Overview of

Foreign Trade Policy

World merchandise trade

Exports in 2007
World - $12,083 billion
Germany - $1327 billion
9.5% (1st place)
China - $1218 billion
8.8% (2nd place)
USA $ 1163 billion
8.4% (3rd place)
India $ 145 billion
1% (26th place)

Imports in 2007
World - $ 12,413 billion
USA - $2017 billion
14.2% (1st place)
Germany - $1059 billion
7.5% (2nd place)
China $ 956 billion
6.7% (3rd place)
India $ 217 billion
1.5% (18th place)

World trade in commercial services

Exports in 2007

Imports in 2007

World - $3260 billion

USA - $454 billion 13.9%
(1st place)
UK - $263 billion 8.1%
(2nd place)
Germany $ 197 billion
6.1% (3rd place)
India $ 86 billion
2.7% (11th place)

World - $ 3060 billion

USA - $336 billion
11% (1st place)
Germany - $245 billion
8% (2nd place)
UK $ 193 billion
6.3% (3rd place)
India $ 78 billion
(13th place)

Understanding Foreign Trade

Policy
Drafted by the DGFT under the Foreign
Trade Development & Regulation Act
1992 and rules framed thereunder
Implemented with the help of various other
Depts mainly Customs, Excise and RBI
In order to understand the co-relation, one
must get familiar with the various laws and
functions of various depts

Study the following Acts, Laws &

Regulations
Customs Act 1962
Customs Tariff Act
1975
FEMA 1999
Central Excise Act
1944
Central Excise Tariff
Act 1985

Industrial Policy
Resolution 1956
Industries
Development and
Regulation Act 1951
Laws of Weights and
Measures

Ministry of Finance
Dept of Revenue
Customs-Coverage

Validity of imports and exports

Assessment and valuation
Determination of import/export
duty applicable
Collection of duty
Inspection and supervision of
cargo
Examining co-relation and
compliance with other laws

Excise-Coverage
Export
Under bond clearance of
excisable goods for export
under bond
Rebate of excise duty post
exports where exports have
been effected after payment of
excise duty
Monitoring factory stuffed
containers in certain cases
Import
Monitoring CENVAT

Understanding Foreign Trade

Policy
Export or import involves movement of
goods as well as receipt/remittance of
foreign exchange
Though foreign exchange regulations are
relaxed, monitoring of forex operations is
still being carried out by RBI

Understanding Policy provisions

Promotional Measures
(Chapter 3)
Assistance to States for Infrastructure Development of
Exports [ASIDE]
Market Access Initiative [MAI]
Marketing Development Assistance [MDA]
Towns of Export Excellence [TEE]
Export and Trading Houses [Status certificate]
Served from India Scheme [SFIS]
Vishesh Krishi and Gram Udyog Yojana [VKGUY]
Focus Market Scheme [FMS]
Focus Products Scheme [FPS]
High-Tech Products Export Promotion Schemes

Duty Exemption / Remission

Scheme [Chapter 4]
I. Duty Exemption Scheme
Advance Authorisation
Advance Authorisation for Annual Requirement
Duty Free import Assistance [DFIA]
II. Duty Remission Scheme
Duty Entitlement Passbook Scheme [DEPB]
Duty Drawback

EPCG Scheme (Chapter 5)

Import of capital goods and spares at
concessional rate of duty [@3% of
Customs Duty] coupled with export
obligation equivalent to 8 times the duty
saved amount to be completed in 8 years.
[as per Annual Supplement to FTP 200809]

EOU / EHTP/ STP/ BTP

Scheme (Chapter 6)
Units undertaking to export their entire
production of goods and services except
permissible sales in Domestic Tariff Area
(DTA) are known as Export Oriented Units
(EOUs).
Permits import of capital goods and inputs
without payment of duty

Deemed Exports (Chapter 8)

Goods supplied do not leave country and
payment is received in Indian Rupees or in
Free Foreign Exchange.

Vishesh Krishi and Gram Udyog Yojana

[VKGUY]

5% Duty credit entitlement to promote export of

(i) Agricultural Produce and their value added products;
(ii) Minor Forest Produce and their value added variants;
for exports w.e.f 1.4.2004;
(iii) Gram Udyog Products, for exports w.e.f 01.04.2006;
(iv) Forest Based Products, for exports w.e.f 01.04.2007;
and
(v) Other products, as notified from time to time.

List of eligible products is given in App 37A of HBP V1.

Focus Market Scheme [FMS]

Export of all products to the notified countries.
Entitlement 2.5% of the FOB value of exports
[ w.e.f. 1.04.2006].
List of Countries eligible for benefit under this
scheme is given in Appendix 37C of HBPv1.
Exports made by EOUs/EHTPs/BTPs who do
not avail direct tax benefits/exemptions, will be
eligible to get benefits under this scheme.

Focus Product Scheme (FPS)

Eligibility: Exports of notified products to
all countries (including SEZ units). List of
notified products is given in Appendix 37D
of HBPv1.
Entitlement:
Duty Credit scrip equivalent to 1.25% of
FOB value of exports for each licensing
year commencing from 1st April, 2006.

Duty Exemption/Remission Scheme

Duty Exemption/
Remission Scheme
Exemption from
payment of duty on
inputs-prior or after to
Exports/ Deemed
Exports
Adv. Autho./DFIA for
1) Phy. Exports
2) Deemed Exports
Annual Adv. Autho.
1) Phy. Exports
2) Deemed Exports

Remission of duty on
inputsPost-Exports by way of
Duty Credit Entitlement
DEPB Scheme
Duty Drawback

Export Promotion Capital Goods

[EPCG] Scheme

Export Promotion Capital Goods

Scheme
This scheme [EPCG]
allows import of capital goods and spares
at concessional rate of duty [@3% of Customs Duty]
coupled with export obligation equivalent to 8 times the
duty saved amount to be completed in 8 years.

In case CVD is paid in cash on imports under EPCG,

incidence of CVD would not be taken for computation of
net duty saved provided the same is not Cenvated.

Export Oriented Units [EOUs]

Export Oriented Units [EOUs]

Units undertaking to export their entire production of
goods and services except permissible sales in Domestic
Tariff Area (DTA) are known as Export Oriented Units
(EOUs).
Electronic Hardware Technology Parks (EHTPs),
Software Technology Parks (STPs) or Bio-Technology
Parks (BTPs) are also covered under EOU scheme.
These are product specific units availing the same
benefits as EOUs.
EOUs/EHTPs/STPs/BTPs are allowed to manufacture
goods including repair, re-making, reconditioning,
reengineering, and rendering of services wherever
applicable.

Deemed Exports

Deemed Exports
This is a special facility provided for
supplies of indigenous products which can
be consumed ultimately in the production
of goods to be exported. The conditions
are that supplied goods as it is do not
leave the country but get consumed in the
process of manufacture, payment for
which is received in Indian Rupees or in
foreign exchange.

Deemed Exports
Supplies to Authorisation Holder [Adv.
Autho./AAA/DFIA/EPCG]
Supplies to EOUS/EHTPs/STPs/BTPs
Supplies to Projects
Supplies to Fertilizer Plant
Marine Freight Containers by 100% EOUs
(Domestic Freight Containers Manufacturers)

Thank you