A THAK: Foreign Trade Policy 2009-14

Foreign Trade Policy

27th August 2009 - 31st March 2014

Government of India

Ministry of Commerce and Industry

Department of Commerce

Website: http://dgft.gov.in

TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY

PART-II, SECTION-3, SUB SECTION (ii)

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

NOTIFICATION No. 1/2009-2014

NEW DELHI, THE 27th August,2009

In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act,1992 (No.22 of 1992) read with paragraph 1.2 of the Foreign

Trade Policy, 2009-2014, the Central Government hereby notifies the ForeignTrade Policy, 2009-2014 as contained in Annexure to this notification. The Policy shall come into force w.e.f. 27th August, 2009.

This issues in Public interest.

( R. S. Gujral ) Director General of Foreign Trade and

Ex OfficioAdditional Secretary to the Government of India

(Issued from F.No. 01/94/180/Foreign Trade Policy/AM10/PC-4)

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FOREIGN TRADE POLICY 2009-14

FOREWORD

The UPA Government has assumed office at a challenging time when the entire world is facing an unprecedented economic slow-down. The year 2009 is witnessing one of the most severe global recessions in the post-war period. Countries across the world have been affected in varying degrees and all major economic indicators of industrial production, trade, capital flows, unemployment, per capita investment and consumption have taken a hit. The WTO estimates project a grim forecast that global trade is likely to decline by 9% in volume terms and the IMF estimates project a decline of over 11%. The recessionary trend has huge social implications. The World Bank estimate suggests that 53 million more people would fall into the poverty net this year and over a billion people would go chronically hungry.

Though India has not been affected to the same extent as other economies of the world, yet our exports have suffered a decline in the last 10 months due to a contraction in demand in the traditional markets of our exports. The protectionist measures being adopted by some of these countries have aggravated the problem. After four clear quarters of recession there is some sign of a turnaround and the emergence of ‘green shoots’, though I would be hesitant to hazard a guess on the nature and extent of this recovery and the time the major economies will take to return to their pre-recession growth levels.

Announcing a Foreign Trade Policy in this economic climate is indeed a daunting task. We cannot remain oblivious to declining demand in the developed world and we need to set in motion strategies and policy measures which will catalyse the growth of exports.

Before defining the objectives of the new policy it would be useful to take stock of our achievements in the foreign trade over the last 5 years. The foreign trade policy announced by the UPA Government in 2004 had set two objectives, namely, (i) to double our percentage share of global merchandize trade within 5 years and (ii) use trade expansion as an effective instrument of economic growth and employment generation. Looking back, we can say with satisfaction that the UPA Government has delivered on its promise.

Agriculture and industry has shown remarkable resilience and dynamism in contributing to a healthy growth in exports.

In the last five years our exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008. India’s total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.

The short term objective of our policy is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world. We would like to set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, we expect to double India’s exports of goods and services. The long term policy objective for the Government is to double India’s share in global trade by 2020.

In order to meet these objectives, the Government would follow a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, enhanced market access across the world and diversification of export markets. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and

levies, would be the three pillars, which will support us to achieve this target. Endeavour will be made to see that the Goods and Services Tax rebates all indirect taxes and levies on exports.

At this juncture, it is our endeavour to provide adequate confidence to our exporters to maintain their market presence even in a period of stress. A Special thrust needs to be provided to employment intensive sectors which havewitnessedjoblossesinthewakeofthisrecession,especiallyinthefields of textile, leather, handicrafts, etc.

We want to provide a stable policy environment conducive for foreign trade and we have decided to continue with the DEPB Scheme upto December

2010 and income tax benefits under Section 10(A) for IT industry and under

Section 10(B) for 100% export oriented units for one additional year till 31st March 2011. Enhanced insurance coverage and exposure for exports through ECGC Schemes has been ensured till 31st March 2010. We have also taken a view to continue with the interest subvention scheme for this purpose.

We need to encourage value addition in our manufactured exports and towards this end, have stipulated a minimum 15% value addition on imported inputs under advance authorization scheme.

It is important to take an initiative to diversify our export markets and offset the inherent disadvantage for our exporters in emerging markets of Africa, Latin America, Oceania and CIS countries such as credit risks, higher trade costs etc., through appropriate policy instruments. We have endeavored to diversify products and markets through rationalization of incentive schemes including the enhancement of incentive rates which have been based on the perceived long term competitive advantage of India in a particular product group and market. New emerging markets have been given a special focus to enable competitive exports. This would of course be contingent upon availability of adequate exportable surplus for a particular product. Additional resources have been made available under the Market Development Assistance Scheme and Market Access Initiative Scheme. Incentive schemes are being rationalized to identify leading products which would catalyze the next phase of export growth.

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As part of our policy of market expansion, we have signed a Comprehensive Economic PartnershipAgreement with South Korea which will give enhanced market access to Indian exports. We have also signed a Trade in Goods Agreement with ASEAN which will come in force from January 01, 2010, and will give enhanced market access to several items of Indian exports. These trade agreements are in line with India’s Look East Policy. We have also concluded the Mercosur Preferential Trade Agreement. It shall be our endeavour to deepen our trade engagement with other major economic groupings in the world.

The Government seeks to promote Brand India through six or more ‘Made in India’ shows to be organized across the world every year.

In the era of global competitiveness, there is an imperative need for Indian exporters to upgrade their technology and reduce their costs. Accordingly, an important element of the Foreign Trade Policy is to help exporters for technological upgradation. Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at zero percent duty.

Under the present Foreign Trade Policy, Government recognizes exporters based on their export performance and they are called ‘status holders’. For technological upgradation of the export sector, these status holders will be permitted to import capital goods duty free (through Duty Credit Scrips equivalent to 1% of their FOB value of exports in the previous year), of specified product groups. This will help them to upgrade their technology and reduce cost of production.

For upgradation of export sector infrastructure, ‘Towns of Export Excellence’ and units located therein would be granted additional focused support and incentives.

The policy is committed to support the growth of project exports. A high level coordination committee is being established in the Department of Commerce to facilitate the export of manufactured goods / project exports creating synergies in the line of credit extended through EXIM Bank for new and emerging markets. This committee would have representation from the

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Ministry of External Affairs, Department of Economic Affairs, EXIM Bank and the Reserve Bank of India. We would like to encourage production and export of ‘green products’ through measures such as phased manufacturing programme for green vehicles, zero duty EPCG scheme and incentives for exports.

To enable support to Indian industry and exporters, especially the MSMEs, in availing their rights through trade remedy instruments under the WTO framework, we propose to set up a Directorate of Trade Remedy Measures.

In order to reduce the transaction cost and institutional bottlenecks, the e-trade project would be implemented in a time bound manner to bring all stake holders on a common platform. Additional ports/locations would be enabled on the Electronic Data Interchange over the next few years. An Inter-Ministerial Committee has been established to serve as a single window mechanism for resolution of trade related grievances.

These are difficult times and we have set an ambitious goal for ourselves.

I am sure that the industry and the Government, working in tandem, will be able to ensure that the Indian exports become globally competitive and that we are able to achieve the target, which we have set for ourselves.

(Anand Sharma)

Minister of Commerce & Industry

Government of India

New Delhi

August 27, 2009

CONTENTS

CHAPTER	SUBJECT	Page
	GLOSSARY	1
1A	LEGAL FRAMEWORK	5
1B	SPECIAL FOCUS INITIATIVES	7
1C	BOARD OF TRADE	15
2	GENERAL PROVISIONS REGARDING	17
	IMPORTS AND EXPORTS
3	PROMOTIONAL MEASURES	29
4	DUTY EXEMPTION / REMISSION SCHEMES	45
5	EXPORT PROMOTION CAPITAL GOODS SCHEME	59
6	EXPORT ORIENTED UNITS (EOUs), ELECTRONICS	67
	HARDWARE TECHNOLOGY PARKS (EHTPs),
	SOFTWARE TECHNOLOGY PARKS (STPs) AND
	BIO-TECHNOLOGY PARKS (BTPs)
7	SPECIAL ECONOMIC ZONES	85
7A	FREE TRADE & WAREHOUSING ZONES	85
8	DEEMED EXPORTS	87
9	DEFINITIONS	93

	GLOSSARY (ACRONYMS)
Acronym	Explanation
ACU	Asian Clearing Union
AEZ	Agri Export Zone
ANF	Aayaat Niryaat Form
ARO	Advance Release Order
ASIDE	Assistance to States for Infrastructure Development of Exports
BG	Bank Guarantee
BIFR	Board of Industrial and Financial Reconstruction
BOA	Board of Approval
BOT	Board of Trade
BRC	Bank Realisation Certificate
BTP	Biotechnology Park
CBEC	Central Board of Excise and Customs
CCP	Customs Clearance Permit
CEA	Central Excise Authority
CEC	Chartered Engineer Certificate
CIF	Cost, Insurance & Freight
CIS	Commonwealth of Independent States
CoD	Cash on Delivery
CoO	Certificate of Origin
CVD	Countervailing Duty
DA	Document against Acceptance
DoBT	Department of Bio Technology
DC	Development Commissioner
DEPB	Duty Entitlement Passbook
DFIA	Duty Free Import Authorisation
DFRC	Duty Free Replenishment Certificate
DGCI&S	Director General, Commercial Intelligence & Statistics.
DGFT	Director General of Foreign Trade
DIPP	Department of Industrial Policy & Promotion

DoC	Department of Commerce
DoE	Department of Electronics
DoIT	Department of Information Technology
DoR	Department of Revenue
DoT	Department of Tourism
DTA	Domestic Tariff Area
EDI	Electronic Data Interchange
EEFC	Exchange Earners’ Foreign Currency
EFC	Exim Facilitation Committee
EFT	Electronic Fund Transfer
EH	Export House
EHTP	Electronic Hardware Technology Park
EIC	Export Inspection Council
EO	Export Obligation
EODC	Export Obligation Discharge Certificate
EOP	Export Obligation Period
EOU	Export Oriented Unit
EPC	Export Promotion Council
EPCG	Export Promotion Capital Goods
EPO	Engineering Process Outsourcing
FDI	Foreign Direct Investment
FIEO	Federation of Indian Export Organisation
FIRC	Foreign Exchange Inward Remittance Certificate
FMS	Focus Market Scheme
FOB	Free On Board
FPS	Focus Product Scheme
FT (D&R) Act	Foreign Trade ( Development & Regulation) Act, 1992 (22 of 1992)
FTDO	Foreign Trade Development Officer
FTP	Foreign Trade Policy
GATS	General Agreement on Trade in Services
GRC	Grievance Redressal Committee
HACCP	Hazard Analysis and Critical Control Process
HBP v1	Handbook of Procedures (Vol.1)

HBP v2	Handbook of Procedures (Vol.2)
ICD	Inland Container Depot
ICM	Indian Commercial Mission
IEC	Importer Exporter Code
ISO	International Standards Organisation
ITC (HS)	Indian Trade Classification (Harmonised System) Classification for Export &
	Import Items
ITPO	India Trade Promotion Organisation
LoC	Line of Credit
LoI	Letter of Intent
LoP	Letter of Permit
LUT	Legal Undertaking
MAI	Market Access Initiative
MDA	Market Development Assistance
MEA	Ministry of External Affairs
MoD	Ministry of Defence
MoF	Ministry of Finance
NC	Norms Committee
NFE	Net Foreign Exchange
NOC	No Objection Certificate
PRC	Policy Relaxation Committee
PTH	Premier Trading House
PSU	Public Sector Undertaking
R&D	Research and Development
RA	Regional Authority
RBI	Reserve Bank of India
REP	Replenishment
RCMC	Registration-cum-Membership Certificate
RSCQC	Regional Sub-Committee on Quality Complaints
S/B	Shipping Bill
SEH	Star Export House
SEI CMM	Software Engineers Institute’s Capability Maturity Model
SEZ	Special Economic Zone

SFIS	Served from India Scheme
SIA	Secretariat for Industrial Assistance
SION	Standard Input Output Norms
SSI	Small Scale Industry
STE	State Trading Enterprise
STH	Star Trading House
STP	Software Technology Park
TEE	Towns of Export Excellence
TH	Trading House
TRA	Telegraphic Release Advice
TRQ	Tariff Rate Quota
VA	Value Addition
VKGUY	Vishesh Krishi and Gram Udyog Yojana
WHOGMP	World Health Organisation Good Manufacturing Practices

		CHAPTER- 1 A
		LEGAL FRAMEWORK
Foreword	1.1	The Foreword spells out the broad framework
Duration	1.2	The Foreign Trade Policy 2009-2014 (FTP), incorporating
		provisions relating to export and import of goods and
		services, shall come into force with effect from 27th
		August, 2009 and shall remain in force upto 31st March,
		2014 unless otherwise specified.All exports and imports
		upto 26th August 2009 shall be accordingly governed by
		the FTP 2004-2009.
Amendment	1.3	Central Government reserves right in public interest
		to make any amendments by notification to this
		Policy in exercise of powers conferred by Section 5 of
		FT(D&R) Act.
Transitional	1.4	Authorisation issued before commencement of FTP shall
Arrangements		continue to be valid for the purpose and duration for
		which such Authorisation was issued, unless otherwise
		stipulated
	1.5	In case an export or import that is permitted freely
		under FTP is subsequently subjected to any restriction
		or regulation, such export or import will ordinarily be
		permitted notwithstanding	such restriction or regulation,
		unless otherwise stipulated, provided that shipment
		of export or import is made within original validity
		with respect to available balance and time period of
		an irrevocable commercial	letter of credit, established
		before date of imposition of such restriction.

However for operationalizing such irrevocable commercial letter of credit the applicant shall have to register the Letter of Credit and contract with the concerned RA within 15 days of the issue of any such restriction or regulation.

CHAPTER- 1 B

SPECIAL FOCUS INITIATIVES

Special Focus	1B.1	With a view to continously increasing our percentage
		share of global trade and expanding employment
		opportunities, certain special focus initiatives have
		been identified/continued for Market Diversification,
		Technological Upgradation, Support to status holders,
		Agriculture, Handlooms, Handicraft, Gems & Jewellery,
		Leather, Marine, Electronics and IT Hardware
		manufacturing Industries, Green products, Exports
		of products from North-East, Sports Goods and Toys
		sectors. Government of India shall make concerted
		efforts to promote exports in these sectors by specific
		sectoralstrategiesthatshallbenotifiedfromtimetotime.
		Further Sectoral Initiatives in other sectors will also be
		announced from time to time.
		(i) Market Diversification
		Weaker demand in developed economies,
		triggered by falling asset prices and increased economic
		uncertainty has pulled down the growth of India’s exports
		to developed countries. There are no clear signals as
		to when the markets in developed countries would
		revive. To insulate Indian exports from the decline in
		demand from developed countries, in this Policy focus
		is on diversification of Indian exports to other markets,
		specially those located in Latin America, Africa, parts of
		Asia and Ocenia. To achieve diversification of Indian
		exports, following initiatives have been taken under this
		Policy.
		(a) 26 new countries have been included within the

	ambit of Focus Market Scheme.
(b)	The incentives provided under Focus Market Scheme
	have been increased from 2.5% to 3%.
(c)	There has been a significant increase in the outlay
	under ‘Market Linked Focus Product Scheme’
	by inclusion of more markets and products. This
	ensures support for exports to all countries in Africa

and Latin America.

(ii) Technological Upgradation

To usher in the next phase of export growth, India needs to move up in the value chain of export goods. This objective is sought to be achieved by encouraging technological upgradation of our export sector. A number of initiatives have been taken in this Policy to focus on technological upgradation; such initiatives include:

(a)EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textiles, plastics, handicrafts, chemicals and allied products and leather and leather products.

(b)Theexisting3%EPCGSchemehasbeenconsiderably simplified, to ease its usage by the exporters.

(c)To encourage value added manufacture export, a minimum 15% value addition on imported inputs under Advance Authorisation Scheme has been stipulated.

(d)A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes.

(e)Steps to encourage Project Exports shall be taken.

(iii)Support to status holders

The Government recognized ‘Status Holders’ contribute approx. 60% of India’s goods exports. To incentivise and encourage the status holders, as well as to encourage Technological upgradation of export production, additional duty credit scrip @ 1% of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition.

(iv)Agriculture and Village Industry

(a)Vishesh Krishi and Gram Udyog Yojana

(b)CapitalgoodsimportedunderEPCGwillbepermitted to be installed anywhere in AEZ.

(c)Import of restricted items, such as panels, are allowed under various export promotion schemes.

(d)Import of inputs such as pesticides are permitted under Advance Authorisation for agro exports.

(e)New towns of export excellence with a threshold limit of Rs 150 crore shall be notified.

(f)Certain specified flowers, fruits and vegetables are entitled to a special duty credit scrip, in addition to the normal benefit under VKGUY.

(v)Handlooms

(a)Specific funds are earmarked under MAI / MDA

Scheme for promoting handloom exports.

(b)Duty free import entitlement of specified trimmings and embellishments is 5% of FOB value of exports during previous financial year.

c)Duty free import entitlement of hand knotted carpet samples is 1% of FOB value of exports during previous financial year.

(d)Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted.

(e)New towns of export excellence with a threshold limit of Rs 150 crore shall be notified.

(f)Machinery and equipment for effluent treatment plants is exempt from customs duty.

(vi)Handicrafts

(a)Duty free import entitlement of tools, trimmings and embellishments is 5%of FOB value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers.

(b)Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable.

(c)Specific funds are earmarked under MAI & MDA

Schemes for promoting Handicraft exports.

(d)CVD is exempted on duty free import of trimmings, embellishments and consumables.

(e)New towns of export excellence with a reduced threshold limit of Rs 150 crore shall be notified.

(f)Machinery and equipment for effluent treatment plants are exempt from customs duty.

(g)All handicraft exports would be treated as special Focus products and entitled to higher incentives.

(vii)Gems & Jewellery

(a)Import of gold of 8k and above is allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content.

