Revised Export and Import Policy 1997-2002 - RBI - Reserve Bank of India
Revised Export and Import Policy 1997-2002
Since 1992, the Ministry of Commerce, Government of India, has been announcing medium-term |
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Export - Import (EXIM) Policy valid for a duration of five years. In the light of the developments in Indias exports and imports as well as other external developments, modifications, if any, are announced at the end of March every year. Accordingly, modifications of the EXIM Policy 1997-2002 were announced on March 31, 1999. |
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The changes effected through the recent modifications in EXIM Policy can be classified into three |
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broad groups which, however, are not necessarily mutually exclusive: |
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(a) |
Procedural Changes |
The recent modifications have signalled significant advances towards improving procedures |
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associated with Indias foreign trade. The emphasis has been to move towards a trust-based regime as opposed to a highly administered regime for compliance of EXIM norms. Major areas where such measures have been initiated include the following : |
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1. |
On a pilot basis, filling up of electronic form for issuing advance licence is being started in Delhi. |
2. |
All administered controls on export samples marked "not for sale" have been removed. Ceilings on export of samples in other cases as well as import of samples has been substantially relaxed. |
3. |
Import of new capital goods under lease finance would no longer need permission from licensing authorities. |
4. |
Manufacturer exporters with export performance of Rs.1 crore and above in the preceding year have been made eligible for duty-free Annual Advance Licence for import of inputs. This can be done without approaching the Director General of Foreign Trade (DGFT) and without any stipulation on value addition. The entitlement under this scheme shall be up to 125 per cent of the average FOB value of export in the preceding licensing year. Licensing procedure has been decentralised in respect of items for which there is no input-output norm. |
5. |
All manufacturers exporting more than 50 per cent of their production, subject to a minimum export of Rs. 1 crore, in the preceding year, have been made eligible for special facilities through the issue of a "green card". |
6. |
Units that receive recognition for three or more successive terms under Export House (EH), Trading House (TH), Star Trading House (STH) and Super Star Trading House (SSTH) Schemes would be eligible for golden status certificate. It would enable them to enjoy the benefits of EH/TH/STH/SSTH irrespective of their actual performance thereafter as per the guidelines issued in this regard from time to time. |
(b) |
Liberalisation Measures |
In order to promote further liberalisation of India's exports and imports as well as to fulfill |
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the commitments to the WTO, the recent modifications of EXIM Policy have initiated the following important steps: |
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1. |
Hitherto, EXIM Policy contained Negative Lists of exports and imports comprising of canalised (imported only by canalised agencies specially notified by the Government), restricted (exportable/importable under specific licences) and prohibited items. This system has been revamped. Following the Indian Trade Classification (based on Harmonised Commodity Description and Coding System) [in short, ITC (HS)] export and import items have been put under the Lists of (a) Free exportable or importable, (b) Canalised imports, (c) items importable under Special Import Licence (SIL) and (d) Restricted List. Further, 894 new items have been made freely importable while 414 new items have been shifted to the SIL list, leaving only 667 items under the restricted list. |
2. |
The direct concessions (for example, in the form of concessional rents) made available till 1998-99, to the units under Exports Oriented Unit (EOU) Scheme, Export Processing Zone (EPZ) Scheme, Electronic Hardware Technology Park (EHTP) Scheme or Software Technology Park (STP) Scheme have been suitably reoriented to reflect liberalisation. |
3. |
The nomenclatures used by the EXIM Policy have been revised to make them more WTO-consistent. For example, the term negative list of exports/imports has been dropped. Likewise, "export obligation" has been replaced by "export performance/commitment", "benefits to exporters" has been replaced by "entitlement of the exporters", 'concession' to exporters has been replaced by 'exemption', etc. |
(c) |
Modifications in the Incentive Structure |
The modified Policy initiated steps to discourage certain kinds of imports/ exports. Simultaneously, |
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measures have been taken to encourage certain types of exports/imports as well as exporters/ importers. Major features of such changes include the following : |
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1. |
Import of second hand capital goods without licence under actual user condition has been done away with and these products have been placed under the restricted list. Second hand capital goods can no longer be imported under the Export Promotion Capital Goods (EPCG) Scheme. Certain relaxation of norms for import of second hand jigs, fixtures, dies, machinery, etc. on export basis have also been withdrawn. |
2. |
Under the EPCG Scheme, the threshold limit of the CIF value for eligibility under the zero-duty scheme has been reduced from Rs. 20 crore to Rs. 1 crore. Sectoral coverage and export obligation under the 10 per cent duty scheme have been modified. Under the changed policy, textiles, biotechnology, engineering and chemical sector would get better coverage. Through the modification, the eligibility for import of machinery under EPCG Scheme has been broadened to cover agricultural exports. |
3. |
The yearly limit of licence-free exports of samples has been increased from Rs. 25,000 to Rs. 1,00,000. The minimum value addition condition on export of imported products against rupee payment has been reduced from 100 per cent to 33 per cent. Various conditions on import for the purpose of export against freely convertible currencies and export of replacement goods have also been relaxed. |
4. |
The coverage on internationally recognised quality certificates has been enlarged and the facilities under the scheme have been revised. Special schemes have been devised to promote branded product exports from India. |
5. |
The rate at which credit of Duty Exemption Pass Book Scheme (DEPB) on pre export basis is to be granted has been increased from 5 per cent to 10 per cent of the average export performance of the applicant during the preceding three licensing years. |
