Highlights of Annual Supplement 2013 to FTP 2009-14
1. Measures to revive investors’ interest in
SEZs.
2. Zero Duty Export Promotion Capital Goods
(EPCG) Scheme
2.3 Reduced EO for Domestic Sourcing of Capital
Goods
2.4 Reduced EO for units in the State of Jammu
& Kashmir
3. Widening of Interest Subvention Scheme
4. Widening the Scope of Utilization of Duty
Credit Scrip
5. Market and Product Diversification
6. Incremental Exports Incentivisation
Scheme
7. Facility to close cases of default in Export
Obligation
8. Served from India Scheme (SFIS)
9. VKGUY Scheme
10. Status Holder Incentive Scheme (SHIS)
12. Duty Free Import Authorization Scheme (DFIA)
13. Import of Cars
14. Improvement in quality and timeliness of
Foreign Trade Data
15. Second Task Force on Transaction Cost in
International Trade
16. Electronic Data Interchange Initiatives
17. Ease of Documentation and procedural
simplification
18. Widening of items eligible for import for
Handloom/Made ups and Sports Goods.
1.
Measures to revive investors’ interest in SEZs.
1.1
A
package of measures has been formulated to revive investors’ interest in SEZs
and to boost exports. The salient features of the package are:-
(i)
In view of the acute difficulties in aggregating large tracts of uncultivable
land for setting up SEZs, while ensuring vacancy and contiguity, we have
decided to reduce the Minimum Land Area Requirement by half. For
Multi-product SEZ from 1000 hectares to 500 hectares and for Sector-specific
SEZ from existing 100 hectares to 50 hectares.
(ii)
To provide greater flexibility in utilizing land tracts falling between 50-450
hectares, it has been decided to introduce a Graded Scale for Minimum Land
Criteria which would permit a SEZ an additional sector for each contiguous
50 hectare parcel of land. This will also bring about more efficient use of the
infrastructure facilities created in such an SEZ.
(iii)
Further flexibility to set up additional units in a sector specific SEZ is
being provided by introducing Sectoral
broad-banding to encompass similar / related areas under the same sector.
(iv)
On the issues relating to Vacancy of Land, while the existing policy
allows for parcels of land with pre-existing structures not in commercial use
to be considered as vacant land for the purpose of notifying an SEZ, it has now
been decided that additions to such pre-existing structures and activities
being undertaken after notification would be eligible for duty benefits similar
to any other activity in the SEZ.
1.2
IT
Exports constitute a very significant part of India’s exports and IT SEZs have
a major contribution in it. Exports from IT SEZs during financial year 2012-13
have exceeded Rs. 1.40 lakh crore
registering a growth of over 70% over the previous year’s exports. We have
specifically addressed issues to boost growth of this very important sector and
also to give a fillip to employment and growth in Tier-II and Tier-III cities.
(i)
The present requirement of 10 hectares of minimum land area has been done away
with. Now there would be no minimum land requirement for setting up an
IT/ITES SEZ. Only the minimum built up area criteria would be required
to be met by the SEZ developers.
(ii)
The minimum built up area requirement has also been considerably relaxed with
the requirement of one lakh square meters to be applicable for the 7 major
cities viz: Mumbai, Delhi (NCR), Chennai, Hyderabad,
Bangalore, Pune and Kolkata. For the other Category B cities 50,000 square
meters and for remaining cities only 25,000 square meters built up area norm
will be applicable.
1.3
The
present SEZ Framework does not include an Exit Policy for the units and
feedback was that this was perceived as a great disadvantage. It has now been
decided to permit transfer of ownership of SEZ units, including sale
2.
Zero Duty Export Promotion Capital Goods (EPCG) Scheme
2.1
Foreign
Trade Policy has two variants under this scheme, namely, Zero Duty EPCG for few
sectors and 3% Duty EPCG for all sectors. During the last announcement on 5th
June, 2012, a new Post Export EPCG Scheme was also announced which was notified
on 18 February, 2013 by the CBEC. Based on the request of all stakeholders,
Government has decided to harmonize Zero Duty EPCG and 3% EPCG Scheme into one
scheme which will be a Zero Duty EPCG Scheme covering all sectors.
2.2
Following
are the salient features of the Zero Duty EPCG Scheme:-
(i)
Authorization holders will have export obligation of 6 times the duty saved
amount. The export obligation has to be completed in a period of 6 years.
(ii)
The period for import under the Scheme would be 18 months.