(b)Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of

Consumables and Tools, for:

1.Jewellery made out of:

(a)Precious metals (other than Gold & Platinum)– 2%

(b)Gold and Platinum – 1%

(c ) Rhodium finished Silver – 3%

2.Cut and Polished Diamonds – 1%

(c)Duty free import entitlement of commercial samples shall be Rs. 300,000.

(d)Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.

(e)Import of Diamonds on consignment basis for

Certification/ Grading & re-export by the authorized offices/agenciesofGemologicalInstituteofAmerica

(GIA) in India or other approved agencies will be permitted.

(f)Personal carriage of Gems & Jewellery products in case of holding/participating in overseas exhibitions increased to US$ 5 million and to US$ 1 million in case of export promotion tours.

(g)Extension in number of days for re-import of unsold items in case of participation in an exhibition in USA increased to 90 days.

(h)In an endeavour to make India a diamond international trading hub, it is planned to establish “Diamond Bourse (s)”.

(viii)Leather and Footwear

(a)Duty free import entitlement of specified items is

3% of FOB value of exports of leather garments during preceding financial year.

(b)Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), gloves, travel bags and handbags is 3% of FOB value of exports of previous financial year. Such entitlement shall also cover packing material, such as printed and non- printed shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear.

(c)Machinery and equipment for Effluent Treatment

Plants shall be exempt from basic customs duty.

(d)Re-export of unsuitable imported materials such

as raw hides & skins and wet blue leathers is permitted.

(e)CVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No

21/2002 dated 01.03.2002.

(f)CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

(g)Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 50% of the applicable export duty.

(ix)Marine Sector

(a)Imports for technological upgradation under EPCG in fisheries sector (except fishing trawlers, ships, boats and other similar items) exempted from maintaining average export obligation.

(b)Duty free import of specified specialised inputs / chemicalsandflavouringoilsisallowedtotheextent of 1% of FOB value of preceding financial year’s export.

(c)To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fish for tuna fishing at Nil duty.

(d)A self removal procedure for clearance of seafood waste is applicable subject to prescribed wastage norms.

(e)Marine products are considered for VKGUY scheme.

(x)Electronics and IT Hardware Manufacturing Industries

(a)Expeditious clearance of approvals required from DGFT shall be ensured.

(b)Exporters /Associations would be entitled to utilize MAI & MDA Schemes for promoting Electronics and IT Hardware Manufacturing industry exports.

(xi)Sports Goods and Toys

(a)Duty free import of specified specialised inputs allowed to the extent of 3% of FOB value of preceding financial year’s export.

(b)Sports goods and toys shall be treated as a Priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI /MDA Scheme for promoting exports from this sector.

(c)Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT.

(d)Sports Goods and Toys are treated as special focus products and entitled to higher incentives.

(xii)Green products and technologies

India aims to become a hub for production and export of green products and technologies. To achieve this objective, special initiative will be taken to promote development and manufacture of such products and technologies for exports. To begin with, focus would be on items relating to transportation, solar and wind power generation and other products as may be notified which will be incentivized under Reward

Schemes of Chapter 3 of FTP.

(xiii)Incentives for Exports from the North Eastern Region

Inordertogiveafilliptoexportsofproductsfromthe

north-eastern States, notified products of this region

would be incentivized under Reward Schemes of

Chapter 3 of FTP.

CHAPTER- 1 C

Board of Trade

Board of Trade	1C.1	BOT has a clear and dynamic role in advising government
(BOT)		on relevant issues connected with Foreign Trade.
Terms of Reference	1C.2	BOT has following terms of reference:
		I	To advise Government on Policy			measures for
			preparation and implementation of both short and
			long term plans for increasing exports in the light
			of emerging national and international economic
			scenarios;
		II	To review export performance of various sectors,
			identify	constraints and suggest	industry specific
			measures to optimize export earnings;
		III	To examine existing institutional framework for
			importsandexportsandsuggestpracticalmeasuresfor
			further streamlining to achieve desired			objectives;
		IV	To review policy instruments and		procedures for
			imports and exports and suggest steps to rationalize
			and channelize such schemes for optimum use;
		V	To examine issues which are considered relevant for
			promotion of India’s foreign trade, and to strengthen
			international competitiveness of Indian goods and
			services;	and
		VI	To commission studies for furtherance of above
			objectives.
Composition	1C.3	Commerce & Industry Minister will be the Chairman of the
		Board of Trade (BOT). Government shall also nominate
		upto 25 persons, of whom at least 10 will be experts in

trade policy. In addition, Chairmen of recognized EPCs and President or Secretary-Generals of National Chambers ofCommercewillbeex-officiomembers. BOTwillmeet at least once every quarter.

CHAPTER-2

GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS

Exports and Imports	2.1	Exports and Imports shall be free, except where regulated
free unless regulated		by FTP or any other law in force. The item wise export and
		import policy shall be, as specified in ITC (HS) notified
		by DGFT, as amended from time to time.
		Import of rough diamond from Cote d’Ivoire shall be
		prohibited in compliance to Paragraph 6 of UN Security
		Council Resolution (UNSCR) 1643(2005).
		The import/export of rough diamond (HS Code 710210,
		710221 or 710231) from / to Venezuela shall be prohibited
		in view of voluntary separation of Venezuela from the
		Kimberley Process Certification Scheme (KPCS). No
		KimberleyProcessCertificateshallbeaccepted/endorsed/
		issued for import and export of rough diamonds from / to
		Venezuela.
	2.1.1	Import / export of arms and related material from / to Iraq
		shall be prohibited.
	2.1.2	Direct or indirect export and import of following items,
		whether or not originating in Democratic People’s
		Republic of Korea (DPRK), to / from, DPRK is
		prohibited:
		All items, materials equipment, goods and technology
		including as set out in lists in documents S/2006/
		814,S/2006/815 and S/2006/853(United Nations Security
		Council Documents) which could contribute to DPRK’s
		nuclear-related, ballistic missile-related or other weapons
		of mass destruction-related programmes.
	2.1.3	Direct or indirect export and import of all items, materials,
		equipment, goods and technology which could contribute
		to Iran’s enrichment-related, reprocessing or heavy water

related activities, or to development of nuclear weapon delivery systems, as mentioned below, whether or not originating in Iran, to / from Iran is prohibited:

i) items, listed in INFCIRC/254/Rev8/Part I in

		document S/2006/814, in Sections B.2 to B.7 as
		well as A.I and B.I except supply, sale or transfer
		of equipment covered by B.I when such equipment
		is for light water reactors and low-enriched uranium
		covered byA.1.2 when it is incorporated in assembled
		nuclear fuel elements for such reactors;
		ii) items listed in S/2006/815 except supply sale or
		transfer of items covered by 19.A.3 of Category II.
		Above-mentioned UN Security Council documents are
		accessible from DGFT web site.
Compliance with Laws	2.2	Every exporter or importer shall comply with the
		provisions of FT (D&R) Act, the Rules and Orders
		made there-under, FTP and terms and conditions of any
		Authorisationgrantedtohim.Allimportedgoodsshallalso
		be subject to domestic Laws, Rules, Orders, Regulations,
		technical specifications, environmental and safety norms
		as applicable to domestically produced goods. No import
		or export of rough diamonds shall be permitted unless
		accompanied by Kimberley Process (KP) Certificate as
		specified by Gem & Jewellery EPC (GJEPC).
Interpretation of Policy	2.3	If any question or doubt arises in respect of interpretation
		of any provision contained in FTP, or classification of
		any item in ITC (HS) or HBP-v1 or HBP-v2, or Schedule
		of DEPB Rates (including content, scope or issue of an
		authorization there under) said question or doubt shall be
		referred to DGFT whose decision thereon shall be final
		and binding.
Procedure	2.4	DGFT may, specify procedure to be followed for an
		exporter or importer or by any licensing or any other
		competent authority for purpose of implementing
		provisions of FT (D&R) Act, the Rules and the Orders
		made there under and FTP. Such procedures shall be
		published by means of a Public Notice, and may, in like
		manner, be amended from time to time.
Exemption from Policy	2.5	DGFT may pass such orders or grant such relaxation or
/ Procedure		relief, as he may deem fit and proper, on grounds of

genuine hardship and adverse impact on trade.

DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or

any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under:

			Sl.		Description	Committee
			No.
			( i )		Fixation / modification of product	Norms
					norms under all schemes	Committee
			(ii)		Nexus with Capital Goods (CG)	EPCG
					and benefits under EPCG Schemes	Committee
			(iii)		All other issues	Policy
						Relaxation
						Committee
						(PRC)
Principles of Restriction	2.6	DGFTmay, through a notification, adopt and enforce any
			measure necessary for: -
			i	Protection of public morals.
			ii	Protection of human, animal or plant life or health.
			iii	Protection of patents, trademarks and copyrights and
				the prevention of deceptive practices.
			iv	Prevention of use of prison labour.
			v	Protection of national treasures of artistic, historic or
				archaeological value.
		vi		Conservation of exhaustible natural resources.
		vii		Protectionoftradeoffissionablematerialormaterial
				from which they are derived; and
		viii		Prevention of traffic in arms, ammunition and
				implements of war.
Restricted Goods	2.7	Any goods, export or import of which is restricted under
		ITC(HS) may be exported or imported only in accordance
		with an Authorisation or in terms of a public notice issued
			in this regard.
Terms and Conditions	2.8	EveryAuthorisation shall be valid for prescribed period of
of a licence / Certificate /		validity and shall contain such terms and conditions as
Permission / Authorisation			may be specified by RAwhich may include:
			(a)	Quantity, description and value of goods;
			(b)	Actual User condition;
			(c)	Export obligation;
			(d)	Value addition to be achieved; and
			(e)	Minimum export / import price.

Authorisation / Licence	2.9	No person may claim anAuthorization as a right and DGFT
/ Certificate / Permission		or RAshall have power to refuse to grant or renew the same
not a Right		in accordance with provisions of FT (D&R) Act, Rules
		made there under and FTP.
Penalty	2.10	If an Authorisation holder violates any condition of such
		Authorisation or fails to fulfill export obligation, he shall
		be liable for action in accordance with FT (D&R) Act, the
		Rules and Orders made there under, FTP and any other
		law for time being in force.
State Trading	2.11	Any goods, import or export of which is governed
		through exclusive or special privileges granted to STE(s),
		may be imported or exported by STE(s) as per conditions
		specified in ITC (HS). DGFT may, however, grant an
		Authorisation to any other person to import or export any
		of these goods.
		Such STE(s) shall make any such purchases or sales
		involving imports or exports solely in accordance with
		commercial considerations, including price, quality,
		availability, marketability, transportation and other
		conditions of purchase or sale in a non discriminatory
		manner and shall afford enterprises of other countries
		adequate opportunity, in accordance with customary
		business practices, to compete for participation in such
		purchases or sales.
Importer-Exporter	2.12	Noexportorimportshallbemadebyanypersonwithoutan
Code (IEC) Number		IECnumberunlessspecificallyexempted.AnIECnumber
		shall be granted on application by competent authority in
		accordance with procedure specified in HBPv1.
Trade with	2.13	DGFT may issue instructions or frame schemes as may be
Neighbouring		requiredtopromotetradeandstrengtheneconomictieswith
Countries		neighbouring countries.
Transit Facility	2.14	Transit of goods through India from / or to countries
		adjacent to India shall be regulated in accordance with
		bilateral treaties between India and those countries and
		will be subject to such restrictions as may be specified by
		DGFT in accordance with International Conventions.
Trade with Russia	2.15	In case of trade with Russia under Debt Repayment
under Debt-		Agreement, DGFT may issue instructions or frame
Repayment Agreement		schemes as may be required, and anything contained in

		FTP, in so far as it is inconsistent with such instructions
		or schemes, shall not apply.
Actual User Condition	2.16	Capital goods, raw materials, intermediates, components,
		consumables, spares, parts, accessories, instruments and
		other goods, which are importable without any restriction,
		may be imported by any person.
		However, if such imports require an Authorisation, actual
		user alone may import such goods unless actual user
		condition is specifically dispensed with by RA.
Second Hand Goods	2.17	All second hand goods, except second hand capital goods,
		shall be restricted for imports and may be imported only
		in accordance with provisions of FTP, ITC (HS), HBP v1,
		Public Notice or an Authorisation issued in this regard.
		Import of second hand capital goods, including
		refurbished / re-conditioned spares shall be allowed freely.
		However, second hand personal computers / laptops,
		photocopier machines, air conditioners, diesel generating
		sets will only be allowed against a licence.
		Import of re-manufactured goods shall be allowed only
		against a licence.
Scrap/Waste in SEZ	2.17A	Any waste or scrap or remnant including any form of
		metallic waste & scrap generated during manufacturing
		or processing activities of an SEZ Unit/ Developer/Co-
		developer shall be allowed to be disposed in DTA freely
		subject to payment of applicable Customs Duty.
Import of samples	2.18	Import of samples shall be governed by HBP v1.
Import of Gifts	2.19	Import of gifts shall be permitted where such goods are
		otherwise freely importable under FTP. In other cases, a
		Customs Clearance Permit (CCP) shall be required from
		DGFT.
Passenger Baggage	2.20	Bonafide household goods and personal effects may
		be imported as part of passenger baggage as per limits,
		terms and conditions thereof in Baggage Rules notified
		by Ministry of Finance.

Samples of such items that are otherwise freely importable under FTP may also be imported as part of passenger

		baggage without an Authorisation.
		Exporters coming from abroad are also allowed to import
		drawings, patterns, labels, price tags, buttons, belts,
		trimming and embellishments required for export, as part
		of their passenger baggage without an Authorisation.
Import on Export	2.21	Freely exportable new or second hand capital goods,
basis		equipments,components,partsandaccessories,containers
		meant for packing of goods for exports, jigs, fixtures,
		dies and moulds may be imported for export without an
		Authorisation on execution of LUT / BG with Customs
		Authorities.
Re-import of goods	2.22	Capital goods, equipments, components, parts and
repaired abroad		accessories, whether imported or indigenous, except
		those restricted under ITC (HS) may be sent abroad for
		repairs, testing, quality improvement or upgradation or
		standardization of technology and re-imported without an
		Authorisation.
Import of goods used	2.23	After completion of projects abroad, project contractors
in projects abroad		may import, without an Authorisation used goods
		including capital goods provided they have been used for
		at least one year.
Sale on High Seas	2.24	Sale of goods on high seas for import into India may be
		made subject to FTP or any other law in force.
Import under Lease	2.25	PermissionofRAisnotrequiredforimportofcapitalgoods
Financing		under lease financing.
Clearance of Goods	2.26	Goods already imported / shipped / arrived, in advance, but
from Customs		not cleared from Customs may also be cleared against an
		Authorisation issued subsequently.
Execution of BG / LUT	2.27	Wherever any duty free import is allowed or where
		otherwise specifically stated, importer shall execute
		prescribed LUT / BG / Bond with Customs Authority
		before clearance of goods. In case of indigenous sourcing,
		Authorisation holder shall furnish LUT / BG / Bond to
		RA concerned before sourcing material from indigenous
		supplier / nominated agency as prescribed in HBP v1.
Private / Public Bonded	2.28	Private / Public bonded warehouses may be set up in DTA
Warehouses for Imports		as per terms and conditions of notification issued by

		DoR.
		Any person may import goods except prohibited items,
		arms and ammunition, hazardous waste and chemicals
		and warehouse them in such bonded warehouses.
		Such goods may be cleared for home consumption
		in accordance with provisions of FTP and against
		Authorisation, wherever required. Customs duty as
		applicable shall be paid at the time of clearance of such
		goods.
		If such goods are not cleared for home consumption
		within a period of one year or such extended period as the
		custom authorities may permit, importer of such goods
		shall re-export the goods.
Free Exports	2.29	All goods may be exported without any restriction except
		to extent such exports are regulated by ITC (HS) or any
		other provision of FTP or any other law for time being in
		force.
		DGFT may, however, specify through a public notice
		such terms and conditions according to which any goods,
		not included in ITC (HS), may be exported without an
		Authorisation.
Export of Samples	2.30	Export of samples and Free of charge goods shall be
		governed by provisions given in HBP v1.
Export of Passenger	2.31	Bonafide personal baggage may be exported either along
Baggage		with passenger or, if unaccompanied, within one year
		before or after passenger’s departure from India. However,
		items mentioned as restricted in ITC (HS) shall require an
		Authorisation. Government of India officials proceeding
		abroad on official postings shall, however, be permitted
		to carry alongwith their personal baggage, food items
		(free, restricted or prohibited) strictly for their personal
		consumption.
Export of Gifts	2.32	Goods, including edible items, of value not exceeding
		Rs.5,00,000 /- in a licensing year, may be exported as a
		gift.

However, items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift, without an

		Authorisation.
Export of Spares	2.33	Warranty spares (whether indigenous or imported) of
		plant, equipment, machinery, automobiles or any other
		goods, (except those restricted under ITC (HS)) may be
		exported along with main equipment or subsequently but
		within contracted warranty period of such goods subject
		to approval of RBI.
Third Party Exports	2.34	Third party exports, as defined in Chapter 9 shall be
		allowed under FTP.
Export of Imported	2.35	Goods imported, in accordance with FTP, may be exported
Goods		insameorsubstantiallysameformwithoutanAuthorisation
		provided that item to be imported or exported is not
		restricted for import or export in ITC (HS).
		Exports of such goods imported against payment in freely
		convertible currency would be permitted against payment
		in freely convertible currency.
	2.36	Goods, including those mentioned as restricted for
		import (except prohibited items) may be imported under
		Customs Bond for export in freely convertible currency
		without an Authorisation provided that item is freely
		exportable without any conditionality / requirement of
		Licence / permission as may be required under ITC (HS)
		Schedule II.
	2.36A	Hides, Skins and semi finished leather may be imported
		in the Public Bonded warehouse for the purpose of DTA
		sale and the unsold items thereof can be re-exported from
		such bonded warehouses at 50% of the applicable export
		duty. However, this facility shall not be allowed for
		import under Private Bonded warehouse.
Export of Replacement	2.37	Goods or parts thereof on being exported and found
Goods		defective / damaged or otherwise unfit for use may be
		replaced free of charge by the exporter and such goods
		shall be allowed clearance by Customs authorities,
		provided that replacement goods are not mentioned as
		restricted items for exports in ITC (HS).
Export of Repaired	2.38	Goods or parts, except restricted under ITC (HS) thereof,
Goods		on being exported and found defective, damaged or

otherwise unfit for use may be imported for repair and subsequent re-export.

