiry of 90 days
• No claim would be entertained if submitted after expiry of 120 days
II. MARKET ACCESS INITIATIVE (MAI) SCHEME
• An Export Promotion Scheme envisaged to act as a catalyst to promote

India’s export on a sustained basis.
• Assistance would be provided to Export Promotion Organizations/ Trade
Promotion Organizations/ National Level Institutions/ Research
Institutions/ Universities/ Laboratories, Exporters, etc., for
enhancement of export through accessing new markets or through
increasing the share in the existing markets.
Activities for which Financial Assistance under MAI is available:
a) Marketing Projects Abroad
• a) Opening of Showrooms & Warehouses;

• b) Organising “Trade Festival of India” – a multi-sectoral event to be
organised in select centers abroad to promote ‘Brand India’ by
showcasing our strength in services like Health (Ayurveda & Yoga),
Taste of India (Indian Cuisine), Tourism, Culture, etc., besides
merchandise;
• c) National Level Participation in Major International Trade Fairs etc.;
• d) Display in International departmental stores;
• e) Publication of World Class Catalogues;
• f) Publicity Campaign and Brand Promotion;
• g) Research and Product Development;
• h) To support Recognized associations in Industrial clusters for

marketing abroad;
• i) Reverse visits of the prominent buyers, etc., from the project focus
countries.
b) Capacity Building
• For imparting training to the Indian Exporters w.r.t. to export in general

and on specific region/country basis;
• For up-gradation/improvements in Laboratories, Universities, Research
Institutions on stand alone or Public Private Partnership basis for
fulfilling SPS measures/related testing etc. including reimbursement of
testing charges
• For quality up-gradation of select products for export markets (by skill
upgradation using experts/designers, production process improvements,
reduction in rejections etc.)
• For developing Common facility centers; design centers; packaging, etc.
• For hiring consultants in the buyer/prospective country
c) Support for Statutory Compliance
1. Charges/expenses for compliance of statutory requirements in the buyer

country including Testing charges for engineering products abroad;
Registration charges for product registration abroad for
pharmaceuticals, bio-technology and agro-chemicals clinical trials for
drugs/pharmaceuticals & medical disposables, medical equipment etc.
2. Other commodities/product groups and the nature of compliance
covered for reimbursement under the scheme shall be as approved by
the Empowered Committee on a case to case basis.
3. For contesting litigation(s) in the foreign country concerning

restrictions/anti dumping duties etc. on particular product(s) of Indian
origin. The commodity/ product groups, nature of litigation to be
supported and the extent of support shall be as decided by the
Empowered Committee on a case to case basis.
d) Studies
• Market studies/survey for evolving proper marketing strategies;

• Export Potential Survey of the States;
• Projects/Study which further the objectives of the schemes;
• WTO studies for evolving WTO compatible strategy;
• All Trade related studies including Joint Study Group(JSG), Free Trade
Agreement(FTA), Regional Trade Agreement(RTA) studies etc. Only
specific markets studies would be undertaken and these studies would
be entrusted to reputed professional organizations
e) Project Development
• To generate focussed projects leading to substantial improvement in

market access, a shelf of projects shall be prepared by engaging
reputed professional organisations. A special focus would be on
preparation of projects pertaining to priority sectors and sectors having
substantial employment generation potential.
f) Miscellaneous
• Developing Foreign Trade Facilitation web Portal (data bases and
systems for dissemination of information (electronic or otherwise to
Indian Exporters);
• To support Cottage and handicrafts units;
Who is Eligible?
• Departments of Central Government and Organisation of Central/ State

Governments including Indian Missions abroad
• Export Promotion Councils
• Registered Trade Promotion Organisation
• Commodity Boards
• Apex Trade Bodies recognized under Foreign Trade Policy of

Government of India
• Recognised Industrial & Artisan Clusters
• Individual Exporters (only for statutory compliance etc.)
• National Level Institutions (e.g. Indian Institute of Technologies (IITs),

Indian Institute of Management (IIMs), National Institute of Designs
(NIDs), NIFT etc.) Research Institutions/ Universities/Recognized
laboratories, etc.
Sanction Criteria
1. Market Access Initiatives (MAI) Scheme is based on Focus country-

product approach and the eligible agencies should formulate a
comprehensive project for market access on the basis of Focus-Country
Focus – Product approach. The project should be for a particular product
for a particular market for the period of 2-3 years so as to get the
maximum result.
2. The proposal should not duplicate the efforts of any existing activity or
organization in the same field.
3. The assistance under the Scheme for activities under the project will not
be provided for which assistance under MDA has already been
sanctioned.
4. The funding for the project will be on cost-sharing basis. However, the
Empowered Committee may consider for enhancement or curtailment of
the level of assistance on the merit of the project
Level of Assistance
Varies from activity to activity – 25% to 100%
III. MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS) AND

SERVICES EXPORT FROM INDIA (SEIS)
(FTP 2015-20)
MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS)
Objective
Objective of Merchandise Exports from India Scheme (MEIS) is to offset

infrastructural inefficiencies and associated costs involved in export of
goods/products, which are produced/manufactured in India, especially
those having high export intensity, employment potential and thereby
enhancing India’s export competitiveness.
Entitlement under MEIS Exports of notified goods/products with ITC[HS]

code, to notified markets as listed in Appendix 3B, shall be rewarded
under MEIS. Appendix 3B also lists the rate(s) of rewards on various
notified products [ITC (HS) code wise]. The basis of calculation of
reward would be on realised FOB value of exports in free foreign
exchange, or on FOB value of exports as given in the Shipping Bills in
free foreign exchange, whichever is less, unless otherwise specified.
Export of goods through courier or foreign post offices using e-
Commerce (i) Exports of goods through courier or foreign post office
using e-commerce, as notified in Appendix 3C, of FOB value upto Rs.
25000 per consignment shall be entitled for rewards under MEIS. (ii) If
the value of exports using e-commerce platform is more than Rs 25000
per consignment then MEIS reward would be limited to FOB value of
Rs.25000 only. (iii) Such goods can be exported in manual mode
through Foreign Post Offices at New Delhi, Mumbai and Chennai. (iv)
Export of such goods under Courier Regulations shall be allowed
manually on pilot basis through Airports at Delhi, Mumbai and Chennai
as per appropriate amendments in regulations to be made by
Department of Revenue. Department of Revenue shall fast track the
implementation of EDI mode at courier terminals.
Ineligible categories under MEIS
The following exports categories /sectors shall be ineligible for Duty

