SEIS scheme is a cash reward to the Service Exporters who are exporting Notified Services from India.The reward is in the form of Transferable Scrips @ 3% to 7% on the Net Foreign Exchange earned by the Service Provider in a year. This Transferable SEIS scrips can be immediately monetised i.e encashed.This reward is for the services and rates as listed in the Annexure to APP3D.
It is to be noted that the reward is for the services rendered in the manner as per para 9.51(i) and para 9.51 (ii) of the FTP 2015-2020 i.e.
It is also to be noted that the rewards are not available for the following: Para 9.51 (iii) Supply of a service from India through commercial presence in any other country. (Mode 3- Commercial Presence). Para 9.51 (iv) Supply of a service from India through the presence of Natural persons in any other country (Mode – Presence of Natural Persons).
The reward is in the form of freely transferable Duty Credit Scrips which can be easily monetised. The Duty Credit Scrips & goods imported / domestically procured against them are freely transferable.It is important to note that SEIS is allowed for Foreign Brands. SEIS is also allowed for Services exported from SEZ to other countries.SEIS scheme is applicable for service exports made from 01.04.2015.
To claim the Service Exports from India Scheme the Service provider is required to have an active IEC at the time of rendering such services. The service provider should have minimum net free foreign exchange earnings of US$15,000 in order to be eligible for Duty Credit Scrip. For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000.Please note that the Payment in Indian Rupees for service charges earned on specifiedservices, shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India. The list of such services is indicated in Appendix 3E.
Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be Ineligible.Following shall not be taken into account for calculation of entitlement under theSEIS scheme.
a. Foreign Exchange remittances:
1. Related to Financial Services Sector
I. Raising of all types of foreign currency Loans;
II. Export proceeds realization of clients;
Ill. 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 financial institutions; and
II. Earned through contract/regular employment abroad (e.g. labour remittances);
b. Payments for services received from EEFC Account;
c. Foreign exchange turnover by Healthcare Institutions like equity participation, donations, etc.
d. Foreign exchange turnover by Educational Institutions like equity participation,donations etc.
e. Export turnover relating to services of units operating under EOU / EHTP / STPI / BTPSchemes or supplies of services made to such units
f. Clubbing of turnover of services rendered by EOU /EHTP / STPI / BTP units withturnover of DTA Service Providers;
g. Foreign Exchange earnings for services provided by Airlines, Shipping lines serviceprovidersplying from any foreign country X to any foreign country Y routes nottouching India at all.
h. Service providers in Telecom Sector
The export of Notified Merchandise is eligible for rewards subject to conditions. The reward is in the form of Transferable Scrips @ 2% to 7%on realised FOB value of exports in free foreign exchange or on FOB value of exports as given in theShipping Bills in freely convertible foreign currencies, whichever is less, unless otherwise specified. This reward is in addition to EPCG and Advance Authorisation benefits.
This reward is for Exports of notified goods/products with ITC[HS] code to notified marketsas listed in Appendix 3B. Appendix 3B also lists the rates of rewards on various notified products.
The reward under MEIS scheme is in the form of freely transferable Duty Credit Scrips which can be easily monetised. The Duty Credit Scrips & goods imported / domestically procured against them are freely transferable.
The following exports categories shall be ineligible for MEIS:
(i) Supplies made from DTA units to SEZ units
(ii) Export of imported goods covered under paragraph 2.46 of FTP;
(iii) Exports through trans-shipment, meaning thereby exports that areoriginating in third country but trans-shipped through India;
(iv) Deemed Exports;
(v) SEZ/ EOU /EHTP/ BTP /FTWZ products exported through DTA units;
(vi) Export products which are subject to Minimum export price orexport duty.
(vii) Exports made by units in FTWZ.
