Unraveling India's growth potential through a series of webinars featuring central & state ministers
Foreign trade in India is promoted and facilitated by the Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry (MoCI). The DGFT issues the authorisation to exporters and monitors their corresponding obligations through a network of 38 regional offices. The DGFT also implements the Foreign Trade Policy of India.
Foreign Trade Policy (FTP) is the prime policy that lays down simple and transparent procedures which are easy to comply with and administer for efficient management of foreign trade in India. The Policy aims at enhancing the country’s trade for economic growth and employment generation. The Customs Tariff Act and the Central Excise Tariff Act are the other two important Acts which lay down how the Customs and Excise duties shall be levied on trade, respectively.
India's overall exports in September 2020 were $27.58 bn, as compared to $26.02 bn in September 2019, exhibiting a positive growth of 5.99%.
Major commodities/commodity groups which have recorded positive growth during September 2020 vis-à-vis September 2019 are Other cereals (337.22%), Iron Ore (109.65%), Rice (93.86%), Oil Meals (47.52%), Carpet (42.89%), Ceramic products & glassware (36.17%), Oil seeds (35.69%), Cereal preparations & miscellaneous processed items (33.57%), Drugs & pharmaceuticals (24.38%), Handicrafts excl. handmade carpet (21.82%), Meat, dairy & poultry products (19.97%), Jute mfg. including floor covering (18.64%), Cotton yarn/fabs./made-ups, handloom products etc. (15.39%), Spices (11.44%), Tobacco (11.09%) and RMG of all textiles (10.22%).
About 95% of India’s merchandise trade (by volume) is handled by its maritime transport. Jawaharlal Nehru Port Trust (JNPT) in Maharashtra is India’s largest port, handling 55% of container cargo across all major ports. Currently, the country has a presence of 290 inland container depots and freight stations for trade (includes those under implementation).
To reduce the logistics cost for cargo and promote port-led industrial development, the Government of India launched the Sagarmala Programme under which 6 new major ports and 14 coastal economic zones have been identified for development. The Programme's four main pillars are port-modernization, better port-connectivity, port-led industrialization and coastal community development.
With a targeted construction of 40 km of national highway every day during 2018-19, the world’s 2nd largest road network in India is aiming to reach the pinnacle soon. For efficient movement of goods and better district-level connectivity, the project of Bharatmala Pariyojana was launched by the Government of India in 2015. The Project aims to develop 50 new industrial corridors, add 34,800 km of road network in its Phase-I, including 10,000 km of the residual road network under NHDP and connect 550 districts through four-lane national highways.
Trade through railways in India is also prominent, with the Indian Railways transporting over 1.2 bn tons of freight in 2017-18. There are 6 high-capacity, high-speed freight corridors coming up in the country to support the Indian Railways to manage 40% modal freight share of the economy.
For an individual/ business unit to avail incentives under the Foreign Trade Policy, it must first register itself as an EXIM unit. Following are the broad steps to register as an EXIM unit:
Set up a sole proprietary concern/ partnership firm/ company.
Open a current account with the bank authorized in foreign exchange.
Get your risks covered from Export Credit Guarantee Corporation (ECGC) through an appropriate insurance policy.
As per the Foreign Trade Policy 2015-20 issued by the Ministry of Commerce in December 2017, following are the mandatory documents needed for an EXIM unit to export or import from India:
Note: For export or import of specific goods or category of goods, which are subject to any restriction/policy condition or require NOC/ product-specific compliances under any statute, the regulatory authority concerned may notify additional documents for purposes of export or import.
Buyers and Sellers have set responsibilities for the delivery of goods under the sales contract, called Incoterms.
For more details, the FTP 2015-20 document can be accessed here.
Allows duty-free import of raw materials for export production
Allows duty-free import of machinery & equipment for export production & services
Importers have to pay IGST and take input tax credit as applicable under the GST rules. The capital goods imported can also be used for domestic production.
Importer under the Scheme has an Export Obligation (EO) equivalent to 6 times of duties, cess and taxes saved on capital goods, to be fulfilled in 6 years from the date of issue.
Duty Credit Scrips are provided against exports that can be used to pay duties
Duty Credit Scrips are provided against exports that can be used to pay Customs or Excise Duties. However, the scrips cannot be used to pay for any type of GST.
TED (Terminal Excise Duty) exemptions/ refund for DTA (Domestic Tariff Area)