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Foreign Trade

Foreign Trade. Foreign trade is exchange of capital, goods, and services across international borders or territories The importance of foreign trade cannot be ignored. It has contributed immensely to the all sided development of a nation.

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Foreign Trade

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  1. Foreign Trade

  2. Foreign trade is exchange of capital, goods, and services across international borders or territories • The importance of foreign trade cannot be ignored. It has contributed immensely to the all sided development of a nation. • Foreign trade, in majority of the countries has contributed significantly to the gross domestic product or the GDP

  3. SEZ’s • A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. • The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports and others. • Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).

  4. A single SEZ can contain multiple 'specific' zones within its boundaries. For e.g. Sricity Multi-product SEZ and Mundra SEZ in India. • SEZ's are located in the states of Andhra Pradesh, Chandigarh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh & West Bengal in India

  5. Incentives • 100% exemption of income tax for a block of 5 years and an additional 50% tax exemption for two years thereafter. • 100% Foreign Direct Investment (FDI) in the manufacturing sector permitted. • External commercial borrowings by SEZ units upto US$500 million a year. • No cap on foreign investment for small scale sector reserved items. • Exemption from industrial licensing requirements for items reserved for the SSI sector.

  6. No import license requirements. • Exemption from customs duties on import of capital goods, raw materials, consumables, spares etc. • Exemption from Central Excise duties on procurement of capital goods, raw materials, consumable spares etc., from the domestic market. • No routine examinations by Customs for export and import cargo. • Exemption from Central Sales Tax and Service Tax.

  7. EPZ’s • Export Processing Zones (EPZs) can be broadly defined as an area enjoying special government of India support with respect to fiscal incentives, tax rebates and other exclusive benefits for the growth of export. • Export Processing Zones (EPZs) also encompasses pre-defined infrastructural facilities and regulations pertaining to establishment of such zones and environmental stipulations, respectively

  8. Objectives of setting up of EPZs • Encourage and generate the economic development • Encourage Foreign Direct Investments (FDI) • Foster the establishment and development of industrial enterprises within the said zones • To channel the foreign exchange earnings for the further development of these zones and explore new areas for the development of Indian exports • Encourage establishment and development of Indian industries and business enterprises and facilitate with proper infrastructure • Generate employment opportunity • Upgrade labor and management skills

  9. Prominent Indian Export Processing Zones • Kandla Free Trade Zone (KAFTZ), Kandla, Gujarat • Santa Cruz Electronic Export Processing Zone (SEEPZ), S. Cruz, Maharashtra • Cochin Export Processing Zone (CEPZ), Cochin, Kerala • Falta Export Processing Zone (FEPZ), Falta,West Bengal • Madras Export Processing Zone (MEPZ), Madras, Tamil Nadu • Noida Export Processing Zone (NEPZ), Noida, Uttar Pradesh

  10. TP’s • Software Technology Parks of India (STPI) is a government agency in India, established in 1991 under the Ministry of Communications and Information Technology, that manages the Software Technology Park scheme. • It is an export oriented scheme for the development and export of computer software, including export of professional services. • It provides physical infrastructure, including dedicated high speed connectivity to technology parks, freedom for 100% foreign equity investment and tax incentives

  11. EOU’s • The Export Oriented Units (EOUs) scheme, introduced in early 1981, is complementary to the SEZ scheme. • The main objectives of the EOU scheme is to increase exports, earn foreign exchange to the country, transfer of latest technologies stimulate direct foreign investment and to generate additional employment

  12. Major Sectors in EOUs: • Granite • Textiles / garments • Food processing • Chemicals • Computer software • Coffee • Pharmaceuticals • Gem & jewellery • Engineering goods • Electrical & electronics

  13. Incentives given to EOUs • No import licenses are required by the EOU units and import of all industrial inputs exempt from customs duty. • On fulfillment of certain conditions, EOUs are exempted from payment of corporate income tax for a block of 5 years in the first 8 years of operation. Export earnings continue to be exempt from tax even after the tax holiday is over. • Industrial plots and standard design factories are available to EOUs at concessional rates. • Single window clearance for EOU. For example, the State Government of Kerala as well of Karnataka has constituted single window clearance mechanisms such as District Single Window Clearance Board (in Kerala) and Karnataka UdyogMitra (in Karnataka) for the purpose of speedy issue of various licenses, clearances.

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