CIA-2

EXIM & FOREX MANAGEMENT

PART1-HIGHLIGHTS OF EXIM POLICY

PART2- EXPORT PROCEDURE FOLLOWED IN
RAJESH EXPORTS LTD

SUBMITTED BY,

SINDHUJAA.V

(0921524)
 PART-1

HIGHLIGHTS OF FOREIGN TRADE POLICY 2004-2009

OBJECTIVES OF FOREIGN TRADE POLICY 2004-2009

(a) It is for the first time that a comprehensive Foreign Trade Policy is being notified. The Foreign
Trade Policy takes an integrated view of the overall development of India’s foreign trade.

(b) The objective of the Foreign Trade Policy is two-fold:

 To double India’s percentage share of global merchandise trade by 2009; and
 To act as an effective instrument of economic growth by giving a thrust to employment
generation, especially in semi-urban and rural areas.

(c) The key strategies are

 Unshackling of controls;
 Creating an atmosphere of trust and transparency;
 Simplifying procedures and bringing down transaction costs;
 Adopting the fundamental principle that duties and levies should not be
 exported;
 Identifying and nurturing different special focus areas to facilitate development of India as a
global hub for manufacturing, trading and services

The objectives of the policy in simple was to

 Enhance exports of major export commodities

 Identify potential export commodities
 Diversify export destinations

Exim Bank Study “Strategy for Quantum Jump in Exports: Focus on Africa, Latin America and China”

India could aim to achieve:

 US$ 18 billion in Africa’s Imports by 2007 from US$ 3.8 bn in 2003-04

 US$ 4 bn in China’s imports by 2007 (in 64 identified groups) from US$ 0.86 bn in 2000
 US$ 1.8 bn in LAC’s imports by 2007 (in 100 identified groups) from US$ 0.6 bn in 2000
 Share in India’s Exports in 2003-04: Africa (6%); Latin America (1.8%); China (4.7)

TRADE PERFORMANCE

 When the Government launched the new Foreign Trade Policy in August 2004, it set out
with the ambitious objective of doubling India’s percentage share of global merchandize
 trade within five years. Merchandize trade in the very first year of the policy period grew at
the rate of 26%. This year’s export figures are unprecedented. I am delighted to share with
you that merchandize exports have crossed the ‘magic figure’ of 100 billion dollars. In fact,
they have touched the ‘auspicious figure’ of 101 billion dollars. The annual growth rate is
25%.

 Our imports have grown 32%, and stand at 140 billion dollars – but 43 billion is our oil bill.
Thus, our non-oil imports are 97 billion dollars, a full 4 billion lower than our exports. On
the non-oil front, therefore, we have a positive balance of trade.

SECTORAL EXPORT GROWTH

 Exports from many sectors have surpassed our expectations. Project goods exports grew at
the rate of 173%. Exports of non-ferrous metals, guar gum meal, computer software in
physical form, rice, pulses, dairy products, all recorded a growth surpassing 50%.
Commodities like man-made staple fibres, cosmetics and toiletries, iron-ore, coffee,
processed food and transport equipment grew at the rate above the average, i.e. more than
25% during this period.

MARKET SHARE IN DIFFERENT COUNTRIES

 India is steadily increasing its share in important markets. Growth in exports to UK has been
30%, to Singapore (with which we implemented the CECA) 54%. India’s exports to South
Africa grew at 44% while for China the growth rate is 35%. We shall be releasing detailed
statistics on all this in the form of a Ready Reckoner next month, after exact figures come in.