EPCG (Export Promotion Capital Goods) scheme was first introduced in 1990 under the Import Export Policy 1990-93. It is almost 30 years now. The scheme is the most tried and tested scheme for promotion of Exports. This scheme led to the growth of exports as the custom duties were really very high during that period. It helped the exporters in technological upgradation as well as reducing the initial cost of capital goods.This scheme has primarily helped exporters to become more competitive as it reduces the initial cost on capital goods. The introductory remarks to Import and Export Policy 1990-93 were “for sometime past there had been a persistent demand from the trade and industry to introduce a scheme whereby capital goods could be imported at Zero Duty for strengthening the export production base, accompanied by suitable export obligation. While it has not been possible at this stage to agree to demand for duty free import of capital goods for export production, Government has decided to allow such import a concessional rate of duty, subject to suitable export obligation being accepted by the exporter. This represents a major step forward towards making our export internationally competitive.”
In terms of above declarations, provisions were made vide para 197 of Policy 1990-93 which states that “with a view to reduce the incidence of high capital cost on export prices and thereby making export competitive in the international market, import of new capital goods upto a maximum CIF value of Rs. 10 crores will be permitted at concessional rate of customs duty of 25% of CIF value of capital goods imported. The above facility will be available to registered Manufacturer exporters, who have been regularly exporting for a period of not less than three years. The applicant will have to take an Export obligation equivalent to three times the value of the capital goods permitted for import and the obligation will have to be fulfilled within a period of 4years from the date of import of capital goods.
The EPCG scheme was introduced when general rate of customs duty on import of capital goods was very high. As customs duty on capital goods was cut, DGFT formulated new schemes from time to time under EPCG and one such scheme was for import of capital goods at 15% duty with E.O. of 4 times to be fulfilled in 5 years announced in 1992 and this duty was further lowered to 10% in 1997, 5% & in 2000than Zero Duty EPCG for few sectors and 3% Duty EPCG for all sectors. From April 2013, the government has merged Zero Duty EPCG and 3% EPCG Scheme into one scheme which is now known as Zero Duty EPCG Scheme covering all sectors.
New Capital Goods can be imported @ Zero Customs Duty under EPCG scheme.
The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.EPCG Scheme allows import / indigenous procurement of capital goods (except those specified in negative list) for pre-production, production and post-production at zero customs duty. Import of items which are restricted for import shall be permitted under EPCG Scheme only after approval from Exim Facilitation Committee (EFC) at DGFT Headquarters. If the goods proposed to be exported under EPCG authorisation are restricted for export, the EPCG authorisation shall be issued only after approval for issuance of export authorisation from Exim Facilitation Committee at DGFT Headquarters.
Import under EPCG Scheme shall be subject to an Export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.
EPCG shall be valid for import for 24 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted.
Capital goods for the purpose of the EPCG scheme in CKD/SKD condition shall include: Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological up-gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector. Computer systems and software which are a part of the Capital Goods being imported; Spares, moulds, dies, jigs, fixtures, tools & refractories; and Catalysts for initial charge plus one subsequent charge.
Imported capital goods shall be subject to Actual User condition till export obligation is completed and Export Obligation Discharge Certificate (EODC) is granted.
In case of direct imports, EO shall be reckoned with reference to actual duty saved amount. In case of domestic sourcing, EO shall be reckoned with reference to notional Customs duties saved on FOR value.
(a) EO shall be fulfilled by the authorisation holder through export of goods which are manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted.
(b) EO under the scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any; except for certain categories. Such average would be the arithmetic mean of export performance in the preceding three licensing years for same and similar products.
(c) In case of indigenous sourcing of Capital Goods, specific EO shall be 25% less than the EO stipulated.
(d) Shipments under Advance Authorisation, DFIA, Drawback scheme or reward schemes under Chapter 3 of FTP; would also count for fulfilment of EO under EPCG Scheme.
(e) Export shall be physical export. However, supplies as specified in paragraph 7.02 (a), (b), (e), (f) & (h) of FTP shall also be counted towards fulfilment of export obligation, along with usual benefits.
(f) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.
(g) Royalty payments received by the Authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.