6. |
Units involved in services, agroprocessing and biotechnology have been made eligible to avail facilities under EOU/EPZ/EHTP/STP Schemes. |
7. |
The upper limit for Domestic Tariff Area (DTA) sales by the EOU/EPZ/ EHTP/STP units has been increased from 25 per cent of the value of production to 50 per cent of the FOB value of exports. Corporate tax holiday for these units has been increased from five to ten years. Supplies to bonded warehouses and against SIL have been included within the scope of the discharge of export performance. |
8. |
Private bonded warehouses have been allowed to procure goods from DTA for the purpose of export without payment of any duty. |
9. |
Service providers have been included within the purview of EH/ TH/STH/SSTH. Equivalents of EH/ TH/STH/SSTH for services exports have been devised. Export performance criteria for recognition under EH/TH/STH/SSTH Schemes have been rationalised with increase in export performance requirement between 1999-2000 and 2000-2001. Weightage for the purpose of recognition under EH/TH/STH/ SSTH Schemes, direct manufacturing and export by Small Scale Industry (SSI)/Tiny sector/Cottage Sector, the handlooms and handicraft sector has been increased from 200 per cent to 300 per cent while that for project exports has been increased from 100 per cent to 200 per cent. |
10. |
A special chapter has been added in the EXIM Policy to set out various schemes for the services exporters. |
11. |
States have been provided with financial incentives for providing infrastructure for foreign trade. |
Major features of the EXIM Policy before and after the modification are enumerated in the |
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following table. |
Major Features on the Revised EXIM Policy |
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Scheme/ Procedure |
Features Prior to the |
Features Effected through the |
(Relevant clause of the |
Current Revision |
Current Revision |
EXIM Policy) |
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General Provisions Regarding Exports and Imports |
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Categorisation of Exports and |
Apart from the freely exportable and |
The convention of announcing |
Imports |
importable goods, the Central |
Negative Lists of exports and |
Government could announce |
imports has been done away with. |
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(Chapter 4, Paragraphs 1, 2, 3, 4, |
Negative Lists of items for exports |
According to the Indian Trade |
5 and 8) |
and imports. The Negative Lists |
Classification (based on Harmonised |
consisted of articles for which |
Commodity Description and Coding |
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import/export were prohibited, |
System) [in short, ITC (HS)] export |
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restricted or canalised. |
and import items have been put |
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under the Lists of Free exportable |
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or importable, List for Canalised |
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imports and Lists for Restricted |
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items. |
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Issue of Green Cards to Exporters |
No such provision. |
All manufacturers exporting more |
than 50 per cent of their |
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(Chapter 4, paragraph 23) |
production, subject to a minimum |
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export of Rs.1 crore, in the preceding |
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year, would be issued a green card by |
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the Director General of Foreign Trade |
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(DGFT). This card would entitle the |
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holder to such facilities as may be |
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specified from time to time. |
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Imports |
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Import of second hand capital |
All second hand capital goods with |
This scheme has been discontinued. |
goods |
a minimum residual life of five years |
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could be imported by actual users |
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(Chapter 5, paragraph 4) |
without a licence subject to Actual |
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User condition and in accordance |
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with the relevant procedure. |
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Import of second hand machinery |
Such imports were allowed even if |
This scheme has been discontinued. |
and accessories on export basis |
residual life for the machinery or |
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accessories were less than five |
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(Chapter 5, Paragraph 7, |
years. |
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Subparagraph b) |
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Import of new capital goods under |
No specific provision in this regard. |
Permission of licensing authority |
lease financing |
would not be required for this |
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purpose. |
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(Chapter 5, Paragraph 11) |
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Export Promotion Capital Goods (EPCG) Scheme |
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Import of second hand capital goods |
Such imports were eligible to avail |
Import of such goods would not be |
facilities under the Scheme. |
allowed under the Scheme. |
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(Chapter 6, Paragraph 1) |
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Threshold limit under zero duty |
The minimum threshold limit in |
The limit has been reduced to Rs.1 |
Scheme |
terms of CIF value of imports was |
crore. |
Rs. 20 crore. |
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(Chapter 6, Paragraph 2) |
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Export obligation and sectoral |
Export obligation on Net Foreign |
This obligation has been increased |
coverage under zero duty Scheme |
Exchange Earning (NFE) basis was |
to six times the CIF value of Capital |
in case CIF value is Rs. 1 Crore or |
five times the CIF value of Capital |
goods imported under the Scheme. |
more |
goods imported under the Scheme. |
Sectoral coverage of certain |
industries including biotechnology, |
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(Chapter 6, Paragraph 2) |
textiles, chemicals and engineering |