Credit Scrip entitlement under MEIS (i) EOUs / EHTPs / BTPs/ STPs who
are availing direct tax benefits / exemption. (ii) Supplies made from
DTA units to SEZ units (iii) Export of imported goods covered under
paragraph 2.46 of FTP; (iv) Exports through trans-shipment, meaning
thereby exports that are originating in third country but transshipped
through India; (v) Deemed Exports; (vi) SEZ/EOU/EHTP/BPT/FTWZ
products exported through DTA units; (vii) Items, which are restricted
or prohibited for export under Schedule-2 of Export Policy in ITC (HS),
unless specifically notified in Appendix 3B. (viii)Service Export. (ix) Red
sanders and beach sand. (x) Export products which are subject to
Minimum export price or export duty. (xi) Diamond Gold, Silver,
Platinum, other precious metal in any form including plain and studded
jewellery and other precious and semi-precious stones. (xii) Ores and
concentrates of all types and in all formations. (xiii) Cereals of all types.
(xiv) Sugar of all types and all forms. (xv) Crude / petroleum oil and
crude / primary and base products of all types and all formulations.
(xvi) Export of milk and milk products. (xvii)Export of Meat and Meat
Products. (xviii)Products wherein precious metal/diamond are used or
Articles which are studded with precious stones. (xix) Exports made by
units in FTWZ.
SERVICE EXPORTS FROM INDIA SCHEME (SEIS)
Objective
Objective of Service Exports from India Scheme (SEIS) is to encourage
export of notified Services from India.
Eligibility
(a) Service Providers of notified services, located in India, shall be

rewarded under SEIS, subject to conditions as may be notified. Only
Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of
this policy shall be eligible. The notified services and rates of rewards
are listed in Appendix 3D. (b) Such service provider should have
minimum net free foreign exchange earnings of US$15,000 in preceding
financial year to be eligible for Duty Credit Scrip. For Individual Service
Providers and sole proprietorship, such minimum net free foreign
exchange earnings criteria would be US$10,000 in preceding financial
year. (c) Payment in Indian Rupees for service charges earned on
specified services, shall be treated as receipt in deemed foreign
exchange as per guidelines of Reserve Bank of India. The list of such
services is indicated in Appendix 3E. (d) Net Foreign exchange earnings
for the scheme are defined as under: Net Foreign Exchange = Gross
Earnings of Foreign Exchange minus Total expenses / payment /
remittances of Foreign Exchange by the IEC holder, relating to service
sector in the Financial year. (e) If the IEC holder is a manufacturer of
goods as well as service provider, then the foreign exchange earnings
and Total expenses / payment / remittances shall be taken into account
for service sector only. (f) In order to claim reward under the scheme,
Service provider shall have to have an active IEC at the time of
rendering such services for which rewards are claimed.
Ineligible categories under SEIS
(1) Foreign exchange remittances other than those earned for rendering
of notified services would not be counted for entitlement. Thus, other
sources of foreign exchange earnings such as equity or debt
participation, donations, receipts of repayment of loans etc. and any
other inflow of foreign exchange, unrelated to rendering of service,
would be ineligible. (2) Following shall not be taken into account for
calculation of entitlement under the scheme (a) Foreign Exchange
remittances: I. Related to Financial Services Sector (i) Raising of all
types of foreign currency Loans; (ii) Export proceeds realization of
clients; (iii) Issuance of Foreign Equity through ADRs / GDRs or other
similar instruments; (iv) Issuance of foreign currency Bonds; (v) Sale of
securities and other financial instruments; (vi) Other receivables not
connected with services rendered by financial institutions; and II.
Earned through contract/regular employment abroad (e.g. labour
remittances); (b) Payments for services received from EEFC Account;
(c) Foreign exchange turnover by Healthcare Institutions like equity
participation, donations etc. (d) Foreign exchange turnover by
Educational Institutions like equity participation, donations etc. (e)
Export turnover relating to services of units operating under SEZ /
EOU / EHTP / STPI / BTP Schemes or supplies of services made to such
units; (f) Clubbing of turnover of services rendered by SEZ / EOU /EHTP
/ STPI / BTP units with turnover of DTA Service Providers; (g) Exports
of Goods. (h) Foreign Exchange earnings for services provided by
Airlines, Shipping lines service providers plying from any foreign
country X to any foreign country Y routes not touching India at all. (i)
Service providers in Telecom Sector.
Entitlement under SEIS
Service Providers of eligible services shall be entitled to Duty Credit

Scrip at notified rates (as given in Appendix 3D) on net foreign
exchange earned.
Remittances through Credit Card and other instruments for MEIS and
SEIS Free Foreign Exchange earned through international credit cards
and other instruments, as permitted by RBI shall also be taken into
account for computation of value of exports.
Effective date of schemes (MEIS and SEIS) The schemes shall come into
force with effect from the date of notification of this Policy, i.e. the
rewards under MEIS/SEIS shall be admissible for exports made/services
rendered on or after the date of notification of this Policy
SPECIAL PROVISIONS UNDER MEIS AND SEIS SCHEMES
(a) Government reserves the right in public interest, to specify export

products or services or markets, which shall not be eligible for
computation of entitlement of duty credit scrip. (b) Government
reserves the right to impose restriction / change the rate/ceiling on
Duty Credit Scrip under this chapter. (c) Government may also notify
goods in Appendix 3A which shall not be allowed for debiting through
Duty Credit Scrips in case of import. (d) Government may prescribe
value cap of any kind for a product(s) or limit total reward per IEC
holder under this chapter at any time. Common Provisions for Exports
from India Schemes (MEIS and SEIS) Transitional Arrangement For the
goods exported or services rendered upto the date of notification of this
Policy, which were otherwise eligible for issuance of scrips under
erstwhile Chapter 3 of the earlier Foreign Trade Policy(ies) and scrip is
applied / issued on or after notification of this Policy against such export
of goods or services rendered, the then prevailing policy and procedure
regarding eligibility, entitlement, transferability, usage of scrip and any
other condition in force at the time of export of goods or rendering of
the services, shall be applicable to such scrips.
CENVAT/ Drawback Additional Customs duty/excise duty/Service Tax

paid in cash or through debit under Duty Credit scrip shall be adjusted
as CENVAT Credit or Duty Drawback as per DoR rules or notifications.
Basic Custom duty paid in cash or through debit under Duty Credit scrip
shall be adjusted for Duty Drawback as per DoR rules or notifications.
3.16 Import under lease financing Utilization of Duty Credit Scrip shall
be permitted for payment of duty in case of import of capital goods
under lease financing in terms of provision in paragraph 2.34 of FTP.
Transfer of export performance (a) Transfer of export performance

