Government unveils changes to Foreign Trade policy, new export sops

The following are the main points of the government’s announcement of 2012-13 supplements and changes to India’s Foreign Trade Policy –

2% interest subvention for Handlooms, Handicrafts, Carpets and SMEs

Last year the government had agreed to create a special dispensation for labour intensive industry by extending the facility of 2% interest subvention for Handlooms, Handicrafts, Carpets and SMEs. The government has now decided to extend the scheme for another year till 31st March 2013 and expand its coverage to include other labour intensive sectors namely Toys, Sports Goods, Processed Agricultural Products and Ready-Made Garments.

Zero Duty EPCG Scheme

The government taken a decision now to extend it upto 31st March 2013. The government has also decided to enlarge the scope of the Scheme. Presently, benefits under the Scheme are not available to units which are availing benefits under Technology Upgradation Fund Scheme (TUFS) and Status Holder Incentive Scheme (SHIS).

However, now benefits under the Zero Duty EPCG Scheme will be allowed to be taken by companies for another line of business for which TUFS benefits have not been availed. Alternately, if benefits under TUFS or SHIS have been availed and were subsequently surrendered or remain unused, the facility of Zero Duty EPCG Scheme will be

New post-export EPCG scheme

The government is now introducing a new post-export EPCG scheme. This scheme provides flexibility to exporters for importing capital goods on payment of duty, based on which an Export Obligation at a level of 85% to the original shall be stipulated. Thereafter, the exporter will be entitled to obtain Duty Free Scrips in proportion to the actual exports effected, thereby doing away with the requirement of monitoring the Export Obligation, thus reducing the transaction cost.

In order to give a thrust to labour intensive exports, the government is doing away with the condition of maintaining average level of exports for labour intensive sectors like carpets, coir, jute in addition to already notified sectors-handicraft, handloom, cottage, sericulture etc.

To facilitate setting up of Common Service Centres located in the town of export excellence, a Common Service Provider under EPCG Scheme will be permitted to give a single Bank Guarantee (BG).

Three new towns are being declared as towns of export excellence- Ahmedabad (Textiles), Kolhapur (Textiles), and Saharanpur (Handicrafts) In order to promote manufactured exports of green technology products, export obligation under EPCG scheme is being reduced to 75% of the normal export obligation for 16 identified products like solar cells, wind turbines, water treatment plants, electrically operated vehicles etc.

To meet the need of promoting manufacturing activity and generating employment in the North Eastern States, it has reduced the Export Obligation under the EPCG Scheme to 25% of the normal export obligation and this facility will be applicable to North Eastern States and Sikkim. The government is also going to provide additional incentive of 1% of FOB value of exports for specified products through all Land Customs Stations of North Eastern Region.

Duty free scrips

The Foreign Trade Policy allows duty free scrips under different Schemes of Chapter-3 of our Foreign Trade Policy – FPS, FMS, VKYGUY, SHIS, MLFPS, SFIS and Agri-infrastructure Incentive Schemes – for utilization of duty free import of goods as per conditions stipulated under these Schemes. Now, in a major decision, we will be permitting utilization of these scrips for procurement of goods from domestic market for payment of excise duty. This decision has been taken to promote domestic manufacturing and value addition and employment and will be a significant measure of import substitution.

Market diversification scheme, Special focus market scheme etc.

Recognizing the efficacy of the market diversification scheme, this year The government is adding 7 new markets to Focus Market Scheme (FMS). These countries are Algeria, Aruba, Austria, Cambodia, Myanmar, Netherland Antilles, and Ukraine 7 new markets are being added to the Special Focus Market Scheme (Spl FMS)- Belize, Chile, El Salvador, Guatemala, Honduras, Morocco, and Uruguay.

46 new items are being added to Market Linked Focus Product Scheme (MLFPS). This would have the effect of including 12 new markets for the first time. Market linked focus product scheme is being extended till 31st March 2013 for export to USA and EU in respect of the apparel sector.

100 new items are being added to the Focus Product Scheme (FPS) list. Roasted cashew kernel, and protein concentrates & textured protein substances are being made eligible for benefits under VKGUY.

Agri-infrastructure Incentive Scrips

The Agri-infrastructure Incentive Scrips were envisaged to promote agricultural exports and strengthen and upgrade infrastructure including establishment of cold storages, pack house etc. scrips have not been used so far, The government has now made them eligible for 14 specified equipments which will have a beneficial impact in strengthening agri export infrastructure.

Status Holder Incentive Scrips

The Status Holder Incentive Scrips (SHIS) allow import of capital goods for technology upgradation in specified sectors. Now, 10% of the value of these Recognising that theseduty. This decision has been taken to promote domestic manufacturing and value addition and employment and will be a significant measure of import substitution.

E-commerce incentives

Courier and E-Commerce platform will be eligible for export benefits if shipments are effected from Delhi and Mumbai. An Inter-Ministerial Task Force constituted by the Ministry of Finance would expeditiously look into various aspects of e-Commerce to enable shipments through designated posts.


The SEZs have been a key instrumentality for providing robust infrastructure for export promotion. over 8.45 lakh people and last year contributed to exports of Rs. 3.65 lakh crores. They have received investment of over Rs. 2.02 lakh crores which is a significant achievement. However, after imposition of MAT and DDT, there has been a visible slowdown in growth of exports from SEZs. The government has now decided that exports shipped through Today, these Zones provide direct employment to

The government has undertaken a comprehensive assessment of the SEZ Scheme to re-visit certain aspects of the policy and operational framework and after concluding the inter-ministerial consultation, we will be able to come out with new guidelines to make the operation of the SEZ policy more buoyant. The 100% EOU Scheme has also been reviewed, to assess its remodeling after withdrawal of Income Tax exemption under section 10(B) of the Income Tax Act. A Committee was constituted for this purpose, which has now submitted its report and over the next few months, we shall be making an announcement of the revamped 100% EOU Scheme.


Small exporters of hand-made woolen carpet very often suffer on account of ignorance of adversely loaded terms of export. In order to protect their interest, it has been decided that these exports will be suitably regulated to ensure secured payments. In order to reduce transaction cost and ensure faster clearance of import consignment, The government has decided that once an Advance Authorization is registered at any port, it will be permitted for utilization at all EDI Ports. Visakhapatnam Airport has been identified as a new Port for the purpose of benefits under export promotion schemes.

Deemed and remission of duty for supplies to specified projects, to domestic manufacturers. This scheme is also undergoing comprehensive review and after concluding inter-ministerial consultations, we shall be announcing changes in this Scheme as well.

Electronic Data Interchange (EDI) is a core driver for facilitating international trade and one of the key initiatives this year is electronic transmission of foreign exchange realization details on exports by banks on a daily basis under the “e-BRC” (Electronic Bank Realization Certificate) initiative.

Exporters will not be required to make any request to banks for issuance of Bank Export and Realization Certificate and this scheme will ensure seamless connectivity amongst DGFT, Customs, Banks and exporters for settlement and release of export benefits. This has been done with the objective of ensuring minimum human interface and reducing transaction cost.