EXIM Policy

Export Policy related Natural Rubber

The current export policy is that NR can be exported from India free of license from 01 April 2001 subject to approvals from the concerned Export Promotion Council (EPC).   The EPC for natural rubber is the Rubber Board, and hence the exporter should get a prior permission form the Board for export of NR.   The permission issued from the Board is the Registration – Cum- Membership Certificate (RCMC). More……. (RCMC)

Export / Import Registration

Only a valid IE code number holder can import or export goods to/from India. But for  importing goods from Nepal or Myanmar through Indo-Myanmar Border areas or from China, through Gunji, Namgaya, Shipkila or Nathula ports, it is not necessary to obtain a IE code number provided the CIF value of a single consignment does not exceed Indian Rs.25000/- (Rs.1,00,000 in case of Nathula port). An IEC number shall be granted on application by the competent authority in accordance with the procedure in force. 

IE Code  –

Importer Exporter Code No is issued from the concerned office of the Director General of Foreign Trade

Selecting the Overseas Buyer –

The information regarding overseas buyers can generally be obtained from the following sources:

• Trade Directories and Yellow pages, like Singapore yellow pages, Japan yellow pages, USA yellow pages etc. available from leading booksellers in India
• Consulate Generals and Trade Representatives of various countries in India and abroad
• Friends and relatives in foreign countries
• International Trade Fairs and Exhibitions
• Chambers of Commerce
• Directorate of Industries
• Indenting Agents of Foreign Suppliers etc.

INCO-TERMS

While finalizing the terms of import contract, the importer should be fully conversant with the mode of pricing and the manner of payment for the imports.  As regards mode of pricing, the overseas supplier should quote the terms prevailing in international trade. The International Chamber of Commerce, Paris has given detailed definition of a few standard terms popularly known as ‘INCO TERMS’

Ex-works (EXW) – it means that the seller’s responsibility is to make the goods available to the buyer at his works or factory. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. This term thus represents the minimum obligation for the seller. It is mostly used for sale of plantation commodities such as tea, coffee and cocoa.

Free carrier (FCA) – means the seller’s obligations are fulfilled when the goods are delivered to the carrier named by the buyer at the named place.

Free Alongside Ship (FAS) – Once the goods have been placed alongside the ship, the seller’s obligations are fulfilled and the buyer notified.  The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight.  The buyer has to bear all costs and risks of loss or damage to the goods hereafter

Free on Board (FOB) – The seller’s responsibility ends the moment the contracted goods pass the ship’s rail at the port of shipment named in the sales contract.  This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.

Cost and Freight (CFR) – means that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must on his own risk contract the carriage of the goods to the port of destination named in the sale contract and pay the freight.  This being a shipment contract, the point of delivery is fixed to the ship’s rail and the risk of loss or damage to the goods is transferred from the seller to the buyer at that very point.

Cost Insurance Freight (CIF) – The term is basically the same as CFR, but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage.

Carriage paid to (CPT) – means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.  The buyer bears all risks and any other costs after the point of delivery.

Carriage and Insurance Paid to (CIP) – it is same as CPT, with the addition that the seller is also required to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage.

Delivered at Frontier (DAF) – The term is primarily intended to be used when the goods are to be carried by rail or road.  The seller’s obligations are fulfilled when the goods have arrived at the frontier, but before the ‘Customs border’ of the country named in the sales contract

Delivered Ex-ship (DES) This is an arrival contract and means that the seller makes the goods available to the buyer in the ship at the named port of destination as per sales contract.  The seller has to bear the full cost and risk involved in bringing the goods there.  The seller’s obligation is fulfilled before the Customs border of the foreign country and it is for the buyer to obtain necessary import license at his own risk and expense.

