KPMG FLASH NEWS

KPMG in India
2 April 2015

Highlights of Foreign Trade Policy 2015-20

 Scrip and goods imported/locally procured

Background against the scrip are freely transferable

 Benefit of MEIS also extended to SEZ units

The long awaited Foreign Trade Policy 2015-20 (‘the except for Free Trade Warehousing Zone units
FTP’ or ‘the policy’) has been announced by the
government.  The exports made up to 31 March 2015 and
scrips applied for or issued on the basis of these
The highlights of the policy are summarised below. exports will be governed by the provisions of the
earlier relevant schemes.
Title come here
Merchandise Export from India Scheme Service Exports from India Scheme (SEIS)
Title
(MEIS)come here

Title come here  SEIS replaces the Served from India Scheme
 Existing multiple schemes like Focus Product (SFIS) and extends the benefit of duty exempted
Scheme, Focus Market Scheme, Market Linked scrip to service providers located in India and
Title come
Focus here
Product Scheme, etc. have been consolidated providing notified services in a specified mode
and replaced by a single MEIS outside India

 Notified goods like; dairy products, vegetables,  Service provider with minimum net foreign
confectionary, pharmaceutical products, capital exchange earnings of USD15,000 in the
goods, etc. exported on and after 1 April 2015 to preceding financial year (earlier INR10 lakh of
notified markets/countries are provided a benefit foreign exchange earnings) is eligible for benefit
ranging from 2 per cent to 5 per cent of FOB value of under the scheme
exports or FOB value realised, whichever is less
 Service providers will be issued SEIS scrip of
5 per cent or 3 per cent (depending on the
 Benefit also extended to export of goods through
category of service) of net foreign exchange
courier or foreign post office using e-commerce up to
earned. Earlier SFIS scheme provided scrip of
FOB value of INR25,000
10 per cent of net foreign exchange earned
 MEIS scrip can be inter alia used for payment of
 Benefit of SEIS is extended to SEZ units.
customs duty, excise duty and service tax
However, it appears by oversight the export by
 Additional customs duty, excise duty and service tax SEZ units continues to be part of ineligible
paid through cash or debit to scrip available as exports for the scheme. We understand that the
CENVAT credit or drawback. Basic customs duty intention of the government is to extend the
paid in cash or through debit in scrip eligible for benefit to SEZ units
drawback

© 2015 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  Benefits of SEIS are similar to MEIS (including  Unit Approval Committee/Inter Ministerial
availment of CENVAT credit and drawback) and Standing Committee (IMSC) to consider sharing
these scrips and the goods imported or locally of infrastructural facilities among EOUs/ STPs on
procured are freely transferable a case to case basis and on recommendation to
BoA. However, sharing of facilities between
 The exports made up to 31 March 2015 and scrips EOUs/STPs and SEZs shall not be permitted
applied for during the same period will be governed
by the provisions of SFIS.  Subject to approval by IMSC, STP unit can set up
for undertaking re-conditioning, repair, remaking,
testing, etc. for exports subject to conditions
Export Promotion Capital Goods Scheme  Simplified procedure to be provided to fast track
(EPCG) debonding/exit of the STP units who have not
availed duty exemption benefit

 In case of import of capital goods under EPCG  Facility to set up a warehouse outside the
scheme, export obligation of six times of duty saved premises and near a port of export permitted,
is required to be met. Reduced export obligation subject to conditions
(25 per cent less than normal export obligation) in
case of local sourcing of capital goods has now been  EOUs having a physical export turnover of INR10
prescribed crore or more allowed fast track clearances on
their procurement.
 Exporter registered with the excise authorities has
now the option to furnish an installation certificate
confirming receipt of capital goods from a Chartered
Engineer subject to conditions Miscellaneous

 Installation certificate is normally required to be

submitted within six months of the completion of the  Exemption under Duty Free Import Authorisation
imports. Licensing authority can now extend the Scheme now restricted to basic customs duty as
period of furnishing the installation certificate by against complete exemption from customs duty
another 12 months earlier. However, additional customs duty will be
available as CENVAT credit subject to conditions
 Specified guidelines for maintenance of average
export obligation and specified export obligation  Eligibility criteria for grant of ‘status’ to an
notified in case of exit of an EOU or SEZ unit under exporter, revised. Deemed export will now be
the EPCG scheme. considered for determining ‘export performance’.
Additional facilitation in terms of self-certification,
export promotion, etc. extended

Export Oriented Unit (EOU)/Software  Export obligation period for exports of defence,
Technology Park (STP) scheme military store, aerospace, and SCOMET items,
etc. under Advance Authorisation extended to 24
months (earlier 18 months)
 Extension of one year in achieving net foreign
exchange earnings to be granted by Board of  Recovery and penal proceedings in case of mis-
Approval (BoA) on a case to case basis under declaration/mis-representation of facts to claim
specific circumstances deemed export benefits notified

 Letter of Permission will now have initial validity of  Trade facilitation measures to reduce transaction
two years (earlier three years) for implementation of costs and document handling introduced in terms
project and commencement of production. Further, of on-line application filing, online inter-ministerial
extension of one year (earlier three years) on a case consultation, physical record maintenance,
to case basis allowed submission of multiple documents, etc.

© 2015 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 Our comments

In this FTP, focus has been on simplicity and stability.

Further, the policy on one hand seeks to realign multiple
schemes with the objective of reducing the complexities,
on the other hand it wants to promote increased use of
technology to reduce the transaction cost and manual
compliances.

By extending benefits under EPCG on domestic

procurements and offering them to more products under
MEIS, the policy seeks to further incentivise the exports.

While the measures proposed in the policy are not

radical, they appear to be in the right direction.

Source: Foreign Trade Policy 2015-20 notified on 1 April

2015

© 2015 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved.