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Foreign Trade and India. Ancient maritime trading nation Bay of Bengal was once known as CHOLA LAKE Exports touch $155 billion in 2007-08 India is among the top ten in services exports The export basket. Laws to note. The foreign trade ( development and regulation ) Act - PowerPoint PPT Presentation
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Foreign Trade and IndiaForeign Trade and India
• Ancient maritime trading nation
• Bay of Bengal was once known as CHOLA LAKE
• Exports touch $155 billion in 2007-08
• India is among the top ten in services exports
• The export basket
Laws to noteLaws to note
• The foreign trade ( development and regulation ) Act
• The Foreign Trade Policy 2004-09
• The FEMA 2000
• RBI Regulations
• The Customs Act
• The Central excise Act
Steps in ExportingSteps in Exporting
• A business organization
• Manufacturer exporter
• Merchant exporter
• Agent/ intermediary
• Service provider
• Product selection
• Procurement of order
Essentials of export contractEssentials of export contract
• Product, standards & specification
• Quantity
• Inspection
• Value
• Terms of delivery
• Taxes, duties and charges
• Period of shipment
Export contract contd….Export contract contd….
• Packing, labeling,marking• Terms of payment- Amount.mode &
currency• Discounts and commissions• Licences and Permits• Insurance• Documentary requirements• Guarantee
Export contract contd……Export contract contd……
• Force majeure
• Remedies
• Arbitration
• The case of Dalmia & Arun Jain of Polaris
IncotermsIncoterms
• EXW– Ex works• FCA--- Free Carrier• FAS---- Free alongside ship• FOB---- Free on board• C&F----- Cost and freight• CIF----- cost ,insurance and freight• CPT– Carriage paid to • CIP---- Carriage and insurance paid to
Incoterms contd------Incoterms contd------
• DAF– delivered at frontier
• DES--- delivered EX ship
• DDU--- delivered duty unpaid
• DDP---- delivered duty paid
• DEQ– delivered ex quay
Risks in International tradeRisks in International trade
• Credit risk
• Currency risk
• Carriage risk
• Country risk
• Voyage risk
Export registrationExport registration
• IEC with DGFT• PAN• Bank account• Appointment of agents• Export licenses• Customs registration• Registration with export promotion
councils
Export inspectionExport inspection
• IPQC– In process quality control
• ISI, AGMARK
• Fumigation
• ISO- 9000 & ISO – 14000
• EIA
• SA- 8000
• Global compact
Currency managementCurrency management
• Understanding currency fluctuations
• Invoicing currency
• Forward contract
• Hedging
• Repatriation
• EEFC
Reading FTPReading FTP
• The policy
• The handbook of procedures
• The ITC- HSN classification
• Export licenses
• Import licenses
• OGL
• State Trading
Customs procedure- exportCustoms procedure- export
• Exporter
• Person in charge of conveyance
• Bill of lading
• Export general manifest
• Shipping bill, packing list,ARE etc
• Stuffing/ examination/ sealing
• Self- sealing/ self- certification
Customs procedure contd----Customs procedure contd----
• Importance of ICD/CFS/
• Customs bonded warehouse
• Green channel for exporters
• Assessment
• New concept of Transaction value
Customs import procedureCustoms import procedure
• Importer
• Person in charge of conveyance
• Bill of entry
• Import general manifest
• Assessment
• EDI
• RMS
Central excise export procedureCentral excise export procedure
• Exports are free of duty• Bond clearances• Rebate clearances• ARE 1• ARE 2• UT1• Proof of export• Sealing of container
Export promotion schemesExport promotion schemes
• Section 65 of customs Act
• Advance authorization / DFIAS
• Export promotion capital goods
• DEPB
• Drawback
• EOU
• SEZ
EOUEOU
• Minimum investment of INR 10 million
• 300 warehousing districts as location
• Nearly 3000 units in existence
• New or conversion from DTA
• Manufacturing & services covered
• Trading units are not permitted
EOU contd-------EOU contd-------
• Widest definition of manufacture
• Single B – 17 Bond
• Duty-free import of raw materials and inputs and similar sourcing of inputs and capital items from DTA
• NFE= A – B = 0 +
• EO over 5 years
EOU contd-----EOU contd-----
• Can subcontract part of production to DTA
• Can sell upto 50% of production in DTA
• Can sell to other EOU/ BTP/ EHTP/STP/SEZ and count against EO
• Exempt from state trading and SSI reservation restrictions
• 100% EEFC retention
EOU contd-----EOU contd-----
• Clubbing of exports with exports of parent company for export house status
• CST exemption
• PC and CT3 procedure
• Self sealing
• Green channel clearance on import
DrawbackDrawback
• Recouping of duties of customs and central excise and service taxes
• All industry rates
• Brand rate
• Special brand rate
• Post export documentation
EPCGEPCG
• Import of capital goods at 5% concessional customs duty
• EO is 8 times the duty saved in 8 years
• 12 years for SSI holders and licenses for INR1000million
• Covers manufacturer exporters or merchant exporters with supporting manufacturers
EPCG contd-----EPCG contd-----
• Direct as well as third party exports allowed
• Shipments under Advance authorization DFIAS , DEPB & draw back will count for fulfillment of EO
• Physical exports required but certain deemed exports allowed
• Clubbing of licenses allowed
Advance authorizationAdvance authorization
• Duty free import of inputs
• Fuel, oil and energy are also allowed to be imported
• SION norms
• Ad hoc SION permitted
• Positive value addition
• Issued for annual requirement also
Advance authorization contd--Advance authorization contd--
• Advance release order/ Invalidation
