Exports from india scheme

FOREIGN TRADE POLICY 2015-20SCHEMES

CONTENTS • EXPORTS FROM INDIA SCHEME • DUTY EXEMPTION/ REMMISION SCHEMES • SCHEMES FOR EXPORTERS OF GEMS & JEWELLERIES • EPCG SCHEME • DEEMED EXPORTS

EXPORTS FROM INDIA SCHEME

OBJECTIVE • Main objectective is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved. • To provide exporters a level playing field.

NATURE OF REWARDS • Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. • The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable.

MERCHANDISE EXPORTS FROM INDIA SCHEME, (MEIS)

INTRODUCTION • In the new Foreign Trade Policy-2015-2020, with effect from 1.4.2015,Merchandise Exports from India Scheme (in short, also known as MEIS) has beenannounced by the Government. It not only replaces five similar incentive schemesavailable under the Foreign Trade Policy 2009-2014, but it rationalize the incentivesunder the erstwhile schemes, removes various kind of restrictions and significantlyenlarges the scope of the earlier schemes. Unlike earlier Schemes, this scheme hasbeen made applicable to exports made by SEZ units.

SCHEMES REPLACED BY MEIS (i) Focus Product Scheme (FPS), (ii) Market Linked Focus Product Scheme (MLFPS), (iii) Focus Market Scheme (FMS), (iv) Agri. Infrastructure Incentive Scrip (AIIS), (v) Vishesh Krishi Gramin Upaj Yojana (VKGUY).

OBJECTIVES OF SCHEME • Objective of Merchandise Exports from India Scheme (MEIS) is to offsetinfrastructural inefficiencies and associated costs involved in export ofgoods/products, which are produced /manufactured in India, especially thosehaving high export intensity, employment potential and thereby enhancing India’sexport competitiveness.

SALIENT FEATURES OF THE SCHEME • Grants rewards in the form of Duty Credit Scrip to the exporter on export ofnotified goods, which have been produced/ manufactured in India. • Rewards for export of notified goods to notified markets payable as percentage ofrealized FOB value (in free foreign exchange). • Exports of specified goods through courier or foreign post office using ecommerceof FOB value upto Rs.25000 per consignment entitled for rewardsunder the scheme. In case of value of consignment being more than Rs.25000/-,benefit is limited on the value of Rs. 25000/- only. • Scrip itself and Goods imported/ domestically procured against the scrip are freelytransferable.

Certain specified categories of export or export goods are not eligible for benefitunder the Scheme. • SEZ Units and EOU/STP/BTP/EHTP units not availing direct tax exemption are also eligible for benefit under the Scheme. • Scrip can be used for payment of (i) Customs Duties for import of inputs orgoods, except items listed in Appendix 3A; (ii) Payment of excise duties ondomestic procurement of inputs or goods, including capital goods and (iii)Payment of service tax on procurement of services (iv) Payment of Customs Dutyand fee as per paragraph 3.18 of this Policy.

No conditionality attached to the Scrips issued under the Scheme. • Different rates have been notified for different destination countries and differentcommodities. • Destination countries divided into three groups- (i) Traditional Market, (ii)emerging & focus market; and (iii) other markets.

Export Catagories/Sectors not eligible for Duty Credit Scrips Under MEIS (REF. 3.06 in FTP) (i) EOUs / EHTPs / BTPs/ STPs who are availing direct tax benefits /exemption. (ii) Supplies made from DTA units to SEZ units (iii) Export of imported goods covered under paragraph 2.46 of FTP; (iv) Exports through trans-shipment, meaning thereby exports that are originatingin third country but trans-shipped through India; (v) Deemed Exports;

(vi) SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units; (vii) Items, which are restricted or prohibited for export under Schedule-2 ofExport Policy in ITC (HS), unless specifically notified in Appendix 3B. (viii) Service Export. (ix) Red sanders and beach sand. (x) Export products which are subject to Minimum export price or export duty.

(xi) Diamond Gold, Silver, Platinum, other precious metal in any form includingplain and studded jewellery and other precious and semi-precious stones. (xii) Ores and concentrates of all types and in all formations. (xiii) Cereals of all types. (xiv) Sugar of all types and all forms. (xv) Crude/Petroleum oil and crude/primary and base products of all types and allformulations.

(xvi) Export of milk and milk products. (xvii) Export of Meat and Meat Products. (xviii) Products wherein precious metal/diamond are used or Articles which arestudded with precious stones. (xix) Exports made by units in FTWZ.