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sectors have been improved under |
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the Scheme. |
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Eligibility under the Scheme |
No specific provision about |
Agricultural exporters have been |
(Chapter 6, Paragraph 3, |
agricultural exporters. |
made eligible to import equipment |
Subparagraph a) |
under the Scheme subject to |
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specific conditions. |
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Discharge of export obligations - |
The export obligation had to be |
In addition, exporters have been |
items eligible for the purpose |
fulfilled by the export of goods |
allowed to fulfill their obligation by |
manufactured or produced by the |
the export of same goods, for which |
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(Chapter 6, Paragraph 5, |
use of the capital goods imported |
EPCG licence has been obtained, |
Subparagraph i) |
under the scheme. |
manufactured or produced in |
different manufacturing units of the |
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licence holder. |
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Discharge of export obligations - |
The export obligation was over and |
Exports made to former USSR |
the process of calculation for the |
above the average level of exports |
during the preceding three licensing |
purpose |
(including those made to former |
years would not be included to |
USSR) achieved by him in the |
calculate the export obligation. |
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(Chapter 6, Paragraph 5, |
preceding three licensing years. |
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Subparagraph v) |
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Duty Exemption Scheme (DES) |
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Treatment of Advance Licences |
These licences were not included |
Advance Licences have been |
within DES. |
included within the purview of the |
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(Chapter 7, Paragraph 1) |
Scheme. |
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Advance Licence |
Exporters having past export |
Manufacturer exporter with export |
performance in preceding three |
performance of Rs.1 crore in the |
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(Chapter 7, Paragraph 4, |
licensing years were eligible to apply |
preceding year and registered with |
Subparagraph A and Paragraph 13) |
for Advance Licence and Advance |
excise authorities have been made |
Intermediate Licence without an |
entitled for a nontransferable and |
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export order. In addition, they are |
duty-free import licence called |
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also eligible for Special Imprest |
Annual Advance Licence. Export |
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licences. The entitlement under all |
Houses and various trading Houses |
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these licences taken together was |
can avail the facility under certain |
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up to 100 per cent of the average |
conditions. Such annual advance |
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FOB value of their exports, in the |
licence would be issued with |
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preceding three licensing years. |
positive value addition without |
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stipulation of minimum value |
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addition. The entitlement under this |
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scheme shall be up to 125 per cent |
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of the average FOB value of export |
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in the preceeding licensing year. The |
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scheme would come into operation |
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from 1st July, 1999. |
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Credit of Duty Exemption Pass |
DEPB credit on pre export basis |
The rate of DEPB credit on pre |
Book (DEPB) Scheme on pre |
was granted at the rate of 5 per |
export basis has been increased to |
export basis |
cent of the average export |
10 per cent of the average export |
performance of the applicant |
performance of the applicant |
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(Chapter 7, Paragraph 35) |
during the preceding three |
during the preceding three |
licensing years. |
licensing years. |
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Diamond Gem and Jewellery Export Promotion Schemes |
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Diamond Imprest Licence |
These licences were issued for |
In addition, these licences can be |
import of rough diamonds. |
issued for the import of cut and |
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(Chapter 8, Paragraph 3) |
polished diamonds. |
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Diamond Imprest Licence for |
No specific provision. |
An exporter of cut and polished |
Export Houses and various Trading |
diamonds having the status of |
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Houses |
Export Houses or any type of |
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Trading Houses could be issued a |
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(Chapter 8, Paragraph 4, |
licence for import of cut and |
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Subparagraph b) |
polished diamonds up to 5 per cent |
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of the export performance of the |
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preceding year of cut and polished |
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diamonds. |
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Coverage of items allowed to be |
Precious, semi-precious stones, |
Personal carriage of precious, |
transported as samples with |
beads and articles were not |
semi-precious stones, beads and |
personal carriage by gems and |
included within the list of samples |
articles as samples has been |
jewellery exporters |
that could be transported as |
allowed within overall limits for |
personal carriage. |
such samples. |
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(Chapter 8, Paragraph 20, |
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subparagraph b) |
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Facilities to Export Oriented Units |
No specific provision. |
EOU/EPZ units are allowed to |
(EOUs)/Export Processing Zones |
import plain gold, platinum and |
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(EPZs) |
silver jewellery for repairs/re-make |