‘FOCUS PRODUCT’ & ‘FOCUS MARKET’ SCHEMES

 The other chief objective of the Foreign Trade Policy was providing a thrust to employment
generation, particularly in semi-urban and rural areas. We are therefore introducing two
new schemes to nurture this. We realized that certain industrial products can generate large
employment per unit of investment compared to other products, and promoting their export
would in turn give a thrust to their manufacture. This realization led to the formulation of
the ‘Focus Product Scheme’ which aims to promote such exports.
 The Scheme allows duty credit facility at 2.5% of the FOB value of exports on fifty percent of
the export turnover of notified products, such as value added fish and leather products,
stationery items, fireworks, sports goods, and handloom & handicraft items.
 It is also necessary to penetrate markets, especially to which our exports are comparatively
low. Some of our competitors are aggressively ‘occupying space’ in Latin America, in Africa
and other destinations which Indian exporters have unfortunately been neglecting, perhaps
 due to high freight costs & undeveloped networks. But these are the markets of the future,
and it is of strategic necessity that we enlarge our market share here.
 For this we have a ‘Focus Market Scheme’ which allows duty credit facility at 2.5% of the
FOB value of exports of all products to the notified countries.
 The scrip and the items imported against it for both these schemes would be freely
transferable.
These two Schemes would replace the Target Plus Scheme.
 To take the benefits of foreign trade further to rural areas, the Vishesh Krishi Upaj Yojana is
being expanded to include village industries based products for export benefits, and it is
therefore renamed as Vishesh Krishi Upaj aur Gram Udyog Yojana – a rather long name,
but one which adequately reflects its intent and coverage.

PROMOTING SERVICES EXPORT

 While Services account for 52% of our GDP, our total services trade – exports & imports –
totals more than 100 billion dollars. Expansion of the Services sector is vital for providing
jobs to urban educated youth. In the WTO too we are actively engaged in the Services
negotiations. A number of features have been added in the Served from India Scheme to
encourage service exports.
 The Scheme ill now allow transfer of both the scrip and the imported input to the Group
Service Company, whereas earlier transfer of imported material only was allowed.

INDIA EMERGING AS GEM AND JEWELLERY HUB

Because of a rich tradition of craftsmanship, enterprise and availability of skilled, low cost
manpower India has the potential to become an international hub for Gems and Jewellery. We have
already introduced some measures in the Budget. The diamond trade, which was concentrated in
Antwerp, is moving out – to Dubai, to Tel Aviv. I want Mumbai be right up there, and not lose out to
its fellow Asian cities. This Supplement now introduces a number of measures for facilitating export
of value added products catering to changing needs of the market and facilitating easier product
movement across the borders and allowing import of precious metal scrap for refining.

(a) We have large unutilized melting, refining and jewellery-making production capacity. To
enable such capacities to be used in a productive manner, import of precious metal scrap and
used jewellery will now be allowed for melting, refining and re-export of jewellery. However,
such import will not be allowed through hand baggage.
(b) Gems & Jewellery exporters will now be allowed to re-import the rejected precious metal
jewellery subject to refund of duty exemption benefits on the inputs only and not the duty on
jewellery as was being done earlier.
(c) Many a times exporters faced the dilemma of unsold jewellery in the foreign markets because
of changing designs and other such factors. To overcome this problem, Gems & Jewellery
exporters will now, be allowed to export jewellery on consignment basis.
(d) Treatment of cut and polished precious and semi-precious stones enhance the quality and
afford higher value in the international market. For this purpose, Gems & Jewellery exporters
will now be allowed to export such items for treatment and subsequent re-import, within a
period of 120 days.
(e) Increase of gold and silver prices in the international market over the past few years has made
the present value addition norms on export of gold & silver jewellery unrealistic. The value
addition norm for such items is being reduced from 7% to 4.5%.

Such measures will help Indian Gems and Jewellery to sparkle on the world stage.

AUTO-COMPONENTS

 India is on the move, metaphorically as well as literally. We not only have the fastest
growing automobile market in the world, but India is fast emerging as an important centre
for sourcing auto-components. The FTP already extends a number of facilities for the sector.
We shall now allow import of new vehicles by auto component manufacturers for R & D
purposes without homologation. This is necessary to give our R&D labs easier access to the
latest technologies current in the auto component industry.

AVIATION SECTOR

 Supplies of stores (food, beverages and other supplies) and refuelling of long distance flights
has emerged as a big business opportunity. Currently, most airlines replenish supplies or
refuel at Thailand, Malaysia or Singapore. Since these supplies were not treated as exports in
India and the suppliers could not obtain the duty neutralisation benefits available to other
export products the store supplies from India were not competitive enough. We have
decided to treat such supplies on an equal footing with other exports, qualifying for benefits
under various Export Promotion Schemes. This will hopefully enable India to offer
competitive fuel prices and will attract mid route stops of the international flights.