List of Items not allowed for Import/or Scrips not be used Forpayment of Customs duty on the following items. (1) Garlic, Peas and all other Vegetables with a Duty of more than 30% underChapter 7 of ITC (HS) Classification of Export and Import items. (2) Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears and allother fruitswith a Duty of more than 30% under Chapter 8 of ITC (HS)Classification of Export and Import items. (3) All Spices with a Duty of more than 30% under Chapter 9 of ITC (HS)Classification of Export and Import items (except Cloves) (4) Tea, Coffee and Pepper as per Chapter 9 of ITC (HS) Classification of Exportand Import items.

(5) All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export andImport items. (6) Natural Rubber as per Chapter 40 of ITC (HS) Classification of Export andImport items. (7) Capital Goods (i) General-purpose agricultural tractors above 25 HP and upto 75 HP. (ii) Stationary Diesel Engines. (iii) Irrigation pumps. (iv) Threshers for cereals. (v) Combine harvesters suitable only for wheat and paddy crops. (vi) Animal driven implements.

NOTIFIED COUNTRY GROUPS UNDER MEIS The Country Groups for the purpose of notified markets are as under:- Category A: Traditional Markets (30) - European Union (28), USA, Canada. Category B: Emerging & Focus Markets (139), Africa (55), Latin America andMexico (45), CIS countries (12), Turkey and West Asian countries (13), ASEANcountries (10), Japan, South Korea, China, Taiwan, Category C: Other Markets (70).

Commodities exported by Post /Courier through E-commerceeligible for reward under the Scheme The following six commodities have been notified for being eligible forreward under the Scheme:- (1) Handicraft Items/Products; (2) Handloom Products; (3) Books/Periodicals; (4) Leather Footwear; (5) Toys; and (6) Customised Fashion Garments. The Customized Fashion Garments are garments that are madeon specificrequest/order of customer and accordingly tailored/manufactured.

PRODUCTS SUPPORTED UNDER MEIS & LEVEL OF SUPPORT • Higher rewards have been granted for thefollowing category ofproducts: • Agricultural and Village industry products, presently covered under VKGUY. • Value added and packaged products. • Eco-friendly and green products that create wealth out of waste from agriculturaland other waste products that generate additional income for the farmers, whileimproving the environment.

Labour intensive Products with large employment potential and Products withlarge number of producers and /or exporters. • Industrial Products from potential winning sectors. • Hi-tech products with high export earning potential.

2. Markets Supported • Most Agricultural products supported across the Globe. • Industrial and other products supported in Traditional and/or Emerging marketsonly.

3.High potential products not supported earlier: • Support to 852 Tariff lines that fit in the product criteria but not providedsupport in the earlier FTP. Includes lines from Fruits, Vegetables, Dairy products,Oils meals,Ayush & Herbal Products, Paper, Paper Board Products.

4. Global support has been granted to the following category: • Fruits, Flowers, vegetables • Tea Coffee, Spices • Cereals preparation, shellac, Essential oils • Processed foods, • Eco Friendly products that add value to waste • Marine Products • Handloom, Coir, Jute, products and Technical Textiles, Carpets Handmade. • Other Textile and Readymade garments have been supported for European Union, • USA, Canada and Japan. • Handicraft, Sports Goods • Furniture, wood articles

5. Support to major markets have been given to the following productcategories • Pharmaceuticals, Herbals, Surgicals • Industrial Machinery, IC Engine, Machine tools, Parts, Auto Components/Parts • Hand Tools, Pumps of All Types • Automobiles, Two wheelers, Bicycles, Ships, Planes. • Chemicals, Plastics • Rubber, Ceramic and Glass • Leather garments, saddlery items, footwear • Steel furniture, Prefabs, Lighters • Wood , Paper, Stationary • iron, steel, and base metals, products

6. Other sectors supported under MEIS • 352 Defence related Product with export of US$ 17.7B consisting of CoreProducts (20), • Dual Use products (60), General Purpose products (272). • 283 Pharmaceutical products of Bulk Drugs & Drug Intermediates, Drug • Formulations Biologicals, Herbal, Surgicals, and Vaccines. • 96 lines of Environment related Goods, Machinery, and Equipments. • 49 lines where mandatory BIS standards are prescribed. • 7 lines of Technical Textiles.

7.Participation in global value chain of the items falling under thescheme: • 1725 lines of Intermediate Goods - These goods become inputs in themanufacturing of other countries and will strengthen backward manufacturinglinkages, which is vital for India’s participation in Global Value Chains. • 1109 lines of Capital Goods sector- will also strengthen Manufacturing Base inIndia. • 1730 lines of Consumer Goods sector- We hope a quantum jump in export fromthis sector with strengthening of Make in India Brand in near future.