		Such	goods	shall	be	allowed	clearance without
		an Authorisation and in accordance with customs
		notification.
Private Bonded	2.39	Private bonded warehouses exclusively for exports may
Warehouses for Exports		be set	up in	DTA	as	per terms	and conditions of

notifications issued by DoR.

		Such warehouses shall be entitled to procure goods
		from domestic manufacturers without payment of duty.
		Supplies made by a domestic supplier to such notified
		warehouses shall be treated as physical exports provided
		payments are made in free foreign exchange.
Denomination of Export	2.40	All export contracts and invoices shall be denominated
Contracts		either in freely convertible currency or Indian rupees but
		export proceeds shall be realised in freely convertible
		currency.
		However, export proceeds against specific exports may
		also be realized in rupees, provided it is through a freely
		convertible Vostro account of a non resident bank situated
		in any country other than a member country of ACU or
		Nepal or Bhutan. Additionally, rupee payment through
		Vostro account must be against payment in free foreign
		currency by buyer in his non-resident bank account. Free
		foreign exchange remitted by buyer to his non-resident
		bank (after deducting the bank service charges) on account
		of this transaction would be taken as export realization
		under export promotion schemes of FTP.
		Contracts [for which payments are received through
		Asian Clearing Union (ACU)] shall be denominated in
		ACU Dollar. Central Government may relax provisions
		of this paragraph in appropriate cases. Export contracts
		and Invoices can be denominated in Indian rupees against
		EXIM Bank / Government of India line of credit.
Realisation of Export	2.41	If an exporter fails to realise export proceeds within time
Proceeds		specified by RBI, he shall, without prejudice to any

liability or penalty under any law in force, be liable to action in accordance with provisions of FT (D&R) Act, Rules and Orders made there under and FTP.

Free movement of	2.42	Consignments of items meant for exports shall not be
export goods		withheld / delayed for any reason by any agency of
		Central / State Government. In case of any doubt,
		authorities concerned may ask for an undertaking from
		exporter.
No seizure of Stock	2.42.1	No seizure of stock shall be made by any agency so as
		to disrupt manufacturing activity and delivery schedule
		of exports. In exceptional cases, concerned agency may
		seize the stock on basis of prima facie evidence. However,
		such seizure should be lifted within 7 days.
Export Promotion	2.43	Basic objective of Export Promotion Councils (EPCs) is
Councils (EPC)		to promote and develop Indian exports. Each Council
		is responsible for promotion of a particular group of
		products, projects and services as given in HBP-v1.
Registration -cum-	2.44	Any person, applying for:
Membership Certificate
(RCMC)		(i) an Authorisation to import / export, [except items
		listed as restricted items in ITC(HS)] or
		(ii) any other benefit or concession under FTP
		shall be required to furnish RCMC granted by competent
		authorityinaccordancewithprocedurespecifiedinHBP-
		v1 unless specifically exempted under FTP.
		Certificate of Registration as Exporter of Spices (CRES)
		issued by Spices Board shall be treated as Registration-
		Cum-Membership Certificate (RCMC) for the purposes
		under this Policy.
Trade Facilitation	2.45	It is endeavor of Government to work towards greater
through EDI Initiatives		simplification, standardization and harmonization of
		trade documents using international best practices. As
		a step in this direction, DGFT shall move towards an
		automatedenvironmentforelectronicfiling,retrievaland
		authentication of documents based on agreed protocols
		and message exchange with other community partners
		including Customs and Banks.
DGCI&S Commercial	2.45.1	To enable users to make commercial decisions in a more
Trade Data		professional manner, DGCI&S trade data shall be made
		available with a minimum time lag in a query based
		structured format on a commercial criteria.

Fiscal Incentives	2.45.2	With a view to promote use of Information Technology,
to promote EDI		DGFT will provide fiscal incentives to user community.
Initiatives adoption		Deductions in Application Fee would be admissible for
		applications signed digitally or / and where application
		fee is paid electronically through EFT (Electronic Fund
		Transfer). Details are enumerated in HBP v1.
Regularization of EO	2.46	With a view to providing assistance to firms who have
default and settlement of		defaulted under FTP for reasons beyond their control as
customs duty and interest		also facilitating merger, acquisition and rehabilitation of
through Settlement		sick units, it has been decided to empower Settlement
Commission		Commission in Central Board of Excise	and
		Customs to decide such cases also with	effect
		from 01.04.2005.
Easing of	2.47	PendingfinalisationofSingleCommonDocument(SCD)
Documentation		for international trade, Government Departments dealing
Requirement		with exports and imports will honourAuthorisation issued
		by other Government departments based on verification
		of export documents Like shipping bill, bank realization
		certificate, Packing list, bill of lading etc. and will not
		insist upon fresh submission of these documents.
Exemption /	2.48	For all goods and services which are exported from units
Remission of Service		in DTAand units in EOU / EHTP / STP / BTP exemption /
Tax in DTA		remission of service tax levied and related to exports,
		shall be allowed, as per prescribed procedure in Chapter
		4 of HBP v1.
Exemption from	2.48.1	Units in SEZ shall be exempted from service tax.
Service Tax in SEZ
Exemption from	2.48.2	For all goods and services exported from India, services
Service Tax on Services		received / rendered abroad, where ever possible, shall be
received abroad		exempted from service tax.

GRIEVANCE REDRESSAL

DGFT as a facilitator of	2.49	DGFT has a commitment to function as a facilitator of
exports / imports		exports and imports. Focus is on good governance, which
		depends on clean, transparent and accountable delivery
		systems.
Citizen’s Charter	2.49.1	DGFT has in place a Citizen’s Charter, giving time
		schedules for providing services to clients, and details of
		grievance committees at different levels.

Grievance Redressal	2.49.2	In order to facilitate speedy redressal of grievances of
Committee (GRC)		trade and industry, a new grievance redressal mechanism
		has been put in place in the form of GRC by a Government
		Resolution.
		The Government is committed to resolving all outstanding
		problems and disputes pertaining to past policy periods
		through GRC set up on 27.10.2004, for condoning delays,
		regularizing breaches by exporters in bonafide cases,
		resolving disputes over entitlements, granting extensions
		for utilization of Authorisations.
Export of perishable	2.50	To reduce transaction and handling costs, a single window
agricultural products		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 Agricultural and Processed Food Products

Export Development Authority (APEDA), New

Delhi. The detailed procedures have been notified at

Appendix 40 of HBP v1.

CHAPTER – 3

PROMOTIONAL MEASURES

PROMOTIONAL MEASURES IN DEPARTMENT OF

COMMERCE

Assistance to States	3.1	Scheme for Assistance to States for Developing Export
for Developing Export		Infrastructure andAlliedActivities (ASIDE) is formulated
Infrastructure and		to involve the States in the export effort by providing
Allied Activities (ASIDE)		assistance to the States Governments for creating
		appropriate infrastructure for the development and growth
		of exports. The Scheme is administered by Department
		of Commerce (DoC).
		The objective of scheme is to establish a mechanism
		for involving the State Governments to participate in
		funding of infrastructure critical for growth of exports by
		providing export performance linked financial assistance
		to them.
		The activities aimed at development of infrastructure for
		exports can be funded from the scheme provided such
		activities have overwhelming export content and their
		linkage with exports is full established. The specific
		purposes for which funds allocated under the Scheme can
		be sanctioned and utilized are as follows:
		■ Creation of new Export Promotion Industrial Parks/
			Zones (SEZs/Agri Business Zones) and augmenting
			facilities in the existing ones.
		■	Setting up of electronics and other related
			infrastructure in export conclave.
		■	Equity participation in infrastructure projects
			including the setting up of SEZs.
		■ Meeting requirements of capital outlay of EPIPs/
			EPZs/SEZs.
		■ Development of complementary infrastructure such
			as, roads connecting the production centres with the
			ports, setting up of Inland Container Depots and
			Container Freight Stations.
		■	Stabilizing power supply through additional
			transformers and islanding of export production
			centre etc.

■Development of minor ports and jetties to serve export purpose.

■AssistanceforsettingupCommon EffluentTreatment facilities and

■Any other activity as may be notified by DoC.

		Details of ASIDE Scheme are available at:
		http://www.commerce.nic.in			or	http://www.commerce.
		gov.in.
Market Access Initiative	3.2	Under MAI scheme,		Financial		assistance is provided
(MAI)		for export promotion activities on focus country, focus
		product basis. Financial assistance is available for
		Export Promotion Councils (EPCs), Industry and Trade
		Associations (ITAs), Agencies of State Government,
		Indian Commercial Missions (ICMs) abroad and other
		national level institutions/eligible entities as may be
		notified.
		A whole range of activities can be funded under MAI
		scheme. These include, amongst others,
		i.	Market studies/surveys,
		ii.	Setting up of showroom / warehouse,
		iii.	Participation in international trade fairs,
		iv.	Displays in International departmental stores,
		v.	Publicity campaigns,
		vi.	Brand promotion,
		vii. Reimbursement		of	registration charges for
			pharmaceuticalsandexpensesforcarryingoutclinical
			trials etc., in fulfillment of statutory requirements in
			the buyer country,
		viii. Testing charges for engineering products abroad,
		ix. Assistance for contesting Anti Dumping litigations
			etc.
		Each of these export promotion activities can receive
		financial assistance from Government ranging from
		25% to 100% of total cost depending upon activity and
		implementing agency. Full text of guidelines is available
		at http://commerce.nic.in.
Market Development	3.3	Under MDA Scheme, financial assistance is provided
Assistance (MDA)		for a range of export promotion activities implemented
		by EPCs and Trade Promotion Organizations on the
		basis of approved annual action plans. The scheme is
		administered by DOC. Assistance includes, amongst

others, participation in:

		i.	Trade Fairs and Buyer Seller meets abroad or in
			India, and
		ii.	Export promotions seminars.
		iii.	Financial assistance with travel grant is available
			to exporters traveling to focus areas, viz., Latin
			America, Africa, CIS region, ASEAN countries,
			Australia and New Zealand. In other areas, financial
			assistance without travel grant is available.
		MDA assistance is available for exports having an annual
		export turnover as prescribed in MDA guidelines. Full
		text of guidelines is available at http://commerce.nic.in.
Meeting expenses for	3.4	DOC provides for reimbursement of charges/expenses
statutory compliances in		for fulfilling statutory requirements in the buyer country,
buyer country for Trade		including registration charges for product registration
Related Matters		for pharmaceuticals, bio-technology and agro-chemicals
		productsonrecommendationofEPCs.Financialassistance
		is also provided for contesting litigation(s) in the foreign
		country concerning restrictions/anti dumping duties etc.
		on particular product(s) of Indian origin, as provided
		under the Market Access Initiative (MAI) Scheme of
		DOC.
Towns of Export	3.5	A number of towns have emerged as dynamic industrial
Excellence (TEE)		clusters contributing handsomely to India’s exports. It is
		necessary to grant recognition to these industrial clusters
		with a view to maximizing their potential and enabling
		them to move higher in the value chain and tap new
		markets.
		Selected towns producing goods of Rs. 750 Crore or more
		will be notified as TEE based on potential for growth in
		exports. However for TEE in Handloom, Handicraft,
		Agriculture and Fisheries sector, threshold limit would be
		Rs 150 Crores.
		(i)	Recognized associations of units will be provided
			financial assistance under MAI scheme, on priority
			basis, for export promotion projects for marketing,
			capacity building and technological services.
		(ii)	Common Service Providers in these areas shall be
			entitled for EPCG scheme.

(iii) The projects received from TEEs shall be accorded

		priority by SLEPC for financial assistance under
		ASIDE.
		Notified Towns (TEEs) are listed in Appendix 7 of
		HBPv1.
Brand Promotion and	3.6	IBEF (originally called India Brand Equity Fund and
Quality		later renamed as India Brand Equity Foundation) was set
		up by the Ministry of Commerce on 11th July, 1996, with
		the primary objective to promote and create international
		awareness of the “Made in India” label in markets
		overseas. IBEF aims to promote India as a business
		opportunity by creating positive economic perceptions
		of India globally as well as effectively present the India
		business perspective and leverage business partnerships
		in a globalised market-place.
		DOC provides funds for capacitybuildingfor up-gradation
		of quality to national level Institutions and EPCs to
		organize training programmes for the skill improvement
		of the exporters for quality up-gradation, reduction in
		rejection, product improvement etc. as provided under
		the Market Access Initiative (MAI) Scheme of DOC.
Test Houses	3.7	Central Government will assist in modernization and
		upgradation of test houses and laboratories to bring them
		at par with international standards.
	PROMOTIONAL MEASURES IN DGFT
Quality Complaints /	3.8	Regional Sub-Committee on Quality Complaints
Disputes		(RSCQC) set up at Regional Offices of this Directorate
		shall investigate quality complaints received from foreign
		buyers. Guidelines for settlement of quality complaints,
		in particular, and such other complaints, in general, are
		given in Appendix-16 of HBPv1.
Trade Disputes affecting	3.9	If it comes to DGFT’s notice or he has reason to believe
Trade Relations		that an export or import has been made in a manner that

(i) is gravely prejudicial to trade relations of India with any other country; and / or

(ii) is gravely prejudicial to interest of other persons engaged in exports or imports; and / or

(iii) has brought disrepute to the country;

Eligibility for Export and Trading Houses Status

Status Category

Double Weightage and other Conditions for Grant of Status

DGFT may take action against such exporter or importer in accordance with FT(D&R) Act, Rules and Orders made there-under and FTP.

3.10EXPORT AND TRADING HOUSES

3.10.1Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zones (AEZs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio- Technology Parks (BTPs) shall be eligible for status.

3.10.2Applicant shall be categorized depending on his total FOB (FOR - for deemed exports) export performance during current plus previous three years (taken together) upon exceeding limit below. For Export House (EH) Status, export performance is necessary in at least two out of four years (i.e., current plus previous three years).

Status Category	Export Performance
	FOB / FOR Value
	(Rupees in Crores)

Export House (EH)	20
Star Export House (SEH)	100
Trading House (TH)	500
Star Trading House (STH)	2500
Premier Trading House (PTH)	7500

3.10.3(i) Exporters in Small Scale Industry (SSI) / Tiny Sector / Cottage Sector, Units registered with KVICs / KVIBs, Units located in North Eastern States, Sikkim and Jammu & Kashmir, Units exporting handloom/ handicrafts / hand knotted or silk carpets, exporters exporting to countries in Latin America / CIS / sub- Saharan Africa as listed in Appendix-9, Units having ISO 9000 (series) / ISO 14000 (series) / WHOGMP/ HACCP/ SEI CMM level-II and above status granted by agencies listed in Appendix-6 of HBP v1, exports of services and exports of agro products shall be entitled for double weightage on exports made for grant of status. Double Weightage shall be admissible to Merchant as well as Manufacturer Exporters. However, a shipment can get double weightage only once in any one of above categories.

	(ii)	Transfer of export performance from one to another
		is not permitted. Therefore disclaimer system shall
		not be allowed for counting of export turnover.
	(iii) Exports made on re-export basis shall not be counted
		for recognition.
	(iv)	Exports made by subsidiary of a limited company
		shall be counted towards export performance of
		limited company for recognition only if limited
		company has a majority share holding in subsidiary
		company.
Privileges of Export and 3.10.4	A Status Holder shall be eligible for privileges as under:
Trading House Status
Holders	(i)	Authorization and Customs Clearances for both
		imports and exports on self-declaration basis;
	(ii)	Fixation of Input-Output norms on priority within 60
		days;
	(iii) Exemption from compulsory negotiation of
		documents through banks. Remittance / Receipts,
		however, would be received through banking
		channels;
	(iv)	100% retention of foreign exchange in EEFC
		account;
	(v)	Exemption from furnishing of BG in Schemes under
		FTP;
	(vi)	SEHs and above shall be permitted to establish
		Export Warehouses, as per DoR guidelines.
	(vii) For status holders, a decision on conferring of ACP
		Status shall be communicated by Customs within 30
		days from receipt of application with Customs.
	(viii)As an option, for Premier Trading House (PTH), the
		average level of exports under EPCG Scheme shall
		be the arithmetic mean of export performance in last
		5 years, instead of 3 years.
	(ix)	StatusHoldersofspecifiedsectorsshallbeeligiblefor
		Status Holder Incentive Scrip under Para 3.16 of FTP.

		(x) Status Holders of Agri. Sector (Chapter 1 to 24) shall
		be eligible for Agri. Infrastructure Incentive Scrip
		under VKGUY - Para 3.13.4 of FTP.
	3.11	SERVICES EXPORTS
Services Exports	3.11.1	Services include all 161 tradable services covered under
		General Agreement on Trade in Services (GATS) where
		payment for such services is received in free foreign
		exchange. A list of services is given in Appendix 10 of
		HBPv1.
		All provisions of this Policy shall apply mutatis mutandis
		to export of services as they apply to goods.
Registration cum	3.11.2	Software exporters shall register themselves with
Membership Certificate		Electronics and Software EPC. Exporters of 15 specific
(RCMC) for Service		services listed in Sl. No. 34 of Appendix 2 of HBPv1
Providers		are required to register themselves with Services EPC.
		Other service exporters shall register themselves with
		Federation of Indian Export Organisations (FIEO).
Common Facility Centres	3.11.3	Government shall promote establishment of Common
		Facility Centres for use by home-based service providers,
		particularly in areas like Engineering & Architectural
		Design, Multi-media operations, Software developers

etc., in State and District level towns, to draw in a vast multitude of home-based professionals into services export arena.