Delivered Ex-Quay (DEQ) Ex-Quay means that the seller makes the goods available to the buyer at a named quay.  As in the term ‘Ex-ship’ the points of division of costs and risks coincide, but they have now been moved one step further – from the ship into the quay or wharf i.e after crossing the Customs border at destination. Therefore, in addition to arranging for carriage and paying freight and insurance the seller has to bear the cost of discharging the goods on the quay. The buyer is required to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import

Delivered Duty Unpaid (DDU) – means that the seller delivers the goods to the buyer, at the port of destination.  The seller has to bear the costs and risks involved in bringing the goods thereto. The buyer has to get the goods unloaded and cleared for import, by paying the applicable duty.

Payment on Export / Import -
The export/import transactions are generally settled by any of the following modes depending upon the credit worthiness of the importer/exporter, demand for the commodity in the international market, exchange control regulations prevailing in the importer/exporter countries and other relevant factors:

• Advance Payment
• Payment/Acceptance against Documentary collections
• Payment under Letter of Credit

Advance Payment - Bank may allow advance remittance for import of goods or export of goods without any ceiling subject to the following conditions:

• If the amount of advance remittance exceeds USD 100000or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD category-I bank in India, if such a guarantee is issued against the counter guarantee of an international bank of repute situated outside India is obtained
• In cases where the importer / exporter (other than a Public Sector Company or a Dept/undertaking of the GOI/State Govt.) is unable to obtain bank guarantee from overseas suppliers and the AD category and the bank is satisfied about the track record and bona-fides of the importer/exporter, the requirement of the bank guarantee/strand by LC may not be insisted upon for advance remittance up to USD 5 Million.
• A Public Sector Company or a Dept/undertaking of the Central/State Govt which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance , GOI before making advance remittance exceeding USD 100000

Payment/Acceptance against Documentary collections- Payment for import can also be made against Documentary Collections, in which case the overseas supplier sends the documents direct to the importer’s banker with instruction to deliver the documents to the importer against payment or against acceptance.  The former mode of payment is known as ‘Documents against Payments (DP)’ and the latter mode is known as ‘Documents against Acceptance (DA)’

Payment against Letter of Credit (L/C) - This is the most important mode of settlement of international trade transactions and has been widely accepted all over the world.  In this method, the payment is settled by means of a Letter of Credit issued by importer’s banker in favor of the supplier abroad.  Under his method, the overseas supplier gets payment of goods from his own bank who negotiates the documents under the credit.
Export / Import finance -Banks authorized to deal in foreign exchange play an important role for issue of letters of credit, finance/payments for imports, issue of guarantees etc.  In matters relating to the finance for import, banks are governed by the instructions issued by their head offices.  With regard to remittance of foreign exchange, they are regulated by RBI regulations under FEMA w.e.f.1.6.200 as amended from time to time and the Rules framed by the Foreign Exchange Dealer’s Association of India (FEDAI Rules).
Free Trade Agreements on Rubber (FTA) - Relevant Trade Agreements in the rubber sector are briefly summarized below. 

Asia Pacific Trade Agreement 1976 (Bangkok Agreement) – The signatories are India, China, S. Korea, Sri Lanka and Bangladesh.  Tyres and inner tubes can be imported from signatories to the  Bangkok Agreement  at concessional rate of customs duty.   Under this agreement, the import duty fixed for all types of Natural Rubber except rubber latex is 16% and in the case of rubber latex it is 40%.

Indo-Sri Lanka Free Trade Agreement - Tyres can be imported at nil customs duty. As per this agreement, Natural Rubber comes under the Negative List.  Several other raw-materials of tyre industry are eligible for duty concessions of varying magnitude.

SAPTA  (SAARC Preferential Trading Agreement) - Truck & Bus, LCV and Jeep tyres and selected raw-materials of tyre industry can be  imported into India at concessional/Nil rate of duty  from signatory countries, (viz. Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka).   Under this agreement, NR comes under negative list.    

India-Singapore Comprehensive Economic Co-operation Agreement - Truck / bus, passenger car (bias) and other Bias tyres can be imported into India at Nil custom duty.  But, Natural Rubber is not covered as per this agreement. 