from one IEC holder to another IEC holder shall not be permitted. Thus,
a shipping bill containing name of applicant shall be counted in export
performance / turnover of applicant only if export proceeds from
overseas are realized in applicant’s bank account and this shall be
evidenced from e - BRC / FIRC. (b) However, MEIS, rewards can be
claimed either by the supporting manufacturer (along with disclaimer
from the company / firm who has realized the foreign exchange directly
from overseas) or by the company/ firm who has realized the foreign
exchange directly from overseas.
Facility of payment of custom duties in case of E.O. defaults and fee

through duty credit scrips (a) Duty Credit Scrip can be utilised / debited
for payment of Custom Duties in case of EO defaults for Authorizations
issued under Chapters 4 and 5 of this Policy. Such utilization /usage
shall be in respect of those goods which are permitted to be imported
under the respective reward schemes. However, penalty / interest shall
be required to be paid in cash. (b) Duty credit scrips can also be used
for payment of composition fee under FTP, for payment of application
fee under FTP, if any and for payment of value shortfall in EO under
para 4.49 of HBP 2015-20
IV. DUTY EXEMPTION/REMISSION SCHEMES
(A) ADVANCE AUTHORISATION
Advance Authorisation
(a) Advance Authorisation is issued to allow duty free import of input,

which is physically incorporated in export product (making normal
allowance for wastage). In addition, fuel, oil, catalyst which is
consumed / utilised in the process of production of export product, may
also be allowed.
(b) Advance Authorisation is issued for inputs in relation to resultant

product, on the following basis:
(i) As per Standard Input Output Norms (SION) notified

(available in Hand Book of Procedures); OR
(ii) On the basis of self declaration as per paragraph 4.07
of Handbook of Procedures.
Advance Authorisation for Spices Duty free import of spices covered

under Chapter-9 of ITC (HS) shall be permitted only for activities like
crushing / grinding / sterilization / manufacture of oils or oleoresins.
Authorisation shall not be available for simply cleaning, grading, re-
packing etc.
Eligible Applicant / Export / Supply (a) Advance Authorisation can

be issued either to a manufacturer exporter or merchant exporter tied
to supporting manufacturer. (b) Advance Authorisation for
pharmaceutical products manufactured through Non-Infringing (NI)
process (as indicated in paragraph 4.18 of Handbook of Procedures)
shall be issued to manufacturer exporter only. (c) Advance
Authorisation shall be issued for: (i) Physical export (including export to
SEZ); (ii) Intermediate supply; and/or (iii) Supply of goods to the
categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of
this FTP. (iv) Supply of ‘stores’ on board of foreign going vessel /
aircraft, subject to condition that there is specific Standard Input Output
Norms in respect of item supplied.
Advance Authorisation for Annual Requirement (i) Advance

Authorisation for Annual Requirement shall only be issued for items
notified in Standard Input Output Norms (SION), and it shall not be
available in case of adhoc norms under paragraph 4.03 (b)(ii) of FTP.
(ii) Advance Authorisation for Annual Requirement shall also not be
available in respect of SION where any item of input appears in
Appendix 4-J.
Eligibility Condition to obtain Advance Authorisation for Annual

Requirement (i) Exporters having past export performance (in at least
preceding two financial years) shall be entitled for Advance
Authorisation for Annual requirement. (ii) Entitlement in terms of CIF
value of imports shall be upto 300% of the FOB value of physical export
and / or FOR value of deemed export in preceding financial year or Rs 1
crore, whichever is higher.
Value Addition Value Addition for the purpose of this Chapter (except
for Gems and Jewellery sector for which value addition is prescribed in
paragraph 4.38 of FTP) shall be:-
A-B
VA = ----------- x 100, where
B
A = FOB value of export realized / FOR value of supply received. B =
CIF value of inputs covered by Authorisation, plus value of any other
input used on which benefit of DBK is claimed or intended to be
claimed.
Minimum Value Addition (i) Minimum value addition required to be

achieved under Advance Authorisation is 15%. (ii) Export Products
where value addition could be less than 15% are given in Appendix 4D.
(iii) For physical exports for which payments are not received in freely
convertible currency, value addition shall be as specified in Appendix
4C. (iv) Minimum value addition for Gems & Jewellery Sector is given in
paragraph 4.61 of Handbook of Procedures. (v) In case of Tea,
minimum value addition shall be 50%.
Import of Mandatory Spares Import of mandatory spares which are

required to be exported / supplied with the resultant product shall be
permitted duty free to the extent of 10% of CIF value of Authorisation.
Ineligible categories of import on Self Declaration basis (a)

Import of following products shall not be permissible on self-declaration
basis: (i) All vegetable / edible oils classified under Chapter-15 and all
types of oilseeds classified under Chapter-12 of ITC (HS) book; (ii) All
types of cereals classified under Chapter–10 of ITC (HS) book; (iii) All
Spices other than light black pepper (light berries) having a basic
customs duty of more than 30%, classified under Chapter-9 and 12 of
ITC (HS) book; (iv) All types of fruits/ vegetables having a duty of more
than 30%, classified under Chapter-7 and Chapter-8 of ITC (HS) book;
(v) Horn, hoof and any other organ of animal; (vi) Honey; (vii) Rough
Marble Blocks/Slabs; and (viii) Rough Granite. (ix) Vitamins except for
use in pharmaceutical industry. (b) For export of perfumes, perfumery
compounds and various feed ingredients containing vitamins, no
Authorisation shall be issued by Regional Authority under paragraph
4.07 of Handbook of Procedures and applicants shall be required to
apply under paragraph 4.06 of Hand Book of Procedures to the Norms
Committee. (c) Where export and/or import of biotechnology items and
related products are involved, Authorisation under paragraph 4.07 of
Handbook of Procedures shall be issued by Regional Authority only on
submission of a “No Objection Certificate” from Department of
Biotechnology.
Accounting of Input (i) Wherever SION permits use of either (a) a