REWARD / INCENTIVE SCHEMES IN DGFT

	3.12	SERVED FROM INDIA SCHEME (SFIS)
Objective	3.12.1	Objective is to accelerate growth in export of services so
		as to create a powerful and unique ‘Served From India’
		brand, instantly recognized and respected world over.
Eligibility	3.12.2	All Indian Service Providers, of services listed in
		Appendix 10 of HBPv1, who have free foreign exchange

earning of at least Rs. 10 Lakhs in preceding financial year / current financial year shall qualify for Duty Credit

Scrip.

		For Individual Indian Service Providers, minimum free
		foreign exchange earnings would be Rs 5 Lakhs.
Ineligible Services and	3.12.3	Services and Service Providers as listed in Para 3.6.1 of
Service Providers		HBPv1 shall not be entitled for benefits under the SFIS
		scheme.
Entitlement	3.12.4	All Service Providers shall be entitled to Duty Credit
		Scrip equivalent to 10% of free foreign exchange earned
		during current financial year.
Eligible Remittances	3.12.5	Free foreign exchange earned through International
		Credit Cards and other instruments as permitted by RBI
		for rendering of service shall also be taken into account
		for computation of Duty Credit Scrip.
Imports Allowed	3.12.6	Duty Credit scrip may be used for import of any capital
		goodsincludingspares,officeequipmentandprofessional
		equipment, office furniture and consumables; that are
		otherwise freely importable and / or restricted under ITC
		(HS). Imports shall relate to any service sector business
		of applicant.
		Utilization of Duty Credit scrip earned shall not be
		permitted for payment of duty in case of import of
		vehicles, even if such vehicles are freely importable under
		ITC (HS).
		In case of hotels, clubs having residential facility
		of minimum 30 rooms, golf resorts and stand-alone
		restaurants having catering facilities, Duty Credit scrip
		may also be used for import of consumables including
		food items and alcoholic beverages.
Non Transferability	3.12.7	Entitlement / goods (imported / procured) shall be non
		transferable (except within group company and managed
		hotels) and be subject to Actual User condition.
Procurement from	3.12.8	Utilization of Duty Credit Scrip shall be permitted for
Domestic Sources		paymentofexcisedutyintermsofDoRnotificationissued

in this behalf for procurement from domestic sources, of items permitted for imports under SFIS Duty Credit Scrip.

3.13VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) (SPECIAL AGRICULTURE AND VILLAGE INDUSTRY SCHEME)

Objective	3.13.1	Objective of VKGUY is to promote exports of :
		(i) Agricultural		Produce	and	their	value	added
			products;
		(ii) Minor Forest		Produce	and	their	value	added
			variants;
		(iii) Gram Udyog Products;
		(iv) Forest Based Products; and
		(v) Other Products, as notified from time to time.
		Such products shall be listed in Appendix 37A of
		HBPv1.
Entitlement	3.13.2	Duty Credit Scrip benefits are granted with an aim to
		compensate high transport costs, and to offset other
		disadvantages.
		Exporters, of products notified in Appendix 37A of
		HBPv1, shall be entitled for Duty Credit Scrip equivalent
		to 5% of FOB value of exports (in free foreign exchange)
		for exports made from 27.8.2009 onwards.
		However,forexportsmadew.e.f27.8.2009,someFlowers,
		Fruits, Vegetables and other products, as listed in Table 2
		of Appendix 37A shall be entitled to an additional duty
		credit scrip equivalent to 2% of FOB value of exports;
		over and above the 5% or 3% VKGUY reduced rate
		entitlement available as per Para 3.13.3 below.
Applicability of	3.13.3	Duty Credit Scrip benefits under VKGUY scheme shall
Reduced Rate		be granted only at a reduced rate of 3% of FOB value
		of exports in such cases where exporter has also availed
		benefits of:
		(i)	Drawback at rates higher than 1%; and/or
		(ii)	Specific DEPB rate (i.e. other than Miscellaneous
			Category – Sr. Nos. 22C & 22D of Product Group
			90); and/or

(iii) Advance Authorization or Duty Free Import Authorization Import of inputs (other than catalysts, consumables and packing materials) for the exported product for which Duty Credit Scrip under VKGUY

			is being claimed.
Agri. Infrastructure	3.13.4	For	exports made during a particular year, all Status
Incentive Scrip		Holders (having status recognition for the current year)
		exporting products covered under ITC HS Chapters 1
		to 24, shall be incentivized with duty credit scrip equal
		to 10% of FOB value of agricultural exports (including
		VKGUY benefits entitled under Policy Para 3.13.2)
		provided that the total benefits for all status holders put
		together does not exceed Rs 100 Cr (i.e. Rs 50 Cr for each
		half year) and the conditions specified in Para 3.7.2 of
		HBPv1 are satisfied.
		Zonal Office, CLA, New Delhi shall be the licensing
		office for grant of the benefit to all status holders.
		The following capital goods / equipments shall be
		permitted for import:
		(i)	Cold storage units (including ControlledAtmosphere
			(CA) and Modified Atmosphere (MA) Stores); Pre-
			cooling Units and Mother Storage Units for Onions,
			etc.;
		(ii)	Pack Houses (including facilities for handling,
			grading, sorting and packaging etc.);
		(iii) Reefer Van / Containers; and
		(iv)	OtherCapitalGoods/Equipmentsasmaybenotified
			in Appendix 37F.

Imported capital goods/equipment shall be utilized for storage, packing etc. (as in (ii) above) and transportation of agricultural products (including agro-processed perishable products).

This additional benefit shall be subject to actual user condition and hence non-transferable.

However, for import of Cold Chain Equipment this

Incentive Scrip shall be freely transferable amongst Status

		Holders.
	3.14	FOCUS MARKET SCHEME (FMS)
Objective	3.14.1	Objective is to offset high freight cost and other
		externalities to select international markets with a view
		to enhance India’s export competitiveness in these
		countries.
Entitlement	3.14.2	Exporters of all products to notified countries (as in
		Appendix 37C of HBPv1) shall be entitled for Duty
		Credit Scrip equivalent to 3% of FOB value of exports (in
		free foreign exchange) for exports made from 27.8.2009
		onwards.
Ineligible Exports	3.14.3	The following categories of export products / sectors shall
Categories / Sectors for		be ineligible for Duty Credit Scrip, under FMS scheme:
FMS		a)	Supplies made to SEZ units;
		a)	Supplies made to SEZ units;
		b)	Service Exports;
		c)	Diamonds and other precious, semi precious stones;
		d)	Gold, silver, platinum and other precious metals in
			any form, including plain and studded Jewellery;
		e)	Ores and Concentrates, of all types and in all forms;
		f)	Cereals, of all types;
		g)	Sugar, of all types and in all forms;
		h)	Crude / Petroleum Oil & Crude / Petroleum based
			Products covered under ITC HS codes 2709 to 2715,
			of all types and in all forms; and
		i)	Export of Milk and Milk Products covered under
			ITC HS Codes 0401 to 0406, 19011001, 19011010,
			2105 & 3501.
	3.15	FOCUS PRODUCT SCHEME (FPS)
Objective	3.15.1	Objective is to incentivise export of such products which
		have high export intensity / employment potential, so as
		to offset infrastructure inefficiencies and other associated
		costs involved in marketing of these products.
Entitlement	3.15.2	Exports of notified products (as in Appendix 37D of
		HBPv1) to all countries (including SEZ units) shall be

entitled for Duty Credit scrip equivalent to 2% of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards.

However, Special Focus Product(s) /sector(s), covered under Table 2 and Table 5 of Appendix 37D, shall be granted Duty Credit Scrip equivalent to 5% of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards.

3.15.3Market Linked Focus Products Scrip (MLFPS):

Export of Products/Sectors of high export intensity/ employment potential (which are not covered under present FPS List) would be incentivized at 2% of FOB

value of exports (in free foreign exchange) under FPS when exported to the Linked Markets (countries), which are not covered in the present FMS list, as notified in Appendix 37D of HBPv1, for exports made from 27.8.2009 onwards.

3.16Status Holders Incentive Scrip

3.16.1With an objective to promote investment in upgradation of technology of some specified sectors as listed in Para

3.16.4 below, Status Holders shall be entitled to incentive scrip @1% of FOB value of exports made during 2009-

10and during 2010-11, of these specified sectors, in the form of duty credit. This shall be over and above any duty credit scrip claimed/availed under this chapter.

3.16.2Status Holders availing Technology Upgradation Fund

Scheme (TUFS) benefits (under Ministry of Textiles) during a particular year shall not be eligible for Status Holders Incentive Scrip for exports of that year.

3.16.3The Status Holders Incentive Scrip shall be with Actual User Condition and shall be used for imports of capital goods (as defined in FTP) relating to the sectors specified in Para 3.16.4 below.

3.16.4The Status Holders of the following Sectors shall be eligible for this Status Holders Incentive Scrip:

1.Leather Sector (excluding finished leather);

2.Textiles and Jute Sector;

3.Handicrafts;

4.Engineering Sector (excluding Iron & Steel, Non- ferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors &

parts and Ships, Boats and Floating Structures; 5. Plastics; and

6. Basic Chemicals (excluding Pharma Products).

	3.17	Common Provisions of Duty Credit Scrips, except
		where specifically provided forSpecial Provisions
‘	3.17.1	Government reserves the right in public interest, to
		specify export products or services or exports to such
		countries, which shall not be eligible for computation of
		entitlement.
		Further Government reserves the right to impose / change
		the rate / ceiling on Duty Credit Scrip under this chapter.
		Similarly, Government may also notify goods (in
		Appendix 37B of HBPv1), which shall not be allowed for
		import under Duty Credit Scrips.
Ineligible Exports	3.17.2	For VKGUY, FMS, FPS (including MLFPS) and Status
Categories /Sectors		Holders Incentive Scrip, the following exports categories
		/sectors shall be ineligible for Duty Credit Scrip
		entitlement:

(i) EOUs / EHTPs / BTPs who are availing direct tax benefits / exemption;

(ii) Export of imported goods covered under Para 2.35 of FTP;

(iii) Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India;

(iv) Deemed Exports;

(v) Exports made by SEZ units or SEZ products exported through DTA units; and

(vi) Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).

Counting of Commission	3.17.3	For computation of Duty Credit Scrip Benefits, FOB
in FOB value of Exports		Value of Exports (in free foreign exchange) shall include
(in free foreign exchange)		up to 12.5% Foreign Agency Commission.
Free Transferability	3.17.4	Duty Credit Scrip and items imported against it would be
		freely transferable.
		However, Duty Credit Scrip under SFIS (Para 3.12) and
		under Status Holders Incentive Scrip (Para 3.16) shall not
		be freely transferable.
Imports Allowed	3.17.5	Duty Credit Scrip may be used for import of inputs or
		goods including capital goods, provided same is freely
		importable and / or restricted under ITC (HS). However,
		import of items listed in Appendix 37B of HBPv1 shall
		not be permitted to be debited.
		Duty Credit Scrips under Chapter 3 of FTP can also be
		utilized for payment of duty against imports under EPCG
		scheme provided the item is importable against the scrip.
CENVAT / Drawback	3.17.6	Additional customs duty/excise duty paid in cash or
		through debit under Duty Credit scrip shall be adjusted
		as CENVAT Credit or Duty Drawback as per DoR rules,
		except under SFIS.
TRA Facility	3.17.7	Utilization of Duty Credit Scrip for imports from a port
		other than port of registration shall be allowed under
		Telegraphic Release Advice (TRA) facility as per DoR
		notification.
Exclusivity of Entitlement	3.17.8	For a shipment, Duty Credit Scrip benefit under any
		one of the schemes covered in this Chapter can alone be
		claimed, at exporter’s option.
Import under Lease	3.17.9	Utilization of Duty Credit Scrip shall be permitted for
financing		payment of duty in case of import of capital goods under
		lease financing in terms of provision in Para 2.25 of FTP.
Transfer of Export	3.17.10	Transfer of export performance from one to another
Performance		shall not be permitted. Thus, a shipment bill containing
		name of applicant shall be counted in export
		performance / turnover of applicant only if export

proceeds from overseas are realized in applicant’s bank account and this shall be evidenced from BRC / FIRC.

Facility of Payment of Customs Duties in case of EO defaults

However, for VKGUY, FMS and FPS (including

MLFPS),benefitscanbeclaimedeitherbythesupporting manufacturer (along with disclaimer from the company / firm who has realized the foreign exchange directly from overseas) or by the company / firm who has realized the foreign exchange directly from overseas.

3.17.11Duty Credit Scrips can also be used / debited towards payment of Customs Duties in case of EO defaults under Authorizations issued under Chapters 4 and 5 of this Policy. However, penalty / interest shall be required to be paid in cash.

CHAPTER-4

DUTY EXEMPTION & REMISSION SCHEMES

Duty Exemption and	4.1	Duty exemption schemes enable duty free import of inputs
Remission Schemes		required for export	production.	Duty	Exemption
		Schemes consist of (a) Advance Authorisation scheme
		and (b) Duty Free Import Authorisation (DFIA)
		scheme. A Duty Remission Scheme enables post export
		replenishment / remission of duty on inputs used in
		export product. Duty	Remission	Schemes	consist of

(a)Duty Entitlement Passbook (DEPB) Scheme and

(b)Duty Drawback (DBK) Scheme.

Re-import of exported goods under Duty Exemption / Remission Scheme

Value Addition

4.1.1Goods exported under Advance Authorisation / DFIA / DEPB may be re-imported in same or substantially same form subject to DoR specified conditions.

4.1.2Value addition (VA) for the purpose of this Chapter (Except for Gems and Jewellery Sector) shall be:-

	A - B
VA =	----------- x 100, where
	B

A= FOB value of export realised / FOR value of supply received.

B= CIF value of inputs covered by authorisation, plus anyotherimportedmaterialsusedonwhichbenefit of DBK is claimed.

ADVANCE AUTHORISATION SCHEME

Advance Authorisation	4.1.3	An Advance Authorisation is issued to allow duty free
		import of inputs, which are physically incorporated in

export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts which are consumed/ utilised to obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation.

Duty free import of mandatory spares upto 10% of CIF value of Authorisation which are required to be exported/ supplied with resultant product are allowed under Advance Authorisation. Advance Authorisations are

issued for inputs and export items given under SION. These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of HBP v1.

Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for:

i)Physical exports (including exports to SEZ); and/ or

ii)Intermediate supplies; and /or

iii)Supply of goods to the categories mentioned in paragraph 8.2 (b), (c), (d), (e), (f), (g), (i) and (j) of FTP ;

iv)supply of ‘stores’ on board of foreign going vessel/ aircraft subject to condition that there is specific

SION in respect of item(s) supplied.

In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d), (e), (f), (g) and

(j) of FTP, an Advance Authorisation can also be availed by sub-contractor to such project provided name of sub- contractor(s) appears in main contract.

Such Authorisation can also be issued for supplies made to United Nations Organisations or under Aid Programme of the United Nations or other multilateral agencies and which are paid for in free foreign exchange.

However, Advance Authorization for import of raw sugar, can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s). Exports can also be made by procurement of white sugar from any other factory(ies). This provision shall be applicable for exports from 17.2.2009.

4.1.4Advance Authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, anti- dumping duty and safeguard duty, if any. However, imports for supplies covered under paragraph 8.2 (h) & (i) will not be exempted from payment of applicable anti-dumping and safeguard duty, if any.

4.1.5Advance Authorisation and / or materials imported thereunder will be with actual user condition. It will not be transferable even after completion of export obligation. However,Authorisation holder will have option to dispose

off product manufactured out of duty free inputs once export obligation is completed. In case where CENVAT credit facility on inputs have been availed for the exported goods, even after completion of export obligation, the goods imported against Advance Authorisation shall be utilized only in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer), for which the authorisation holder shall produceacertificatefromeitherthejurisdictionalCentral

Excise Supdt. or Chartered Accountant, at the option of the exporter, at the time of filing application for EODC to

RA concerned. However, the actual user condition shall not be applicable in case of raw sugar to be imported from 17.2.2009, till 30.09.2009 under Advance Authorization Scheme.

Further the manufacturing wastes/scrap, as allowed, can be disposed off with the payment of applicable duty before fulfilment of export obligation.

4.1.6Advance Authorisations necessitate exports with a minimum value addition of 15%, except for items in Gems & Jewellery sector, for which value addition would be as per paragraph 4A.2.1 of HBP v.1. Exports to SEZ Units/ supplies to Developers / Co-Developers, irrespective of currency of realization, would also be covered.

For physical exports for which payments are not received in freely convertible currency, same shall be subject to value addition as specified inAppendix-11 of HBPv1.

In case ofAuthorisation for import of Tea, minimum value addition under Advance Authorisation shall be 50%.

Similarly, in case of spices {covered by Chapter 9 of ITC(HS)}, duty free import of spices shall be permitted only for value addition purposes like crushing / grinding / sterilization or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc.

4.1.7Advance Authorisation shall be issued in accordance with Policy and procedure in force on Authorisation issue date.

Validity period of Advance Authorisation for import shall be as prescribed in HBP v1.

Free of Cost Supply by Foreign Buyer

Export Obligation

Provision for BIFR units

Advance Authorisation for Annual Requirement

Advance Release Orders

(ARO) and Invalidation

Letter

4.1.8Facility of Advance Authorisation shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer.

In such cases, for calculation of value addition, notional value of free of cost inputs along with value of other duty- free inputs shall be taken into consideration. However, if all inputs are supplied free of cost, exporter shall also have option to follow provision prescribed by DoR.

4.1.9PeriodforfulfillmentofexportobligationunderAdvance

Authorisation shall be as prescribed in HBP v1.

4.1.9A Any firm / company registered with BIFR or any firm/ company acquiring a unit, which is under BIFR shall be allowed Export Obligation Period (EOP) extension as per rehabilitation package prepared, subject to approval of BIFR or 5 years if not specified, without payment of composition fee.

Above provisions apply also to SSI units as per rehabilitation scheme of concerned State government.

4.1.10Advance Authorisation can also be issued for annual requirement.