In cases where Authorisation holder has fulfilled 75% or more of specific export obligation and 100% of Average Export Obligation till date, if any, in half or less than half the original Export obligation period specified, remaining export obligation shall be condoned.
AEO is a trade facilitation scheme for ease of doing business in light of international development holder of this certificate is entitled for privilege, benefits, exemption and relaxation on account of import and export. This certificate is issued for particular period after that it has to be renewed.
There will be three tiers of certification i.e. AEO-T1, AEO-T2 and AEO-T3. To begin with, the application for Tier 1 would be the appropriate. Normally for obtaining status under AEO T2, physical verification of the premise(s)/place(s) by the AEO program manager is compulsory and only after physical verification of requirements specified in the application such as legal compliance, financial solvency, safety and security, the status of AEO T2 would be given.
Units undertaking to export their entire production of goods andservices(except permissible sales in DTA), may be set up under theExport Oriented Unit (EOU) Scheme, Electronics HardwareTechnology Park (EHTP) Scheme, Software Technology Park(STP) Scheme or Bio-Technology Park (BTP) Scheme for manufacture ofgoods, including repair, re-making, reconditioning, re-engineering,rendering of services, development of software, agriculture includingagro-processing, aquaculture, animal husbandry, bio-technology,floriculture, horticulture, pisciculture, viticulture, poultry andsericulture. Trading units are not covered under these schemes. Only projects having a minimum investment of Rs.1 Crore in plant & machinery shall be considered for establishment as EOUs. However, this shall not apply to existing units, units in EHTP / STP/ BTP, and EOUs in Handicrafts /Agriculture / Floriculture / Aquaculture / Animal Husbandry /Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BOA may allow establishment of EOUs with a lower investment criteria.
To promote exports, enhance foreignexchange earnings, attract investment for export production andemployment generation.
Second hand capital goods, without any age limit, may also be importedwith or without payment of duty/ taxes as provided.
EOU / EHTP / STP / BTP unit shall be a positive net foreign exchangeearner. In addition, sector specific provision of Appendix 6 B of Appendices& ANFs, where a higher value addition and other conditions are given, shallbe required to be followed. NFE Earnings shall be calculated cumulativelyin blocks of five years, starting from commencement of production.
Whenever a unit is unable to achieve NFE due to prohibition / restrictionimposed on export of any product mentioned in LoP, the five year blockperiod for calculation of NFE earnings may be suitably extended by BoA.
(i) The unit has turnover of Rs. 5 crore or above.
(ii) The unit is in existence for at least three years.
(iii) The Unit:
has achieved positive NFE / export obligation whereverApplicable.
has not been issued a show cause notice or a confirmeddemand, during the preceding 3 years, on groundsother than procedural violations, under the penalprovision of the Customs Act, the Central Excise Act, theForeign Trade (Development & Regulation) Act, theForeign Exchange Management Act, the Finance Act,1994 covering Service Tax or any allied Acts or the rulesmade thereunder, on account of fraud / collusion / wilfulmis-statement / suppression of facts or contravention ofany of the provisions thereof.
With approval of DC, an EOU may opt out of scheme. Such exit shallbe subject to payment of applicable Excise and Customs duties andon payment of applicable IGST/ CGST/ SGST/ UTGST andcompensation cess, if any, and industrial policy in force.
If unit has not achieved obligations, it shall also be liable topenalty at the time of exit
In the event of a gems and jewellery unit ceasing its operation,gold and other precious metals, alloys, gems and other materialsavailable for manufacture of jewellery, shall be handed over to anagency nominated by DoC, at price to be determined by thatagency.
An EOU / EHTP / STP / BTP unit may also be permitted byDC to exit from the scheme at any time on payment of applicableduties and taxes and compensation cess on capital goods under theprevailing EPCG Scheme for DTA Units. This will be subject tofulfillment of positive NFE criteria under EOU scheme, eligibilitycriteria under EPCG scheme and standard conditions indicated inHBP.