generic input or (b) alternative input, unless the name of the specific
input [which has been used in manufacturing the export product] gets
indicated / endorsed in the relevant shipping bill and these inputs, so
endorsed, match the description in the relevant bill of entry, the
concerned Authorisation will not be redeemed. In other words, the
name/description of the input used (or to be used) in the Authorisation
must match exactly with the name/description endorsed in the shipping
bill. (ii) In addition, if in any SION, a single quantity has been indicated
against a number of inputs (more than one input), then quantities of
such inputs to be permitted for import shall be in proportion to the
quantity of these inputs actually used/consumed in production, within
overall quantity against such group of inputs. Proportion of these inputs
actually used/consumed in production of export product shall be clearly
indicated in shipping bills. (iii) At the time of discharge of export
obligation (issue of EODC) or at the time of redemption, Regional 77
Authority shall allow only those inputs which have been specifically
indicated in the shipping bill. (iv) The above provisions will also be
applicable for supplies to SEZs and supplies made under Deemed
export. Details as given above will have to be indicated in the relevant
Bill of Export, ARE-3, Central Excise certified Invoice / import document
/ document for domestic procurement/supply.
Pre-import condition in certain cases (i) DGFT may, by Notification,

impose pre-import condition for inputs under this Chapter. (ii) Import
items subject to pre-import condition are listed in Appendix 4-J or will
be as indicated in Standard Input Output Norms (SION). (iii) Import of
drugs from unregistered sources shall have pre-import condition.
Details of Duties exempted Imports under Advance Authorisation

are exempted from payment of Basic Customs Duty, Additional Customs
Duty, Education Cess, Anti-dumping Duty, Safeguard Duty and
Transition Product Specific Safeguard Duty, wherever applicable.
However, Import against supplies covered under paragraph 7.02 (c),
(d) and (g) of FTP will not be exempted from payment of applicable
Antidumping Duty, Safeguard Duty and Transition Product Specific
Safeguard Duty, if any.
Admissibility of Drawback Drawback as per rate determined and

fixed by Central Excise authority shall be available for duty paid
imported or indigenous inputs (not specified in the norms) used in the
export product. For this purpose, applicant shall indicate clearly details
of duty paid input in the application for Advance Authorisation. As per
details mentioned in the application, Regional Authority shall also
clearly endorse details of such duty paid inputs in the condition sheet of
the Advance Authorisation.
Actual User Condition for Advance Authorisation (i) Advance

Authorisation and / or material imported under Advance Authorisation
shall be subject to ‘Actual User’ condition. The same shall not be
transferable even after completion of export obligation. However,
Authorisation holder will have option to dispose of product
manufactured out of duty free input once export obligation is
completed. (ii) In case where CENVAT credit facility on input has been
availed for the exported goods, even after completion of export
obligation, the goods imported against such Advance Authorisation shall
be utilized only in the manufacture of dutiable goods whether within the
same factory or outside (by a supporting manufacturer). For this, the
Authorisation holder shall produce a certificate from either the
jurisdictional Central Excise Authority or Chartered Accountant, at the
option of the exporter, at the time of filing application for Export
Obligation Discharge Certificate to Regional Authority concerned. (iii)
Waste / scrap arising out of manufacturing process, as allowed, can be
disposed off on payment of applicable duty even before fulfillment of
export obligation.
Validity Period for Import (i) Validity period for import of Advance
Authorisation shall be 12 months from the date of issue of
Authorisation. (ii) Advance Authorisation for Deemed Export shall be
coterminus with contracted duration of project execution or 12 months
from the date of issue of Authorisation, whichever is more.
Importability / Exportability of items that are Prohibited/Restricted/

STE (i) No export or import of an item shall be allowed under Advance
Authorisation / DFIA if the item is prohibited for exports or imports
respectively. Export of a prohibited item may be allowed under Advance
Authorisation provided it is separately so notified, subject to the
conditions given therein. (ii) Items reserved for imports by STEs cannot
be imported against Advance Authorisation / DFIA. However those
items can be procured from STEs against ARO or Invalidation letter.
STEs are also allowed to sell goods on High Sea Sale basis to holders of
Advance Authorisation / DFIA holder. STEs are also permitted to issue
“No Objection Certificate (NOC)” for import by Advance Authorisation /
DFIA holder. Authorisation Holder would be required to file Quarterly
Returns of imports effected against such NOC to concerned STE and
STE would submit halfyearly import figures of such imports to
concerned administrative Department for monitoring with a copy
endorsed to DGFT. (iii) Items reserved for export by STE can be
exported under Advance Authorisation / DFIA only after obtaining a ‘No
Objection Certificate’ from the concerned STE. (iv) Import of restricted
items shall be allowed under Advance Authorisation/ DFIA. (v) Export of
restricted / SCOMET items however, shall be subject to all
conditionalities or requirements of export authorisation or permission,
as may be required, under Schedule 2 of ITC (HS).
Free of Cost Supply by Foreign Buyer Advance Authorisation shall

also be available where some or all inputs are supplied free of cost to
exporter by foreign buyer. In such cases, notional value of free of cost
input shall be added in the CIF value of import and FOB value of export
for the purpose of computation of value addition. However, realization
of export proceeds will be equivalent to an amount excluding notional
value of such input.
Domestic Sourcing of Inputs (i) Holder of an Advance Authorisation /

Duty Free Import Authorisation can procure inputs from indigenous
supplier/ State Trading Enterprise in lieu of direct import. Such
procurement can be against Advance Release Order (ARO), Invalidation
Letter, Back-to-Back Inland Letter of Credit. (ii) When domestic supplier
intends to obtain duty free material for inputs through Advance
Authorisation for supplying resultant product to another Advance
Authorisation / DFIA / EPCG Authorisation, Regional Authority shall
issue Invalidation Letter. (iii) Regional Authority shall issue Advance
Release Order if the domestic supplier intends to seek refund of duty
through Deemed Exports mechanism as per provisions under Chapter-7
of FTP. (iv) Regional Authority may issue Advance Release Order or
Invalidation Letter at the time of issue of Authorisation simultaneously
or subsequently. (v) Advance Authorisation holder under DTA can
procure inputs from EOU / EHTP / BTP / STP / SEZ units without
obtaining Advance Release Order or Invalidation Letter. (vi) Duty Free
Import Authorisation holder shall also be eligible for Advance Release
Order / Invalidation Letter facility. (vii) Validity of Advance Release
Order / Invalidation Letter shall be co-terminous with validity of
Authorisation.
Currency for Realisation of Export Proceeds (i) Export proceeds

shall be realized in freely convertible currency except otherwise
specified. Provisions regarding realization of export proceeds are given
in paragraph 2.43 of FTP. (ii) Export to Rupee Payment Area (RPA) (for
which payments are not received in freely convertible currency) shall be
subject to minimum value addition as specified in Appendix-4C. (iii)
Export to SEZ Units shall be taken into account for discharge of export
obligation provided payment is realised from Foreign Currency Account
of the SEZ unit. (iv) Export to SEZ Developers / Co-developers can also
be taken into account for discharge of export obligation even if payment
is realised in Indian Rupees. (v) Authorisation holder needs to file Bill of
Export for export to SEZ unit / developer / co-developer in accordance
with the procedures given in SEZ Rules, 2006.
Export Obligation (i) Period for fulfilment of export obligation under

