Annual Supplement to Foreign Trade Policy (2005-2006)

Minister for Commerce & Industry, Government of India Mr. Kamal Nath had announced Annual Supplement 2005, to the Foreign Trade Policy 2004-09 on the 8th April 2005.
Main Points:
1. Setting up an Inter State Trade Council to engage the State Governments in providing an enabling environment for boosting international trade.
2. Agriculture:
2.1. Cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts removed.
2.2. Concessional duty imports made by agro units under the EPCG Scheme were allowed to fulfill the export obligation over a longer period of time.

Earlier the obligation was to export worth 8 times the duty saved in 8 years and now it was made to export 6 times the duty saved in 12 years.

3. SSI Sector:
3.1. Import of capital goods at 5% Customs duty allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved on capital goods imported under the EPCG Scheme over a period of 8 years.

At that time the export obligation under the EPCG Scheme was 8 times the duty saved and it was reduced for small manufacturing units to 6 times.

4. Retail Sector:
4.1. Concessional duty benefits under EPCG scheme shall be extended for import of capital goods required by retailers having a minimum covered shopping area of 1000 sq meters.
5. Changes in Served from India Scheme:
Goods imported under the Served from India Scheme made transferable within the Group companies and managed hotels subject to Actual User condition.

At that time Hotels & Restaurants were required to submit a Chartered Accountant certificate that the entire duty benefits availed under the Served from India Scheme have been passed on to the consumer. After announcement of this supplement, only a declaration was to be submitted by the Hotels & Restaurants that the duty benefits shall be passed on to the consumer and no CA certificate would be required to be submitted.

6. Extension of VKUY:
Benefits of Vishesh Krishi Upaj Yojana were extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.
7. Gems & Jewelry:
7.1. Earlier the samples of value less than Rs. 1 lakh were entitled for Duty Free Imports. Entitlement for Duty Free imports of Gems and Jewelry samples enhanced to Rs. 3 lakh in a financial year or 0.25% of the average of the last three years exports turnover or gems and jewelry items, whichever is lower.
7.2. Supply of gold of 0.995+ purity allowed for exports. Earlier this facility was only available for supply of gold in the domestic market.
8. Marine Sector:
Duty free import were allowed of specified specialized inputs/chemicals and flavoring oils as per a defined list. However a limit was set and that was 1% FOB (Free on Board) value of previous years export.
9. Advanced Licensing Scheme :
No safeguard and antidumping duty on inputs under Advance Licence for deemed export supplies made to ICB (International Competitive Bidding).
10. DFRC: (Duty Free Replenishment Certificate)
List of Sensitive Items pruned down to nine items. Brass scrap, Additives, Paper/Paper Board and Dye Stuffs shall be removed from the Sensitive List of items prescribed for import of items under DFRC.
11. EOU:

The de-bonding procedure for EOUs simplified. EOUs to be permitted to claim IT exemption in respect of income on export proceeds realized within a period of 12 months from date of export.
12. Bank Guarantee:

Reduced from 25% to 15%. Units in Agri Export Zones (AEZs) shall also be eligible to submit a Bank Guarantee of 15%.
13. Procedural Simplification:
13.1. EDI linkage of all community trade partners like DGFT, Customs, Banks, Export Promotion Councils etc to facilitate web based filing, retrieval and verification of documents;
13.2. A fast track mechanism for clearances, examination, testing, quarantine, packaging etc. to be set up by all agencies to facilitate import/export of perishable cargo;
13.3. Laying down time limits for giving approvals/sanctions for different import and export activities by different agencies to ensure a transparent system of working in Government Departments and ensure continuous improvement in quality of services rendered.
13.4. As a first step towards this exercise, the DGFT has devised a single common application form called Aayaat Niryaat Form. This 50 page set of forms, as against the 120 page set currently in existence, provides availability of information on DGFT related documentation at a single place and has a web interface for on-line filing by the exporter and retrieval of documents by the licensing authorities.

14. Trade Facilitation:

14.1 All DGFT offices shall continue to provide facilitation to exporters in regard to developments in international trade i.e. WTO agreements, Rules of Origin and SPS requirements, anti dumping issues etc. to help the exporters strategise their import and export decisions in an internationally dynamic environment.
14.2 To promote export of ‘Minor Forest Produce’ products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.
14.3 Handloom – Government decided to develop a trademark for Handloom on lines similar to ‘Woolmark’ and ‘Silkmark’. This will enable handloom products to develop a niche market with a distinct identity.
14.4 Tea – In order to maintain quality and retain the brand equity of Indian teas, the Government has issued a new Tea (Distribution and Export) Control Order, 2005 which prescribes strict norms for tea. All teas, whether imported or exported would be required to conform to the specifications cited in the new Order. Tea has been classified for the purpose of issue of non-preferential Certificate of Origin into three categories:
i. Tea wholly produced or obtained in India will only be classified as “India tea.”
ii. Where the Indian tea content in the export is not less than 90% by weight, it will be classified as “India tea (not less than 90% by weight of tea)”.
iii. In case of tea not wholly produced or obtained in India and where the content of Indian tea is less than 90% by weight, it will be classified as “Blended tea of different origin and packed in India”.
The new Order also prescribes a minimum value addition norm of 50% on export of all imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.

with inputs from PIB

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