(iii)
Export obligation discharge by export of alternate products as well as
accounting of exports of group companies will not be allowed.
(iv)
The exporters who have availed benefits under Technology Upgradation
Fund Scheme (TUFS) administered by Ministry of Textiles,
can also avail the benefit of Zero duty EPCG Scheme.
(v)
The import of motor cars, SUVs, all purpose vehicles for hotels, travel agents,
or tour transport operators and companies owning/operating golf resorts will
not allowed under the new Zero Duty EPCG Scheme.
2.3
Reduced EO for Domestic Sourcing of Capital Goods
The
quantum of specific Export Obligation (EO) in the case of domestic sourcing of
capital goods under EPCG authorizations has been reduced by 10%. This would
promote domestic manufacturing of capital goods.
2.4
Reduced EO for units in the State of Jammu & Kashmir
In
order to encourage manufacturing activity in the State of Jammu & Kashmir,
it has been decided to reduce the specific export obligation (EO) to 25% of the
normal export obligation. Earlier, this benefit was announced on 5th June, 2012
in respect of units located in North Eastern Region and Sikkim. This provision
is now being extended to J&K.
3.
Widening of Interest Subvention Scheme
3.1
At
present, 2% interest subvention scheme is available to certain specific sectors
like Handicrafts, Handlooms, Carpets, Readymade Garments, Processed
Agricultural Products, Sports Goods and Toys. The scheme had been further
widened to include 134 sub-sectors of engineering sector. Government had also
announced that the benefit of this scheme of 2% interest subvention could be
available upto 31.03.2014.
3.2
Government
has now decided to further widen the scheme to include items covered under
Chapter 63 of ITC (HS) (other made up textile articles, sets, rags) and
additional specified tariff lines of engineering sector items under the scheme.
These sectors would be able to avail benefit under this scheme during the
period from 01.05.2013 to 31.03.2014.
4.
Widening the Scope of Utilization of Duty Credit Scrip
4.1
Duty
Credit Scrips issued under Focus Market Schemes,
Focus Product Scheme and Vishesh Krishi
Gramin Udyog Yojana (VKGUY) can be used for payment of service tax on
procurement of services within the legal framework of service tax exemption
notifications under the Finance Act, 1994. Holder of the scrip shall be
entitled to avail drawback or CENVAT credit of the service tax debited in the scrips as per Department of Revenue rules.
4.2
All
duty credit scrips issued under Chapter 3 can be
utilized for payment of application fee to DGFT for obtaining any authorization
under Foreign Trade Policy. This benefit shall be available only to the
original duty credit scrip holders. Duty credit scrip can also be paid for
payment of composition fee and for payment of value shortfalls in EO under para 4.28 (b) of Hand Book of Procedure Vol. 1.
5.
Market and Product Diversification
5.1
Norway
has been added under Focus Market Scheme and Venezuela has been added under
Special Focus Market Scheme. The total number of countries under Focus Market
Scheme and Special Focus Market Scheme becomes 125 and 50 respectively.
5.2
Approximately,
126 new products have been added under Focus Product Scheme. These products
include items from engineering, electronics, chemicals,
pharmaceuticals and textiles sector.
5.3
About
47 new products have been added under Market Linked Focus Product Scheme
(MLFPS). These products are from engineering, auto components and textiles
sector. 2 new countries i.e., Brunei and Yemen have been added as new markets
under MLFPS.
5.4
MLFPS
is being extended from 01.04.2013 to 31.03.2014 for exports to USA and EU in
respect of items falling in Chapter 61 and Chapter 62 of ITC(HS).
5.5
Exports
of High Tech products would be incentived and it
would be separately notified by 30th June, 2013.
5.6
The
towns of Morbi (Gujarat) and Gurgaon (Haryana) have
been added to the existing list of towns of export excellence for ceramic tiles
and apparel exports respectively. These towns shall be eligible to get benefit
under ASIDE Scheme.
6.
Incremental Exports Incentivisation Scheme
6.1
Government
has announced Incremental Export Incentivisation
Scheme on 26.12.12 for the exports made during January 2013 to March 2013. This
scheme is available for exports made to USA, EU and Asia. It has been agreed to
extend this scheme for the year 2013-14. The calculation of the benefit shall
be on annual basis under the extended scheme.
6.2
The
Government has also agreed to include additional countries under Incremental
Exports Incentivisation Scheme. 53 countries of Latin
America and Africa have been added with the objective to increase India’s share
in these markets. The present exports to each of these
markets is less than US $ 100 million.