• Supplies to SEZ counted
• Actual user condition
• Disposal of imported items after meeting EO
• License transferable after meeting EO and with the permission of DGFT
DEPBDEPB
• Duty free post export remission scheme
• SION norms
• Ad hoc SION norms permitted
• Schedule of rates
• Can be used to pay for import duties
• Transferable scrip
• Scheme valid upto March 2009
SEZSEZ
• Exclusive geography
• Duty free enclave
• Sales to DTA permitted
• Special concessions for promoters
• Positive EO is required
• Customs duty, excise duty, service tax and VAT & CST are exempt on supplies to SEZ units
High Tech products promotion High Tech products promotion schemescheme
• Appendix 37E goods
• Duty free scrip equal to 10% incremental export growth
• Ceiling of INR 150 million
• Some exports not counted
• Scrip freely transferable
Focus products schemeFocus products scheme
• Goods notified in appendix 37D
• Some exports not counted
• Duty credit scrip equal to 1.25% of FOB value of exports for each year
• Scrip transferable
Focus markets schemeFocus markets scheme
• Notified as per Appendix 37C
• Duty credit scrip of 2.5% on the FOB value of exports achieved
• Certain exports not allowed
• Scrip transferable
Deemed ExportsDeemed Exports
• The concept of deemed exports
• Covers supply of goods against:
• Advance authorization/ DFIAS
• EOU/ STP/EHTP/BTP
• EPCG
• Projects under International competitive bidding procedure
Deemed exports contd-----Deemed exports contd-----
• Projects approved by ministry of finance
• Supplies of capital stock to fertilizer plants
• Supplies of goods to Refineries and power projects
• Supplies of goods to UN- funded projects
• Supplies of goods to Nuclear power projects thro competitive bidding
Benefits to deemed exportsBenefits to deemed exports
• Advance authorization / DFIAS
• Deemed duty drawback
• Exemption from terminal excise duty if supplies are against International competitive bidding
• In other cases refund of terminal excise duty paid will be given
Served from India schemeServed from India scheme
• To promote served from India image
• Appendix 10
• Minimum previous year exports of INR1 million
• 10% duty credit scrip
• Scrip transferable within corporate group and not otherwise
Status Holders under the FTPStatus Holders under the FTP
• Export House Rs 20 crores
• Star export House Rs 100 crores
• Trading House Rs 500 crores
• Star Trading House Rs 2500 crores
• Premier Trading House Rs 10000 crores
• Benefits allowed to status holders
Excise export concessionsExcise export concessions
• Export without payment of duty
• Export under claim for duty
• Procurement of excisable goods for export production without payment of duty
• Drawback
• Concessional notifications
Service tax concessionsService tax concessions
• Drawback
• Its limitations
• ASTR 1
• ASTR 2
• Clearances to SEZ exempt
• Refund of service tax paid on export related input services
WTO/ GATTWTO/ GATT
• International Treaty
• Governing Principles
• MFN
• Non discrimination
• National treatment
• Reduction of tariffs
• Elimination of Non tariff barriers
Free Trade AgreementsFree Trade Agreements
• NAFTA• EU• MECOSUR• ASEAN• SAFTA• Indian agreements with Sri Lanka,
Thailand and Singapore• Implications of FTAs
Importance of Ports in International Importance of Ports in International TradeTrade
• 70% of international trade is over the seas
• For India, it is 90%
• Trade through Air is comparatively very expensive and cannot become a common preference, and is unsuited for heavy, large cargo
• Many coastal states possess a number of ports
Ports in IndiaPorts in India
• India has 12 major ports and more than 180 lesser ones
• India has a coastline of nearly 6000 KMs
• All ports of India together handled 519 million tons of cargo during the fiscal year ended March 2008
• Growth rate of 12%
Problems of Indian PortsProblems of Indian Ports
• Limited land area
• Industries located in hinterland
• Low channel draft
• Too many players
• Inadequate deployment of skill and technology
• Lack of coordinated approach
Requirements of modern World Requirements of modern World class portclass port
• Skill – Intensive
• Technology driven, minimal paper work
• Port is the best when its an industrial complex by itself
• Quay cranes
• Crane productivity
• Fully automated terminals with good quay length
Port stake holders in IndiaPort stake holders in India
• Customs
• Port Trusts
• Port Health Organization
• Plant Quarantine
• Immigration
• Terminal operator
• Vessel operating agent
continuedcontinued
• Steamer agent / Mainline operator• Container operating agent ( NVOCC,
VOCC )• Stevedore• CHA / Exporters / Importers• Transport operators• CFS / ICD• Security agencies / External players
A comparison A comparison
• Factor JNPT SINGAPORE PORT
• Terminals 3 4
• Vessels per
terminal 9 41
• Quay length 600 m 11,754 m
• Total area 133 ha 425 ha
continuedcontinued
• Factor JNPT SINGAPORE
• Total no of quay
cranes 8 131
• Crane moves
per hour 20 – 25 25 -30
• Crane rate per hour 60 -70 100
continuedcontinued
• All Indian ports in 2005 -06 together handled cargo of 423.3 million tons
• Singapore port in the same period handled 423 million tons of cargo
• Transaction costs at Indian ports are 10 %
• Transaction costs in leading ports are 6 %
• The transaction costs at Indian ports are in money terms - $ 12 billion per annum
Dwell time at Indian ports as on Dwell time at Indian ports as on 2005 - 062005 - 06
• Cargo type As on 2005-06 expected
export import exp imp
• Dry bulk 3.57 3.23 1.7 1.6
• Break Bulk 6.6 5.62 3.3 1.5
• Containers 3.78 1.88 1.5 1.00