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Anjuman-I-Islam’sAkbar Peerbhoy College of Commerce & Economics Export-Import Procedures and Documentation
Introduction India adopted inward orientation and self-reliance after Independence However, after 1991 India opened up by liberalizing trade, foreign investment, and financial and industrial trade, foreign investment, and financial and industrial sector. The reforms helped the country experience a steady growth of 6-7 percent improving standard of living, availability of consumer goods, foreign trade and employment opportunities.
Introduction The Indian experience with Regional Trading Arrangements (RTA) and preferential trading taken up after 1991 as a part of the trade liberalization strategy, and draws lessons from them to promote more effective RTAs
India's Preferential Trade Areas (PTAs) Post 1991 The South Asia Association for Regional Cooperation (SAARC) member countries have signed SAFTA replacing the ineffective South Asian Preferential Trade Agreement (SAPTA). India also has a framework agreement called BIMSTEC, and is engaging in Free Trade Area (FTA) negotiations with Association of South East Asian Nations, and has worked out a Comprehensive Economic Cooperation Agreement (CECA) with Singapore.
Review of PTAs in India India has signed the maximum number of bilateral trade agreements. However, as seen in South Asia, the RTAs have not been effective in integrating the region or making a mark globally. In the face of successful trading blocs like North Atlantic Free Trade Area, European Union, So, the agreements merit a review to learn from the mistakes for maximum benefit.
(1)SAARC, SAPTA, SAFTA For a number of South Asian nations the 1990s marked liberalizing of trade and investment regimes to intensify their integration with the world economy. The regional cooperation body SAARC, including India, Pakistan, Bangladesh, Sri Lanka, The Maldives, Nepal and Bhutan, has not achieved much since its initiation in 1985, primarily due to the tenuous political relations between India and Pakistan and a general environment of mistrust among member countries.
Import Liberalization Initiatives- 1 Moving away from Import Substitution Phasing out of Quantitative Restrictions on imports Reduction in and simplification of tariff structure
Import Liberalization Initiatives- 2 Sharp Reduction in Customs Duty Rates Simple Average of Basic Duty Rates 1991-92: 128 per cent 2004-05: 22 per cent 2007-08: Peak duty reduced to 10 per cent for non-agricultural goods Collection Rate (import revenue to value of imports ratio) 1990-91: 47 per cent
Import Liberalization Initiatives- 2 2004-05: 11 per cent 2005-06: 10 per cent Distribution of Duty Rates Has Changed Remarkably 1991-92: 4100 out of 5200 commodities Basic Rates above 100 per cent 2004-05: 4261 out of 5144 commodities Basic Rates Below (BRB) 25 per cent 2007-08: 8537 out of 10084 commodities BRB 25 per cent
Exchange Rate Management Initial Ex Ante Real Devaluation Switch to a market determined exchange rate regime since 1993 Focus on management of volatility without fixed rate target. Underlying demand and supply conditions determine the exchange rate movements in an orderly way
Negative List for Imports Free Importable Items: Free import of goods is not allowed for item included under the Prohibited list. However under Duty Exemption Scheme, certain items of import are allowed free of duty meant for export production. Such items are freely imported means they do not require import licences. Most capital goods are included in this category.
Negative List for Imports All the second hand goods, except second hand capital goods, may be imported only in accordance with provision of Foreign Trade Policy 2009-2014. Import of second hand capital goods shall be allowed freely. When import of second hand capital goods are made they must have a minimum residual life of 5 years.
Negative List for Imports Prohibited List: Under the prohibited list, the following four items has been banned: Unprocessed ivory. Animal rennet. Tallow fat, and Wild animal including their parts and products.
Negative List for Imports Restricted List: Restricted items cannot be imported freely. They can be imported with the special permission / licence from DGFT (Director General of Foreign Trade). The grounds on which importers are restricted includes health, security and environmental protection or the goods are reserved fro production by small entrepreneurs.
Negative List for Imports Small and tiny sector in India adopt home-based and village based production requiring low skills but making available employment to large number of people. Consumer Goods: Cameras Exports goods
Negative List for Imports Consumer telecommunication equipment Electronic goods Watches and watch cases Gift of consumer goods Saffron Alcoholic beverages Wines Cloves and cinnamon Cotton, woolen, silk, man-made and blended fabrics.
Negative List for Imports Safety and Security Items: Fire arms Ammunition Explosives Empty cartridges of all sizes Paper for security printing, currency paper, stamp paper and other special types of paper.
Negative List for Imports Electronic Items: Audio Magnetic Tapes Video Magnetic Tapes 20’’ and 21’’ colour TV Printed Circuit Boards Computer system and Personal computer
Negative List for Imports Precious, Semi-Precious Stones: Diamonds Synthetic stones finished or unfinished, Pearls both real and cultured Cubic zirconia Onyx Granite, basalt, sand and monumental or building stones.