MARINE SECTOR

 Having done something for the ‘land’ and the ‘air’, we felt we must do something for the
‘sea’ too! We had already brought in some benefits for shrimp and tuna fishing through the
budget. Now the list of specialized inputs used in the marine sector has been expanded to
include additional items of chemicals and other additives within the present duty free
entitlement of 1%.
TEXTILE SECTOR INCENTIVES

 Duty free entitlement for garments & handicrafts increased from 3% to 5%Will help
exporters to move up the value chain
 However, further incentives required to consolidate India’s position in the post-MFA era
 Handicraft Special Economic Zone to be established will contribute to strong growth in
handicraft exports will generate employment opportunities.

DUTY FREE IMPORT AUTHORISATION SCHEME

 Export production requires use of many inputs in small quantities. Even though such inputs
are allowed for import without payment of customs duty under Advance Licensing Scheme,
exporters generally do not import them because of lack of economies of scale and are forced
to source them locally at a higher price. The existing Duty Exemption Schemes have been of
little help in such cases because of design limitations.
 To address the issue, the salient features of the Advance Licensing scheme (which allows
imports before exports) and Duty Free Replenishment Certificate (which allows
transferability of import entitlements) have been clubbed to evolve a new scheme named
Duty Free Import Authorisation Scheme. The new scheme offers the facility to import the
required inputs before the exports. It allows transferability of scrip once the export
obligation is complete.
 Imports made under this authorisation will be exempt from payment of basic custom duty,
additional customs duty, education cess, anti-dumping duty and safeguard duty, if any. The
scheme will come into effect from 1st May, 2006.

SERVICE TAX & FRINGE BENEFIT TAX

 The incidence of un-rebated Service Tax and Fringe Benefit Tax on exports will be factored
in the various duty neutralisation and remission schemes.

EPCG SCHEME

 We have introduced certain flexibilities in the conditions relating to maintenance of average

export performance under the EPCG Scheme, and also in the extension of export obligation
period by 2 years, based on certain conditions.

EOUs

 EOUs account for a substantial portion of our exports. Just because we have the new SEZ Act
in place, it does not mean that our EOUs can be neglected. On the contrary, we will continue
to nurture them.
  In order to facilitate the smooth functioning of the EOU units, Development Commissioners
will fix time limits for finalizing the disposal of matters.
 EOU units in the textile sector are allowed to dispose of the left over fabrics upto 2% of CIF
value of imports, on consignment basis. Settling accounts for every consignment is complex
and time consuming. It has therefore been decided to allow disposal of left over material on
the basis of previous year’s imports.

GENETICALLY MODIFIED (GMO) MATERIAL

 For the benefit of the consumer clear guidelines for import of Genetically Modified Material
are being laid down. While making such imports, products which have been subjected to
Genetic Modification will have to carry a declaration stating the fact.

INTEREST PAYMENT ON REFUNDS

 It has been decided that interest for delayed payment of refunds would be made by the
Government to ensure accountability and cut delays.

TRADE FACILITATION

 Clearance of import or export consignments are held up for want of test reports of samples
drawn at the time of import or export. Therefore, to accelerate cargo clearances, it has been
decided to allow pre-shipment test certificates from accredited international agencies in lieu
of demanding only test reports.

EDI INITIATIVES

 We are committed to simplifying procedures relating to international trade and putting in

place an exporter friendly regime for obtaining import authorizations and disbursement of
export linked incentives. A web based online system of filing import & export applications is
functional.
 Requests for obtaining authorizations relating to Advance Licence, EPCG Licence and DEPB
are to be filed on the DGFT website with a digital signature and payment of licence fee
through the Electronic Fund Transfer mode. No manual applications and supporting
documents are required to be submitted. All EDI applications are processed within one
working day. We propose to take more EDI initiatives in the next six months to take the
process further.