7.
Facility to close cases of default in Export Obligation
7.1
Requests
have been received for grant of relief to close cases where there is default in
export obligations pertaining to advance authorizations and EPCG
authorizations. It has been decided to allow a facility to close such cases
after payment of required duty, along with applicable interest. The duty +
interest have to be paid within a limited period of six months from the date of
notification of this scheme. The total payment shall not exceed two times the
duty saved amount on default in Export Obligation.
8.
Served from India Scheme (SFIS)
8.1
Service
providers are entitled to duty credit scrips under
Served from India Scheme at the rate of 10% of free foreign exchange earned
during a financial year. The entitlement shall now be calculated on the basis
of net free foreign exchange earned (i.e., after deducting foreign exchange
spent from the total foreign exchange earned during the financial year).
8.2
Limited
transferability of SFIS scrips shall be allowed by
the Regional Authority within group company of the
status holder provided the group company is manufacturer.
8.3
Service
exporters who are also engaged in manufacturing activity are permitted to use
SFIS duty credit scrip for importing/domestically procuring capital goods as
defined in para 9.12 of FTP including spares related
to manufacturing sector business of the service provider.
8.4
Hotels,
travel agents, tour operators or tour transport operators and companies
owning/operating golf resorts having SFIS scrip can import or domestically
procure motor cars, SUVs and all purpose vehicles using SFIS scrips for payment of duties. Such vehicles need to be
registered for “tourist purpose” only.
9.
VKGUY Scheme
9.1
There
is a limiting provision which restricts benefit of VKGUY to a reduced rate of
3% when a particular item avails drawback at more than 1% rate. It has been
decided to delete para 3.13.3 of FTP.
9.2
Limited
transferability of the Agri Infrastructure Incentive
Scheme (AIIS) scrip from status holder to the supporting manufacturer (of the
status holder exporter) who is neither a status holder nor has a unit in a Food
Park (and is not a developer) shall be allowed. Such transfer from the status
holder would be endorsed by the Regional Authority.
10.
Status Holder Incentive Scheme (SHIS)
10.1
Status
Holder Incentive Scheme (SHIS) was extended for the year 2012-13. The scheme
will not be available for the year 2013-14. Regional Authority shall allow
limited transferability of SHIS scrip within group company
of the status holder provided the group company is a manufacturer.
11.
Recredit of 4% SAD
11.1
Utilization
of recredited 4% SAD scrips
shall be allowed upto 30.09.13 as a trade
facilitation measure. However, no further extension shall be considered by
Government and this would be the last such opportunity. The importers are
advised to make the initial payment of 4% SAD in cash in future if they want a
refund.
12.
Duty Free Import Authorization Scheme (DFIA)
12.1
Anti Dumping
Duty and Safeguard Duty was exempted under DFIA Scheme. Exemption from payment
of Anti Dumping Duty and Safeguard Duty shall
henceforth not be available after endorsement of transferability of such
authorizations
13.
Import of Cars
13.1
Import
of cars/vehicles is permitted through designated ports only. Now import of cars/vehicles
would also be allowed at ICD Faridabad and Ennore
Port (TN).
14.
Improvement in quality and timeliness of Foreign Trade Data
14.1
Initiative
been taken to improve quality and accuracy of foreign trade data. The release
of Press Note relating to Quick estimates has been compressed to 15 days after
completion of the month to which it relates. The period of reporting by DGCIS
about data on principal commodity-wise has been reduced from 2 ½ months to 1
month. Further transaction level (8 digit level) data is now available within a
period of 2 months.
14.2
It
has been decided that items falling under chapter 3 schemes for export
incentive would be aligned with ITC (HS). This task has been completed by DGFT
and it has been uploaded on the website of DGFT to seek feedback from the
trade. Tade is requested to give their feedback by
17th May, 2013.
15.
Second Task Force on Transaction Cost in International Trade
15.1
The
report on Transaction Cost was released in Feb 2011. Implementation of its
recommendation resulted into estimated reduction of transaction cost of
approximately Rs 2495 Crores.
Second Task Force on Transaction Costs has been constituted. The Committee
would submit its report in six months
16.