8. Technology based analysis: • 572 lines-Low skill Technology-intensive manufacturing. • 1010 lines-Medium skill Technology-intensive manufacturing. • 1309 lines-High Skill Technology-intensive manufacturing.

9.Women Centric Products supported under MEIS (a) Women workers constitute 52% of plantation workers-203 lines of Tea, Coffee, Spices, Cashew.

(b) 69% of the aggregate female employment is concentrated in thefollowing sectors:- (i) Manufacture of other food products -Jelly Confectionery, tomatoketchup, cooked stuffed pasta, pawa, mudi and the like, gingerbread ,papad, pastries and cakes. (ii) Manufacture of wearing apparel-396 lines of Readymade Garments

(c) Sectors that have a significant proportion of female employment(more than 25%):- (i) Agricultural and animal husbandry service activities, except veterinaryactivities– 263 lines of basic Agriculture products. (ii) Manufacture of footwear – 28 Footwear and Leather products. (iii) Consumer Electronics and Electronic Components, watches andclocks -483lines.

SERVICE EXPORT FROM INDIA SCHEME, (SEIS)

INTRODUCTION • In the new Foreign Trade Policy-2015-2020, with effect from 1.4.2015, ServiceExports from India Scheme (in short, also known as SEIS) has been announced by theGovernment. It not only replaces Served from India scheme (SFIS) available under the ForeignTrade Policy 20109-2014, but it rationalize the incentives under the erstwhile schemes,removes various kind of restrictions of use of scrip issued under the Scheme andsignificantly enlarges the scope of the earlier scheme. Unlike earlier Scheme, this schemehas been made applicable to exports by SEZ units. • SEIS shall apply to ‘Service Providers located in India’ instead of ‘Indian ServiceProviders’. Thus SEIS provides for rewards to all Service providers of notified services,who are providing services from India, regardless of the constitution or profile of theservice provider. The present rates of reward are 3% and 5% of net foreign ExchangeEarning.

OBJECTIVES • Objective of Service Exports from India Scheme (SEIS) is to encourage export ofnotified Services from India. This Scheme has been announced on 01.04.2015 under theNew Foreign Trade Policy- 2015-2020 and has come into effect from 1.4.2015. In otherwords, the rewards under the scheme are admissible on exports of notified servicesrendered on or after 1.4.2015.

SALIENT FEATURES OF THE SCHEME • Apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. • Provides for rewards to all Service providers of notified services, who areproviding exporting services from India, regardless of the constitution or profile ofthe service provider • Rate of reward under SEIS are based on net foreign exchange earned. • Reward issued as duty credit scrip is freely transferable and usable for all types ofgoods and service tax Debits on procurement of services / goods.

Debits are eligible for CENVAT credit or drawback. • Certain specified categories of services are not eligible for benefit under theScheme. • Scrip can be used for payment of (i) Customs Duties for import of inputs orgoods, except items listed in Appendix 3A; (ii) Payment of excise duties ondomestic procurement of inputs or goods, including capital goods and (iii)Payment of service tax on procurement of services (iv) Payment of Customs Dutyand fee as per paragraph 3.18 of this Policy. • The services and rates of rewards notified are applicable for services export madebetween 01.4.2015 to 30.09.2015 only. The list of services/rate is subject to reviewwith effect from 01.10.2015.

ELIGIBILITY CRITERIA FOR REWARD UNDER THE SCHEME (REF 3.08 OF FTP) • Service Providers of notified services, located in India, eligible for reward underSEIS, subject to conditions as may be notified. • Only Services rendered in Mode I: Cross Border Trade i.e. Supply of a ‘service’from India to any other country and Mode-2: Consumption abroadSupply of aservice’ from India to service consumer(s) of any other country only are eligible. • Supply of service through Mode 3 – Commercial Presence- i.e.- Supply of a‘service’ from India through commercial presence in any other country and Mode4- Presence of natural persons i.e. Supply of a ‘service’ from India through thepresence of natural persons in any other country- not eligible for reward under thescheme.

The notified services and rates of rewards are as per Appendix 3D. • Minimum net free foreign exchange earnings criterion prescribed is US$15,000 inpreceding financial year for eligibility under the Scheme. • For Individual Service Providers and sole proprietorship, such minimum net freeforeign exchange earnings criterion isUS$10,000 in preceding financial year. • Payment in Indian Rupees for service charges earned on specified services (listed inAppendix 3E) to be treated as receipt in deemed foreign exchange. • In case of IEC holder being manufacturer of goods as well as service provider,then the foreign exchange earnings and Total expenses / payment / remittances tobe taken into account for service sector only. • To claim reward, Service provider is required to have an active IEC at the time ofrendering such services.

