Understanding How Foreign Trade Policies (FTP) making Import-Export Process Easier in India

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India is the most important & emerging player in the global economy. India’s trade policies and Governance reforms have made it a significant destination for foreign investments around the world and it provides the basic framework of policy and strategy for promoting exports and trade.

For the economic development of country vigorous FTP is of great importance and this is the reason India adopted a foreign trade policy is known as EXIM policy or Import-Export Policy. It was introduced by the Indian Government to boost the exports of goods and services for employment generation and adding value to the country.

The current FTP was announced on 1st April 2015 by the Government of India and set the export target of $900 Bn or about 58 lakh CR by 2020. To achieve this target it has to grow 14% every year.

Duration of the Policy:-

It is updated every year on the 31st march improvement, modification and addition of new schemes become effective from 1st April each year. In FTP policies are amended in every 5 years.

Objectives of FTP 2015-20:-

  • To enable substantial growth in Export
  • Double the percentage share of global merchandise trade in 5 years
  • To act as an effective tool for economic growth by generating employment
  • To expand the trade activities the more workforce required.
  • To improve the balance of payment and trade
  • To Provide Globally competitive rates and quality goods and services to the clients
  • To increase the technological capacity for production and cost-effectiveness of industry and services
  • To create opportunities by engaging in ethical practices
  • Turning low-level economic activities to high-level economic activities
  • To permit hassle-free transactions
  • To allow Duty-free machinery and raw materials required for making export products and making goods of International standards of quality
  • Making policies that favour ease of doing business and e-Governance

Foreign Trade Policy 2015-20 had introduced two new schemes: Merchandise exports from India scheme & Service exports from India scheme.

MEIS and SEIS schemes replaced multiple schemes having different conditions for eligibility and usage. Following additions done in these schemes:-

  • Benefits made available to SEZs.
  • Ecommerce of handicrafts, handlooms and books etc.

Introduction of MEIS and SEIS:-

Merchandise Exports from India Scheme (MEIS) & The Service Exports from India Scheme ( SEIS Scheme ) are the two schemes under the Foreign Trade Policy 2015-20 for giving incentives to the goods exporter and service exporter respectively to offset infrastructural inefficiencies and associated costs.

Objective of MEIS and SEIS:-

The MEIS & SEIS both the schemes provide an incentive in the form of duty credit scrip to the exporters having the aim to make India goods competitive in the global markets & to encourage export of notified Services from India respectively.

The MEIS is the new scheme which replaced 5 similar schemes which were available in earlier policy and SEIS replaced the Served from India Scheme (SFIS).

Rate of reward under MEIS and SEIS:-

Under the MEIS benefits is determined as a percentage of the FOB value of exports the rate of reward is specified in Appendix 3B of FTP which is categorized according to ITC(HS) code whereas in SEIS rewards are calculated on the basis of Net Foreign Exchange Earned and the services which are eligible for the benefits are given in Appendix 3E.

Under MEIS rate of rewards varies from product to product and are in the range of 2% to 5% for most items, In SEIS rate of rewards are in the range of 5% – 7% depending on the notified type of the services.

How can we use duty credit scrip obtained under MEIS & SEIS?

  • Payment of Basic customs duty and additional customs duty.
  • Payment of Central excise duties on domestic procurement of inputs.

Under MEIS the documents required for obtaining a license are:-

  • Shipping bills
  • Electronic bank realisation certificate (eBRC).
  • Registration Cum Membership Certificate (RCMC).

Under SEIS the documents required for obtaining a license are:-

  • Invoice raised in the FY
  • FIRC against invoice
  • IEC copy
  • Valid RCMC copy
  • Justification & Brief writeup of services provided.

Validity Period of the Scrip/License:-

License is valid for the 24 months from the date of the issue of the license for both MEIS & SEIS Scheme.

Last Date for online application for both the scheme:-

  • The application shall be filed within a period of 12 months from date of Let Export Order (LEO) without Late Cut under MEIS.
  • Under SEIS application shall be filed within a period of 12 months from the end of the relevant financial year of the claim period.

Eligibility criteria under SEIS Scheme:-    

  • Service Provider Should have active IEC (Import Export Code).
  • Service Exporter should have minimum net free foreign exchange earnings of US $15,000 in the year of rendering the services for the Pvt. Ltd. Partnership or LLP company.
  • And for individual or proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000.

Eligibility criteria under MEIS:-

On the shipping bill, copy scheme reward should be Yes and e-BRC (bank realisation certificate) should be generated on DGFT site.

  The Rebate of State & Central Taxes and Levies (RoSCTL) Scheme:-

  • Exporters of readymade garments and Made-ups can avail the benefits under RoSCTL scheme in the form of transferable or sellable Duty Credit Scrip depending on the FOB value of exports in the Foreign exchange from 07/03/2019 to 31/03/2020.

For More information, please visit – https://www.boostcredit101.com/tradelines/

The application has to be done on DGFT site. The license obtained under the SEIS scheme shall be valid for 24 months for utilisation at the customs.

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