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and export subject to a minimum |
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(Chapter 8, Paragraph 28, |
Net Foreign Exchange Earning as a |
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subparagraph A) |
Percentage of Export Earning |
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(NFEP)of 7.5 per cent. |
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Export of Samples |
Samples made in wax models, |
Export of such samples can be |
silver models and rubber moulds |
done with intimation to the |
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(Chapter 8, Paragraph 35) |
were allowed to be exported with |
Development Commissioner. The |
the permission of the Development |
permissible value of the export of |
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Commissioner provided its value |
samples has been increased |
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does not exceed Rs.10,000 in a |
to Rs. 1,00,000. |
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year. |
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Export Oriented Units (EOUs) and Units in Export Processing Zones (EPZs), Electronic |
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Hardware Technology Park Units (EHTP) and Software Technology |
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Park Units (STP) |
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Permissible activities by EOU/ |
Such activities did not specifically |
Services, agro-processing and |
EPZ/ EHTP/STP units |
include services, agro-processing |
biotechnology have been specifically |
(Chapter 9, Paragraph 1 and 2) |
and biotechnology. These units were |
included in the list of permissible |
not specifically allowed to procure |
activities. Further, they may export |
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goods duty-free from Bonded |
all products except goods mentioned |
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warehouses within the Domestic |
as prohibited items of exports in |
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Tariff Area (DTA). |
ITC (HS) Classifications of Export |
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items. Apart from direct duty-free |
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imports, these units have been |
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allowed to procure goods duty-free |
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from bonded warehouses within the |
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DTA. |
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DTA sales |
Up to 25 per cent of the production |
Permissible DTA sale has been |
in value terms were allowed to be |
increased up to 50 per cent of the |
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(Chapter 9, Paragraph 9, |
sold in the DTA. |
FOB value of exports. |
Subparagraph b) |
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DTA sale as part of discharge of |
Sale to Bonded warehouses and |
Supplies made to Bonded |
export performance requirement |
supply against special entitlement |
warehouses set up under paragraph |
of duty free import of goods were |
11.14 of the EXIM Policy and supply |
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(Chapter 9, Paragraph 10, |
not specifically treated as discharge |
of goods against special entitlement |
Subparagraph d and e) |
of export obligation. |
of duty free import of goods would |
be treated as discharge of export |
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performance requirement. |
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Rents for EOU/EPZ units |
Such units used get clear con- |
Such rents would be fixed by the |
cessions on rent for their premises |
authorities from time to time. |
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(Chapter 9, Paragraph 15, |
for a period of up to five years from |
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Subparagraph a) |
the setting up of the unit. |
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Tax holiday for EOU/EPZ/ EHTP/ |
EOU/EPZ/EHTP/STP Units were |
Such concessions have been |
STP units |
eligible for exemption from payment |
increased for a period of ten years. |
of corporate income tax for a block |
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(Chapter 9, Paragraph 15, |
of five years in the first eight years |
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Subparagraph b) |
of operation. |
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Subcontracting by EOU/EPZ/ |
Such subcontracting was allowed if |
Stipulation on indigenous raw |
EHTP/STP units to other EOU/ |
the EOU/EPZ/ EHTP/STP units |
material use has been done away |
EPZ/ EHTP/STP units or units in |
used 90 per cent or more |
with. These may be permitted to |
DTA |
indigenous raw material. |
subcontract up to 50 per cent of |
(Chapter 9, Paragraph 17, |
their production. |
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Subparagraph a) |
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Private Bonded warehouses in EPZ |
Such warehouse could re-export |
These warehouses have been |
imported goods with re-packing or |
allowed to re-export imported goods |
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(Chapter 9, Paragraph 21, |
labelling. There was no specific |
with or without re-packing/ |
Subparagraph a) |
provision for duty-free procurement |
labelling/minor processing. These |
of goods from DTA or duty-free |
warehouses may procure goods from |
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import of packing, labelling and |
DTA without payment of excise duty |
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such other material. |
for exports. They may also import |
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packing, labelling and such other |
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material without payment of duty |
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concerning their operations. |
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Exports |
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Export of gifts |
The annual limit for export of gifts |
The limit has been increased to |
was Rs. 25,000. |
Rs. 1,00,000. |
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(Chapter 11, Paragraph 4) |
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Re-export of restricted import/ |
Restricted export/ import items |
The minimum value addition |
export item |
could be re-exported with a |
condition has been relaxed. |
minimum value addition of 10 per |
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(Chapter 11, Paragraph 8) |
cent. |
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Export Houses (EHs), Trading Houses (THs), Star Trading Houses (STHs) and Super Star |
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Trading Houses (SSTHs) |