SIMPLIFYING PROCEDURES AND BRINGING DOWN TRANSACTION COSTS

Transaction costs are incurred at the pre and post-production stages, and arise out from several
procedural complexities associated with administrative processes, availability of finance and
transportation problems.

For enhancing the growth of exports it is important to reduce the transaction costs involved.

EXIM BANK STUDY ON TRANSACTION COSTS OF INDIAN EXPORTS

Sector No. of Transaction Transaction

Firms costs as % of costs as % of
export revenue export
Textile/Garments 23 (20033-10
Survey) 15
revenue
Engineering 18 <5 (1998 10
Survey)
goods  
Pharmaceuticals 9 8 10
Chemicals 7 <5 14
Computer 9 1-5 10
software
Agro-Industries 2 1-2 7-8.5
Electronic & 3 5 -
Electrical
Plastic
machinery 2 5-10 -
components
Paper Industry 2 5-7 -
Others 7 1-2  

SPECIAL PACKAGE FOR AGRICULTURE

 Duty free imports of capital goods will lower production cost and hence improve
profitability
 Exports of medicinal plants & herbal products facilitated
 Global imports of medicinal plants: US$ 1 bn (2001)
 India second largest exporter after China
 Potential to increase export to Rs. 1750 crore by 2006-07 and more than Rs. 2500 crore by
2009-10.
 Global market for Herbal products: US$ 80 bn
 India’s exports of Herbal products: US$ 280 mn (2002-03)

FINAL OBSERVATIONS

 Import of second hand capital goods allowed without age restrictions

 No outdated technology should be imported
 “Special Focus Initiatives” Could be extended to other sectors of high export orientation like
chemicals & pharmaceuticals
  Export orientation of FDI should be increased

Low share of FDI in major export

sectors

INDIA’S EXPORT PERFORMANCE

India's Export Performance (1999-2000 to 2003-04)

70000
52856 63623
60000
44147 43976
50000 47742
36760
US$ million

40000

30000
29751
20000

10000

0
1999-2000 2000-01 2001-02 2002-03 2003-04
All Commodities Years Agricultural & allied products
Ores & minerals Manufactured goods
Petroleum & crude products

HIGHLIGHTS OF FOREIGN TRADE POLICY 2009-2014

STRATEGY

 To arrest and revise declining trend of exports is the main aim of the policy. The policy is
reviewed after 2 years.
 To double export of goods and services by 2014.
 To double India’s share in global merchandise trade by 2020 as a long term aim of this
policy

HIGHER SUPPORT FOR MARKET AND PRODUCT DIVERSIFICATION

  Incentive schemes under Chapter 3 have been expanded by way of addition of new
products and markets.
 26 new markets have been added under Focus Market Scheme. These include 16 new
markets in Latin America and 10 in Asia-Oceania.
 The incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%.
 The incentive available under Focus Product Scheme (FPS) has been raised from 1.25% to
2%.
 A large number of products from various sectors have been included for benefits under FPS.
These include, Engineering products (agricultural machinery, parts of trailers, sewing
machines, hand tools, garden tools, musical instruments, clocks and watches, railway
locomotives etc.), Plastic (value added products), Jute and Sisal products, Technical Textiles,
Green Technology products (wind mills, wind turbines, electric operated vehicles etc.),
Project goods, vegetable textiles and certain Electronic items.
 Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by inclusion of
products classified under as many as 153 ITC (HS) Codes at 4 digit level. Some major
products include; Pharmaceuticals, Synthetic textile fabrics, value added rubber products,
value added plastic goods, textile made-ups, knitted and crocheted fabrics, glass products,
certain iron and steel products and certain articles of aluminium among others. Benefits to
these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt,
Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia,
Australia and New Zealand).
 MLFPS benefits also extended for export to additional new markets for certain products.
These products include auto components, motor cars, bicycle and its parts, and apparels
among others.
 A common simplified application form has been introduced for taking benefits under FPS,
FMS, MLFPS and VKGUY.
 Higher allocation for Market Development Assistance (MDA) and Market Access Initiative
(MAI) schemes is being provided.