Status Certificate holder and all other categories of exporters having past export performance (in preceding two years) shall be entitled for Advance Authorisation for Annual Requirement.

Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and / or FOR value of deemed export in preceding licensing year or Rs 1 crore, whichever is higher.

4.1.11Holder of Advance Authorisation, Advance Authorisation for Annual Requirement and Duty Free Import Authorisation intending to source inputs from indigenous sources / State Trading Enterprises, in lieu of direct import, has option to source them either against Advance Release Order (ARO) or Invalidation letter denominated in free foreign exchange / Indian rupees. However, supplies may be obtained against Authorisation from EOU / EHTP / BTP / STP / SEZ units, without conversion into ARO or Invalidation letter.

		Transferee of DFIA shall also be eligible for ARO /
		invalidation letter facility.
		Validity period of ARO shall be as prescribed in HBP v1.
Back-to-Back Inland	4.1.12	Holder of Advance Authorisation, Advance Authorisation
Letter of Credit		for Annual Requirement and DFIA may, instead of
		applying for an ARO or Invalidation letter, avail of
		the facility of Back-to-Back Inland Letter of Credit in
		accordance with procedure specified in HBPv1.
Prohibited Items	4.1.13	Prohibited items of imports mentioned in ITC(HS) shall
		not be imported under Advance Authorisation / DFIA.
		Further items reserved for imports by STEs cannot be
		imported againstAdvanceAuthorisation / DFIA. However
		those items can be procured from STEs against ARO or
		Invalidation letter.
		STEs are also allowed to sell goods on High Sea Sale
		basis to holders of Advance Authorisation / DFIA holder.
		In addition, STEs are permitted to issue “No Objection
		Certificate (NOC)” for import by advanceAuthorisation/
		DFIA holder. Authorisation Holder would be required
		to file Quarterly Returns of imports effected against
		such NOC	to concerned STE and STE would submit
		half-yearly import figures of such imports to concerned
		administrative Department for monitoring with a copy
		endorsed to DGFT.
		Similarly	prohibited items of exports mentioned
		in ITC(HS) shall not be exported under Advance
		Authorisation / DFIA scheme. Export of restricted items
		shall be subject to all conditionalities or requirements of
		Export Authorisation or permission, as may be required,
		under Schedule II of ITC (HS).
Admissibility of	4.1.14	In case of an Advance Authorisation, drawback shall be
Drawback		available for any duty paid material, whether imported
		or indigenous, used in goods exported, as per drawback
		rate fixed by DoR, Ministry of Finance (Directorate of

Drawback). Drawback allowed shall be mentioned in

Authorisation.

DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME

Scheme	4.2.1	DFIA is issued to allow duty free import of inputs, fuel,
		oil, energy sources, catalyst which are required for
		production of export product. DGFT, by means of Public
		Notice, may exclude any product(s) from purview of
		DFIA. This scheme is in force from 1st May, 2006.
Entitlement	4.2.2	Provisions of paragraph 4.1.3 shall be applicable in case
		of DFIA. However, these Authorisations shall be issued
		only for products for which Standard Input and Output
		Norms (SION) have been notified.
		In case of post export DFIA, a merchant exporter shall
		be required to mention only name(s) and address(s)
		of manufacturer(s) of the export product(s). Applicant
		is required to file application to concerned RA before
		effecting exports under DFIA.
		Pre-export Authorisation shall be issued with actual user
		condition and shall be exempted from payment of basic
		customs duty, additional customs duty / excise duty,
		education cess, anti-dumping duty and safeguard duty, if
		any.
		In case of actual user DFIA and where CENVAT credit
		facility on inputs have been availed for the exported
		goods, even after completion of export obligation, the
		goods imported against such DFIA shall be utilized in the
		manufacture of dutiable goods whether within the same
		factory or outside (by a supporting manufacturer).
Import items	4.2.3	Provisions of paragraphs 4.1.11, 4.1.12, 4.1.13 and 4.1.14
		of FTP shall be applicable for DFIA holder.
Value Addition	4.2.4	A minimum 20% value addition shall be required for
		issuance of such authorisation, except for items in gems
		and jewellery sector, for which value addition would be as
		per paragraph 4A.2.1 of HBP v1. Items for which higher
		value addition is prescribed under Advance Authorisation
		Scheme, shall be applicable.
Export Obligation	4.2.5	ProcedureandtimeperiodrelatedtofulfillmentofExport
		Obligation have been laid down in Chapter 4 of HBP v1.

Transferability	4.2.6	Once export obligation has been fulfilled, request for
		transferability ofAuthorisation or inputs imported against
		it may be made before concerned RA. Once, transferability
		is endorsed, Authorisation holder may transfer DFIA or
		dutyfreeinputs,exceptfuelandanyotheritem(s)notified
		by DGFT. However, for fuel, import entitlement may be
		transferred only to companies which have been granted
		authorisation to market fuel by Ministry of Petroleum and
		Natural Gas.
		Once transferability is endorsed, imports / domestic
		procurement against authorisation or transfer of imported
		inputs / domestically procured inputs shall be subject to
		payment of applicable additional customs duty / excise
		duty. While endorsing transferability, authorisation would
		bear a note as to liability of such additional customs
		duty / excise duty. However, in case where CENVAT
		facility has not been availed, exemption from additional
		customs duty/ excise duty would be available even after
		endorsement of transferability on DFIA.
		Wherever SIONs prescribe actual user condition and
		in case of Acetic Anhydride, Ephedrine and Pseudo-
		Ephedrine, DFIAshall be issued with actual user condition
		for these inputs and no transferability shall be allowed for
		these inputs even after fulfillment of export obligation.
		However, for authorizations issued prior to 1.4.2007,
		exemption from Additional Customs Duty/ Excise Duty
		shall continue to be available even after endorsement of
		transferability as provided in FTP (RE-2006).
CENVAT Facility	4.2.7	CENVAT credit facility shall be available for inputs either
		imported or procured indigenously.

DUTY ENTITLEMENT PASSBOOK (DEPB) SCHEME

Duty Entitlement	4.3	Objective of DEPB is to neutralise incidence of customs
Passbook (DEPB)		duty on import content of export product. Component
Scheme		of customs duty on fuel (appearing as consumable in the
		SION) shall also be factored in the DEPB rate. Component

of Special Additional Duty shall also be allowed under DEPB (as brand rate) in case of non-availment of CENVAT credit. Neutralisation shall be provided by way of grant of duty credit against export product.

	4.3.1	An exporter may apply for credit, at specified percentage
		of FOB value of exports, made in freely convertible
		currency. In case of supply by a DTA unit to a SEZ unit/
		SEZ Developer/Co-Developer, an exporter may apply
		for credit for exports made in freely convertible currency
		or payment made from foreign currency account of SEZ
		Unit/SEZ Developer/Co-Developer. In addition, the
		exporter shall also be entitled for DEPB benefit in case
		payment is made in Indian Rupees by SEZ Developer/
		Co-Developer for supplies received w.e.f 10.2.2006.
		Credit shall be available against such export products
		and at such rates as may be specified by DGFT by way
		of public notice. Credit may be utilized for payment of
		Customs Duty on freely importable items and/or restricted
		items. DEPB Scrips can also be utilized for payment of
		duty against imports under EPCG Scheme. Further, DEPB
		Scrips can also be used / debited towards payment of
		Customs Duty in case of EO defaults for Authorizations
		issued under Chapters 4 and 5 of this Policy. However,
		penalty / interest shall be required to be paid in cash.
		Prohibited items of exports mentioned in ITC(HS) Book
		(as amended from time to time) shall not be entitled
		for DEPB credit except for the exports effected under
		transitional facility, wherever allowed, in terms of
		paragraph 1.5 of FTP.
	4.3.2	DEPB holder shall have option to pay additional customs
		duty in cash as well.
Validity	4.3.3	Validity period of DEPB for import shall be as prescribed
		in HBP v1.
Transferability	4.3.4	DEPB and / or items imported against it are freely
		transferable. Transfer of DEPB shall however be for
		import at specified port, which shall be the port from
		where exports have been made. Imports from a port other
		than the port of export shall be allowed under TRAfacility
		as per terms and conditions of DoR notification.
Applicability of	4.3.5	Additional customs duty / Excise Duty and Special
Drawback		Additional Duty paid in cash or through debit under
		DEPB may also be adjusted as CENVAT Credit or Duty
		Drawback as per DoR rules.

GEMS AND JEWELLERY

Scheme for Gems	4A	Exporters of gems and Jewellery can import / procure
and Jewellery		duty free inputs for manufacturing.
Replenishment	4A.1	Exporters	may	obtain	Replenishment		(REP)
Authorisation		Authorisations from RA in accordance with					procedure
		specified in HBPv1.
	4A.1.1	Replenishment authorisation may also be issued for
		consumables & tools as per paragraph 4A.28 of HBP v1.
Import of Diamonds for	4A.2	The authorized offices/agencies in India of Gemological
Certification/ Grading &		Institute of America (GIA) or any other agency approved
re-export		in this regard, shall be permitted to import diamonds to
		their laboratories for the purpose of certification/grading
		reports by them with a condition that the same should be
		re-exported with the certification/grading reports issued
		by them without any import duty, as per the procedure
		laid down in HBP v1.
Schemes for Gold/	4A.3	Exporters of gold / silver / platinum jewellery and articles
Silver/ Platinum		thereof may import their essential inputs such as gold,
Jewellery		silver, platinum, mountings, findings, rough gems,
		precious and semi-precious stones, synthetic stones and
		unprocessed pearls etc. in accordance with the procedure
		specified in this behalf.
Nominated Agencies	4A.4	Nominated	agencies are		MMTC Ltd,	Handicraft

and Handloom Export Corporation (HHEC), State Trading Corporation (STC), the Project and Equipment Corporation (PEC) of India Ltd, STCL Ltd, MSTC Ltd, Diamond India Limited (DIL), Gems & Jewellery Export Promotion Council (G&J EPC)), Star Trading House (only for Gems & Jewellery sector) and Premier Trading House under Paragraph 3.10.2 of FTP and any other agency authorised by RBI. Exporters (except EOUs and units in SEZ) may obtain gold / silver / platinum from nominated agency(s).

Procedure for import of precious metal by these agencies (other than those authorized by RBI and the Gems & Jewellery units operating under EOU and SEZ schemes) and the monitoring mechanism thereof shall be as per the provisions laid down in HBP v1 in this regard.

A bank authorised by RBI is allowed export of gold scrap for refining and import standard gold bars as per RBI guidelines.

Items of Export	4A.5	Following items, if exported, would be eligible for
		facilities:
		(a)	Gold jewellery, including partly processed jewellery
			and articles including medallions and coins
			(excluding legal tender coins), whether plain or
			studded, containing gold of 8 carats and above;
		(b)	Silver jewellery including partly processed jewellery,
			silverware, silver strips and articles including
			medallions and coins (excluding legal tender coins
			and any engineering goods) containing more than
			50% silver by weight;
		(c)	Platinum jewellery including partly processed
			jewellery and articles including medallions and coins
			(excluding legal tender coins and any engineering
			goods) containing more than 50% platinum by
			weight.
Value Addition	4A.6	Value Addition (VA) for gems and jewellery sector
		shall be as per paragraph 4A.2.1 of HBP v1. It would be
		calculated as under:
			A – B
		VA = ----------- x 100, where
			B
		A = FOB value of the export realised / FOR value of
			supply received.
		B = Value of inputs (including domestically procured)
			such as gold / silver / platinum content in export
			product plus admissible wastage along with value of
			other items such as gemstone etc. Wherever gold has
			been obtained on loan basis, value shall also include
			interest paid in free foreign exchange to foreign
			supplier.
Wastage Norms	4A.7	Wastage or manufacturing loss for gold / silver / platinum
		jewellery shall be admissible as per paragraph 4A.2 of
		HBP v1.
Export against Supply	4A.8	Where export orders are placed on nominated agencies/
by Foreign Buyer		status holder / exporters of three years standing having

		an annual average turnover of Rs. Five Crores during
		preceding three licensing years, foreign buyer may supply
		in advance and free of charge, gold / silver / platinum,
		alloys, findings and mountings of gold / silver / platinum
		for manufacture and export.
		Such supplies can also be in advance and may involve
		semi-finished jewellery including findings / mountings /
		components for repairs / re-make and export subject to
		minimum value addition of 10%. However, if so imported
		semifinishedgold/silver/platinumjewelleryisexported
		as studded jewellery, value addition of 15% shall be
		achieved. In such cases of export, wastage of 2% may be
		permitted.
		Exports may be made by nominated agencies directly or
		through their associates or by status holder / exporter.
		Import and Export of findings shall be on net to net
		basis.
Export Against Supply	4A.9	Exporter may obtain gold / silver / platinum as an input
by Nominated Agencies		for export products from nominated agencies in advance
		or as replenishment after exports in accordance with
		specified procedure.
Export Against Advance	4A.10	An Advance Authorisation may be granted for duty free
Authorisation		import of:
		(a) Gold of fineness not less than 0.995 and mountings,
		sockets, frames and findings of 8 carats and above;
		(b) Silver of fineness not less than 0.995 and mountings,
		sockets, frames and findings containing more than
		50% silver by weight;
		(c) Platinum of fineness not less than 0.900 and
		mountings, sockets, frames and findings containing
		more than 50% platinum by weight.
	4A.11	Such authorisations shall carry an export obligation to
		be fulfilled as per procedure specified in paragraph 4Aof
		HBP v1. Value addition shall be as per paragraph 4A.2.1
		of HBP v.1.

Advance Authorisation holder may obtain gold / silver/ platinum from nominated agencies in lieu of direct import.

Gem Replenishment	4A.12	Gem Replenishment (Gem & Jewellery REP)
Authorisation		Authorisation may be issued as given in paragraph 4A.8,
		4A.9 and 4A.10 above.
		In case of plain or studded gold / silver / platinum
		jewellery and articles, value of such Authorisations shall
		be determined with reference to realisation in excess of
		prescribed minimum VA.
		Such Gem REP Authorisations shall be freely
		transferable.
Gem REP Rate and	4A.13	Replenishment Rate and item of import will be as
Item		prescribed in Appendix 12B of HBP v1.
Export Promotion	4A.14	Nominated agencies and their associates, with the
Tours/Export of		approval of Department of Commerce, and others, with
Branded Jewellery		the approval of Gem & Jewellery EPC (GJEPC), may
		export gold / silver / platinum jewellery and articles
		thereof for exhibitions abroad.
		Personal carriage of gold / silver / platinum jewellery,
		precious, semi-precious stones, beads and articles and
		export of branded jewellery is also permitted, subject to
		conditions as in HBP v1.
Personal Carriage of	4A.15	Personal carriage of gems and jewellery export parcels
Export / Import Parcels		by foreign bound passengers and import parcels by an
		Indian importer/foreign national may be permitted as in
		HBP v1.
Export by Post	4A.16	In case of exports through Foreign Post Office (including
		via Speed Post), value of jewellery parcels shall not
		exceed US$ 75000 and 20 kg. by weight.
Diamond & Jewellery	4A.17	Firms and companies dealing in purchase/ sale of rough
Dollar Accounts		or cut and polished diamonds/precious metal jewellery
		plain, minakari and / or studded with / without diamond

and/or other stones, with a track record of at least two years in import or export of diamonds / coloured gemstones/ diamond and coloured gemstones studded jewellery / plain gold jewellery, and having an average annual turnover of Rs. 3 crores or above during preceding three licensing years, may also carry out their business through designated Diamond Dollar Accounts (DDA).

Dollars in such accounts available from bank finance and

/ or export proceeds shall be used only for:

(i) Import / purchase of rough diamonds from overseas/

		local sources;
		(ii) Purchase of cut and polished diamonds, coloured
		gemstones and plain gold jewellery from local
		sources;
		(iii) Import / purchase of gold from overseas / nominated
		agencies and repayment of dollar loans from the
		bank; and
		(iv) Transfer to Rupee Account of exporter. Details of
		this DDA Scheme are given in HBP v1.
		A non DDA holder is also permitted to supply cut and
		polished diamonds to DDA holder, receive payment in
		dollars and convert same into Rupees within 7 days.
		Cut and polished diamonds and coloured gemstones so
		supplied by non-DDAholder will also be counted towards
		discharge of his export obligation and / or entitle him to
		replenishment Authorisation.
	4A.18	Gems and Jewellery exporters shall be allowed to export
		cut and polished precious and semi-precious stones for
		the treatment and re-import as per Customs rules and
		regulations. In case of re-export, the exporter shall be
		entitled for duty drawback as per rules.
Re-import of rejected	4A.19	Gems & Jewellery exporters shall be allowed to re-import
jewellery		rejected precious metal jewellery as per para 4A.32 of
		HBP v1.
Export on consignment	4A.20	Gems & Jewellery exporters shall be allowed to export
basis		diamond, gemstones & jewellery on consignment basis
		as per HBP v1 and Customs rules and regulations.

CHAPTER-5

EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME

Zero duty EPCG Scheme	5.1	Zero duty EPCG scheme allows import of capital goods for
		pre production, production and post production (including
		CKD/SKD thereof as well as computer software systems)
		at zero Customs duty, subject to an export obligation
		equivalent to 6 times of duty saved on capital goods
		imported under EPCG scheme, to be fulfilled in 6 years
		reckoned from Authorization issue-date.
		The scheme will be available for exporters of engineering
		& electronic products, basic chemicals & pharmaceuticals,
		apparels & textiles, plastics, handicrafts, chemicals &
		allied products and leather & leather products; subject to
		exclusions as provided in HBPv1.
		Validity period for import of capital goods and provision
		for extension in export obligation period will be as
		separately provided in the HBPv1. All other provisions
		pertaining to concessional 3% duty EPCG scheme under
		this Chapter, to the extent they are not inconsistent with
		the above provisions of zero duty EPCG scheme, shall be
		applicable to the zero duty EPCG scheme also. The zero
		duty EPCG scheme will be in operation till 31.3.2011.
Concessional 3% Duty	5.2	Concessional 3% duty EPCG scheme allows import of
EPCG Scheme		capital goods for pre production, production and post
		production (including CKD/SKD thereof as well as
		computer software systems) at 3% Customs duty, subject
		to an export obligation equivalent to 8 times of duty
		saved on capital goods imported under EPCG scheme, to
		be fulfilled in 8 years reckoned fromAuthorization issue-
		date.

