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Essay on EXIM Policy
EXIM Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. The Foreign Trade Policy of India is guided by the Export Import in known as in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992.
Directorate General of Foreign Trade is the main governing body in matters related to Exim Policy. Trade Policy is prepared and announced by the Central Government (Ministry of Commerce). India’s Export Import Policy also known as Foreign Trade Policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position.
Essay # 1. Exim Policy 2002-2007:
Offshore banking units (OBUs) shall be permitted in SEZs. Detailed guidelines are being worked out by the RBI. This should help some of our cities emerge as financial nerve centres of Asia. Units in SEZ would be permitted to undertake hedging of commodity price risks, provided such transactions are undertaken by the units on stand-alone basis.
This will impart security to the returns of the unit. It has also been decided to permit external commercial borrowings (ECBs) for tenure of less than three years in SEZs. The detailed guidelines will be worked out by the RBI. This will provide opportunities for accessing working capital loan for these units at internationally-competitive rates.
Export restrictions such as registration and packaging requirement are being removed on butter, wheat and wheat products, coarse grains, groundnut oil and cashew to Russia. Quantitative and packaging restrictions on wheat and its products, butter, pulses, grain and flour of barley, maize, bajra, ragi and jowar have already been removed on March 5. Restrictions on export of all cultivated (other than wild) varieties of seed, except jute and onion, removed.
To promote export of agro and agro- based products, 20 agri export zones have been notified. In order to promote diversification of agriculture, transport subsidy shall be available for export of fruits, vegetables, floriculture, poultry and dairy products. The details shall be worked out in three months. Three per cent special DEPB rate for primary & processed foods exported in retail packaging of 1 kg or less.
An amount of Rs. 5 crore under market access initiative (MAI) has been earmarked for promoting cottage sector exports coming under the KVIC. The units in the handicrafts sector can also access funds from MAI scheme for development of a Web site for virtual exhibition of their product. Under the export promotion capital goods (EPCG) scheme, these units will not be required to maintain average level of exports, while calculating the export obligation.
These units shall be entitled to the benefit of Export House status on achieving lower average export performance of Rs 5 crore as against Rs 15 crore for others. The units in handicraft sector shall be entitled to duty-free imports of an enlarged list of items as embellishments up to 3 per cent of f.o.b. value of their exports.
With a view to encouraging further development of centres of economic and export excellence such as Tirupur for hosiery, woollen blanket in Panipat, woollen knitwear in Ludhiana, following benefits shall be available to small-scale sector:
(a) Common service providers in these areas shall be entitled for facility of EPCG scheme;
(b) The recognised associations of units in these areas will be able to access the funds under the market access initiative scheme for creating focused technological services and marketing abroad. Such areas will receive priority for assistance for identified critical infrastructure gaps from the scheme on Central assistance to State.
Duty-free imports of trimmings and embellishments up to 3 per cent of the f.o.b. value hitherto confined to leather garments extended to all leather products. Sample fabrics permitted duty-free within the 3 per cent limit for trimmings and embellishments. 10 per cent variation in GSM is allowed for fabrics under advance licence.
Additional items such as zip fasteners, inlay cards, eyelets, rivets, eyes, toggles, velcro tape, cord and cord stopper included in input output norms. Duty entitlement pass book (DEPB) rates for all kinds of blended fabrics permitted. Such blended fabrics to have the lowest rate as applicable to different constituent fabrics.
Customs duty on import of rough diamonds is being reduced to 0 per cent. Import of rough diamonds is already freely allowed. Licensing regime for rough diamond is being abolished. This should help the country emerge as a major international centre for diamonds.
Value addition norms for export of plain jewellery reduced from 10 per cent to 7 per cent. Export of all mechanized unstudded jewellery allowed at a value addition of 3 per cent only. Having already achieved leadership position in diamonds, now efforts will be made for achieving quantum jump on jewellery exports as well.
Personal carriage of jewellery allowed through Hyderabad and Jaipur airport as well. The electronic hardware technology park (EHTP) scheme is being modified to enable the sector to face the zero duty regimes under the ITA (Information Technology Agreement).
All pesticides formulations to have 65 per cent of DEPB rate of such pesticides. Reimbursement of 50 per cent of registration fees for registration of drugs. Transport subsidy for exports to be given to units located in North East, Sikkim and Jammu & Kashmir so as to offset the disadvantage of being far from ports. To encourage re-location of industries to India, plant and machineries would be permitted to be imported without a licence, where the depreciated value of such relocating plants exceeds Rs 50 crore.
Direct negotiation of export documents to be permitted. This will help the exporters to save bank charges. Foreign inward remittance certificate to be accepted in lieu of bank realisation certificate for documents negotiated directly. In case the exporter is denied the benefit under one scheme, he shall be entitled to claim benefit under some other scheme. Newcomers to be entitled for licences without any verification against execution of bank guarantee.
Essay # 2. Exim Policy 2009-14:
The Foreign trade Policy which was announced on August 28, 2009 is an integrated policy for the period 2009-14. The policy aims at developing export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange.
FTP assumes great significance this year as India’s exports have been battered by the global recession. 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.
Market Linked Focus Product Scheme (MLFPS) expanded by inclusion of products like pharmaceuticals, textile fabrics, rubber products, glass products, auto components, motor cars, bicycle and its parts etc. Focus Product Scheme benefit extended for export of ‘green products’ and some products from the North East. Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced.
Additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports accelerate exports and encourage technological upgradation. Income Tax exemption to 100 percent EOUs and to STPI units under Section 10B and 10A of Income Tax Act has been already extended for the financial year 2010-11 in the Budget 2009-10.
Duty Drawback is allowed on Gold Jewellery exports to neutralize duty incidence. On the payment of 50 percent applicable export duty, Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi-finished leather from public bonded ware houses. Dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorisation scheme for deemed supplies.
Presently the duty free imported goods could be taken only to the manufacturing unit of the authorisation holder or its supporting manufacturer. Maximum applicable fee for 18 Authorisations/licence applications has been 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).
Disposal of manufacturing wastes/scrap will now be allowed after payment of applicable excise duty also before fulfillment of export obligation under Advance Authorisation and EPCG Scheme. Earlier it was allowed after fulfillment of export obligation. Licenses for the import of sports weapon will be issued now by Regional Authorities provided a NOC (No Objection Certificate) is issued by Ministry of Sports & Youth Affairs.
Those Automobile industries which have their R&D; establishment will be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which are not manufactured in India. A Directorate of Trade Remedy Measures shall be set up, which will enable support to Indian industry and exporters, especially the Micro Small & medium Enterprises MSMEs in availing their rights through trade remedy instruments.