TECHNOLOGICAL UPGRADATION

 To aid technological up gradation of our export sector, EPCG Scheme at Zero Duty has been
introduced. This Scheme will be available for engineering & electronic products, basic
chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied
products and leather & leather products (subject to exclusions of current beneficiaries
under Technological Up gradation  Fund Schemes (TUFS), administered by Ministry of
Textiles and beneficiaries of Status Holder Incentive Scheme in that particular year). The
scheme shall be in operation till 31.3.2011.
  Jaipur, Srinagar and Anantnag have been recognised as ‘Towns of Export Excellence’ for
handicrafts; Kanpur, Dewas and Ambur have been recognised as ‘Towns of Export
Excellence’ for leather products; and Malihabad for horticultural products.

Agriculture which is the major occupation of people in India has not seen any technological
developenment since the last green revolution. Still old practices of farming are used and the
farm productivity is very low as compared to the developed countries. In 1991 agriculture was
contributing to about 17 % to the exports which has come down to around 12% in 2007- 08. So
it shows that the steps that were taken to increase the productiviity of this sector has not
successfully frutified. The various agro export zones that were set are yet to show results and
private initiatives of the kind of E-chaupal are playing important role in educating and creating
awareness among the farmers which may also help in inceasing the productivity in long run

EPCG SCHEME RELAXATIONS

 To increase the life of existing plant and machinery, export obligation on import of spares,
moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific export
obligation.
 Taking into account the decline in exports, the facility of Re-fixation of Annual Average
Export Obligation for a particular financial year in which there is decline in exports from
the country, has been extended for the 5 year Policy period 2009-14.

SUPPORT FOR GREEN PRODUCTS AND PRODUCTS FROM NORTH EAST

 Focus Product Scheme benefit extended for export of ‘green products’; and for exports of
some products originating from the North East.

STATUS HOLDERS
  To accelerate exports and encourage technological  upgradation, additional Duty Credit
Scrips shall be given to Status Holders @ 1% of the FOB value of past exports. The duty
credit scrips can be used for procurement of capital goods with Actual User condition. This
facility shall be available for sectors of lether (excluding finished leather), textiles and jute,
handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and
intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats
and floating structures), plastics and basic chemicals (excluding pharma products) [subject
to exclusions of current beneficiaries under Technological Upgradation Fund Schemes
(TUFS)]. This facility shall be available upto 31.3.2011.
 Transferability for the Duty Credit scrips being issued to Status Holders under paragraph
3.8.6 of FTP under VKGUY Scheme has been permitted. This is subject to the condition that
transfer would be only to Status Holders and Scrips would be utilized for the procurement
of Cold Chain equipment(s) only.

STABILITY/ CONTINUITY OF THE FOREIGN TRADE POLICY

 To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme is
extended beyond 31-12-2009 till 31.12.2010.
 Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been extended
till 31.3.2010 in the Budget 2009-10.
 Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of
Income Tax Act, has been extended for the financial year 2010-11 in the Budget 2009-10.
 The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC
cover at 95%, to the adversely affected sectors, is continued till March, 2010. Marine sector
 Fisheries have been included in the sectors which are exempted from maintenance of
average EO under EPCG Scheme, subject to the condition that Fishing Trawlers, boats, ships
and other similar items shall not be allowed to be imported under this provision. This would
provide a fillip to the marine sector which has been affected by the present downturn in
exports.
 Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement
(DFCE) Scheme for Status Holders has been given to Marine sector. Gems & Jewellery Sector
23. To neutralize duty incidence on gold Jewellery exports, it has now been decided to allow
Duty Drawback on such  exports.
 In an endeavour to make India a diamond international trading hub, it is planned to
establish “Diamond Bourse(s)”.
 A new facility to allow import on consignment basis of cut & polished diamonds for the
purpose of grading/ certification purposes has been introduced.
 To promote export of Gems & Jewellery products, the value limits of personal carriage have
been increased from US$ 2 million to US$ 5 million in case of participation in overseas
 exhibitions. The limit in case of personal carriage, as samples, for export promotion tours,
has also been increased from US$ 0.1 million to US$ 1 million. Agriculture Sector
 To reduce transaction and handling costs, a single window system to facilitate export of
perishable agricultural produce has been introduced. The system will involve creation of
multi-functional nodal agencies to be accredited by APEDA.