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Eligibility of service providers |
No specific provision. |
Service providers have been made |
eligible for recognition as EH/ TH/ |
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(Chapter 12, Paragraph 2) |
STH/SSTH. |
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Export performance level |
The level of minimum export |
The minimum export performance |
performance for recognition as EH/ |
level requirements have been |
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(Chapter 12, Paragraph 5, |
TH/STH/SSTH were not rounded |
rationalised. Higher performance |
Subparagraph c) |
up figures and the performance level |
requirement levels have been set for |
requirements for consecutive years |
2000-2001 as against 1999-2000. |
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were uniform within each specific |
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category. |
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Special weightage for recognition |
Export of products reserved for |
All these products produced and |
as EH/TH/ STH/SSTH |
Small Scale Industry (SSI) units and |
directly exported by the respective |
manufactured by units in the SSI, |
units would be attributed triple |
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(Chapter 12, Paragraph 7, |
tiny sector, cottage sector |
weightage for the purpose of |
Subparagraphs a and b) |
handlooms and handicraft sector |
recognition. |
(including handloom made silk |
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products) were assigned double |
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weightage for the purpose of |
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recognition. |
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Facilities of various types of |
No specific provision. |
Service Export House, International |
Service Export Houses |
Service Export House, International |
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Star Service Export House, |
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(Chapter 12, Paragraphs 10 and |
International Super Star Service |
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12, Subparagraph B) |
Export House have been made |
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entitled to the facilities extended to |
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EH/TH /STH/SSTH. |
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Facilities for manufacturing |
No specific provision. |
Under certain conditions manufac- |
companies and industrial houses |
turing companies and industrial |
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houses have been made eligible to |
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(Chapter 12, Paragraph 12, |
avail the facilities of STH and SSTH, |
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Subparagraph A) |
respectively. |
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Golden status certificate |
No specific provision. |
Exporters who have attained or |
would attain in future EH/TH/STH/ |
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(Chapter 12, Paragraph 14) |
SSTH status for three successive |
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terms or more would be eligible for |
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golden status certificate which |
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would enable them to enjoy the |
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benefits of EH/TH/ STH/SSTH |
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irrespective of their actual |
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performance thereafter as per the |
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guidelines issued in this regard from |
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time to time. |
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Brand Promotion and Quality |
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Increase in coverage for recognition |
No specific provision for SEI CMM |
Manufacturers/ processors who |
of quality standards and the |
accreditation/ certification and |
have acquired SEI CMM level 2 and |
facilities |
quality trademark holders. |
above accreditation/ certification |
would be recognised. Exporter |
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(Chapter 14, Paragraph 4) |
exporting products with quality |
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trademarks would be recognised for |
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extending special facilities. Such |
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facilities would also include issue of |
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Green Card to quality certificate |
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holders. |
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Brand promotion |
No specific provision. |
With the objective of promoting |
exports of branded products, a |
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(Chapter 14, Paragraph 7) |
Committee would be constituted for |
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identification of such products. |
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Exporters of such branded products |
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would receive special benefits. |
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Export of Services |
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Special provisions for services |
No specific provision for service |
Exporters of services and service |
exporters and service providers to |
exporters of service providers. |
providers to exporters have been |
exporters |
made eligible for a host of facilities |
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that were earlier extended to |
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(Chapter 15, Paragraphs 1 to 9) |
manufactured and merchant |
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exporters of goods. These facilities |
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include EPCG Scheme, EOU/EPZ/ |
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EHTP/ STP Scheme, EH/ TH/STH/ |
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SSTH Scheme, etc. Furthermore, in |
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many cases, services exporters and |
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service providers have been |
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extended these facilities on more |
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favourable terms than the exporters |
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of goods. |
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* Prepared in the Division of International Trade, Department of Economic Analysis & Policy. |