Ineligible categories under SEIS • Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. • Other sources of foreign exchange earnings such as equity or debt participation,donations, receipts of repayment of loans etc. and any other inflow of foreignexchange, unrelated to rendering of service, - not eligible for benefit under theScheme.

Following is not to be considered for calculation of entitlement under the scheme (a) Foreign Exchange remittances: I. Related to Financial Services Sector (i) Raising of all types of foreign currency Loans; (ii) Export proceeds realization of clients; (iii) Issuance of Foreign Equity through ADRs / GDRs or other similarinstruments; (iv) Issuance of foreign currency Bonds; (v) Sale of securities and other financial instruments; (vi) Other receivables not connected with services rendered by financialinstitutions.

II. Earned through contract/regular employment abroad (e.g. labourremittances); • (i) Payments for services received from EEFC Account; • (ii) Foreign exchange turnover by Healthcare Institutions like equityparticipation, donations etc. • (iii) Foreign exchange turnover by Educational Institutions like equityparticipation, donations etc. • (iv) Export turnover relating to services of units operating under SEZ / EOU/ EHTP / STPI / BTP Schemes or supplies of services made to suchunits;

List of items not allowed for import/orScrips not be used for payment of Customs duty on specifiedItems • The Scrips issued under the Scrip is not allowed to be used for payment of duty onimport of the following Commodities: (1) Garlic, Peas and all other Vegetables with a Duty of more than 30% under Chapter7 of ITC (HS) Classification of Export and Import items. (2) Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears and allother fruits with a Duty of more than 30% under Chapter 8 of ITC (HS)Classification of Export and Import items. (3) All Spices with a Duty of more than 30% under Chapter 9 of ITC (HS)Classification of Export and Import items (except Cloves) (4) Tea, Coffee and Pepper as per Chapter 9 of ITC (HS) Classification of Export andImport items.

(5) All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export and Importitems. (6) Natural Rubber as per Chapter 40 of ITC (HS) Classification of Export andImport items. (7) Capital Goods (i) General-purpose agricultural tractors above 25 HP and upto 75 HP. (ii) Stationary Diesel Engines. (iii) Irrigation pumps. (iv) Threshers for cereals. (v) Combine harvesters suitable only for wheat and paddy crops. (vi) Animal driven implements.

COMMON PROVISIONS FOR MEIS & SEIS • Transitional Arrangement • CENVAT/ Drawback • Import under lease financing • Transfer of export performance • Facility of payment of custom duties in case of E.O. defaults and fee through dutycredit scrips. • Risk Management System

Transitional Arrangement • For the goods exported or services rendered upto the dateof notification of this Policy, which were otherwise eligible for issuance of scrips undererstwhile Chapter 3 of the earlier Foreign Trade Policy(ies) and scrip is applied / issued on orafter notification of this Policy against such export of goods or services rendered, the thenprevailing policy and procedure regarding eligibility, entitlement, transferability, usage of scripand any other condition in force at the time of export of goods or rendering of the services,shall be applicable to such scrips.

CENVAT/ Drawback • Additional Customs duty/excise duty/Service Tax paid in cash orthrough debit under Duty Credit scrip shall be adjusted as CENVAT Credit or Duty Drawback asper DoR rules or notifications. Basic Custom duty paid in cash or through debit under DutyCredit scrip shall be adjusted for Duty Drawback as per DoR rules or notifications.

Import under lease financing • Utilization of Duty Credit Scrip shall be permitted forpayment of duty in case of import of capital goods under lease financing in terms of provisionin paragraph 2.34 of FTP.

Transfer of export performance • Transfer of export performance from one IEC holder to another IEC holder shall not bepermitted. Thus, a shipping bill containing name of applicant shall be counted in exportperformance / turnover of applicant only if export proceeds from overseas are realizedin applicant’s bank account and this shall be evidenced from e - BRC / FIRC. • However, MEIS, rewards can be claimed either by the supporting manufacturer (alongwith disclaimer from the company / firm who has realized the foreign exchange directlyfrom overseas) or by the company/ firm who has realized the foreign exchange directlyfrom overseas.

Facility of payment of custom duties in case of E.O. defaults and fee through dutycredit scrips • Duty Credit Scrip can be utilised / debited for payment of Custom Duties in case of EOdefaults for Authorizations issued under Chapters 4 and 5 of this Policy. Suchutilization /usage shall be in respect of those goods which are permitted to beimported under the respective reward schemes. However, penalty / interest shall berequired to be paid in cash. • Duty credit scrips can also be used for payment of composition fee under FTP, forpayment of application fee under FTP, if any and for payment of value shortfall in EOunder para 4.49 of HBP 2015-20.

Exports from india scheme