Advance Authorisation shall be 18 months from the date of issue of
Authorisation or as notified by DGFT. (ii) In cases of supplies to turnkey
projects in India under deemed export category or turnkey projects
abroad, the Export Obligation period shall be co-terminus with
contracted duration of the project execution or 18 months whichever is
more. (iii) Export Obligation for items falling in categories of defence,
military store, aerospace and nuclear energy shall be 24 months from
the date of issue of authorization or co-terminus with contracted
duration of the export order whichever is more. (ii) Export Obligation
Period for specified inputs, from the date of clearance of each
consignment, is given in Appendix 4-J.
Export Obligation Period (EOP) Extension for units under BIFR/

Rehabilitation. A company holding Advance Authorisation and registered
with BIFR / Rehabilitation Department of State Government or any
firm / company acquiring a unit holding Advance Authorisation which is
under BIFR / Rehabilitation, may be permitted export obligation
extension for the Advance Authorisation(s) held by the acquired unit, as
per rehabilitation package prepared by operating agency and approved
by BIFR / Rehabilitation Department of State Government. If time-
period upto which EO extension is to be granted is not specifically
mentioned in the BIFR order, EO extension of two years from the date
of expiry of EOP (including extended period) or the date of BIFR order,
whichever is later, shall be granted without payment of composition fee.
Re-import of exported goods under Duty Exemption / Remission
Scheme Goods exported under Advance Authorisation / Duty
Free Import Authorisation may be re-imported in same or
substantially same form subject to such conditions as may be specified
by Department of Revenue. Authorisation holder shall also inform about
such re-importation to the Regional Authority which had issued the
Authorisation within one month from date of re-import.
(B) DUTY FREE IMPORT AUTHORISATION SCHEME (DFIA)
DFIA Scheme (a) Duty Free Import Authorisation is issued to allow

duty free import of inputs. In addition, import of oil and catalyst which
is consumed / utilised in the process of production of export product,
may also be allowed. (b) Provisions of paragraphs 4.12, 4.18, 4.20,
4.21 and 4.24 of FTP shall be applicable to DFIA also.
Duties Exempted and Admissibility of Cenvat and Drawback (i)

Duty Free Import Authorisation shall be exempted only from payment of
Basic Customs Duty. (ii) Additional customs duty/excise duty, being not
exempt, shall be adjusted as CENVAT credit as per DoR rules. (ii)
Drawback as per rate determined and fixed by Central Excise authority
shall be available for duty paid inputs, whether imported or indigenous,
used in the export product. However, in case such drawback is claimed
for inputs not specified in SION, the applicant should have indicated
clearly details of such duty paid inputs also in the application for Duty
Free Import Authorization, and as per the details mentioned in the
application, the Regional Authority should also have clearly endorsed
details of such duty paid inputs in the condition sheet of the Duty Free
Import Authorization.
Eligibility (i) Duty Free Import Authorisation shall be issued on post

export basis for products for which Standard Input Output Norms have
been notified. (ii) Merchant Exporter shall be required to mention name
and address of supporting manufacturer of the export product on the
export document viz. Shipping Bill / Airway Bill / Bill of Export / ARE-1 /
ARE-3. (iii) Application is to be filed with concerned Regional Authority
before effecting export under Duty Free Import Authorisation.
Minimum Value Addition Minimum value addition of 20% shall be

required to be achieved. For items where higher value addition has
been prescribed under Advance Authorisation in Appendix 4C, the same
value addition shall be applicable for Duty Free Import Authorisation
also.
Validity & Transferability of DFIA (i) Applicant shall file online
application to Regional Authority concerned before starting export under
DFIA. (ii) Export shall be completed within 12 months from the date of
online filing of application and generation of file number. (iii) While
doing export/supply, applicant shall indicate file number on the export
documents viz. Shipping Bill / Airway Bill/ Bill of Export / ARE-1 / ARE-
3, Central Excise certified Invoice. (iv) After completion of exports and
realization of proceeds, request for issuance of transferable Duty Free
Import Authorisation may be made to concerned Regional Authority
within a period of twelve months from the date of export or six months
(or additional time allowed by RBI for realization) from the date of
realization of export proceeds, whichever is later. (v) Applicant shall be
allowed to file application beyond 24 months from the date of
generation of file number as per paragraph 9.03 of Hand Book of
Procedures. (vi) Separate DFIA shall be issued for each SION and each
port. (vii) Exports under DFIA shall be made from from a single port as
mentioned in paragraph 4.37 of Handbook of Procedures. (viii)No Duty
Free Import Authorisation shall be issued for an export product where
SION prescribes ‘Actual User’ condition for any input. (ix) Regional
Authority shall issue transferable DFIA with a validity of 12 months from
the date of issue. No further revalidation shall be granted by Regional
Authority.
Sensitive Items under Duty Free Import Authorisation (a) In

respect of resultant products requiring following inputs, exporter shall
be required to provide declaration with regard to technical
characteristics, quality and specification in Shipping Bill: “Alloy steel
including Stainless Steel, Copper Alloy, Synthetic Rubber, Bearings,
Solvent, Perfumes / Essential Oil/ Aromatic Chemicals, Surfactants,
Relevant Fabrics, marble, Articles made of polypropylene, Articles made
of Paper and Paper Board, Insecticides, Lead Ingots, Zinc Ingots, Citric
Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped /
Stranded Mat, Roving Woven Surfacing Mat), Relevant Synthetic Resin
(unsaturated 87 polyester resin, Epoxy Resin, Vinyl Ester Resin,
Hydroxy Ethyl Cellulose), Lining Material”. (b) While issuing Duty Free
Import Authorisation, Regional Authority shall mention technical
characteristics, quality and specification in respect of above inputs in
the Authorisation.
V. EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG)
Objective
The objective of the EPCG Scheme is to facilitate import of capital goods

