EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME The scheme allows import of capital goods for pre-production, production and post- production (including CKD/SKD thereof as well as computer software systems) at 5% customs duty subject to an export obligation equivalent to eight times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of licence. However, in respect of EPCG licences with a CIF value of Rs 100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.
Capital goods shall include spares, Jigs, fixtures, dies and moulds. EPCG licence may be also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the licence holder. Second-hand capital goods up to 10 years old may also be imported under the EPCG scheme. Spares for the existing plant and machinery may also be imported under the EPCG scheme subject to an export obligation equivalent to eight times of duty saved to be fulfilled over a period of 8 years reckoned from the date of issuance of licence.
The scheme covers manufacturer xporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers. Import of capital goods shall be subject to actual user condition till the export obligation is completed. The following conditions shall apply to the fulfillment of the export obligation: The export obligation shall be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme.
The export obligation may also be fulfilled by the export of same goods, for which EPCG licence as been obtained, manufactured or produced in different manufacturing units of the licence holder/specified supporting manufacturer (s)/vendor (s). The export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products. Alternatively, export obligation may also be fulfilled by exports of other goods manufactured or service provided by the same firm/company that has the EPCG licence.
However, in such case, the additional export obligation imposed under EPCG scheme shall be over and above the average exports achieved by the unit in receding three years for the substitute products/services. This facility shall only be available to manufacturer exporters/service provider. The export obligation under the scheme shall be, in addition to any other export obligation undertaken by the importer, expect the export obligation for the same product under advance licence, DFRC, DEPB or drawback scheme.
ADVATAGES FOR INDIA FROM THE EMERGING GLOBAL TRENDS Our government spelt out a bold vision to double India’s share in world trade within 5 years and to focus on the generation of additional employment in the process. The current trade figures indicate that India is not only on the right path but approaching tne goal at an accelerated place. IND GLOBAL TRENDS In the fast-changing international trading scenario, outsourcing of manufacturing activities in the skill-intensive sectors has become an essential business strategy for the developed countries.
India with its large skilled workforce, growing domestic market, raw material availability and the emergence of a mature supply base is set to gain enormously from this trend since the Indian advantage goes well beyond the low wage rates. While there is no doubt that knowledge-based industries such as information technology offer India a smooth route to world markets, great potential and opportunities exist in the manufacturing sector also.
FTP STRATEGY IS ON THE RIGHT TRACK When the 5 year Foreign Trade Policy (FTP) was announced on 31 August 2004, the government took cognizance of the fact that a bold and clearly delineated approach was needed to tap such opportunities. The FTP articulated two basic objectives that would enable India to achieve these goals. 1. The first objective was doubling the percentage share of global merchandise trade within 5 years. To achieve this, an average annual growth rate of about 16 percent wa envisaged.
The DGCI & S trade statistics show that the actual growth of the merchandise trade in the very first year of the policy period has been of the order of 24 percent, which has far surpassed the target we set for ourselves. This growth has been unprecedented in India’s economic history and if we can maintain the momentum, the government is confident that India will cross the $ 150 billion milestone substantially earlier than the target date. 2.
The second objective of the FTP was providing thrust to employment generation articularly in semi-urban and rural areas. The FTP announced special focus initiatives in the employment-intensive areas of agriculture, handicrafts, handlooms, gems and Jewellery and leather and footwear sectors. Employment generation has been encouraging not only in these sectors, but in other sectors across the board. A study commissioned by the ministry reveals that exports generated an incremental direct employment of 10 lakh Jobs in the year 2004-2005, over the previous year.
The total employment generated during the year corresponding to export activity valued t 78 billion was 1 crore Jobs – 86 lakh of direct employment and 14 lakh indirect employment opportunities in the logistics, transport and related sectors, The study further reveals that if we achieve our target over the next 4 years, we shall be adding a further 1 crore Jobs: 85 percent of its direct employment and 15 percent indirectly associated jobs.
A POLICY OF PARTNERSHIP The FTP provided a roadmap that could help Indian companies become globally competitive and simultaneously aimed at giving Indian consumers world-Class products and services. Specific sectoral initiatives have helped in creating more Jobs, igher exports and an enhanced level of confidence for Indian Products and services in the global economy. It is the new equation of partnership and cooperation engendered by the FTP last year that has paid the rich dividends we are now encountering.
Business and industry have responded remarkably. The government is committed to resolving all outstanding problems and disputes pertaining to the past policy periods through the grievance redressal committee setup for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputes over ntitlements, grantlng extenslons Tor utlllzatlon 0T llcences. I ne atmospnere 0T partnership between government and business will be enhanced and taken forward.
CHANGING INTERNATIONAL TRADE BY DYNAMICS The dynamics of global trade and the opportunities provided by the multilateral trading platform necessitate a continuous realignment of our international trade strategies and priorities. While India’s international trade will continue to function under the overall framework of the Foreign Trade Policy 2004-09 announced on 31 August 2004, some fine-tuning needs to be done to take into account the changing nternational trade dynamics.
In order to achieve our foreign trade policy objective of becoming a major player in world trade, a comprehensive view needs to be taken for the overall development of the countrys foreign trade. Coherence and consistency among trade and other economic policies of both the union and the state government is important for maximizing the contribution of such policies to development. State government are increasingly required to partner with the union government the process. EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME avallaDle to manuTacturer exporters/servlce prov10er. I ne export ODIlgatlon unaer DFRC, DEPB or drawback scheme.
SERVICE EXPORTS To enable the service providers to upgrade the infrastructures in their associates companies, the goods imported Under the served from India scheme shall be transferable within the group companies and managed hotels subject to actual user condition Similarly there are other departments which are covered under such scheme and some they are gems and Jewellery, package for marine sector and many more DUTY FREE REPLENISHMENT CERTIFICATE As cleared from the name duty wave can be taken from this scheme and in export elated units duty wav e off can be taken which are mentioned as under : Export oriented units Target plus scheme PRODURAL SIMPLIFICATION AND REDUCTION OF TRANSACTION COSTS There multiple application and procedures which have to be fulfill by exporter and importer and thus to simplify these process which will reduce the transaction costs a organization was formed named as Director general of foreign trade and recommendations of the committee are mentioned below : a.
Internal process re- engineering to enable greater dedication and simplification for forms and ocumentation b. Edi linkage of community trade partners like DGFT,customs ,banks, export promotion councils to facilitate web based filling retrieval and verification of the documents c. A fast track mechanism for clearance ,examination, testing, packaging to be setup by all agencies to facilitate export import of perishable cargo d. Laying down time limits for giving approvals/. sanction for different export import activities by different agencies to ensure a transparent system of working in government department and ensure continues improvement in quality of services