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Submittedby:

 ArshpreetKaur

 AtishThakur

 AshishSangar

 AnuragSharma

DeemedExports

&

CategoriesofExporters

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Definition

 

“Deemed Exports”refertothosetransactionsinwhichgoodssupplieddonotleavecountry,andpaymentfor

suchsuppliesisreceivedeitherinIndianrupeesorin

freeforeignexchange.

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DeemedExports

• Supplyofgoodsshallberegardedas“DeemedExports” provided goods are manufactured in

India.

• Thegoods from domestic tariff area (DTA)are

supplied to manufacturer-exporters in export

processingzoneunits(EPZ)andthepayments

arereceivedinIndianRupees.

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Suppliesregardedasdeemedexports

•SupplyofgoodsagainstAdvanceAuthorisation/

 AdvanceAuthorisationforannualrequirement/

DFIA.

•SupplyofgoodstoEOU/STP/EHTP/BTP.

•SupplyofcapitalgoodstoEPCGAuthorisation

holders.

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Contd…….

• SupplyofgoodstoprojectsfinancedbymultilateralorbilateralAgencies/Fundsas

notifiedbyDepartmentofEconomicAffairs(DEA),

MoFunderInternationalCompetitiveBidding

(ICB).

• SupplytoprojectsfundedbyUNAgencies.

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Contd……..

•Supply of goods to any project or purpose in

respect of which the MoF, by notification permits

importofsuchgoodsatzerocustomsduty.

•Supply ofmarine freight containers by 100%EOU

providedsaidcontainersareexportedoutofIndia.

•Supplyofgoodstonuclearpowerprojectsthrough

competitivebiddingasopposedtoICB.

Source:ForeignTradePolicy(2009-2014) 

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Benefitsfordeemedexports

•  AdvanceAuthorisation/Advance

 Authorisationforannualrequirement/

DFIA.

• DeemedExportDrawback.

• Exemptionfromterminalexciseduty

wheresuppliesaremadeagainstICB.

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Procedureforclaimingbenefits

•The Suppliers of the goods under

„DeemedExports‟shouldmakeapplication

to the regional licensing authority

concerned claiming the benefits of

„DeemedExports‟.

•The applications should be made in the

formsgiveninAppendix17of„HandBook

ofProcedure‟sofexportandImportPolicy,

along-withdocumentsprescribedtherein.

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Whogetsthesebenefits?

• Powerprojects/refineries.

ProjectsfundedbyWorldBank/ADB/JBIC/IFAD/OPEC/SIDA/UNAgencies.

•  Advanceauthorizationholders,DFIAholders,

EPCGholders.

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Issuesrelatingtodeemedexports

UNDERTHESALESTAXLAWININDIA

• FormH – Notmandatory.

• Goodspurchasedmustbeexportedinthe

sameform.1. Coffeeandcoffeepowder

2. Paddyandrice

3. Chassisandbuses

4. Roughgraniteandpolishedgranite.

 

• Purchasetaxandexports.

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Pruningofdeemedexportbenefits

• Largescalemisuseoverseveralyears,

especiallybypowercompanies.

• Fakeclaimsbycertainsuppliers,

especiallyfirmsthatsuppliedboilers,

turbinesandgenerator.

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Contd…….

• In2010-11,theDGFTnoticeddeemed

exportduestothetuneofaboutRs5,000

crorewerenotpaid.

• ThemoveisaimedatsavingaboutRs

2,000croreannually.

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 Amendmentsindeemedexportpolicy

An amendment was carried vide

notificationno. 92dated28-12-2011

toallowbenefitofdeemedexportto

supplies made to non-mega power

projects only under Para 8.3(a) ofFTP, viz., Advance Authorization /

 Advance Authorization for annual

requirement/DFIA.

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 Amendmentscontd…..

Now,deemedexportpolicyhasfurther

beenamendedtodenythedeemed

exportbenefittoallsuppliesmadetonon-megaprojects. – Notificationno.107

dated21-3-2012

Ch

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Changes

• TheSupplyofcement,fuelandsteelwillnotgetdutyincentivesifusedforprojectsor

manufacturingofgoodsthatenjoythe

deemedexportstatus.

Thesebenefitsareusuallyaccordedto

capitalgoodstobringdownthecostof

infrastructurebuildingandmanufacturingof

goods.Theideaistopromotemanufacturingandinfrastructurebuilding.

Source:BusinessStandard 

E

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•Exportsareoneoftheoldestformsofeconomictransfer,andoccuronalargescalebetweennationsthathavefewerrestrictionsontrade,suchastariffsorsubsidies.

Exports

C t i b k f E t

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Country-wisebreakupofExports

• India is leading exporter of gems and jewellery, textiles,engineering goods, chemicals, leather manufactures and services.

• India is poor in oil resources and is currently heavily dependent on

coal and foreign oil imports for its energy needs. Other imported

products are: machinery, gems, fertilizers and chemicals.

•Main trading partners are European Union, The United States,China and UAE.

Thisdataisfor2010 – 11andtakenfromtheCommerceMinistrywebsite.

T d B l

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TradeBalance

Di t d I di t E t

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DirectandIndirectExport

Basicallytherearetwomethodsofexporting – 

(A)Direct Exporting:Indirectexporting,theexportis

undertakendirectlybythemanufacturer.The

manufacturingfirmmakesitsownarrangementto

exportitsproductseitherwithintheexistingsalesnetworkorbycreatingaseparateexportdepartment

ofdivision.Thistypeofexportersisknownas

manufacturerexporters.

(B)Indirect Exporting :The manufacturer does not directly

export to foreign buyers. The manufacturer exports

through intermediaries such as merchant exporters,

export houses, all forms of trading houses, export

consortia etc.

M f t i E t

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ManufacturingExporter

• Whodon‟twanttooperatethroughintermediaries.• Mayengageagentsordeputerepresentatives

abroadtobookorder

M f t i E t

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ManufacturingExporter

• Eitherwithintheexistingsalesnetworkorbycreatingaseparateexportdepartmentofdivision.

M f t i E t

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ManufacturingExporter

M f t i E t

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ManufacturingExporter

Man fact ring E porter

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ManufacturingExporter

Global Manufacturing Competitiveness Index

Manufacturing Exporter

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ManufacturingExporter

India’s Position 

Types Of Manufacturing Exporters

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TypesOfManufacturingExporters

• Sellingthroughdistributors

Distributor,purchasestheproductfromthe

manufacturerandsellsthematprofit.

Todeveloptheirowninternational

marketingcapability.

Selling through distributors

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Sellingthroughdistributors

Useadistributorifyou: –  Needtomaintaininventoryontheforeigncountry.

 –  Donotwanttomaintainyourowndistribution

network.

Types Of Manufacturing Exporters

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TypesOfManufacturingExporters

• SellingthroughforeignretailersThesetransactionsofteninvolveconsumer

products.

Effectiveincountriesthathavelargeretailchains.

Types Of Manufacturing Exporters

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TypesOfManufacturingExporters

• Sellingdirectlytoenduser

Sellingoverseasmayincursomeaddedcosts.

Thesellerisresponsiblefor:

 –  Shipping

 –  Paymentcollection

 –  Productsupportandservice

Types Of Manufacturing Exporters

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TypesOfManufacturingExporters

• SellingthroughWorldWideWeb

Timedifferenceisnolongeraproblem(24*7)

Notravelcosts.

The Brighter Side(Advantages)

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TheBrighterSide(Advantages)

• Goodwill

• OptimumProductionCapacity

• ExportObligation

• DirectControl• ExportIncentives

• FirstHandInformation

• HigherPrice

Disadvantages

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Disadvantages

• HighDegreeofRisk

• MoreInvestment

• LacksSpecialization

• HighOverhead

• Unsuitabletosmallfirms

Categories under Indirect Exporters

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CategoriesunderIndirectExporters

Exporters

• MerchantExporters

• Brokers

• TradingHouses

• Manufacturers

Merchant Exporters

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MerchantExporters

• Buysthegoodsandthenresellsthemtoitsforeigncontactsatamarkup.

•  Actsinthesameroleasadomesticwholesaler.

•  Aclassofexportmerchantistheexportvendor,

whichspecializesinpurchasingsurplusorpoorqualitygoodsthatproducerscan'tprofitablysell

domestically.

 

Merchant Exporters (Contd )

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MerchantExporters(Contd…)

• TheExporterswhodonothavetheirmanufacturing/processing/growingfacilityand

sourcetheproductfromothersandexports.

•  Amerchantexporterbasicallyguardstheinterests

ofthemanufacturers,aswellas,theendclients,keepingthelongterminterestsofallthepeople

involved,inview.

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Trading Houses

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TradingHouses• TradingHouseisappropriateifthemanufacturer

donothavetheresourcestoserviceadistribution

channelinthemarket.• Canbebothexportersandimporters.Theyare

knowledgeableabouttheirmarkets,knowthe

customers'needs,thecommunicationproblemsin

foreignmarkets,andtheculturalproblemsinthemarket.

• Theyusuallyhandlepacking,shipping,and

documentationandthusrelievetheproducerof

manyofthetedioustasksrequiredforexporting

Brokers & Manufacturers

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Brokers&Manufacturers

•  Alocalexportbrokerworksonacommissionbasis,andissimilartoanoverseasagentor

broker.

Usuallyaspecialistincertainbulkcommodities

ormanufacturedproducts,brokersaretheninagoodpositiontofindbuyersforthoseproducts

inmanyareasoftheworld.

• Somemanufacturersbuymanycomponentsorpartsfromotherdomesticmanufacturers,either

foruseintheproductstheyexportorto

complementtheirexportproductline.

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 Advantages

• LessRisk

• LessInvestment

• Specialization

• Suitabletosmallfirms

• Technicalguidance

•  Aftersaleservice

• LessOverhead

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Disadvantages

• LowerPrice

• Noexportincentives

• Excessivedependence

• Secondhandinformation

• Lackofcontrol

• LowerSale

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ThankYou