for producing quality goods and services to enhance India’s export
competitiveness.
EPCG Scheme (a) EPCG Scheme allows import of capital goods for
preproduction, production and post-production at Zero customs duty.
Alternatively, the Authorisation holder may also procure Capital Goods
from indigenous sources in accordance with provisions of paragraph
5.07 of FTP. Capital goods for the purpose of the EPCG scheme shall
include: (i) Capital Goods as defined in Chapter 9 including in CKD/SKD
condition thereof; (ii) Computer software systems; (iii) Spares, moulds,
dies, jigs, fixtures, tools & refractories for initial lining and spare
refractories; and (iv) catalysts for initial charge plus one subsequent
charge. (b) Import of capital goods for Project Imports notified by
Central Board of Excise and Customs is also permitted under EPCG
Scheme. (c) Import under EPCG Scheme shall be subject to an export
obligation equivalent to 6 times of duty saved on capital goods, to be
fulfilled in 6 years reckoned from date of issue of Authorisation. (d)
Authorisation shall be valid for import for 18 months from the date of
issue of Authorisation. Revalidation of EPCG Authorisation shall not be
permitted. (e) In case countervailing duty (CVD) is paid in cash on
imports under EPCG, incidence of CVD would not be taken for
computation of net duty saved, provided CENVAT is not availed. (f)
Second hand capital goods shall not be permitted to be imported under
EPCG Scheme. (g) Authorisation under EPCG Scheme shall not be
issued for import of any Capital Goods (including Captive plants and
Power Generator Sets of any kind) for (i) Export of electrical energy
(power) (ii) Supply of electrical energy (power) under deemed exports
(iii) Use of power (energy) in their own unit, and (iv) Supply/export of
electricity transmission services (h) Import of items which are restricted
for import shall be permitted under EPCG Scheme only after approval
from Exim Facilitation Committee (EFC) at DGFT Headquarters. (i) If the
goods proposed to be exported under EPCG authorisation are restricted
for export, the EPCG authorisation shall be issued only after approval
for issuance of export authorisation from Exim Facilitation Committee at
DGFT Headquarters.
Coverage (a) EPCG scheme covers manufacturer exporters with or

without supporting manufacturer(s), merchant exporters tied to
supporting manufacturer(s) and service providers. Name of supporting
manufacturer(s) shall be endorsed on the EPCG authorisation before
installation of the capital goods in the factory / premises of the
supporting manufacturer (s). In case of any change in supporting
manufacturer (s) the RA shall intimate such change to jurisdictional
Central Excise Authority of existing as well as changed supporting
manufacturer (s) and the Customs at port of registration of
Authorisation. (b) Export Promotion Capital Goods (EPCG) Scheme also
covers a service provider who is designated / certified as a Common
Service Provider (CSP) by the DGFT, Department of Commerce or State
Industrial Infrastructural Corporation in a Town of Export Excellence
subject to provisions of Foreign Trade Policy/Handbook of Procedures
with the following conditions:- (i) Export by users of the common
service, to be counted towards fulfilment of EO of the CSP shall contain
the EPCG authorisation details of the CSP in the respective Shipping
bills and concerned RA must be informed about the details of the Users
prior to such export; (ii) Such export will not count towards fulfilment of
specific export obligations in respect of other EPCG authorisations (of
the CSP/User); and 100 (iii) Authorisation holder shall be required to
submit Bank Guarantee (BG) which shall be equivalent to the duty
saved. BG can be given by CSP or by any one of the users or a
combination thereof, at the option of the CSP.
Actual User Condition Import of capital goods shall be subject to

Actual User condition till export obligation is completed.
Export Obligation (EO) Following conditions shall apply to the

fulfilment of EO:- (a) EO shall be fulfilled by the authorisation holder
through export of goods which are manufactured by him or his
supporting manufacturer / services rendered by him, for which the
EPCG authorisation has been granted. (b) EO under the scheme shall
be, over and above, the average level of exports achieved by the
applicant in the preceding three licensing years for the same and similar
products within the overall EO period including extended period, if any;
except for categories mentioned in paragraph 5.13(a) of HBP. Such
average would be the arithmetic mean of export performance in the
preceding three licensing years for same and similar products. (c) In
case of indigenous sourcing of Capital Goods, specific EO shall be 25%
less than the EO stipulated in Para 5.01. (d) Shipments under Advance
Authorisation, DFIA, Drawback scheme or reward schemes under
Chapter 3 of FTP; would also count for fulfillment of EO under EPCG
Scheme. (e) Export shall be physical export. However, deemed exports
as specified in paragraph 7.02 (a), (b), (e), (f) & (h) of FTP shall also be
counted towards fulfillment of export obligation, alongwith usual
benefits available under paragraph 7.03 of FTP. (f) EO can also be
fulfilled by the supply of ITA-I items to DTA, provided realization is in
free foreign exchange. (g) Royalty payments received by the
Authorisation holder in freely convertible currency and foreign exchange
received for R&D services shall also be counted for discharge under
EPCG. (h) Payment received in rupee terms for such Services as notified
in Appendix 3E shall also be counted towards discharge of export
obligation under the EPCG scheme.
Provision for units under BIFR /Rehabilitation A company holding

EPCG authorisation and registered with BIFR / Rehabilitation
Department of State Government or any firm/ company acquiring a unit
holding EPCG authorisation which is under BIFR / Rehabilitation, may be
permitted EO extension for the EPCG authorisation(s) held by the
acquired unit, as per rehabilitation package prepared by operating
agency and approved by BIFR / Rehabilitation Department of State
Government. If time-period upto which EO extension is to be granted is
not specifically mentioned in the BIFR order, EO extension of 3 years
from the date of expiry of EOP (including extended period) or the date
of BIFR order, whichever is later, shall be granted without payment of
composition fee.
LUT/Bond/BG in case of Agro units LUT/Bond or 15% BG, as

applicable, may be furnished for EPCG authorisation granted to units in
Agri-Export Zones provided EPCG authorisation is taken for export of
primary agricultural product(s) notified or their value added variants.
Indigenous Sourcing of Capital Goods and benefits to Domestic

Supplier A person holding an EPCG authorisation may source capital
goods from a domestic manufacturer. Such domestic manufacturer shall
be eligible for deemed export benefit under paragraph 7.03 of FTP.
Such domestic sourcing shall also be permitted from EOUs and these
supplies shall be counted for purpose of fulfilment of positive NFE by
said EOU as provided in Para 6.09 (a) of FTP.
Calculation of Export Obligation In case of direct imports, EO shall

be reckoned with reference to actual duty saved amount. In case of
domestic sourcing, EO shall be reckoned with reference to notional
Customs duties saved on FOR value.
Incentive for early EO fulfilment With a view to accelerating exports,

in cases where Authorisation holder has fulfilled 75% or more of specific
export obligation and 100% of Average Export Obligation till date, if
any, in half or less than half the original export obligation period
specified, remaining export obligation shall be condoned and the
Authorisation redeemed by RA concerned. However no benefit under
para 5.21 of HBP shall be permitted where incentive for early EO
fulfilment has been availed.
Reduced EO for Green Technology Products For exporters of Green