In case of agro units, and units in cottage or tiny sector, import of capital goods at 3% Customs duty shall be allowed subject to fulfillment of export obligation equivalent to 6 times of duty saved on capital goods imported, in 12 years from Authorization issue-date.

For SSI units, import of capital goods at 3% Customs duty shallbeallowed,subjecttofulfillmentofexportobligation

equivalent to 6 times of duty saved on capital goods, in 8 years from Authorization issue-date, provided the landed cif value of such imported capital goods under the scheme does not exceed Rs. 50 lakhs and total investment in plant and machinery after such imports does not exceed SSI limit.

However, in respect of EPCG Authorization with a duty saved amount of Rs. 100 crores or more, export obligation shall be fulfilled in 12 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.

Capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds.

Second hand capital goods, without any restriction on age, may also be imported under EPCG scheme.

However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning/operating golf resorts, subject to the condition that:

(i)total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current and preceding three licensing years is Rs. 1.5 crores or more.

(ii)‘duty saved’ amount on all EPCG Authorizations issued in a licensing year for import of motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 50% of average foreign exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three licensing years.

(iii)vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A copy of the Registration certificate should be submitted to concernedRAasaconfirmationofimportofvehicle.

However, parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc. cannot be

		imported under the EPCG Scheme.
		Import of Restricted items of imports mentioned under
		ITC(HS) shall only be allowed under EPCG Scheme after
		approval from EFC at Headquarters.
	5.2A	Spares (including refurbished/reconditioned spares),
		moulds, dies, jigs, fixtures, tools, refractory for initial
		lining and catalyst for initial charge; for existing plant and
		machinery (imported earlier, under EPCG or otherwise),
		shall be allowed to be imported under the EPCG scheme
		subject to an export obligation equivalent to 50% of the
		normal export obligation prescribed in para 5.1 and 5.2
		above (for import of capital goods), to be fulfilled in 8
		years (6 years for zero duty EPCG scheme), reckoned
		from Authorization issue date. This would however be
		subject to the condition that the c.i.f. value of import of
		the above spares etc. will be limited to 10% of the value of
		plant and machinery imported under the EPCG scheme.
		In case of plant and machinery not imported under the
		EPCG scheme, c.i.f. value of import of the spares etc.
		will be limited to 10% of the book value of the plant and
		machinery.
EPCG for Projects	5.2B	An EPCG Authorization can also be issued for import of
		capital goods under Scheme for project Imports notified
		by the Central Board of Excise and Customs under S.No.
		441 of Customs Exemption Notification No. 21/2002
		dated 01.03.2002
		Export obligation for such EPCG Authorizations would
		be eight times (6 times for zero duty EPCG scheme) of
		duty saved. Duty saved would be difference between the
		effective duty under aforesaid Customs Notification and
		concessional duty under the EPCG Scheme.
EPCG for Retail Sector	5.2C	To create modern infrastructure in retail sector,
		concessional duty benefits under EPCG scheme shall be
		extended for import of capital goods required by retailers
		having minimum area of 1000 sq. meters. Such retailer
		shall fulfill export obligation i.e. 8 times of duty saved, in
		8 years.
Eligibility	5.3	EPCG scheme covers manufacturer exporters with or
		without supporting manufacturer(s)/ vendor(s), merchant
		exporters tied to supporting manufacturer(s) and service

providers.

Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is designated / certified as a Common Service Provider (CSP) by the

DGFT, Department of Commerce or State Industrial InfrastructuralCorporationinaTownofExportExcellence subject to provisions of Foreign Trade Policy/Handbook of Procedures with the following conditions:-

		(i)	EPCG licence to be given to the CSP should have a
			clear endorsement giving the details of the users and
			the quantum of Export Obligation (EO) which each
			user would fulfill;
		(ii)	Such exports will not count towards fulfillment of
			other specific export obligations ; and
		(iii) Each one of the users of the CSP apart from the CSP
			should furnish 100% bank Guarantee (BG) equivalent
			to their portion of duty foregone apportioned in terms
			of quantum of EO to be discharged by them and the
			B.G. will be enforced in the event of the obligation
			not being fulfilled.
Conditions for import of	5.4	Import of capital goods shall be subject to Actual User
Capital Goods		condition till export obligation is completed.
Export obligation	5.5	Following conditions shall apply to the fulfillment of the
		export obligation:-
		(i)	ExportObligationshallbefulfilledbyexportofgoods
			manufactured/services rendered by the applicant.

Export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for the same and similar products within the overall export obligation period including extended period, if any; except for categories mentioned in paragraph 5.7.6 of HBP v1. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years

		instead of three years.
		Upto50%ExportObligationmayalsobefulfilledby
		exports of other good(s) manufactured or service(s)
		provided by the same firm / company, or group
		company / managed hotel, which has the EPCG
		authorization. However, EPCG authorization issued
		prior to 1.4.2008 will be governed by earlier policy
		provisions.
		However, in such cases, additional export obligation
		imposed shall be over and above average exports
		achieved by the unit / company / group company /
		managed hotel in preceding three years for both the
		original and the substitute product(s) / service(s),
		despite exemptions in Para 5.7.6 of HBP v1.
	(ii)	Shipments under Advance Authorization, DFRC,
		DFIA, DEPB or Drawback scheme, or incentive
		schemes under Chapter 3 of FTP; would also count
		for fulfillment of EPCG export obligation.
	(iii) Export obligation can also be fulfilled by the supply
		ITA-I items to DTA, provided realization is in free
		foreign exchange.
	(iv)	Exports shall be physical exports. However, deemed
		exports as specified in paragraph 8.2 (a), (b), (d)
		(f), (g) & (j) of FTP shall also be counted towards
		fulfillment of export obligation, alongwith usual
		benefits available under paragraph 8.3 of FTP.
		Royalty payments received in freely convertible
		currency and foreign exchange received for R&D
		services shall also be counted for discharge under
		EPCG. Payment received in rupee terms for port
		handling services, in terms of Chapter 9 of FTP shall
		also be counted for export obligation discharge.
Provision for BIFR units 5.5.1	Any firm/ company registered with BIFR or any firm/
	company acquiring a unit, which is under BIFR, may

be allowed EO extension, as per rehabilitation package prepared by operating agency and approved by BIFR/ Rehabilitation Department of State Government, upto 12 years if not specified.

		Above provisions apply also to SSI units as per
		rehabilitation scheme of concerned State government.
EPCG for agro units	5.5.2	LUT/Bond or 15% BG ( as applicable) may be given
		for EPCG Authorization granted to units in Agri Export
		Zones provided EPCG Authorization is taken for export
		of primary agricultural product(s) notified inAppendix 8
		or their value added variants.
Indigenous Sourcing of	5.6	A person holding an EPCG Authorization may source
Capital Goods and		capital goods from a domestic manufacturer. Such
benefits to Domestic		domestic manufacturer shall be eligible for deemed
Supplier		exportbenefitunderparagraph8.3ofFTP.Suchdomestic
		sourcing shall also be permitted from EOUs and these
		supplies shall be counted for purpose of fulfillment of
		positive NFE by said EOU as provided in Para 6.9 (a) of
		FTP.
Fixation of Export	5.7	In case of direct imports, export obligation shall be
Obligation		reckoned with reference to actual duty saved amount.
		In case of domestic sourcing, export obligation shall be
		reckoned with reference to notional Customs duties saved
		on FOR value.
Technological	5.8	EPCG Authorization holders can opt for Technological
Upgradation of existing		Upgradation of existing capital good imported under
EPCG machinery		EPCG Authorization.

Conditions governing Technological Up-gradation of existing capital goods are as under:

(i) Minimum time period for applying for Technological Up-gradation of existing capital goods imported under EPCG is 5 years from Authorization issue- date.

(ii) Minimum exports made under old capital goods must be 40% of total export obligation imposed on first EPCGAuthorization.

(iii) Export obligation would be re-fixed such that total export obligation mandated for both capital goods would be sum total of 6 times of duty saved on both the capital goods, to be fulfilled in 8 years from new authorization issue-date.

		(iv)	Facility for technological up-gradation shall be
			available only once and the minimum imports to be
			made shall be at least 10% of the existing investment
			in plant and machinery by applicant.
		(v)	Capital Goods to be imported must be new and
			technologically superior to earlier CG.
Incentives for Fast	5.9	To	incentivize fast track companies with a view to
Track Companies		accelerate exports, in cases where Authorization holder

has fulfilled 75% or more of specific export obligation and 100% ofAverage Export Obligation till date, if any, in half or less than half the original export obligation period specified , remaining export obligation shall be condoned and the Authorization redeemed by RA concerned.

However no benefits under Para 5.12 of HBP v1 shall be available in such cases.

CHAPTER-6

EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs).

Eligibility	6.1	Units undertaking to export their entire production of
		goods and services (except permissible sales in DTA),
		may be set up under the Export Oriented Unit (EOU)
		Scheme, Electronics Hardware Technology Park (EHTP)
		Scheme, Software Technology Park (STP) Scheme or
		Bio-Technology Park (BTP) Scheme for manufacture of
		goods, including repair, re-making, reconditioning, re-
		engineering and rendering of services. Trading units are
		not covered under these schemes.
Export and Import of	6.2	(a)	An EOU / EHTP / STP / BTP unit may export all
Goods			kinds of goods and services except items that are
			prohibited in ITC (HS). Export of Special Chemicals,
			Organisms, Materials, Equipment and Technologies
			(SCOMET) shall be subject to fulfillment of the
			conditions indicated in ITC(HS).
			Procurement and supply of export promotion material
			like brochure / literature, pamphlets, hoardings,
			catalogues, posters etc. upto a maximum value limit
			of 1.5% of FOB value of previous years exports shall
			also be allowed.
		(b)	An EOU / EHTP / STP / BTP unit may import and/
			or procure, from DTA or bonded warehouses in
			DTA / international exhibition held in India, without
			payment of duty, all types of goods, including capital
			goods, required for its activities, provided they are
			not prohibited items of import in the ITC (HS). Any
			permission required for import under any other law
			shall be applicable. Units shall also be permitted
			to import goods including capital goods required
			for approved activity, free of cost or on loan / lease
			from clients. Import of capital goods will be on a self
			certification basis. Goods imported by a unit shall be
			with actual user condition and shall be utilized for
			export production.
		(c)	State Trading regime shall not apply to EOU

manufacturing units. However, in respect of Chrome Ore / Chrome concentrate, State Trading Regime as stipulated in export policy of these items, will be applicable to EOUs.

(d)EOU / EHTP / STP / BTP units may import / procure fromDTA,withoutpaymentofduty,certainspecified goods for creating a central facility. Software EOU/ DTA units may use such facility for export of software.

(e)An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture, pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in connection with its activities for use outside bonded area.

(f)Gems and jewellery EOUs may source gold / silver/ platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold/ silver/ platinum from nominated agencies, either on loan basis or outright purchase basis shall export gold/ silver / platinum within 90 days from date of release.

(g)EOU / EHTP / STP / BTP units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit / Escrow Rupee Account of buyer subject to RBI clearance, if any.

(h)Procurement and export of spares / components, upto 5% of FOB value of exports, may be allowed to same consignee / buyer of the export article, subject to the condition that it shall not count for NFE and direct tax benefits.

(i)BoA may allow, on a case to case basis, requests

of EOU / EHTP / STP / BTP units in sectors other than Gems & Jewellery, for consolidation of goods related to manufactured articles and export thereof along with manufactured article. Such goods may be allowed to be imported / procured from DTA by EOU without payment of duty, to the extent of 5% FOB value of such manufactured articles exported by the unit in preceding financial year. Details of

		procured / imported goods and articles manufactured
		by the EOU will be listed separately in the export
		documents. In such cases, value of procured /
		imported goods will not be taken into account for
		calculation of NFE, DTA sale entitlement & profits
		accruing out of such procured / imported goods
		will not be eligible for income tax benefits. Such
		procured/ imported goods shall not be allowed to
		be sold in DTA. BoA may also specify any other
		conditions.
Second Hand Capital	6.3	Second hand capital goods, without any age limit, may
Goods		also be imported duty free.
Leasing of Capital Goods	6.4	a) An EOU / EHTP / STP / BTP unit may, on the basis
		of a firm contract between parties, source capital
		goods from a domestic / foreign leasing company
		without payment of customs / excise duty. In such a
		case, EOU / EHTP / STP / BTP unit and domestic /
		foreign leasing company shall jointly file documents
		to enable import / procurement of capital goods
		without payment of duty.
		b) An EOU / EHTP / BTP / STP unit may sell capital
		goods and lease back the same from a Non Banking
		Financial Company (NBFC), subject to the following
		conditions:
		i)	The unit should obtain permission from the
			jurisdictional Deputy / Assistant Commissioner
			of Customs or Central Excise, for entering into
			transaction of ‘Sale and Lease Back of Assets’,
			and submit full details of the goods to be sold
			and leased back and the details of NBFC;
		ii)	The goods sold and leased back shall not be
			removed from the unit’s premises;
		iii)	The unit should be NFE positive at the time when
			it enters into sale and lease back transaction
			with NBFC;
		iv)	A joint undertaking by the unit and NBFC
			should be given to pay duty on goods in case of
			violation or contravention of any provision of
			the notification under which these goods were

		imported or procured, read with Customs Act,
		1962 or Central Excise Act, 1944, and that the
		lien on the goods shall remain with the Customs/
		Central Excise Department, which will have
		first charge over the said goods for recovery
		of sum due from the unit to Government under
		provision of Section 142(b) of the Customs
		Act, 1962 read with the Customs (Attachment
		of Property of Defaulters for Recovery of Govt.
		Dues) Rules, 1995.
Net Foreign Exchange	6.5	EOU / EHTP / STP / BTP unit shall be a positive net
Earnings		foreign exchange earner except for sector specific
		provision of Appendix 14-I-C of HBP v1, where a
		higher value addition shall be required. NFE earnings
		shall be calculated cumulatively in blocks of five years,
		starting from commencement of production. Whenever
		a unit is unable to export due to prohibition / restriction
		imposed on export of any product mentioned in LoP, the
		five year block period for calculation of NFE earnings
		may be suitably extended by BoA. BoA may also
		consider extension of block period by another one year,
		for calculation of NFE, on case to case basis, for those
		units which complete 5 years block period in between
		30.09.2008 and 30.09.2009, keeping in view the decline
		in exports in that particular unit, due to economic slow
		down only.
Letter of Permission /	6.6	(a) On approval, a Letter of Permission (LoP) / Letter
Letter of Intent and Legal		of Intent (LoI) shall be issued by DC / designated
Undertaking;		officer to EOU / EHTP / STP / BTP unit. LoP / LoI
Investment Criteria		shall have an initial validity of 3 years, by which
		time unit should have commenced production.
		Its validity may be extended further up to 3 years
		by competent authority. However, proposals for
		extension beyond six years shall be considered in

exceptional circumstances, on a case-to-case basis by BoA. Once unit commences production, LoP/ LoI issued shall be valid for a period of 5 years for its activities. This period may be extended further by DC for a period of 5 years at a time.

(b) LoP / LoI issued to EOU / EHTP / STP / BTP units by concerned authority, subject to compliance of provision in para 6.2 above, would be construed as an Authorisation for all purposes.

Application & Approvals 6.7

DTA Sale of Finished

6.8

Products / Rejects / Waste /Scrap/Remnants and by- products

(c)Unit shall execute an LUT with DC concerned. Failure to ensure positive NFE or to abide by any of the terms and conditions of LoP / LoI / IL / LUT shall render the unit liable to penal action under provisions of the FT (D&R) Act and Rules and Orders made thereunder, without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL.

(d)Only projects having a minimum investment of Rs. 1 Crore in plant & machinery shall be considered for establishment as EOUs. However, this shall not apply to existing units and units in EHTP / STP / BTP, Handicrafts /Agriculture / Floriculture /Aquaculture/ Animal Husbandry / Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BoA may also allow establishment of EOUs with a lower investment criteria.

(a)Applications for setting up of units under EOU scheme, other than proposals for setting up of units in services sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by the Units Approval Committee within 15 days as per criteria indicated in HBP v1.

(b)In other cases, approval may be granted by BoA set up for this purpose as indicated in HBP v 1.

(c)Proposals for setting up EOU requiring industrial licence may be granted approval by DC after clearance of proposal by BoA and DIPP within 45 days.

(d)Applications for conversion into an EOU / EHTP/ STP / BTP unit from existing DTA units, having an investment of Rs. 50 crores and above in plant and machinery or exporting Rs. 50 crores and above annually, shall be placed before BoA for a decision.

Entire production of EOU / EHTP / STP / BTP units shall be exported subject to following:

(a) Units, other than gems and jewellery units, may sell

goods upto 50% of FOB value of exports, subject to fulfilment of positive NFE, on payment of concessional duties. Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. However, units which are manufacturing and exporting more than one product can sell any of these products into DTA, upto 90% of FOB value of export of the specific products, subject to the condition that total DTAsale does not exceed the overall entitlement of 50% of FOB value of exports for the unit, as stipulated above. No DTA sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, books, tea (except instant tea), pepper & pepper products, marble and such other items as may be notified from time to time. Such DTA sale shall also not be permissible to units engaged in activities of packaging / labeling / segregation / refrigeration/ compacting / micronisation / pulverization / granulation / conversion of monohydrate form of chemical to anhydrous form or vice-versa. Sales made to a unit in SEZ shall also be taken into account for purpose of arriving at FOB value of export by EOU provided payment for such sales are made from Foreign Exchange Account of SEZ unit. Sale to DTA would also be subject to mandatory requirement of registration of pharmaceutical products (including bulk drugs). An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.

