Foreign Trade Policy : 2004-09

Objective :
The new Foreign Trade Policy (FTP) takes an integrated view of the of the overall development of India’s foreign trade to achieve the following objectives:
1. To double India’s %age share of global merchandise trade to 1.5% by 2009, for which exports from India have to be $ 175 billion by 2009 & annual compounded growth rate required would be 21% (global export growth rate estimate : 4-5%).
2. To act as an effective instrument of economic growth by giving thrust to employment generation, especially in semi-urban and rural areas.
Strategies :
The strategies include:
1. Unshackling of controls -creating an atmosphere of trust and transparency .
2. Simplifying procedures and bringing down transaction costs .
3. Adopting the fundamental principle that duties/levies should not be exported .
4. Identifying and nurturing different special focus areas to facilitate development of India as a global hub for manufacturing, trading and services.

Export promotion schemes
Target Plus : Under the scheme exporters achieving a quantum growth in exports and exceeding the overall normal export target growth target of 16% fixed for 2004-05, would be entitled to duty free credit based on the the incremental exports. For incremental growth of over 20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% of FOB value of incremental exports.
Served from India : For creating ‘Served from India’ brand to be instantly recognized and respected, under this scheme, individual service providers who earn foreign exchange of at least Rs.5 lac and other service providers who earn foreign exchange of at least Rs.10 lac will be eligible for a duty credit entitlement of 10% of total forex earned by them. In case of stand alone restaurants, the entitlement shall be 20% and for hotels, it will be 5%.
EPCG :
a : additional flexibility to fulfil export obligation under EPCG scheme to reduce difficulties of exporters.
b: technological upgradation under EPCG scheme has been facilitated and incentivised.
c : transfer of capital goods to group companies and managed hotels now permitted under EPCG. d: in case of movable capital goods in the service sector, the requirement of installation certificate from Central Excise, has been done away with.
e: export obligation for specified projects shall be calculated based on concessional duty permitted to them, for improvement in viability of the project.
Status Holder Categorization : The new rationalized scheme of categorization of Status Holders as Star Export Houses has been introduced as under: For 1 Star, the required export turnover over 3 years should be : Rs.15 cr, for 2 Star : Rs.100 cr, for 3 Star : Rs.500 cr, for 4 Star : Rs.1500 cr, and 5 Star : Rs.5000 cr The Star Export houses shall be eligible for a no. of privileges such as fast track clearance procedures, exemption from furnishing of bank guarantee, eligibility for consideration under target plus scheme etc. Export Oriented Units: Such units to be exempted from service tax in proportion of exported goods and services. They can retain 100% of export earnings in EEFC accounts. Income tax benefits on plant and machinery shall be extended to DTA units which convert to EOUs. Import of capital goods shall be on self-certification basis for EOU.
Free Trade and Warehousing Zones (FTWZ):
A new scheme to establish FTWHZ has been introduced with a view to create trade related infrastructure to facilitate the import/export of goods/services with freedom to carry out trade transactions in free currencyto make India, a global trading hub. FDI would be allowed up to 100% in such zones. Each Zone would have minimum outlay of Rs.100 cr and 5 lac sq mt. built up area. SEZ benefits would be available to units in such zones. The maximum period for which goods will be allowed to be stored would be 2 years. If importers fail to re-export within this period, they will have to pay customs duties and sell the goods in the domestic market. Customers in India would also be allowed to purchase goods, provided payment is made in convertible foreign currency.
2nd hand Machinery : Import shall be permitted without any age restrictions and minimum depreciated value for plant and machinery to be re-located into India has been reduced from Rs.50 cr to Rs.25 cr.
Service Export Promotion Council : An exclusive council to be set up to map the opportunities for key services in key markets and develop strategic market access programmes in coordination with sectoral players and recognized nodal bodies of the services industry. Procedure simplification and rationalization : All exporters with minimum export turnover of Rs.5 cr and good track record to be exempt from furnishing bank guarantee in any of the schemes. All goods and services exported, including those from DTA units, shall be exempted from service tax. Validity of all licences/entitlements issued under various schemes, has been increased to a uniform 24 months.