ROLE OF DGFT IN FOREIGN TRADE POLICY

BY SWATI SHARMA ABHINEET KHARD RUPALI AGARWAL TARUN CHAWLA DINESH BEHERA SIIB-AB (GROUP 6) 2012-2014

FOREIGN TRADE POLICY OR EXIM POLICY

Exim Policy, also known as the Foreign Trade Policy is announced every 5 years by Ministry of Commerce and Industry, Government of India. It is updated every year on the 31st of March and all the amendments and improvements in the scheme are effective from the 1st of April. Exim policy deals in general provisions pertaining to exports and imports, promotional measures, duty exemption schemes, export promotion schemes, special economic zone programs and other details for different sectors.

FOREIGN TRADE POLICY

It is the exchange of goods and services

between nations. International trade enables a nation to specialize in those goods it can produce most cheaply and efficiently. Trade also enables a country to consume more than it would be able to produce if it depended only on its own resources. Trade has always been the major force behind the economic relations among nations.

A Little Bit of History

Scenario pre 1991

Requirement for licenses The inspector raj Bureaucratic controls Complex legislations & manufacturer protective policies High import duties

A Little Bit of History

contd

Scenario post 1991

End of licensed raj A marked shift from protecting producers to benefiting consumers. Process of global integration of Indian economy commenced Markets opened up for import, simplification in rules Drastic cut in import duties Emergence of world wide production, broader access to factors of production in a range of foreign destinations

Our merchandise exports till 1991 (in 44 years after independence) were US$ 17.86 b and in the last 20 years these have grown (in 2010-11) to US$ 246 b !!

Objectives of Foreign Trade Policy 2009-14

To arrest and reverse declining trend of exports is the main aim of the policy. This aim will be reviewed after two years. To Double Indias exports of goods and services by 2014. Simplification of the application procedure for availing various benefits To set in motion the strategies and policy measures which catalyse the growth of exports To encourage exports through a mix of measures including fiscal incentives, institutional changes, procedural rationalization, and efforts for enhance market access across the world and diversification of export markets.

WHAT IS DGFT ?
The Directorate General of Foreign Trade (DGFT) is an organization under the MINISTRY OF COMMERCE AND INDUSTRY of the government of India. it was formed in 1991 after the liberalization. Its headquarter is in Delhi. It has four zonal offices in Delhi,Mumbai,Kolkata,Chennai. It has 35 regional offices in different cities all over the country.

History OF DGFT
Earlier

it was known as Chief Controller of Imports & Exports (CCI&E) till 1991. Till liberalization it worked as controller but after liberalization there was a need of a body which not only controls import and export but also to promote and take forward those industries which are in dire condition and then it was termed as DGFT.

FUNCTION AND RESPONSIBILITY

To provide Importer Exporter Code Number (IEC) to Indian Exporter and Importers.
IEC is a 10 Digit unique code which is mandatory to all importers and exporters to operate business in India and enable company to acquire benefit on import and export.

Registration Procedure & Licensing Importer Exporter Code (IEC)

Obtaining the IEC number DGFT provide exporter a unique 10 digit IEC code number required for export or import. No export allowed without IEC number. Application for IEC number to be submitted to the nearest regional authority of DGFT. Application form known as "Aayaat Niryaat Form - ANF2A" can also be submitted online at the DGFT web-site: http://dgft.gov.in.

Registration Procedure & Licensing Importer Exporter Code (IEC) (contd.)

Pre-requirements for IEC application

PAN No. from IT authorities, a bank account in the name of your company with any commercial bank authorized to deal in foreign exchange Application to be accompanied by relevant documents Validity & features of IEC number

Issued

in a prescribed format Valid for all braches/divisions/units/factories of the company as indicated on the IEC number

DGFT controls DEPB ( Duty Entitlement Passbook) rates It is a scheme which is offered by the Indian government to encourage exports from the country.

DEPB means Duty Entitlement Pass Book to neutralise the incidence of basic and special customs duty on import content of export product. This is provided by way of grant of duty credit against the export product at specified rates. The DEPB Scheme which was notified on 1/4/1997 consisted of (a) Postexport DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book at a pre-determined credit on the FOB value. The DEPB allows import of any items except the items which are otherwise restricted for imports.

ITC HS CODE-

Indian Trade Clarification based on Harmonized System of Coding was adopted in India for import-export operations. Indian custom uses an eight digit ITC-HS Codes to suit the national trade requirements.

Governing Body of ITC (HS) Code-Any

changes or formulation or addition of new codes in ITCHS Codes are carried out by DGFT Commodity description, weeding out of defunct codes, addition of new codes, change of product description etc., are taken up periodically as a part of the ongoing process towards perfection

Setting standard input-output norms is also controlled by the DGFT. To promote trade with neighbouring countries. DGFT perform its functions in coordination with state governments and all the other departments of Ministry of Commerce and Industry, Government of India. cont

DGFT permits or regulate Transit of Goods from India or to countries adjacent to India in accordance with the bilateral treaties between India and other countries. It keeps track on illegal activities like smuggling etc. DGFT has important role to issue notification, public notices, circular and foreign laws.

SCHEMES OF DGFT

Technological Up gradation- To aid

technological up gradation of our export sector. Scheme will be available for engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products

EPCG Scheme Relaxations-The Export Promotion

Capital Goods (EPCG) scheme was one of the several export-promotion initiatives launched by the government in the early '90s. The basic purpose of the scheme was to allow exporters to import machinery and equipment at affordable prices so that they can produce quality products for the export market.

The import duty on capital goods like all other items was high during that period, inflating the cost of capital goods nearly 50%, so the government allowed exporters to import capital goods at only 25% import duty. For waiver of the remaining portion of import duty, exporters were supposed to undertake an 'export obligation' (a promise to export) which was worked out on the basis of the duty concession obtained.

Agriculture Sector-To

reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been introduced. The system will involve creation of multifunctional nodal agencies to be accredited by APEDA.

Tea- Minimum value addition under advance

authorisation scheme for export of tea has been reduced from the existing 100% to 50%. DTA sale limit of instant tea by EOU units has been increased from the existing 30% to 50%. Export of tea has been covered
under VKGUY Scheme benefits.

EOUs-EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing75%, without changing the criteria of similar goods, within the overall entitlement of 50% for DTA

FTP 2004-09

Changes Brought about in India as per FTP of 2009:

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. Indias 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.

FTP 2009-14

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 Indias exports of goods and services. The long term policy objective for the Government is to double Indias share in global trade by 2020

What is Govt doing for the same:

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 viilevies, 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.

BIBLIOGRAPHY.
www.dgft.org FTP 2009-2014, GOI www.answers.com www. commerce.nic.in/

THANK YOU