Foreign Trade Policy

Foreign Trade Policy (FTP) is regulated by the Government of India by way of the Foreign Trade (Development & Regulation) Act, 1992. This Act is concerned with the development and regulation of foreign trade by facilitating imports into and augmenting exports from India. FTP is a set of guidelines and instructions formulated by Central Government covering a period of 5 years. The latest FTP has been issued covering period 2015-2020. Following schemes are mainly covered in the policy of 2015-2020.

The scheme has been designed by merging 5 different schemes of earlier policy (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) in one scheme. Duty credit script is granted on making export of specified products to specified countries. The scripts can be used for payment of duty liability and is freely transferable in market.

This scheme has replaced the earlier Served From India Scheme (SFIS). 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 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.

This scheme endeavours to neutralise the incidence of customs duties of the imported inputs. Advance authorisation are exempted from payment of basic customs duty, additional customs duty, anti-dumping duty and safeguard duty, if any. To avail such benefit under the scheme, there is a condition to fulfil export obligation. The scheme necessitates export with minimum value addition of 15%. Advance authorisations are issued to the exporters on the basis of their annual requirements.

DFIAs are issued to exporters to allow duty free import of inputs, fuel, oil, enery sources, catalyst which are required for production of export products. The DFIA authorisations are issued only for the specific products for which SION have been notified. Unlike certain exceptions, most of the provisions of DFIA are similar to the provision of Advance Authorisation Scheme.

DBK has been one of the popular and principal methods of encouraging exports. It is a relief by way of refund/recoupment of customs and excise duty paid on inputs or raw materials and service tax paid on input services used in manufacture of export goods. Duty Drawback is beneficial provision given under the Customs Act, 1962 and Drawback Rule, 1995. Drawback is not allowed when assessee opts for advance authorisation scheme. DBK could be all industry rate or brand rate. Latest Notification through which DBK allowed is 110/2015-cus.

EPCG Scheme allows import of capital goods at Zero customs duty. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources. Import under EPCG Scheme is subject to an export obligation equivalent to 6 times of duty saved on capital goods to be fulfilled in 6 years. The scheme covers manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service providers.

“Deemed Exports” refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. It mainly covers supplied made to SEZ/ EOU / STP / EHTP / BTP. Deemed exports are allowed most of the benefits which are extended to exporter making physical exports outside India.