LEATHER SECTOR

 Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi
finished leather from public bonded ware houses, subject to payment of 50% of the
applicable export duty.
 Enhancement of FPS rate to 2%, would also significantly benefit the leather sector.

TEA

 Minimum value addition under advance authorisation scheme for export of tea has been
reduced from the existing 100% to 50%.
 DTA sale limit of instant tea by EOU units has been increased from the existing 30% to 50%.
 Export of tea has been covered under VKGUY Scheme benefits.

PHARMACEUTICAL SECTOR

 Export Obligation Period for advance authorizations issued with 6-APA as input has been
increased from the existing 6 months to 36 months, as is available for other products.
 Pharma sector extensively covered under MLFPS for countries in Africa and Latin America;
some countries in Oceania and Far East.

HANDLOOM SECTOR
  To simplify claims under FPS, requirement of ‘Handloom Mark’ for availing benefits under
FPS has been removed.

EOUs

 EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90%
instead of existing 75%, without changing the criteria of ‘similar goods’, within the overall
entitlement of 50% for DTA sale.
 To provide clarity to the customs field formations, DOR shall issue a clarification to enable
procurement of spares beyond 5% by granite sector EOUs.
 EOUs will now be allowed to procure finished goods for consolidation along with their
manufactured goods, subject to certain safeguards.
 During this period of downturn, Board of Approvals (BOA) to consider, extension of block
period by one year for calculation of Net Foreign Exchange earnings of EOUs.
 EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education
Cess on DTA sale.

THRUST TO VALUE ADDED MANUFACTURING

 To encourage Value Added Manufactured export, a minimum 15% value addition on

imported inputs under Advance Authorization Scheme has now been prescribed.
 Coverage of Project Exports and a large number of manufactured goods under FPS and
MLFPS.

DEPB

 DEPB rate shall also include factoring of custom duty component on fuel where fuel is
allowed as a consumable in Standard Input-Output Norms.

FLEXIBILITY PROVIDED TO EXPORTERS

 Payment of customs duty for Export Obligation (EO) shortfall under Advance Authorisation /
DFIA / EPCG Authorisation has been allowed by way of debit of Duty Credit scrips. Earlier
the payment was allowed in cash only.
 Import of restricted items, as replenishment, shall now be allowed against transferred DFIAs,
in line with the erstwhile DFRC scheme.
 Time limit of 60 days for re-import of exported gems and jewellery items, for participation
in exhibitions has been extended to 90 days in case of USA.
 Transit loss claims received from private approved insurance companies in India will now
be allowed for the purpose of EO fulfilment under Export Promotion schemes. At present,
the facility has been limited to public sector general insurance companies only.

WAIVER OF INCENTIVES RECOVERY, ON RBI SPECIFIC WRITE OFF

  In cases, where RBI specifically writes off the export proceeds realization, the incentives
under the FTP shall now not be recovered from the exporters subject to certain conditions.

SIMPLIFICATION OF PROCEDURES

 To facilitate duty free import of samples by exporters, number of samples/pieces has been
increased from the existing 15 to 50. Customs clearance of such samples shall be based on
declarations given by the importers with regard to the limit of value and quantity of
samples.
 To allow exemption for up to two stages from payment of excise duty in lieu of refund, in
case of supply to an advance authorisation holder (against invalidation letter) by the
domestic intermediate manufacturer. It would allow exemption for supplies made to a
manufacturer, if such manufacturer in turn supplies the products to an ultimate exporter.
At present, exemption is allowed up to one stage only.
 Greater flexibility has been permitted to allow conversion of Shipping Bills from one Export
Promotion scheme to other scheme. Customs shall now permit this conversion within three
months, instead of the present limited period of only one month.
 To reduce transaction costs, dispatch of imported goods directly from the Port to the site has
been allowed under Advance Authorisation scheme for deemed supplies. At present, the
duty free imported goods could be taken only to the manufacturing unit of the authorisation
holder or its supporting manufacturer.
 Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable
excise duty, even before fulfilment of export obligation under Advance Authorisation and
EPCG Scheme.
 Regional Authorities have now been authorised to issue licences for import of sports
weapons by ‘renowned shooters’, on the basis of NOC from the Ministry of Sports & Youth
Affairs. Now there will be no need to approach DGFT (Hqrs.) in such cases.
 The procedure for issue of Free Sale Certificate has been simplified and the validity of the
Certificate has been increased from 1 year to 2 years. This will solve the problems faced by
the medical devices industry.
 Automobile industry, having their own R&D establishment, would be allowed free import of
reference fuels (petrol and diesel), up to a maximum of 5 KL per annum, which are not
manufactured in India.
 Acceding to the demand of trade & industry, the application and redemption forms under
EPCG scheme have been simplified.