Negative List for Imports Drugs and Pharmaceuticals: Fetracycline / oxytetracycline and their salts Rifampicin Streptomycin Pencillin 6-APA Vitamin B12 Vitamin B1, B2 and their salts.
Negative List for Imports Insecticides and Pesticides: DDT Pesticide, Insecticide, Weedicide, Herbicide, Rodentcide and Niticide Other items prohibited under Insecticides Act, 1969.
Negative List for Imports Seed, Plants and Animals: Plants, fruits and seeds Animals, birds and reptiles both body parts and their products. Liverstock, pureline, birds eggs, commercial chicks etc.
Negative List for Imports Chemicals and Allied Items: Hazardous chemicals Hazardous wastes Crocidolite Tris phosphate
Negative List for Imports Items Covering Small Scale Sector: Paper cutting knives of all sizes Wire stitching machines single headed Domestic water meters Copper oxychloride Flavouring essence Drawing and mathematical instruments
Negative List for Imports Miscellaneous Items: Newsprint Silver Cotton Yarn Batteries and Tyres Natural Rubber Raw Silk
Negative List for Imports Canalised List: These are the items which are imported through canalsing agencies like STC, MMTC, MTC etc.
Negative List for Imports Canalised Items of imports are: Petroleum Products (through Indian Oil Corporation) Mica waste and scrap (through MMTC) Mineral oils and concentrates (MMTC and MOIL) Niger seeds (through NAFED)
Negative List for Imports Maize unfit for human consumption but fit for use as poultry or animal feed (through food Corporation of India) Vitamin A drugs (through STC) Coconut oil, RBD palm oil and RBD pal steanin (through STC)
Importer means a person who imports or intends to import and hold an Importer-Exporter Code Number.
Two Categories 1.Actual User (industrial) 2.Actual user (non-industries)
Actual User (Industrial) It refers to a person who uses the imported good for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit
Actual User (Non-Industrial) It refers to person who uses the imported goods for his own use in: Any commercial establishment carrying on any business trade or profession
Any laboratory, scientific or research and other educational institution, university or any other educational institution or hospital • Any service industry
Non-Actual Users It refers to such user who import but not meant for commercial use and includes
Personal imports Imports of gift Import for stock and sale
Special Scheme for Importers • Under the Foreign Trade Policy 2009-2014, import of goods is permitted provided it helps to boost exports. The following special schemes for importers have been finalized: • Export Promotion Capital Goods Schemes (EPCG) Scheme: Under The Export promotion capital (asset) goods (EPCG)scheme, the import of capital goods, both new and second hand, jigs, fixtures, dies & moulds are allowed. Spares upto 20% of CIF value may also be imported subject to export obligation.
EPCG scheme offers two windows. Under the first window, the capital goods may be imported at a concessional rate of custom duty of 10%. The importer is under obligation to export 4 times of the CIF value of capital goods over a period of 5 years. • The second window offers zero duty imports if CIF value of capital(asset) goods is 20 crore or more. In this case, the export obligation in 6 times of CIF value of capital goods to be fulfilled over a period of 8 years.
Features of EPCG Scheme: • The EPCG licence holder can buy capital (assets) goods from domestic manufacturers. Such domestic manufacturers are permitted to import components at concessional custom duty of 10%. • Whatever capital (assets) goods are imported, it is subject to actual user conditions. • The EPCG licence holder will submit a certificate from his banker when payment is received from abroad.
Duty Entitlement Passbook (DEPB) Scheme: The main objective of DEPB scheme is to neutralize the incidence of the basic custom duty and surcharge on the import content of the export product. Import duty credit is granted against the export product.
Features of DEPB Scheme: • DEPB was introduced in the EXIM Policy 1997-2002. • An Exporter can import raw materials, parts, components (machinery), packing materials etc., Except those items mentioned as restricted items for imports. • DEPB shall be valid for 12 months from the date of its issue.
Duty Free Import Authorization (DFIA) scheme: Under the Foreign Trade Policy 2009-2014 DFIA is issued to allow duty free import of Fuel, Oil, Inputs, Energy sources, Catalyst (vehicle) which are required for production of Export Product.
Features of DFIA Scheme: • A minimum 20% addition shall be required for issue of DFIA expect for items in Gems & Jewellery sector. • Goods Imported against transferable DFIA which are found defective or unfit for use may be Re-Exported. • Once Export obligation is fulfilled and required documents have been submitted, RA shall make authorization transferable.
Gold Touch Tea • They are working since last 12 years. • They make import of tea from — • Srilanka • Assam • Calcutta
They usually prefer to import from Assam and Calcutta, due to complexity involved in International Trade.
They market it in areas of Mumbai and out of Mumbai as well. • They had also exported tea in England and France to their known dealer.