FTP POLICY

Foreign Trade policy was effective from 1st April,2004 for a period of 5 years. It was formulated & implemented mainly by Ministry of Commerce and Industry. It lays down that Export and imports shall be free , except in cases where they are regulated by the provisions of this policy or any other law for the time being in force.

Objectives
To arrest & reserve the declining trend of exports. To provide support especially to those sectors which have been hit badly by recessions. To double Indias Share in global trade by 2020.

Strategies
Simplifying procedures & bringing down transaction Costs. Facilitating development of India as a global hub for Manufacturing , Trading ,& Services. Strengthening role of Indian embassies in export. Facilitating technological & infrastructural up gradation of Indian economy. Identifying & nurturing special focus areas.

Schemes of FTP in various Sectors

Agriculture Sector Gems and Jewellery Sector Marine Sector Leather Sector Tea Pharmaceutical Handloom

Agriculture
A new scheme called "Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme)" to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products has been introduced. Duty free import of capital goods under Export Promotion Capital Goods (EPCG) scheme, permitting the installation of capital goods imported under EPCG for agriculture anywhere in the Agri- Export Zone (AEZ); Utilizing funds from the 'Assistance to States for Infrastructure Development of Exports (ASIDE) scheme' for development of AEZs;

Gems and Jewellery

Permission for duty free import of consumables for metals other than gold and platinum up to 2 per cent of Free On Board (f.o.b) value of exports; Duty free re-import entitlement for rejected jewellery allowed up to 2 per cent of f.o.b value of exports; Increase in duty free import of commercial samples of jewellery to Rs. 1 lakh; and

Permission to import of gold of 18 carat and above under the replenishment scheme.

Marine Sector
Fisheries have been included in the sectors which are exempted from maintenance of average EO under EPCG Scheme, subject to the condition that Fishing Trawlers, boats, ships and other similar items shall not be allowed to be imported under this provision. This would provide a fillip to the marine sector which has been affected by the present downturn in exports. Additional flexibility under Target Plus Scheme (TPS) /Duty Free Certificate of Entitlement (DFCE) Scheme forStatus Holders has been given to Marine sector.

Leather and footwear Sector

Increase in the limit for duty free entitlements of import trimmings, embellishments and footwear components for leather industry to 3 per cent of Free On Board (f.o.b) value of exports and that for duty free import of specified items for leather sector to 5 per cent of f.o.b value of exports; Import of machinery and equipment for Effluent Treatment Plants for leather industry exempted from customs duty; and Re-export of unsuitable imported materials (such as raw hides and skin and wet blue leathers) has been permitted.

Tea Sector
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 E units has been increased from the existing 30% to 50%. Export of tea has been covered under VKGUY Scheme benefits.

Pharmaceutical
Export Obligation Period for advance authorizations issued with 6-APA as input has been increased from the existing 6 months to 36 months, as is available for other products. Pharma sector extensively covered under MLFPS for countries in Africa and Latin America; some countries in Oceania and Far East.

Handloom and Handicraft Sector

Enhancing to 5 per cent of Free On Board (f.o.b) value of exports duty free import of trimmings and embellishments for handlooms and handicrafts; Exemption of samples from countervailing duty (CVD);

Authorizing Handicraft Export Promotion Council to import trimmings, embellishments and samples for small manufacturers; and Establishment of a new Handicraft Special Economic Zone.

Benefits of FTP Policy

Flexibility provided to exporters Payment of customs duty for Export Obligation (EO)shortfall under Advance Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit of Duty Credit scrips. Earlier the payment was allowed in cash only. Import of restricted items, as replenishment, shall now be allowed against transferred DFIAs, in line with the erstwhile DFRC scheme.

Waiver of Incentives Recovery, On RBI Specific Write off In cases, where RBI specifically writes off the export proceeds realization, the incentives under the FTP shall now not be recovered from the exporters subject to certain conditions

 Simplification of Procedures
To facilitate duty free import of samples by exporters,number of samples/pieces has been increased from the existing 15 to 50. Customs clearance of such samples shall be based on declarations given by the importers with regard to the limit of value and quantity of samples. To allow exemption for up to two stages from payment of excise duty in lieu of refund, in case of supply to an advance authorisation holder (against invalidation letter) by the domestic intermediate manufacturer. It would allow exemption for supplies made to a manufacturer,if such manufacturer in turn supplies the products to an ultimate exporter. At present, exemption is allowed upto one stage only.

 Reduction of Transaction Costs No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP. Further, for all other Authorisations/ licence applications, maximum applicable fee is being reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications).

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