Technology Products, Specific EO shall be 75% of EO as stipulated in
Para 5.01. There shall be no change in average EO imposed, if any, as
stipulated in Para 5.04. The list of Green Technology Products is given
in Para 5.29 of HBP.
Reduced EO for North East Region and Jammu & Kashmir For
units located in Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura and Jammu & Kashmir, specific EO
shall be 25% of the EO, as stipulated in Para 5.01. There shall be no
change in average EO imposed, if any, as stipulated in Para 5.04.
Post Export EPCG Duty Credit Scrip(s) (a) Post Export EPCG Duty
Credit Scrip(s) shall be available to exporters who intend to import
capital goods on full payment of applicable duties in cash and choose to
opt for this scheme. (b) Basic Customs duty paid on Capital Goods shall
be remitted in the form of freely transferable duty credit scrip(s),
similar to those issued under Chapter 3 of FTP. (c) Specific EO shall be
85% of the applicable specific EO under the EPCG Scheme. However,
average EO shall remain unchanged. (d) Duty remission shall be in
proportion to the EO fulfilled. (e) All provisions for utilization of scrips
issued under Chapter 3 of FTP shall also be applicable to Post Export
EPCG Duty Credit Scrip (s). (f) All provisions of the existing EPCG
Scheme shall apply insofar as they are not inconsistent with this
scheme.
VI. STATUS HOLDERS SCHEME (SHS)
(FTP 2015-20)
Status Holders Recognition
To cut down transaction cost, Business leaders contributing significantly

to export earnings to be recognised as Status Holders and given special
treatment.
The earlier Nomenclature of Export House, Star Export House, Trading

House, Star Trading House, Premier Trading House has been changed to
One Star, Two Star, Three Star, Four Star, and Five Star.
The Criteria for obtaining Status Holder Recognition has also been
changed from INR (Rs Crore) to USD (Million) in the FTP 2015-20.
Old Criteria New Criteria

Category EP during Category EP FOB/FOR (as
current year converted) Value in USD
plus previous million during current
three years and previous two years
(INR Crores)
Export House 20 One Star 3
Star Export 100 Two Star 25
House
Trading 500 Three 100
House Star
Star Trading 2500 Four 500
House Star
P T House. 7500 Five Star 2000
PRIVILEGES TO STATUS HOLDERS
The FTP (2015-20) provides for the following privileges to Status

Holders.
• Authorization 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. Remittance / Receipts,however, would be received through
banking channels;
• Exemption from furnishing of BG in Schemes under FTP, unless
otherwise specified
• Two Star and above shall be permitted to establish Export
Warehouses, as per DoR guidelines.
• Three Star and above shall be entitled benefit of ACP as per
guidelines of CBEC
• Status holders entitled to preferential treatment and priority in
handling consignments by concerned agencies
• Status holders manufacturers (3/4/5 stars) entitled to self-
certification of their mfd. goods as originating from India to
qualify for preferential treatment under PTAs, FTAs, CECA and
CEPA. Facility to be extended to other status holders.
• SHs entitled to export freely exportable items on free of cost basis
for EP subject to annual limit of Rs 10 lacs or 2% of average
annual export realisation during preceding three licensing years
whichever is higher.
VII. DUTY DRAWBACK SCEHME
The main objective of Drawback scheme is to rebate duty or tax chargeable on

any imported/excisable materials and input services used in the manufacture
of export goods. The duties and tax neutralised under the scheme include (a)
Customs and Union Excise Duties in respect of inputs, and (b) Service tax in
respect of input services.
Section 74, 75, 75A, and 76 of Indian Customs Act 1962 read with relevant
sections of Central Excise Act 1944, and Finance Act 1994, and notifications
issued from time to time cover procedure for grant of DBK by Customs
Authorities while processing Trade documents of an exporter.
While Section 74 allows drawback on re-export of duty paid goods; Section 75

provides for drawback on imported materials used in manufacture of export
goods; Section 75A provides for payment of interest on delayed payment of
drawback; and Section 76 covers prohibition and regulation of drawback.
Section 74 of ICA 1962: Part of Customs Duty paid at the time of import is
remitted on export of the imported goods subject to their identification and
adherence to the prescribed procedure.
Conditions under Section 74: (a) Goods should have been imported into
India (b) Duty of customs should be paid thereon (c) Goods capable of easy
identification as originally imported (d) Goods should have been entered for
export either on S/B and clearance of goods for export permitted taken (e)
Satisfaction of AC/DC of goods imported (f) Goods are entered for export
within two years from the date of payment of duty on importation thereof.
98% of import duty, except otherwise provided hereafter, be paid back.
S. Length of period b/w date of clearance for HC and %age of

No goods placed under Customs control for export import duty
as DBK
1 Not more than three months 95
2 More than three months but not more than six 85
months
3 More than six months but not more than nine 75
months
4 More than nine months but not more than twelve 70
months
5 More than twelve months but not more than65
fifteen months
6 More than fifteen months but not more than 60
eighteen months
7 More than eighteen months Nil
Payment of Drawback in case of Car or specified goods under Section 74
• 98% in case car or specified goods re-exported immediately.

• First year – 4% reduction per quarter or part thereof
• Second year – 3% per quarter or part thereof
• Third year – 2.5% per quarter or part thereof
• Fourth year – 2% per quarter or part thereof
• No drawback if such motor car or goods used for more than four years
Documents for claiming Drawback
• Triplicate copy of S/B bearing examination report recorded by Customs