REDUCTION OF TRANSACTION COSTS

 No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP.
Further, for all other Authorisations/ licence applications, maximum applicable fee is being
reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs.
50,000 from the existing Rs.75,000 (for EDI applications).
  To further EDI initiatives, Export Promotion Councils/ Commodity Boards have been advised
to issue RCMC through a web based online system. It is expected that issuance of RCMC
would become EDI enabled before the end of 2009.
 Electronic Message Exchange between Customs and DGFT in respect of incentive schemes
under Chapter 3 will become operational by 31.12.2009. This will obviate the need for
verification of scrips by Customs facilitating faster clearances.
 For EDI ports, with effect from December ’09, double verification of shipping bills by
customs for any of the DGFT schemes shall be dispensed with.
 In cases, where the earlier authorization has been cancelled and a new authorization has
been issued in lieu of the earlier authorization, application fee paid already for the cancelled
authorisation will now be adjusted against the application fee for the new authorisation
subject to payment of minimum fee of Rs. 200.
 An Inter Ministerial Committee will be formed to redress/ resolve problems/issues of
exporters.
 An updated compilation of Standard Input Output Norms (SION) and ITC (HS) Classification
of Export and Import Items has been published.

DIRECTORATE OF TRADE REMEDY MEASURES

 To enable support to Indian industry and exporters, especially the MSMEs, in availing their
rights through trade remedy instruments, a Directorate of Trade Remedy Measures shall be
set up.

PART-2

EXPORT PROCEDURES AT RAJESH EXPORTS LTD

The Import and export (control) Act, 1947 regulates the export and import of goods. All the
countries impose restrictions on export of certain specified goods which are in short supply. The
central government declares rules, policies and procedure of export of goods from time to time. The
procedure of export must be guided with those rules and polices so framed by the central
government. The following procedures are adopted while exporting goods:

Receipt of Enquiry and Sending Quotations: The prospective buyers of a commodity send an enquiry
to the exporter requesting the exporter to send information regarding price, quality and terms and
conditions of supply of goods. The enquiries are sent directly or through an indent firms. The replies
to the enquiry are made in the form of a quotation or Performa invoice. There are different types of
quotations like Loco Price, Free on Rail (FOR), Free on Board (FOB), free alongside ship (FAS) and
Franco. Both the reply to enquiry and quotation must specify the various conditions like mode of
delivery, mode of packing and terms of payment.

Receipt of Indent: When the prospective buyer is satisfied with the terms and conditions of trade, he
gives an order for the goods to be dispatched. The indent or order may be received by the exporter
directly from the importer or through indent houses. An indent contains description of goods
ordered, the price, the nature of invoicing and specific instruction of goods ordered, the price, the
nature of invoicing and specific instruction on packing and forwarding of goods. There are two
types of indent called open indent and close indent. In the former case, all necessary facts are not
given by the importer and the order will take a final shape after negotiation between the exporter
and importer. In the later case, full particulars of goods to be delivered are clearly stated.

Enquiry about Creditworthiness: After receipt of indent, the exporter makes necessary enquiry about
the creditworthiness of the buyer. Before sending the goods the exporter will ensure that there is no
risk of non-payment. For this purpose, the exporter demands a letter of credit (L/C). It is a guarantee
by the bank to the foreign dealer that their bills will be honoured up to a specified amount.