Electronic Data Interchange Initiatives
16.1
e-BRC
system allows Transmission of realization of export
proceeds details from banks to DGFT in electronically secured format. The
system has been made mandatory with effect from 17th August, 2012. Up to 16th
April, 2013, 31.2 lakh e-BRC have been uploaded on the
website of DGFT by 81 banks. e-BRC data is also of use
to different ministries/departments of Central Government and State Governments
who have expressed interest in obtaining this data from DGFT. Government of
Maharashtra and Delhi has started the process, as first movers, to use e-BRC
data for processing VAT refund claims of exporters. E-BRC will improve the
productivity of DGFT, Banks, Central and State Government department dealing
with exporter/importers and will lead to substantial reduction of transaction
cost and time
16.2
Reconciliation
of export and bank documents at the time of closure of an Advance or EPCG
Authorisation involved manual submission of many documents. Transmission of two
key documents (Shipping bill from Customs and e-BRC from Banks) relating to
Advance Authorization and EPCG Authorizations in secured electronic format to
DGFT has established. Accordingly, DGFT has introduced the system of online
Export Obligation Discharge certificate (EODC). Exporters can file EODC
applications online. DGFT will also transmit all EODCs to DG Systems through a
secured message exchange. This will obviate the need to have re- verification
at the Custom’s end. Reconciliation of export import/Closure of an
authorization was document heavy process. With online EODC exporter can
complete the formalities at DGFT online and may get quick clearances at the
Customs on account of e-transmission of EODC from DGFT to Customs.
16.3
Message
Exchange System for exchanging shipping data relating to Focus Product Scheme
(FPS), Focus Market Scheme(FMS), Market linked Focus
Product Scheme(MLFPS), Status Holder Incentive Scrip(SHIS), Served From India
Scheme (SFIS)and Agri Infrastructure Scheme shall be
established with DG Systems. This will allow exporters to quickly link (and not
fill all details) Shipping bills received from Customs with their applications
for quick processing.
16.4
System
for online issuance of Registration Certificate for export of Cotton, Cotton
Yarn, Non-Basmati Rice, Wheat and Sugar has been introduced. This will allow
quick issuance of Registration Certificates and easy monitoring.
16.5
An
online system to resolve EDI issues has been established. The system generates
a key number for each complaint for follow up.
16.6
A
new online complaint resolution system relating to EDI issues has been devised
where users can file online complaint. A key number for each complaint will be
generated which can be followed up by the users and DGFT officials for early
resolution of issues.
17.
Ease of Documentation and procedural simplification
17.1
Submission
of physical copies of IEC and Registration-cum-Membership Certificate (RCMC)
with individual application has been dispensed with.
17.2
It
has been decided to dispense with submission of hard copy of EP copy of
shipping bills in case of (a) advance authorization, (b) duty free import
authorization for grant of Export Obligation Discharge Certificate (EODC) if
exports are made through EDI ports.
17.3
Application
fee can be paid either in cash or through demand draft or through EFT. Now
exporters/importers would be allowed shortly to utilize their credit card for
payment of such application fee.
17.4
Existing
procedures contained in para 2.20A of Handbook of
Procedures related to execution of bank guarantee / legal undertaking stands
deleted.
17.5
In
order to facilitate IT exports, we have extended the facility of ‘work from
home’ to STPI / EOUs / BTPs / EHTPs.
18.
Widening of items eligible for import for Handloom/Made ups and Sports Goods.
18.1
5
additional items (embroidery/sewing threads/poly/quilted bedding materials and
printed bags) are included in the list of items which are allowed duty free
within the existing limits upto 5% FOB value of
exports of handloom made ups in preceding year or within the existing limit of upto 1% of FOB value of exports of cotton/man-made ups in
preceding year.
(i)
Similarly, 5 additional items have been added pertaining to sports goods
exports. These 5 items are (i) PVC Leather Clot (to be used in the manufacture
of Inflatable Balls & Sports Gloves), (ii) Latex Foam (to be used in the
manufacture of Shin Guard & Goal Keeper Gloves & other Sports Gloves),
(iii) Peva / Eva Foil (to be used in the manufacture
of Shin Guard & Sports Gloves), (iv) Stitching Thread (to be used in the
manufacture of Inflatable balls & Sports Gloves), (v)Printing Ink (to be
used in the manufacture of Inflatable balls & Sports Gloves).
(ii)
Item descriptions shall be amended, from Synthetic Rubber Bladder to
PVC/Synthetic Rubber Bladders for Inflatable Balls and from PU Leather Cloth/PU
laminated with cotton for Inflatable Balls to TPU/PU Leather cloth/TPU/PU
laminated with cotton for Inflatable Balls, in Notification No.12/2012 – [Cus (Sl.No.521 (f) and (k)] in relation to sports goods
exports.