on exports
• Copy of B/E or other document against which goods cleared on
importation
• Import invoice
• Evidence of import duty paid
• Permission from RBI for re-export of goods, wherever necessary
• Export invoice
• Copy of B/L or AWB
• Any other documents as indicated in deficiency memo.
Goods not entitled for Drawback:
• Wearing apparel
• Tea Chests
• Exposed cinematograph films passed by Board of Film Censors in India
• Unexposed photographic films, paper and plates, and X-ray films.
Time Limit for Filing DBK Claim
• In prescribed form
• Within Three months (extendable by another three months)
from the date on which an order permitting clearance and loading of
goods for exportation under Section 51 is made by proper officer of
Customs
Drawback Scheme – Section 75
Conditions:
• Goods exported are entirely different from the inputs
• Input could be either imported or indigenous on which custom/excise
duty paid
• Existence of imported/indigenous inputs, on which duty paid, in the final
goods not capable of easy verification at the point of export
• Goods, namely inputs might have undergone changes in physical shape,
property etc.
• Quantity of inputs per piece of final product may not be uniform and
may not also be capable of verification at time of exportation.
Two Types of Drawback under Section 75
1. AIR: Average rate based on average qty and value of inputs and duties
borne by them and Service Tax suffered by a particular export product.
Notified by Govt. in DBK Schedule – three months from announcement of
Union Budget every year – currently more than 3900 entries covered in
Schedule. Legal framework is provided under Section 75 and 76 of ICA 1962,
Customs and CE Duties, and Service Tax DBK Rules 1995 (referred as DBK
Rules).
2.Brand rate/Special Brand Rate is allowed where export product does not
have AIR or same neutralises less than 4/5th of duties paid on materials used
in mfr of export goods
Duty Drawback Scheme – Section 75
Cases where no amount of DBK is determined:
• Less than 1% of FOB value except where the amount of DBK per
shipment exceeds Rs 500/-
• Export value is less than value of imported materials used in such
export goods
• Export value is not more than such percentage of the value of the
imported materials used in manufacture of such goods or class of goods
as GOI may notify in Official Gazette
Upper limit of DBK money or rate determined under Rule 3 should not exceed
1/3rd of market price of export product
Documents for claiming Drawback
• Triplicate copy of S/B along with Annexure II

• Copy of Export Contract or L/C
• Copy of packing list
• Copy of ARE-I
• Insurance Certificate
• Copy of DBK brand rate letter
Drawback not allowed in following cases:

• Packing materials for export of tea, except teachests
• Goods manufactured out of duty free materials
• Jute batching oil used in manufacture jute yarn, twine etc
• Packing material used for jute yarn, fabrics etc.
Interest on Drawback – Section 75A
In cases where drawback is not paid either under Section 74 or 75, within a
period of one month from date of filing a claim for payment of such drawback,
interest @ fixed under Section 27A from date of expiry of said one month
period till date of payment of such drawback will be paid to claimant.
In case drawback has been paid erroneously, the claimant shall within a period
of two months from date of payment, pay in additional to said amount of DBK,
interest @ fixed under Section 28AB and amount shall be calculated for the
period beginning from date of payment till the date of recovery of such
drawback.
Duty Drawback Scheme – Section 76
Prohibition and Regulation – No Drawback shall be allowed:
• In respect of any goods, the market price of which is less than the
amount of drawback due thereon
• Where the amount of drawback in respect of any goods is less than fifty
rupees.
• Goods Smuggled back in India
Market price is as prevailing in India and not the price which exporter
expects to receive from foreign customer.

Understanding Foreign Trade Policy-Highlights of FTP 2015-20 and Important Ep Schemes

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Understanding Foreign Trade Policy-Highlights of FTP 2015-20 and Important Ep Schemes

Încărcat de

Drepturi de autor:

Formate disponibile

UNDERSTANDING FOREIGN TRADE POLICY OF INDIA

1st April 2015- March 31, 2020

Why does a Country Need Foreign Trade Policy?

In pursuance of its liberalization programme launched in 1991 with the

The foreign trade policy or commercial policy of a country is considered as

To cite an example, one of the entrepreneurs got an export order from an

Financial and Fiscal Benefits on Exports under the Foreign Trade

In order to motivate and encourage the entrepreneurs to venture into the

Besides, the procedures have been largely simplified. For example:

(a) IEC (Importer-Exporter Code) holders excepting those who

A. SIMPLIFICATION & MERGER OF REWARD SCHEMES

Export from India Schemes:

1. Merchandise Exports from India Scheme (MEIS) (a) Earlier

The main features of MEIS, including details of various groups of

The debits towards basic customs duty in the transferable reward

2. Service Exports from India Scheme (SEIS) (a) Served From

3. Chapter -3 Incentives (MEIS & SEIS) to be available for SEZs It is

(b) Scrips issued under Exports from India Schemes can be

(i) Payment of customs duty for import of inputs / goods including

4. Status Holders (a) Business leaders who have excelled in

The new criteria for Status Holder recognition is as under:-

B. BOOST TO "MAKE IN INDIA"

5. Reduced Export Obligation (EO) for domestic procurement under

C. TRADE FACILITATION & EASE OF DOING BUSINESS

7. Online filing of documents/ applications and Paperless

(a) DGFT already provides facility of Online filing of various

(b) Henceforth, hardcopies of applications and specified documents

8. Online inter-ministerial consultations: It is proposed to have

9. Simplification of procedures/processes, digitisation and e-

10. Forthcoming e-Governance Initiatives (a) DGFT is currently

12. Facilitating & Encouraging Export of dual use items

13 Facilitating & Encouraging Export of Defence Exports (a)

14. e-Commerce Exports (a) Goods falling in the category of

15. Duty Exemption (a) Imports against Advance Authorization

17. Duty Free Tariff Preference (DFTP) Scheme India has

18. Quality complaints and Trade Disputes (a) In an endeavour

19. Vishakhapatnam and Bhimavaram added as Towns of

I. Merchandise Exports from India Scheme(MEIS)

(i) Merchandise Exports from India Scheme has replaced 5 different

Category A: Traditional Markets (30) - European Union (28), USA,

Category B: Emerging & Focus Markets (139), Africa (55), Latin

Category C: Other Markets (70).

B. Products supported under MEIS Level of Support: Higher

C. Markets Supported Most Agricultural products supported

D. High potential products not supported earlier: Support to

E. Global support has been granted to the following category:

F. Support to major markets have been given to the following

G. Other sectors supported under MEIS 352 Defence related

H. Participation in global value chain of the items falling

I. Technology based analysis: 572 lines-Low skill Technology-

J. Women Centric Products supported under MEIS

(a) Women workers constitute 52% of plantation workers-203 lines

(c) Sectors that have a significant proportion of female employment

Services Exports from India Scheme (SEIS)

A Professional services Legal services, Accounting, auditing and

B Research and development services R&D services on natural

2 COMMUNICATION SERVICES Audiovisual services Motion picture

3 CONSTRUCTION AND RELATED ENGINEERING SERVICES General

4 EDUCATIONAL SERVICES (Please refer Note 1) Primary education

5 ENVIRONMENTAL SERVICES Sewage services, Refuse disposal

6 HEALTH-RELATED AND SOCIAL SERVICES Hospital services 5%

7 TOURISM AND TRAVEL-RELATED SERVICES A. Hotels and

8 RECREATIONAL, CULTURAL AND SPORTING SERVICES (other than