DGFT and Foreign Trade Policy Presentation by D

DGFT and Foreign Trade Policy Presentation by D K Singh, Additional DGFT 28. 6. 2016 1

Outline v DGFT Background / Organizational Structure v Major Functions v Major DGFT Schemes v. Financial Support Under Various Schemes v. Digitization and Trade Facilitation Initiatives v. The Way Forward 2

DGFT: Background v Attached office of Department of Commerce v Implements Foreign Trade (Development & Regulation) Act 1992 v Previously Chief Controller of Imports and Exports under Imports and Exports (Control and Regulations) Act, 1947. Reformed to be DGFT under FT(D&R) Act, 1992. v Organization details: § ISO 9001: 2008 certified, digital friendly § 37 Regional offices § Approx 2400 employees. (2387 -Sanctioned strength) 3

DGFT Organization Minister, Commerce Secretary DGFT 4 Additional DGFT at HQ 37 Regional Offices Zonal office, Mumbai Zonal office, Kolkata Zonal office, Delhi Zonal office, Chennai RAs at Ahmedabad, Surat, Vadodara etc. RAs at Shillong, Cuttack etc. RAs at Jammu, Jaipur, Kanpur etc. RAs at Bengaluru, Cochin, Coimbatore etc. 4

DGFT: Major Functions v Implementation of FT(D&R) Act: Authorizations for items under Import / Export control (< 4 % tariff lines) v Formulation of Foreign Trade Policy (FTP ) v Implementation of promotional schemes of FTP v Grievance Redressal v Enforcement function v Capacity Building: Niryat Bandhu v Indian Trade Service (ITS) cadre management 5

IEC Information v More than 800, 000 IECs issued so far. Less than 125, 000 exported last year. v Every year over 60, 000 new IECs issued. v New mandatory online application system introduced w. e. f. April 1, 2016 v Digital signature , PAN and bank details required 6

Active Exporter & Importer Count Trade Type Export Import Exporter & Importer Count 2013 -14 2014 -15 2015 -16 115806 119411 122162 125936 133088 138725 7

Import /Export Control Functions EXIM controls mainly on account of security, public health, public morals and environment grounds. Involves less than 4% of India’s Tariff Lines (at 8 digit level) IMPORTS EXPORTS §Prohibited items - 53 Lines: Include beef, beef tallow, products of wild animals and ivory § Prohibited items - 59 Lines-Include Wild animals, beef, pulses and ivory § Restricted items - 155 lines: include horses, birds, rice bran, psychotropic substances, SCOMET [Special Chemicals, Organism, Materials, Equipment & Technology] items §Restricted items - 485 Lines - include live animals, birds, vegetable planting material, psychotropic substances §STEs - 33 Lines: include foodgrains, certain petroleum products and fertilizers. § STEs - 15 Lines: include certain grades of Iron ore 8

Major DGFT Schemes 9

A - Schemes for Merchandise exports Category Scheme Details For sourcing Advance raw material Authorisation Scheme Allows duty free import of raw material for production of export products. Minimum value addition required is 15%. The authorization is not transferable. Duty Free Allows duty free import of raw material. Import The authorization is transferable. Authorisation Minimum value addition required is 20%. (DFIA) Scheme. For sourcing Export Allows duty free import of Capital Goods. Capital promotion Export Obligation equal to 6 times value of Goods Capital Goods duty saved, to be completed by exporter in 6 Scheme(EPCG) Reward Scheme Merchandise Exports from India Scheme years. Incentivizes export of selected products to specified markets. Rates of rewards are 2, 3 or 5%. 10 The duty credit scrip is transferable.

B - Schemes for Service Exports / other Schemes Category Scheme for Service Exports from Service India Scheme Exports (SEIS) Other Important Schemes Details The scheme offers duty credit at the rate of 3 or 5% on net foreign exchange earned to eligible Service Exporters Schemes for Gems & (I) Advance authorization and Jewellery sector replenishment scheme for import of raw material and (II) EPCG for import of capital goods; are available to the sector. Schemes for supplies Deemed export benefits like within the country terminal excise duty refund. 100% Export Oriented Units (EOU) The scheme caters to units geared to export large part of production 11

Status Holder Certificates Category Number issued after 1. 4. 2016 Export threshold US$M* One Star Export House 2835 3 Two Star Export house 765 25 Three Star Export House 268 100 Four Star Export House 46 500 Five Star Export House 13 2000 • Minimum export performance in current and previous three financial Years ( except for Gems and Jewellery sector) 12

Merchandise Exports from India Scheme (MEIS) v Incentives for 5012 tariff lines @ 2% / 3% / 5% of FOB value globally v. Includes permissible exports by post / courier under ecommerce window v. Resource ceiling of Rs. 22, 000 Crore per annum v. No landing certificate required v Implemented with support of DOR; further ease of implementation being explored with Do. R 13