Unit proposing to exit out of EOU scheme shall intimate DC andCustoms authorities in writing. Unit shall assess duty liabilityarising out of exit and submit details of such assessment toCustoms authorities. Customs authorities shall confirm dutyliabilities on priority basis, subject to the condition that the unithas achieved positive NFE, taking into consideration thedepreciation allowed. After payment of duty and clearance of all dues, unit shall obtain “No Dues Certificate” from Customsauthorities. On the basis of “No Dues Certificate” so issued by theCustoms authorities, unit shall apply to DC for final exit. In casethere is no proceeding pending under FT (D&R) Act, as amended, DC shall issue final exit order within a period of 7 working days.Between “No Dues Certificate” issued by Customs authorities andfinal exit order by DC, unit shall not be entitled to claim anyexemption for procurement of capital goods or inputs. However, unit can claim Advance Authorisation / DFIA / Duty Drawback.
Since the duty calculations and dues are disputed and take a longtime, a BG / Bond / Installment processes backed by BG shall beprovided for expediting the exit process.
In cases where a unit is initially established as DTA unit withmachines procured from abroad after payment of applicableimport duty, or from domestic market after payment of exciseduty/GST, and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA after exit would bewithout payment of duty. Similarly, in cases where a DTA unitimported capital goods under EPCG Scheme and after completelyfulfilling export obligation gets converted into EOU, unit would not be charged customs duty on capital goods at the time ofremoval of such capital goods in DTA when exit.
An EOU / EHTP / STP / BTP unit may also be permitted byDC to exit under Advance Authorisation as one time option. Thiswill be subject to fulfillment of positive NFE criteria.
A simplified procedure may be provided to fast track the Debonding/Exit of the STP / EHTP Unit which has not availed anyduty benefit on procurement of raw material, capital goods etc.
The duty drawback scheme allows exporters to get a refund on customs duty paid on imported goods where those goods are to be treated, processed or incorporated in other goods for export or are exported unused since importation. The central government may revise amount or rates determined under rule 3.
The SVB is a unit of the Indian custom authorities that investigates valuation of goods during imports between related parties. A special relationship between Indian importer and foreign supplier may impact the transaction price of the import and thereby affect the custom duty imposed on such transaction. SVB function is precisely to examine the impact of such relationship on the invoice value of the imported goods.
SVB examines the influence of relationship on the invoice value of the imported goods in respect of transactions between related parties. In respect of Technical Collaboration Agreements and Joint Venture Agreements, the terms and conditions of these agreements are examined to arrive at the conclusion, whether the existence of such agreement has influenced the invoice value of the imports.
They are officers or directors of one another's businesses
Import of Raw Materials / components for Export purpose can be made under Zero Duty under Advance Authorisation Scheme. Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed.
Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable. Import against supplies covered under paragraph 7.02 (c), (d) and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, Countervailing Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any.
Advance Authorisation shall be issued for:
(i) Physical export (including export to SEZ);
(ii) Intermediate supply; and/or
(iii) Supply of goods to the categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of this FTP.
(iv) Supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.
Minimum value addition required to be achieved under Advance Authorisation is 15%. Export Products where value addition could be less than 15% are given in Appendix 4D. In case of Tea, minimum value addition shall be 50%.
Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation.
(i) Wherever Standard Input Output Norms (SION) are notified, AA are applied on SION basis. OR
(ii) Where SION for the Export Items are not available, then AA can be applied on Self declaration basis as per paragraph 4.07 of HBP. OR
(iii) Applicant specific prior fixation of norm by the Norms Committee. OR
(iv) On the basis of Self Ratification Scheme in terms of Para 4.07A of Foreign Trade Policy.
DGFT may, by Notification, impose pre-import condition for inputs under AA. Import items subject to pre-import condition are listed in Appendix 4-J or will be as indicated in Standard Input Output Norms (SION). Import of drugs from unregistered sources shall have pre-import condition.
