The Government of India Has Withdrawn Cotton and Cotton Yarn From FMS

The Government of India has withdrawn cotton and cotton yarn from Duty Credit Scrip eligibility under the Focus Market Scheme (FMS), with effect from September 25, 2013.

‘Export of cotton’ and ‘export of cotton yarn’ have been added after serial no (x) in the list appended in paragraph 3.14.3 of Foreign Trade Policy bearing the Heading “Ineligible Exports Categories / Sectors for FMS”, a notification from the Department of Commerce, Ministry of Commerce and Industry said.

The objective of FMS is to offset high freight cost and other externalities to select international markets with a view to enhance India’s export competitiveness in these countries.

Under the policy, exporters to notified countries are entitled for Duty Credit Scrip, equivalent to 1- 3 percent of FOB value of exports (in free foreign exchange) for exports made by them.

Taking advantage of the scheme, Indian spinning sector was able to capture new markets in Africa and Latin America, as well as the CIS countries.

Argentina, Peru, Venezuela, Tunisia and Morocco were some of the countries where Indian cotton yarn exports increased after the implementation of the scheme.

The notification also says that the benefit of Incremental Export Incentivisation Scheme (IEIS) for the year 2013-14 will be limited to a scrip of a value not exceeding Rs. 10 million per Import Export Code (IEC).

Claims in excess of Rs. 10 million would be subjected to greater scrutiny by Regional Authority, the notification said.