Obtaining Export License: Export of goods in India are subject to the control of the Import and
Export (Control) Act, 1947. Certain commodities cannot be exported without obtaining an export
license. The export license, free license and Limited free license. No export license is required for
exporting the following goods:

 The goods exported by the central government.

 Personal luggage of a person going outside India.
 Permitted goods exported by Post.
 The goods included in the purview of OGL.

Depositing foreign Exchange: The foreign exchange regulation Act, 1947 necessitates that every
exporter must deposit foreign exchange earned with the Government or Reserve Bank of India
within a specified time. For this purpose, the exporter will give on undertaking by filling GR forms
which contains value of goods exported, mode of receiving payment and the name of the foreign
exchange.

DOCUMENTS REQUIRED

Certain documentation takes place while exporting from India. Special documents may be
required depending on the type of product or destination. Certain export products may require a
quality control inspection certificate from the Export Inspection Agency. Some food and
pharmaceutical product may require a health or sanitary certificate for export.
Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing
shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the
goods being subject to certain conditions which are mentioned below:

 Export duty/ cess

 Free of duty/ cess
 Entitlement of duty drawback
 Entitlement of credit of duty under DEPB Scheme
 Re-export of imported goods

The following are the documents required for the processing of the Shipping Bill:

 GR forms (in duplicate) for shipment to all the countries.

 4 copies of the packing list mentioning the contents, quantity, gross and net weight of each
package.
 4 copies of invoices which contains all relevant particulars like number of packages,
quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods etc.
 Contract, L/C, Purchase Order of the overseas buyer.
 AR4 (both original and duplicate) and invoice.
 Inspection/ Examination Certificate.

The formats presented for the Shipping Bill are as given below

 White Shipping Bill in triplicate for export of duty free of goods.

 Green Shipping Bill in quadruplicate for the export of goods which are under claim for duty
drawback.
 Yellow Shipping Bill in triplicate for the export of dutiable goods.
 Blue Shipping Bill in 7 copies for exports under the DEPB scheme.

For the goods which are cleared by Land Customs, Bill of Export (also of 4 types - white, green,
yellow & pink) is required instead of Shipping Bill .

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

Customs declaration form-It is prescribed by the Universal Postal Union (UPU) and international
apex body coordinating activities of national postal administration. It is known by the code number
CP2/ CP3 and to be prepared in quadruplicate, signed by the [Link] Note, also known as
CP2. It is filled by the sender to specify the action to be taken by the postal department at the
destination in case the address is non-traceable or the parcel is refused to be accepted.
Commercial invoice - Issued by the seller for the full realisable amount of goods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New
Zealand, Burma, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the
prescribed format and is signed/ certified by the counsel of the importing country located in the
country of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special
form being presented by the Customs authorities of the importing country. It facilitates entry of
goods in the importing country at preferential tariff rate.

Legalised/ Visaed Invoice - This shows the seller's genuineness before the appropriate consulate/
chamber of commerce/ embassy. It do not have any prescribed form.

Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are
of a particular origin or manufactured/ packed at a particular place and in accordance with specific
contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the
exporter expects immediate payment and Usance Draft is required for credit delivery.

Packing List - It shows the details of goods contained in each parcel/ shipment.

Certificate of Inspection - It shows that goods have been inspected before shipment.

Black List Certificate - It is required for countries which have strained political relation. It certifies
that the ship or the aircraft carrying the goods has not touched those country(s).

Weight Note - Required to confirm the packets or bales or other form are of a stipulated weight.

Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to
show that the goods shipped have actually been manufactured and are available.

Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such
as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products,
hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity

factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of India in case of antiques.

Transhipment Bill - It is used for goods imported into a customs port/ airport intended for
transhipment.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the
reservation of space of shipment of cargo through the specific vessel from a specified port and on a
specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the
shipper's name, cart/ lorry No., marks on packages, quantity, etc.

Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the
concerned shed and is sent to the exporter.

Short Shipment Form - It is an application to the customs authorities at port which advises short
shipment of goods and required for claiming the return.

Shipping Advice - It is prepared in aligned document to be used to inform the overseas customer
about the shipment of goods