News Bulletin >> April 2006

ANNUAL SUPPLEMENT 2006 - FOREIGN TRADE POLICY (2004-09) irT Nhe cir

Highlights of Annual Supplement to FTP

• Commerce & Industry Minister on 7th April, 2006 announced trade initiatives in form of Annual Supplement (AS) to put country's exports on a trajectory of quantum growth and to create large number of jobs.
• Exports emerge as major employer: Annual Supplement focuses on employment generation in the rural and semi-urban areas with thrust on traditional sectors.
• For promoting export of rural and agro products, the Vishesh Krishi Upaj Yojana is expanded.

Exports and Employment

• Exports emerge as a major source of job creation in Indian economy.
• 1.4 million incremental jobs created through exports in 2004-05.
• 8 million additional jobs projected through exports by 2009.
• Textiles, garments, leather goods, gems & jewellery, horticultural exports of fruits & flowers, dairy products, processed foods, pharmaceuticals, and automobiles identified as high growth sectors for employment.

Merchandise Exports

• Merchandise Exports cross 100 billion dollars in 2005-06.
• 25% growth rate registered in 2005-06.
• Merchandise exports jumped by 60% from 63 billion dollars to 101 bn dollars within two years.
• Project goods export grew at 173%.

Product _ Market Focus

• To focus not only on neutralising duties and levies but also provide additional stimulus to export of products having large employment potential and for greater penetration in strategic markets.

Product Focus

• It proposes additional duty credit facility @ 2.5% of FOB value of export turnover of notified products such as value added fish and leather products, stationery, fireworks, sports goods, handloom products bearing handloom marks and handicraft items.
• The scheme is to offset inherent infrastructure bottlenecks in rural and semi-urban areas.

Market Focus

• Duty credit facility @ 2.5% of the FOB value of export of all products to notified countries.
• This scheme aims at offsetting the high freight cost and other disabilities faced in accessing select international markets.

Expanding Vishesh Krishi Upaj Yojana

• Duty free scrip @ 5% of FOB value of exports under VKUY to incentivise the export of Gram Udyog products.
• The scheme is renamed as Vishesh Krishi and Gram Udyog Yojana.
• Additional benefit on use of domestic farm produce in Agricultural exports.
• This will promote in indigenous procurement of inputs for agricultural exports and help the farming community.

India as a Gem & Jewellery hub

• Measures for facilitating export of value added products catering to changing needs of market, facilita-ting easier product movement across the borders and allowing import of precious metal scrap for refining.
• Export of jewellery on consignment basis allowed.
• Re-import of rejected jewellery allowed.
• Import of precious metal scrap/used jewellery for melting and re-export permitted.
• Exporters will be allowed to export stones for treatment abroad and subsequent re-import without payment of customs duty.

India as an Automotive Hub

• Provision to allow import of new vehicles by auto component manufacturers for R&D purposes without homologation is being introduced.
• To further accelerate India's emergence as an important center for sourcing auto components.

India as a refuelling stop

• Supply of stores (Food, beverages etc.) and refuelling of long distance flights has emerged as a big business opportunity.
• Such export of supplies brought on equal footing with other exports for claiming duty neutralisation benefits under various export promotion schemes.
• This will enable India to offer competitive fuel prices and attract mid route stops for international flights.

Benefit of un-rebated Service Tax and FBT

• Incidence of un-rebated service tax and Fringe Benefit Tax(FBT) on exports will be factored in the various duty neutralisation and remission schemes.
• Details are being worked out and would be announced separately being announced.

Trade facilitation measures

• Interest for delayed payment of refunds would be made by the government to ensure accountability and cut delays
• Fast track clearance procedure for units in EOUs. Now units having physical turnover of Rs15 crore can avail of the facility of receiving goods and warehousing on self-declaration basis
• Advance licencing liberalised where norms are not fixed
• Pre-shipment certificates in lieu of test report for faster clearances