Advance Authorisation and / or material imported under Advance Authorisation shall be subject to ‘Actual User’ condition. The same shall not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed.
Advance Authorisation shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer. In such cases, notional value of free of cost input shall be added in the CIF value of import and FOB value of export for the purpose of computation of value addition. However, realization of export proceeds will be equivalent to an amount excluding notional value of such input.
Where import of meat and meat products of any kind including fresh, chilled and frozen meat, tissue or organs of poultry, pig, sheep, goat; egg & egg powder; milk & milk products; bovine, ovine and caprine embryos, ova or semen; and pet food products of animal origin has been sought as an input under Advance Authorisation, the Regional Authority, while issuing Advance Authorisation shall endorse a condition that before effecting imports of any of these inputs, Sanitary Import Permit shall be obtained from the Department of Animal Husbandry, Dairying and Fisheries (DAHDF). Regional Authority shall also endorse a copy of authorisation to DAHDF, Krishi Bhawan, New Delhi.
“SCOMET” is the nomenclature for dual use items of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). Export of dual-use items and technologies under India’s Foreign Trade Policy is regulated. It is either prohibited or
is permitted under an Authorisation.
An application for grant of Export Authorisation in respect of restricted items [other than Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET)] mentioned in Schedule 2 of ITC (HS) Classifications of Export and Import Items may be made to DGFT (Headquarters) along with documents prescribed therein.
If the exporter has been notified in writing by DGFT or he knows or has reason to believe that an item not covered in the SCOMET list has a potential risk of use in or diversion to weapons of mass destruction (WMD) or in their missile system or military end use (including by terrorists and non-state actors), the export of such an item may be denied or permitted subject to the grant of a license, as per the procedure provided for SCOMET items.
Note: “Military use” shall mean incorporation into items listed in SCOMET Categories 5D or 6 or for the use, development, or production of military items listed in these categories.’
An application for grant of Export Authorisation in respect of SCOMET items mentioned in Appendix 3 to Schedule 2 of ITC (HS) Classifications of Export and Import Items may be made to DGFT (Hqrs) along with documents prescribed therein.
Every SCOMET authorisation holder shall maintain the following records in manual or electronic form for a period of 5 years from the date of export or import, as applicable:
a) All documents submitted while making an application for SCOMET Authorization.
b) Correspondence with buyer/consignee/end-user or DGFT or relevant Government agency;
c) Relevant Contracts;
d) Relevant Books of account;
e) Relevant Financial records;
f) Any communication from any government agency related to an application for authorization for any item on the SCOMET list or a commodity classification request;
g) Shipping documents including shipping bill, bill of entry an
This is a MEIS type of Scheme introduced in the FTP vide PN NO.: 83 / 29.03.2019. The New scheme has come into effect from 07.03.2019
This scheme is to support the Textile sector (for Garments and Made-ups). The RoSCTL shall be implemented through a Merchandise Exports
The rates of rebate under the scheme have been notified vide the Gazette Notifications of the Ministry of Textiles No.14/26/2016-IT(Vol-II) dated 08.03.2019. The rates of the RoSCTL scheme are notified as Schedules 1,2,3 and 4 of the notification. The Schedule 1 and 2 are the rates of State and Central Taxes and levies respectively, for Apparel and Made-ups. Schedules 3 and 4 are the rates of State and Central Taxes and levies respectively, applicable for Apparel Exports when the fabric (including interlining) only has been imported duty free under Special Advance Authorisation Scheme.
Rebate of State Taxes and Levies shall be understood to comprise VAT on fuel used in transportation, captive power, farm sector, mandi tax, duty of electricity, stamp duty on export documents, embedded SGST paid on inputs such as pesticides, fertilizers,etc used in production of raw cotton, purchases from unregistered dealers, coal used in production of electricity and inputs for transport sector.
Rebate of Central Taxes and Levies shall be understood to comprise Central Excise Duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilizers, etc used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and Compensation Cess on coal used in production of electricity.