India-South Korea (CEPA) - Tyres in the Negative List (Excluded from Tariff Concession).  Select raw materials of tyre industry eligible for Nil/Concessional Customs duty from 2015 onwards.   Natural Rubber as per this agreement is excluded from tariff concession. 

ASEAN Agreement  (2009) - Key tyre categories tariff to be brought down to 5% by 2016.   Select raw materials of tyre industry eligible for Nil/Concessional Customs duty from 2013 onwards.  Natural Rubber as per this agreement is excluded from tariff concession. 

Import Policy related to Natural Rubber

The current Import policy is that NR can be imported to India free of license from 01 April 2001 on payment of prevailing import duty.  The current basic import duty is 20% based on the average domestic price in the preceeding three years for all forms of NR except NR latex for which it is 70%.   NR can be imported through any port. 

Import Duty Structure for the year 2010-11

	Basic Duty (%)	Counter veiling duty (%)	Cess (%)
All forms of NR excluding latex (RSS, ISNR, EBC, PLC etc)	20 *	4	0.60
NR latex	70	4	2.10

•  Applied duty is fixed annually based on the average domestic price of rubber in the preceding three years.

Import Registration –  

Only a valid IE code number holder can import or export goods to/from India. But for  importing goods from Nepal or Myanmar through Indo-Myanmar Border areas or from China, through Gunji, Namgaya, Shipkila or Nathula ports, it is not necessary to obtain a IEC number provided the CIF value of a single consignment does not exceed Indian Rs.25000/- (Rs.1,00,000 in case of Nathula port). An IEC number shall be granted on application by competent authority in accordance with procedure in force. 

IE Code

Importer Exporter Code No is issued from the concerned office of the Director General of Foreign Trade

Import Channel

Open Channel- The importer has to pay the prevailing import duty ie, 20% of the average domestic price of the preceding three years for all forms of NR except NR latex for which it is 70%.  Four percent countervailing duty has been imposed on all forms of NR, effective from 01 March 2006.

Duty Entitlement Passbook Scheme (DEPB) - Under this scheme, Government provides credit (called DEPB credit) to exporters at rates fixed for different products exported.  The exporter can use the DEPB credit entered in his passbook for payment of customs duty for further imports made under this scheme. This scheme introduced by the Govt of India under the Exim Policy for 1997-2002 was confined to products not included under the ‘negative list’ of imports. Since NR was in the ‘negative list’ of imports till 31 March 2001, it was not importable through the DEPB scheme.  The removal from the ‘negative list’ on 01 April 2001 made NR importable under the DEPB scheme.  Though import undertaken under the DEPB scheme provides payment of full customs duty, it is considered as a duty free channel at the operational level.

Duty Exemption Entitlement Certificate (DEEC) or Advance License Scheme-  This scheme facilitates duty free imports of raw materials in advance against commitment on export of manufactured products.  Against each export product, importable quantity of different inputs is notified in the SION (Standard Input Output Norms) published by the Government of India.  Normal validity period of DEEC is 18 months after issue and it could be extended twice for durations of six-months each.  DEEC is issued subject to fulfillment of time-bound export obligations. 

Duty Free Import Authorization Scheme (DFIAS) - Government of India has introduced this scheme in place of Duty Free Replenishment Certificate (DFRC) scheme.  Imports made under DFIAS are exempted from basic customs duty, additional customs duty, anti-dumping duty and safeguard duty as long as certain conditions are met.  The DFIAS allows exporters to import the required inputs before exports.  The scheme also allows exporters to transfer the scrip once the export obligation is completed.  Under the DFIAS, exporters have to give a declaration of the technical characteristics and specification of materials used in the shipping bill. 

Scheme for 100% EOU and units in SEZ/EPZ -; The 100% export oriented units (EOU) and the manufacturing units which operate in export processing zones (SEZ) can import NR free of duty.