(b)For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of foreign exchange earned, where payment of such services is received in foreign exchange.

(c)Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA, subject to fulfillment of positive NFE. In respect of sale of plain jewellery, recipient shall pay concessional rate of duty as applicable to sale from nominated

agencies. In respect of studded jewellery, duty shall be payable as applicable.

(d)UnlessspecificallyprohibitedinLoP,rejectswithinan overall limit of 50% may be sold in DTA on payment of duties as applicable to sale under sub-para 6.8(a) on prior intimation to Customs authorities. Such sales shall be counted against DTA sale entitlement. Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE.

(e)Scrap / waste / remnants arising out of production process or in connection therewith may be sold in

DTA, as per SION notified under Duty Exemption

Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six monthsandwithinthisperiod,normsshouldbefixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee.

Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported.

(f)There shall be no duties / taxes on scrap / waste / remnants, in case same are destroyed with permission of Customs authorities.

(g)By-products included in LoPmay also be sold in DTA subject to achievement of positive NFE, on payment of applicable duties, within the overall entitlement of sub-para 6.8(a). Sale of by-products by units not entitled to DTA sales, or beyond entitlements of sub- para 6.8 (a), shall also be permissible on payment of full duties.

(h)EOU / EHTP / STP / BTP units may sell finished products, except pepper and pepper products and marble, which are freely importable under FTP in DTA, under intimation to DC, against payment of full duties, provided they have achieved positive NFE. An amount equal to Anti Dumping duty under

section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.

(i) In case of units manufacturing electronics hardware and software, NFE and DTA sale entitlement shall be reckoned separately for hardware and software.

(j) In case of DTA sale of goods manufactured by EOU/ EHTP / STP / BTP, where basic duty and CVD is nil, such goods may be considered as non-excisable for payment of duty.

(k) In case of new EOUs, advance DTA sale will be allowed not exceeding 50% of its estimated exports for first year, except pharmaceutical units where this will be based on its estimated exports for first two years.

(l) Units in Textile and Granite sectors shall have an option to sell goods into DTA in terms of sub- paras 6.8 (a), (d), (e), (g) and (k) above, on payment of an amount equal to aggregate of duties of excise leviable under section 3 of the Central Excise Act, 1944 or under any other law for the time being in force, on like goods produced or manufactured in India other than in an EOU, subject to the condition that they have not used duty paid imported inputs in excess of 3% of the FOB value of exports of the preceding year and they have achieved positive NFE. Once this option is exercised, the unit will not be allowed to import any duty free inputs for any purpose.

Other Supplies in DTA 6.9 Following supplies effected from EOU / EHTP / STP/

BTP units to DTA will be counted for fulfillment of positive NFE:

(a) Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIAunder duty exemption / remission scheme / EPCG scheme. However, printing sector

EOUs (or any other sector that may be notified in

HBP v 1), can not supply goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance Authorisation / Advance Authorization

for annual requirement.

(b)Supplies effected in DTA against foreign exchange remittance received from overseas.

(c)Supplies to other EOU / EHTP / STP / BTP / SEZ units, provided that such goods are permissible for procurement in terms of para 6.2 of FTP.

(d)Supplies made to bonded warehouses set up under FTP and / or under section 65 of Customs Act and free trade and warehousing zones, where payment is received in foreign exchange.

(e)Supplies of goods and services to such organizations which are entitled for duty free import of such items in terms of general exemption notification issued by

MoF, as may be provided in HBP v 1.

(f)Supplies of Information Technology Agreement

(ITA -1) items and notified zero duty telecom / electronics items.

(g)Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.

(h)SupplyofLPGproducedinanEOUrefinerytoPublic

Sector domestic oil companies for being supplied to household domestic consumers at subsidized prices under the Public Distribution System (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural GasvidenotificationNo.E-20029/18/2001-PPdated

28.01.2003 (hereinafter referred to as PDS Scheme) subject to the following conditions:-

(a)Only supply of such quantity of LPG would be eligible for which Ministry of Petroleum and Natural Gas declines permission for export and requires the LPG to be cleared in DTA; and

(b)The Ministry of Finance by a notification has permitted duty free imports of LPG for supply under the aforesaid PDS Scheme.

Export through others	6.10	An EOU / EHTP / STP / BTP unit may export goods
		manufactured / software developed by it through another
		exporter or any other EOU / EHTP / STP / SEZ unit
		subject to conditions mentioned in para 6.18 of HBP v1.
Entitlement for supplies	6.11	(a)	Supplies from DTA to EOU / EHTP / STP / BTP
from the DTA			units will be regarded as “deemed exports” and DTA
			supplier shall be eligible for relevant entitlements
			under chapter 8 of FTP, besides discharge of export
			obligation, if any, on the supplier. Notwithstanding
			the above, EOU / EHTP / STP / BTP units shall,
			on production of a suitable disclaimer from DTA
			supplier, be eligible for obtaining entitlements
			specified in chapter 8 of FTP. For claiming deemed
			exportdutydrawback,theyshallgetbrandratesfixed
			by DC wherever All Industry Rates of Drawback are
			not available.
		(b)	Suppliers of precious and semi-precious stones,
			synthetic stones and processed pearls from DTA to
			EOU shall be eligible for grant of Replenishment
			Authorisations at rates and for items mentioned in
			HBP v1.
		(c)	In addition, EOU / EHTP / STP / BTP units shall be
			entitled to following:-
			(i) Reimbursement of Central Sales Tax (CST) on
			goods manufactured in India.
			Simple interest @ 6% per annum will be
			payable on delay in refund of CST, if the
			case is not settled within 30 days of receipt of
			complete application (as in paragraph 9.10.1 of
			HBP v1).
			(ii) Exemption from payment of Central Excise
			Duty on goods procured from DTA on goods
			manufactured in India.

(iii) Reimbursement of duty paid on fuel procured from domestic oil companies / Depots of domestic oil Public Sector Undertakings as per drawback rate notified by DGFT from time to time. Reimbursement of additional duty of excise levied on fuel under the Finance Acts

				would also be admissible.
			(iv) CENVAT Credit on service tax paid.
Other Entitlements	6.12	Other entitlements of EOU / EHTP / STP / BTP units are
		as under:
		(a)	Exemption from Income Tax as per Section 10A and
			10B of Income Tax Act.
		(b) Exemption from industrial licensing for manufacture
			of items reserved for SSI sector.
		(c)	Export proceeds will be realized within 12 months.
		(d)	Units will be allowed to retain 100% of its export
			earning in the EEFC account.
		(e) Unit will not be required to furnish bank guarantee
			at the time of import or going for job work in DTA,
			where unit has
			(i)	a turnover of Rs. 5 crores or above;
			(ii)	unit	is in existence for at least three years;
				and
			(iii) The unit:
				(a) has achieved positive			NFE	/ export
					obligation	wherever applicable;
				(b)	has not been issued a show cause notice or
					a confirmed demand, during the preceding
					3 years, on grounds other than procedural
					violations,	under the	penal	provision

of the Customs Act, the Central Excise Act, the Foreign Trade (Development & Regulation) Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder, on account of fraud / collusion / willful mis-statement / suppression of facts or contravention of any of the provisions thereof;

(f)100% FDI investment permitted through automatic route similar to SEZ units.

(g)Units shall pay duty on the goods produced or manufactured and cleared into DTA on monthly basis in the manner prescribed in the Central Excise Rules.

Inter Unit Transfer 6.13 (a) Transfer of manufactured goods from one EOU / EHTP / STP / BTP unit to another EOU / EHTP / STP / BTP unit is allowed with prior intimation to concerned DC and Customs authorities, following procedure of in-bond movement of goods. Transfer of manufactured goods shall also be allowed from EOU / EHTP / STP / BTP unit to a SEZ developer or unit following procedure prescribed in SEZ Rules, 2006.

(b)Capital goods may be transferred or given on loan to other EOU / EHTP / STP / BTP / SEZ units, with prior intimation to concerned DC and Customs authorities.

(c)Goods supplied by one unit of EOU / EHTP / STP / BTP to another unit shall be treated as imported goods for second unit for payment of duty, on DTA sale by second unit.

Sub-Contracting 6.14 (a) (i) EOU / EHTP / STP / BTP units, including gems and jewellery units, may on the basis of annual permission from Customs authorities, subcontract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in DTA.

(ii)These units may subcontract upto 50% of overall production of previous year in value terms in DTA with permission of Customs authorities.

(b)(i) EOU may, with annual permission from Customs authorities, undertake job work for export, on behalf of DTA exporter, provided that goods are exported directly from EOU and export document shall jointly be in name of DTA / EOU. For such exports, DTA units will

be entitled for refund of duty paid on inputs by way of brand rate of duty drawback.

(ii)Duty free import of goods for execution of export order placed on EOU by foreign supplier on jobwork basis, would be allowed subject to condition that no DTA clearance shall be allowed.

(iii)Subcontracting of both production and production processes may also be undertaken without any limit through other EOU / EHTP / STP / BTP / SEZ units, on the basis of records maintained in unit.

(iv)EOU / EHTP / STP / BTP units may subcontract part of production process abroad and send

intermediate products abroad as mentioned in LoP. No permission would be required when goods are sought to be exported from subcontractor premises abroad. When goods are sought to be brought back, prior intimation to concerned DC and Customs authorities shall be given.

		(c)	Scrap / waste / remnants generated through job work
			may either be cleared from job worker’s premises on
			payment of applicable duty on transaction value or
			destroyed in presence of Customs / Central Excise
			authorities or returned to unit. Destruction shall not
			apply to gold, silver, platinum, diamond, precious
			and semi precious stones.
		(d)	Sub-contracting / exchange by gems and jewellery
			EOUs through other EOUs or SEZ units or units in
			DTA, shall be as per procedure indicated in HBP
			v1.
Sale of Unutilized	6.15	(a)	In case an EOU / EHTP / STP / BTP unit is unable
Material			to utilize goods and services, imported or procured
			from DTA, it may be

(i) transferred to another EOU / EHTP / STP / BTP/ SEZ unit; or

(ii) disposed off in DTA with approval of Customs

authorities on payment of applicable duties and submission of import authorization; or

(iii)exported. Such transfer from EOU / EHTP / STP / BTP unit to another such unit would be treated as import for receiving unit.

(b)Capital goods and spares that have become obsolete / surplus, may either be exported, transferred to another EOU / EHTP / STP / BTP / SEZ unit or disposed off in DTAon payment of applicable duties. Benefit

of depreciation, as applicable, will be available in case of disposal in DTA only when the unit has achieved positive NFE taking into consideration the depreciation allowed. No duty shall be payable in case capital goods, raw material, consumables, spares, goods manufactured, processed or packaged, and scrap / waste / remnants / rejects are destroyed within unit after intimation to Customs authorities or destroyed outside unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi precious stones.

(c) In case of textile sector, disposal of left over material / fabrics upto 2% of cif value or quantity of import, whichever is lower, on payment of duty on transaction value, may be allowed, subject to certification of Central Excise / Customs officers that these are leftover items.

(d) Disposal of used packing material will be allowed on payment of duty on transaction value.

Reconditioning / Repair	6.16	EOU / EHTP / STP / BTP units may be set up with
and Re-engineering		approval of BoA to carry out reconditioning, repair,
		remaking, testing, calibration, quality improvement, up-
		gradation of technology and re-engineering activities for
		export in foreign currency. Provisions of paragraphs 6.8,
		6.9, 6.10, 6.13, 6.14 of FTP and para 6.28 of HBP v1 shall
		not, however, apply to such activities.
Replacement / Repair	6.17	(a) General provisions of FTP relating to export / import
of imported / Indigenous		of replacement / repair of goods would also apply
Goods		equally to EOU / EHTP / STP / BTP units. Cases not
		covered by these provisions shall be considered on

		merits by DC.
	(b)	Goods sold in DTA and not accepted for any reasons,
		may be brought back for repair / replacement, under
		intimation to concerned jurisdictional Customs /
		Central Excise authorities.
	(c)	Goods or parts thereof, on being imported /
		indigenously procured and found defective or
		otherwise unfit for use or which have been damaged
		or become defective subsequently, may be returned
		and replacement obtained or destroyed. In the event
		of replacement, goods may be brought back from
		foreign suppliers or their authorized agents in India
		or indigenous suppliers. The unit can take free of
		cost replacement (duty paid) from the authorized
		agents in India of foreign suppliers, provided the
		defective part is re-exported or destroyed. However,
		destruction shall not apply to precious and semi
		precious stones and precious metals.
Exit from EOU Scheme 6.18	(a)	With approval of DC, an EOU may opt out of scheme.
		Such exit shall be subject to payment of Excise and
		Customs duties and industrial policy in force.
	(b)	If unit has not achieved obligations, it shall also be
		liable to penalty at the time of exit.
	(c)	In the event of a gems and jewellery unit ceasing
		its operation, gold and other precious metals, alloys,
		gems and other materials available for manufacture
		of jewellery, shall be handed over to an agency
		nominated by DoC, at price to be determined by that
		agency.
	(d)	An EOU / EHTP / STP / BTP unit may also be
		permitted by DC to exit from the scheme at any
		time on payment of duty on capital goods under
		the prevailing EPCG Scheme for DTA Units.
		This will be subject to fulfillment of positive NFE
		criteria under EOU scheme, eligibility criteria under
		EPCG scheme and standard conditions indicated in
		HBP v 1.
	(e)	Unit proposing to exit out of EOU scheme shall
		intimate DC and Customs and Central Excise

authorities in writing. Unit shall assess duty liability arising out of debonding and submit details of such assessment to Customs and Central Excise authorities. Customs and Central Excise authorities shallconfirmdutyliabilitiesonprioritybasis,subject to the condition that the unit has achieved positive NFE, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain “No Dues Certificate” from

Customs and Central Excise authorities. On the basis of “No Dues Certificate” so issued by the Customs and Central Excise authorities, unit shall apply to

DC for final debonding.

In case there is no proceeding pending under

FT(D&R)Act, DC shall issue final debonding order within a period of 7 working days. Between “No

Dues Certificate” issued by Customs and Central Excise authorities and final debonding order by DC, unit shall not be entitled to claim any exemption for procurement of capital goods or inputs. However, unit can claim Advance Authorisation / DEPB / Duty Drawback. Since the duty calculations and dues are disputed and take a long time, a BG / Bond / Installment processes backed by BG shall be provided for expediting the exit process.

(f)In cases where a unit is initially established as DTA unit with machines procured from abroad after payment of applicable import duty, or from domestic market after payment of excise duty, and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTAafter debonding would be without payment of duty. Similarly, in cases where a DTA unit imported capital goods under

EPCG Scheme and after completely fulfilling export obligation gets converted into EOU, unit would not be charged customs duty on capital goods at the time of removal of such capital goods in DTA when debonding.

(g)An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit underAdvanceAuthorization asaonetimeoption.Thiswillbesubjecttofulfillment of positive NFE criteria.

Conversion	6.19	(a)	Existing DTA units may also apply for conversion
			into an EOU / EHTP / STP / BTP unit, and Income
			Tax benefits under Section 10A and 10B will be
			available for plant, machinery and equipment already
			installed.
		(b)	Existing EHTP / STP units may also apply for
			conversion / merger to EOU and vice-versa. In such
			cases, units will remain in bond and avail exemptions
			in duties and taxes as applicable.
Monitoring of NFE	6.20	Performance of EOU / EHTP / STP / BTP units shall be
		monitored by UnitsApproval Committee as per guidelines
		in HBP v1.
Export through	6.21	EOU / EHTP / STP / BTP are permitted to:
Exhibitions / Export
Promotion Tours /		(i)	Export goods for holding / participating in exhibitions
showrooms abroad /			abroad with permission of DC.
Duty Free Shops		(ii)	Personal carriage of gold / silver / platinum jewellery,
		(ii)	Personal carriage of gold / silver / platinum jewellery,
			precious, semi-precious stones, beads and articles.
		(iii) Export goods for display / sale in permitted shops set
			up abroad.
		(iv)	Display / sell in permitted shops set up abroad, or in
			showrooms of their distributors / agents.

Personal Carriage of

6.22

Import / Export Parcels including through Foreign bound Passengers

Export / Import by Post	6.23
/ Courier

(v)Set up showrooms / retail outlets at International Airports.

Import / export through personal carriage of gems and jewellery items may be undertaken as per Customs procedure. However, export proceeds shall be realized through normal banking channel. Import / export through personal carriage by units, other than gems and jewellery units, shall be allowed provided goods are not in commercial quantity. An authorized person of Gems & Jewellery EOU may also import gold in primary form, upto 10 Kgs in a financial year through personal carriage, as per guidelines prescribed by RBI and DoR.

Goods including free samples, may be exported / imported by airfreight or through foreign post office or through courier, as per Customs procedure.

Administration of	6.24	Details of administration of EOUs and powers of DC are
EOUs/ Powers of DC		given in HBP v1.
Revival of Sick Units.	6.25	Subject to a unit being declared sick by appropriate
		authority, proposals for revival of the unit or its take over
		may be considered by BoA .
Approval of EHTP / STP	6.26	In case of units under EHTP / STP schemes, necessary
		approval / permission under relevant paragraphs of
		this Chapter shall be granted by officer designated by
		Ministry of Communication and Information Technology,
		Department of Information Technology, instead of DC,
		and by Inter-Ministerial Standing Committee (IMSC)
		instead of BoA.
Approval of BTP	6.27	Bio-TechnologyParks(BTP)wouldbenotifiedbyDGFT
		on recommendations of Department of Biotechnology.

In case of units in BTP, necessary approval / permission under relevant provisions of this chapter will be granted by designated officer of Department of Biotechnology.

CHAPTER-7

SPECIAL ECONOMIC ZONES

The policy relating to Special Economic Zones is governed by SEZ Act 2005, and the Rules framed thereunder.

CHAPTER-7 A

FREE TRADE & WAREHOUSING ZONES

The policy relating to Free Trade and Warehousing Zones is governed by SEZ Act 2005, and the Rules framed thereunder.