Services Exports from India Scheme (SEIS) • Incentive scheme for eligible service exports offering reward @ 3 and 5% of net foreign exchange earned • Only Mode 1 and Mode 2 services eligible. • Covers ‘Service Providers located in India’ instead of ‘Indian Service Providers’. • Service covered include at two rates @3% and @5% • Simplification in implementation proposed with support of RBI 14

Interest Equalisation scheme • • • Cabinet Committee on Economic Affairs (CCEA) approved the Interest Equalisation Scheme on 18. 11. 2015 for 5 years w. e. f. 01. 04. 2015. Operational guidelines of the scheme were issued by RBI vide Circular No. 62 dated 04. 12. 2015. The main features of the scheme are as follows: The rate of interest equalisation @ 3% per annum will be available on Pre Shipment Rupee Export Credit and Post Shipment Rupee Export Credit. The scheme would be applicable w. e. f 01. 04. 2015 for 5 years. Government, however, reserves the right to modify/amend the Scheme at any time. • The scheme will be available to all exports under 416 specified tariff lines [at ITC (HS) code of 4 digit] and to all exports made by Micro, Small & Medium Enterprises (MSMEs) across all ITC (HS) codes. • Scheme would not be available to merchant exporters. • Banks are required to completely pass on the benefit of interest equalisation, as applicable, to the eligible exporters upfront and submit the claims to RBI for reimbursement, duly certified by the external auditor. • All eligible exports under the scheme would have to meet the criteria of minimum processing for the goods to be called as Originating from India and would be governed by provision of Paragraph 2. 108 (a) (Rules of Origin [Non preferential]) of Handbook of Procedures of Foreign Trade Policy 2015 -2020. 15

Financial Support Under Various Schemes 16

Benefits Under Major DGFT Schemes: 2015 -16 S. No. Scheme Name Number FOB in Cr Value in crores Nature of scrip/ Authorisation 4107. 86 Duty Credit 1 MEIS 31401 138146. 47 2 Advance Authorisation 20620 295720. 41 166942. 75 3 Annual Advance Authorisation 138 7779. 39 6687. 22 CIF value 4 Duty Free Import Authorisation (DFIA) 175 594. 05 384. 33 CIF value 5 0% EPCG POST EXPORT 22 87. 29 17. 11 Duty Entitlement 6 Zero duty EPCG Scheme 22513 78715. 47 13348. 89 Duty Entitlement 8 Export Licence 341 1712. 88 - CIF value 9 Import licence 658 - 94061. 25 CIF value 10 Replenishment Licence 24 773. 88 40. 46 CIF value 17

Benefits Under Old schemes: 2015 -16 S. No. Scheme Name FOB in Cr Value in Rs. Nature of scrip/ Number Cr Authorisation 1 EPCG Concessional Duty 03% 5 2. 06 0. 27 Duty Entitlement 2 DEPB-Post Export 434 1715. 34 102. 09 Duty Credit 3 Duty Free Replenishment Certificate 3 0. 36 0. 28 CIF value 4 SERVED FROM INDIA SCHEME 2072 1125. 51 Duty Credit 5 Status Holder Incentive Scrip 815 390. 87 Duty Credit 6 Vishesh Krishi and Gram Udyog Yojana 13520 28877. 3 1441. 19 Duty Credit 7 Focus Market Scheme 23346 64871. 58 2369. 71 Duty Credit 8 Focus Product Scheme 84041 240541. 05 6381. 44 Duty Credit 9 Target Plus Scheme 4 1. 78 Duty Credit 10 Incremental Export Incentivisation Scheme 2160 455. 58 Duty Credit 18

Digitalization & Trade Facilitation Initiatives 19

DGFT: Facilities for users v DGFT data exchange with Customs, Banks and EPCs through EDI message exchange system, reducing physical interface of clients and fraud possibilities v Exporter can now: Ø File online applications for IEC, Advance License, Drawbacks, MEIS Ø Pay application fee online and Ø Check status of their applications (EODC, TED refund need to be addressed) v DGFT launched mobile application called “DGFT” in June 2015 20

DGFT: Facilities for users - The e-BRC system v Electronic Bank Realization Certificate (e. BRC) for electronic transmission of export related foreign exchange realization from Banks to DGFT server operationalized on June 5, 2012. v So far over 1. 7 Crore e-BRCs captured through this system. v Includes integrated platform for receipt, processing and subsequent use of all bank realisation related information. v DGFT Mo. Us with 13 State Governments for sharing e-BRC data for VAT refunds to exporters. Mo. U also with Enforcement Directorate. v RBI also uses e. BRC data to fill data gaps in its system 21

DGFT: Facilities for users Complaint Resolution System, Twitter v Complaint Resolution System for resolution of EDI related issues. 5000+ complaints resolved v Public grievances portal of Department of Administrative Reforms & Public Grievances. v Twitter-#DGFTINDIA v Responds to tweets sent to CIM’s account and mc. twitterseva. com/ 22

Thank you 23