		CHAPTER –8
		DEEMED EXPORTS
Deemed Exports	8.1	“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.
Categories of Supply	8.2	Following categories of supply of goods by main / sub-
		contractors shall be regarded as “Deemed Exports” under
		FTP, provided goods are manufactured in India:
		(a)	Supply of goods against Advance Authorisation /
			Advance Authorisation for annual requirement /
			DFIA;
		(b)	Supply of goods to EOU / STP / EHTP / BTP;
		(c)	Supply of capital goods to EPCG Authorisation
			holders;
		(d)	Supplyofgoodstoprojectsfinancedbymultilateralor
			bilateralAgencies / Funds as notified by Department
			of EconomicAffairs (DEA), MoF under International
			Competitive Bidding (ICB) in accordance with
			procedures of those Agencies / Funds, where legal
			agreements provide for tender evaluation without
			including customs duty;
			Supply and installation of goods and equipment
			(single responsibility of turnkey contracts) to projects
			financedbymultilateralorbilateralAgencies/Funds
			as notified by DEA, MoF under ICB, in accordance
			with procedures of those Agencies / Funds, which
			bids may have been invited and evaluated on the
			basis of Delivered Duty Paid (DDP) prices for goods
			manufactured abroad;
		(e)	Supply of capital goods, including in unassembled /
			disassembled condition as well as plants, machinery,
			accessories, tools, dies and such goods which are
			used for installation purposes till stage of commercial
			production, and spares to extent of 10% of FOR value
			to fertilizer plants;

		(f)	Supply of goods to any project or purpose in respect
			of which the MoF, by a notification, permits import
			of such goods at zero customs duty;
		(g)	Supply of goods to power projects and refineries not
			covered in (f) above;
		(h)	Supply of marine freight containers by 100%
			EOU (Domestic freight containers-manufacturers)
			provided said containers are exported out of India
			within 6 months or such further period as permitted
			by customs;
		(i)	Supply to projects funded by UN Agencies; and
		(j)	Supply of goods to nuclear power projects through
			competitive bidding as opposed to ICB.
		Benefits of deemed exports shall be available under
		paragraphs (d), (e), (f) and (g) only if the supply is made
		under procedure of ICB.
Benefits for Deemed	8.3	Deemed exports shall be eligible for any / all of following
Exports		benefits in respect of manufacture and supply of goods
		qualifying as deemed exports subject to terms and
		conditions as in HBP v1:-
		(a)	Advance Authorisation / Advance Authorisation for
			annual requirement / DFIA.
		(b)	Deemed Export Drawback.
		(c)	Exemption from terminal excise duty where supplies
			are made against ICB. In other cases, refund of
			terminal excise duty will be given. Exemption from
			TED shall also be available for supplies made by
			an Advance Authorisation holder to a manufacturer
			holding another Advance Authorization if such
			manufacturer, in turn, supplies the product(s) to an
			ultimate exporter.
Benefits to the Supplier	8.4.1	(i)	In respect of supplies made against Advance
			Authorisation / DFIA in terms of paragraph 8.2(a)

of FTP, supplier shall be entitled to Advance Authorisation / DFIA for intermediate supplies.

(ii)If supplies are made against Advance Release Order (ARO) or Back to Back Letter of Credit issued against Advance Authorisation / DFIA in terms of paragraphs 4.1.11 and 4.1.12 of FTP, suppliers shall be entitled to benefits listed in paragraphs 8.3(b) and

(c)of FTP, whichever is applicable.

8.4.2In respect of supply of goods to EOU / EHTP / STP / BTP in terms of paragraph 8.2(b) of FTP, supplier shall be entitled to benefits listed in paragraphs 8.3(a), (b) and

(c)of FTP, whichever is applicable.

8.4.3In respect of supplies made under paragraph 8.2(c) of

FTP, supplier shall be entitled to the benefits listed in paragraphs 8.3(a), (b) and (c) of the Policy, whichever is applicable.

8.4.4(i) In respect of supplies made under paragraphs 8.2(d),

(f)and(g)ofFTP,suppliershallbeentitledtobenefits listed in paragraphs 8.3(a), (b) and (c), whichever is applicable.

(ii)In respect of supplies mentioned in paragraph 8.2(d), supplies to projects funded by such Agencies alone, as may be notified by DEA, MoF, shall be eligible for deemed export benefits.Alist of suchAgencies /

Funds is given in Appendix 13 of HBP v1 .

(iii)Benefits of deemed exports under para 8.2(f) of

FTP shall be applicable in respect of items, import of which is allowed by DoR at zero customs duty, subject to fulfillment of conditions specified under Notification No. 21/2002-Customs dated 1.3.2002, as amended from time to time.

(iv)Supply of Capital goods and spares upto 10% of FOR value of capital goods to power projects in terms of paragraph 8.2(g), shall be entitled for deemed export benefits provided the ICB procedures have been followed at Independent Power Producer (IPP) / Engineering and Procurement Contract (EPC) stage.

Benefit of deemed exports shall also be available for renovation / modernization of power plants. Supplier shallbeeligibleforbenefitslistedinparagraph8.3(a) and (b) of FTP, whichever is applicable. However, supply of goods required for setting up of any mega

power project as specified in S.No. 400 of DoR Notification No. 21/2002-Customs dated 1.3.2002, as amended, shall be eligible for deemed export benefits as mentioned in paragraph 8.3(a), (b) and

(c) of FTP, whichever is applicable, if such mega power project complies with the threshold generation capacity specified therein, in Customs Notification.

(v)Supplies under paragraph 8.2(g) of FTP to new refineries being set up during Ninth Plan period and spilled over to Tenth Plan period, shall be entitled for deemedexportbenefitsinrespectofgoodsmentioned in list 17 specified in S.No. 228 of Notification No.

21/2002-Customs dated 1.3.2002, as amended from time to time. Supplier shall be eligible for benefits listed in paragraphs 8.3(a) and (b) of FTP, whichever is applicable.

8.4.5In respect of supplies made under paragraph 8.2(e) of FTP, supplier shall be eligible for benefits listed in paragraph 8.3(a) and (b) of FTP, whichever is applicable. Benefit of deemed exports shall be available in respect of supplies of capital goods and spares to Fertilizer Plants which are set up or expanded / revamped / retrofitted / modernized duringNinthPlanperiod.Benefitofdeemedexportsshall also be available on supplies made to Fertilizers Plants, which have started in the 8th / 9th Plan periods and spilled over to 10th Plan period.

8.4.6Supplies of goods to projects funded by UN Agencies covered under para 8.2(i) of FTPare eligible for benefits listed in paragraph 8.3(a) and (b) of FTP, whichever is applicable.

8.4.7In respect of supplies made to Nuclear Power Projects under para 8.2(j) of FTP, the supplier would be eligible for benefitsgiveninpara8.3(a),(b)and(c)ofFTP,whichever is applicable. Supply of only those goods required for setting up any Nuclear Power Project specified in list 43 at S.No. 401 of Notification No. 21/2002-Customs dated 1.3.2002, as amended from time to time, having a capacity of 440MW or more as certified by an officer not below rank of Joint Secretary to Government of India in Department of Atomic Energy, shall be entitled for deemed export benefits in cases where procedure of competitive bidding (and not ICB ) has been followed.

Eligibility for refund of terminal excise duty / drawback

Supplies to be made by the main / sub-contractor

8.5Supply of goods will be eligible for refund of terminal excise duty in terms of para 8.3(c) of FTP, provided recipient of goods does not avail CENVAT credit / rebate on such goods. Similarly, supplies will be eligible for deemed export drawback in terms of para 8.3(b) of FTP on Central Excise paid on inputs / components, provided CENVAT credit facility / rebate has not been availed by applicant. Such supplies will however be eligible for deemed export drawback on customs duty paid on inputs/ components.

8.5.1Simple interest @ 6% per annum will be payable on delay in refund of duty drawback and terminal excise duty under deemed export scheme, if the case is not settled within 30 days of receipt of complete application (as in paragraph 9.10.1 of HBP v1).

8.6.1In all cases of deemed exports, supplies shall be made directly to designated Projects / Agencies / Units /

Advance Authorisation / EPCG Authorisation holders. Sub-contractor may, however, make supplies

to	main contractor instead of supplying	directly
to	designated projects / Agencies. Such	supplies

shall be eligible for deemed export benefits as per procedure laid down in paragraph 8.4 of HBP v1.

8.6.2Supplies made by an Indian sub-contractor of an Indian or foreign main contractor directly to the designated projects / Agencies, shall also be eligible for deemed exportbenefitsprovidedsub-contractorisindicatedeither originally or subsequently in the contract, and payment certificate is issued by project authority in the name of sub-contractor as in Appendix 22C of HBP v1.

CHAPTER-9

DEFINITIONS

9.1For purpose of FTP, unless context otherwise requires, following words and expressions shall have the following meanings attached to them.

9.2“Accessory” or “Attachment” means a part, sub-assembly orassemblythatcontributestoefficiencyoreffectiveness of a piece of equipment without changing its basic functions.

9.3“Act”meansForeignTrade(DevelopmentandRegulation) Act, 1992 (No.22 of 1992) [FT(D&R) Act].

9.4“Actual User” means an actual user who may be either industrial or non-industrial.

9.5“Actual User (Industrial)” means a person who utilises imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit.

9.6“Actual User (Non-Industrial)” means a person who utilises the imported goods for his own use in

(i)any commercial establishment carrying on any business, trade or profession; or

(ii)any laboratory, Scientific or Research and

Development (R&D) institution, university or other educational institution or hospital; or

(iii)any service industry.

9.7“AEZ” means Agricultural Export Zones notified by

DGFT in Appendix 8 of HBP v1.

9.8“Appeal” is an application filed under section 15 of the

Act and includes such applications preferred by DGFT officials in government interest against decision by designated adjudicating / appellate authorities.

9.9“Applicant” means person on whose behalf an application is made and shall, wherever context so requires, includes person signing the application.

9.9.1“Authorisation” means a permission as included in Section 2 (g) of FT(D&R) Act to import or export as per provisions of FTP.

9.10“BoA” means the Board ofApproval as notified by DoC.

9.11“BTP” means Biotechnology Park as notified by DGFT on recommendation of Department of Biotechnology.

9.12“CapitalGoods”meansanyplant,machinery,equipmentor accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion. It also includes packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector.

9.13“Competent Authority” means an authority competent to exercise any power or to discharge any duty or function under the Act or the Rules and Orders made thereunder or under FTP.

9.14“Component” means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A component includes an accessory or attachment to another component.

9.15“Consumables” means any item, which participates in or is required for a manufacturing process, but does not necessarily form part of end-product. Items, which are substantially or totally consumed during a manufacturing process, will be deemed to be consumables.

9.16“Consumer Goods” means any consumption goods, which candirectlysatisfyhumanneedswithoutfurtherprocessing and includes consumer durables and accessories thereof.

9.17“Counter Trade” means any arrangement under which exports/imports from/to India are balanced either by

direct imports/exports from importing/exporting country or through a third country under a Trade Agreement or otherwise. Exports/Imports under Counter Trade may be carried out through Escrow Account, Buy Back arrangements, Barter trade or any similar arrangement. Balancing of exports and imports could wholly or partly be in cash, goods and/or services.

9.18“Developer” means a person or body of persons, company, firm and such other private or government undertaking, who develops, builds, designs, organises, promotes, finances, operates, maintains or manages a part or whole of infrastructure and other facilities in SEZ as approved by Central Government and also includes a co-developer.

9.19“Development Commissioner” means Development Commissioner of SEZ.

9.20“DFRC” means Duty Free Replenishment Certificate (as given in FTP 2004-09).

9.21“Domestic Tariff Area (DTA)” means area within India which is outside SEZs and EOU/ EHTP/ STP/BTP.

9.22“Drawback” in relation to any goods manufactured in India and exported, means rebate of duty chargeable

on any imported material or excisable material used in manufacture of such goods in India. Goods include imported spares, if supplied with capital goods manufactured in India.

9.23“EHTP” means Electronic Hardware Technology Park.

9.24“EOU” means Export Oriented Unit for which an LOP has been issued by Development Commissioner.

9.25“Excisable goods” means any goods produced or manufactured in India and subject to a duty of excise under Central Excise and Salt Act 1944 (1 of 1944).

9.26	“Exporter” means a person who exports or intends
	to export and holds an IEC number, unless otherwise
	specifically exempted.

9.27“Export Obligation” means obligation to export product or products covered by Authorisation or permission in

terms of quantity, value or both, as may be prescribed or specified by Regional or competent authority.

9.27.1“FTP” means the Foreign Trade Policy which specifies policy for exports and imports under section 5 of the Act.

9.28“Group Company” means two or more enterprises which, directly or indirectly, are in a position to —

(i)exercise twenty-six per cent, or more of voting rights in other enterprise; or

(ii)appointmorethanfiftypercent,ofmembersofboard of directors in the other enterprise.

For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of group, the group company should have been in existence at least 2 years prior to date of application under any of export promotion schemes notified in FTP.

9.29“HBP v1” means the Handbook of Procedures (Vol.1) and “HBP v2” means Handbook of Procedures (Vol.2) published under provisions of paragraph 2.4 of FTP.

9.30	“Importer” means a person who imports or intends
	to import and holds an IEC number, unless otherwise
	specifically exempted.

9.31“Infrastructure facilities” means industrial, commercial and social infrastructure or any other facility for development of SEZ as notified.

9.32“ITC(HS)” means ITC(HS) Classifications of Export and

Import Items Book.

9.33“Jobbing” means processing or working upon of raw materials or semi-finished goods supplied to job worker, so as to complete a part of process resulting in manufacture orfinishingofanarticleoranyoperationwhichisessential for aforesaid process.

9.34“Licensing Year” means period beginning on the 1st April of a year and ending on 31st March of following year.

9.35“Managed Hotel” means hotels managed by a three star or above hotel/ hotel chain under an operating management contract for a duration of at least three years between operating hotel/ hotel chain and hotel being managed. Management contract must necessarily cover the entire gamut of operations/ management of managed hotel.

9.36“Manufacture” means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re- conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry,floriculture,horticulture,pisciculture,poultry, sericulture, viticulture and mining.

9.37“Manufacturer Exporter” means a person who exports goods manufactured by him or intends to export such goods.

9.38“MAI” means Market Access Initiative Scheme notified by Department of Commerce.

9.39“Merchant Exporter” means a person engaged in trading activity and exporting or intending to export goods.

9.40“NC” means the Norms Committee in the Directorate General of Foreign Trade, for recommending grant of Authorisations under Duty Exemption Scheme and for recommending Input Output norms and value addition norms to be notified by DGFT.

9.41“NFE” means Net Foreign Exchange.

9.42“Notification” means a notification published in Official

Gazette.

9.43“Order” means an Order made by Central Government under the Act.

9.44“Part” means an element of a sub-assembly or assembly not normally useful by itself, and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory.

9.45“Person” includes an individual, firm, society, company, corporation or any other legal person including the DGFT officials.

9.46“Policy” means FTP 2009-2014 as amended from time to time.

9.47“Prescribed” means prescribed under the Act or the Rules or Orders made thereunder or under FTP.

9.48“Public Notice”means a noticepublished under provisions of paragraph 2.4 of FTP.

9.49“Raw material” means:

(i)basic materials which are needed for manufacture of goods, but which are still in a raw, natural, unrefined or unmanufactured state; and

(ii)for a manufacturer, any materials or goods which are required for his manufacturing process, whether they have actually been previously manufactured or are processed or are still in a raw or natural state.

9.49.1“Regional Authority” means authority competent to grant an Authorisation under the Act / Order.

9.50“Registration-Cum-Membership Certificate” (RCMC) means certificate of registration and membership granted by an Export Promotion Council/Commodity Board/ Development Authority or other competent authority as prescribed in FTP or HBP v1.

9.51“Rules” means Rules made by Central Government under Section 19 of the Act.

9.52“Services” include all tradable services covered under General Agreement on Trade in Services and earning free foreign exchange.

9.53“Service Provider” means a person providing

(i)Supply of a ‘service’ from India to any other country;

(ii)Supply of a ‘service’ from India to service consumer of any other country in India; and

(iii)Supply of a ‘service’ from India through commercial or physical presence in territory of any other country.

(iv)Supply of a ‘service’ in India relating to exports paid in free foreign exchange or in Indian Rupees which are otherwise considered as having being paid for in free foreign exchange by RBI.

9.54“SEZ”meansSpecialEconomicZonenotifiedbyMinistry of Commerce & Industry, Department of Commerce.

9.55“Ships” mean all types of vessels used for sea borne trade or coastal trade, and shall include second hand vessels.

9.56“SION” means Standard Input Output Norms notified by

DGFT in HBP v2 / approved by Board of Approval.

9.57“Spares” means a part or a sub-assembly or assembly for substitution, that is ready to replace an identical or similar part or sub-assembly or assembly. Spares include a component or an accessory.

9.58“Specified”meansspecifiedbyorundertheprovisionsof this Policy through Notification / Public Notice.

9.59“Status holder” means an exporter recognized as Export House/Trading House etc. by DGFT/Development Commissioner.

9.59.1“Stores” means goods for use in a vessel or aircraft and includes fuel and spares and other articles of equipment, whether or not for immediate fitting.

9.60“STP” means Software Technology Park

9.61“Supporting Manufacturer” means any person who manufactures any product or part/accessories/components of that product. Name of supporting manufacturer as well as the exporter must be endorsed on export documents.

9.62“Third-party exports” means exports made by an exporter or manufacturer on behalf of another exporter(s). In

such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/ manufacturer and third party exporter(s). BRC, GR declaration, export order and invoice should be in the name of third party exporter.

9.63“Transaction Value” is as defined in Customs Valuation

Rules of Department of Revenue.

9.64“Wild Animal” means any wild animal as defined in

Section 2(36) of Wildlife (Protection) Act, 1972.

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Foreign Trade Policy 2009-14

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