Duty Drawback- Clarification allowing higher Rate of Duty Drawback on Self Certification Amendment in Notification no. 131/2016-Customs (N.T.) dated 31.10.2016 relating to AIRs of duty drawback

GST -Amendments in CGST Rules, 2017 (Invoice Description, Exchange rate, Monthly Return, Form Tran -1 etc)

Reminder- Inviting Pre-Budget Proposals for the Year 2018-19

Form GSTR-1 creation / Offline Utility for upload of Invoice data available on GST portal

CBEC:- Detailed guidelines for re-testing of samples

Imp- FAQs on Exports/ GST Ready Reckoner

EOU’s- Clarifications on Operational problems being faced by EOU’s in GST regime consequent to amendment in Notification no. 52/2003-Customs dated 31-3-2003

Link for checking availability of GSTIN in Customs EDI System

India - BIMSTEC Goods negotiations

Imp - ITC Refund Calculation Formula for Exports against LUT/ Bond as per CGST Rules

CBEC Clarifications on LUT/BOND/Bank Guarantee

F. No. 349/82/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs (GST Policy Wing)

Issues related to Bond/Letter of Undertaking for exports without payment of integrated tax

Notification No. 16/2017 – Central Tax, Dated:7th July 2017

GST Master Classes by Revenue Secretary- Dr Hasmukh Adhia

Important FTP provisions in the context of the implementation of the GST regime applicable w.e.f. 01.07.2017

GST - Contact Details of GST Seva Kendras (All India)

Most exemptions on input taxes removed; exporters to get input tax credit

NEW DELHI, JULY 1:
The Centre has modified existing export incentive schemes removing most exemptions provided on input taxes to align them with the Goods & Services Tax (GST) regime which has rolled in from July 1.

Exporters importing inputs including machinery under popular schemes such as Advance Authorisation (AA) and Export Promotion Capital Goods Scheme without paying import duties (customs duty, countervailing duty and special additional duty) up to a given limit will now have to pay GST on it and later apply for refund.

“Under the GST regime, no exemption from payment of Integrated GST (IGST) and compensation cess would be available for imports under Advance Authorisation. Importers would need to pay IGST and take input tax credit as applicable under GST,” a trade notification issued by the Directorate General of Foreign Trade (DGFT) modifying provisions under the Foreign Trade Policy (2015-20) on Friday night stated.

However, imports under Advance Authorisation would continue to be exempted from payment of basic customs duty, additional customs duty and education cess. Exemptions will also be provided wherever penal duties such as anti-dumping, safeguard and transition product specific safeguard duty are applicable.

The notification added that under the EPCG scheme (Chapter 5 of the FTP), too, importers of capital goods would need to pay IGST and take input tax credit.

Benefits under the Merchandise Export from India Scheme (MEIS) and the Services Export from India Scheme (SEIS), which provides exporters with duty free scrips based on the value of their exports, have also been curtailed. “The scrips cannot be used for payment of IGST and GST compensation cess in imports, and CGST, SGST, IGST and GST compensation cess for domestic procurement,” the notification stated.

Imports by Export Oriented Units (EOUs), which were allowed duty free imports of goods for their authorised operations, will now get exemption on only the customs duty. “Such goods would attract integrated tax and compensation cess. The taxes so paid on imports will be neutralised by ITC (input tax credit),” the notification said.

(Source: http://www.thehindubusinessline.com/economy/policy/centre-modifies-export-incentive-schemes-to-align-with-gst/article9744780.ece dated 1st July-2017)

The DGFT has issued a notification giving details of the changes in the FTP with the implementation of the GST regime.These changes have been mentioned chapter wise. Given below are the changes made in the FTP as prescribed in the notification no. 11/2018 dtd June 30, 2017

With effect from July 1, 2017, the term “Central Excise Authority” used in Foreign Trade Policy 2015-20 and Foreign Trade procedures 2015-20 will be read as “Jurisdictional Customs Authority”.

Chapter 2: Changes in IEC have already been notified through Trade Notice No.09/2018 dated 12.06.2017

Under Chapter 3 The Duty Credit Scripps cannot he used for payment of IGST and GST compensation cess in imports, and CGST, SGST, IGST and GST compensation cess for domestic procurement.

In Chapter 4 the following changes have been implemented in the FTP:
Under the GST regime, no exemption from payment of Integrated GST and Compensation Cess would be available for imports under Advance Authorisation.

Importers would need to pay IGST and take input tax credit as applicable under GST rules.

However, imports under Advance Authorisation would continue to be exempted from payment of Basic Customs Duty, Additional Customs Duty specified under Section 3(1), 3(3) and 3(5) of the Customs Tariff Act, Education Cess, Anti-dumping Duty, Safeguard Duty and Transition Product-Specific Safeguard Duty, wherever applicable.

Applicable GST would need to be paid while making local procurement, using an invalidation letter of Advance Authorisation/DFIA. Recipient of goods can take Input Tax Credit (ITC) of the GST paid on such local procurement. This Input Tax Credit can be utilised as per GST rules.

Advance Release Order facility shall not be available for procurement of inputs under Advance Authorization scheme except for inputs listed in Schedule 4 of Central Excise Act, 1944 read with The Taxation Laws (Amendment) Act 2017 No.18 of 2017, with effect from July 1, 2017. Regional Authorities are directed not to issue ARO except for Schedule-4 items as stated above.

Imports/exports under the replenishment schemes for the Gems and Jewellery sector covered under Chapter 4 of FTP and HBP shall be subject to Customs Notification issued/ to be issued in this regard.

Under Chapter 5 the FTP has the following changes:
Importers would need to pay IGST and take input tax credit as applicable under GST rules.

ARO facility shall not be available for sourcing of Capital Goods manufactured indigenously

Chapter 6
The following changes have been implemented in the FTP in relation to Imports
Export Oriented Units(EOU)/Electronics Hardware Technology Park (EHTP)/, Software Technology Park (STP)/ or Bio-Technology Park (BTP)

EOU's are allowed duty-free Imports of goods for their authorised operations. In GST regime, the import of goods covered under GST would be exempted from the whole of the duty of customs specified under the First Schedule to the Customs Tariff Act, 1975 (BCD) enabled by Notification no.52/2003-Cus. But such goods would attract integrated tax and compensation cessleviable under sub-section (7) and (9) of the said Act. The taxes so paid on imports will be neutralised by ITC.

The import of goods covered under Fourth Schedule of the Central Excise Act would be exempted from the whole of the duty of customs specified under the First Schedule to the Customs Tariff Act, 1975 (BCD) and also from the additional duty leviable under sub-sections (1), (3) and (5) of section (3) of the said Act (CVD & SAD) enabled by Notification no.52/2003-Cus.

Domestic procurements:
For the indigenous procurement of goods covered under GST, the EOU will not get ab-initio exemptions. Such supplies would be on payment of CGST/SGST/UTGST/IGST. The taxes so paid will be neutralised by ITC. For the indigenous procurement of goods covered under Fourth Schedule, the EOU will continue to get ab-initio exemptions from central excise duty.

DTA clearances of finished goods covered under GST
EOUs would be required to pay only CGST & SGST or IGST, as the case may be, besides paying back of whole of the duty of customs specified under the First Schedule to the Customs Tariff Act, 1975 (BCD) exemptions, if availed, on inputs used in the manufacture of such finished goods.

The DTA clearances of finished goods covered under Fourth Schedule of the Central Excise Act, 1944, the EOUs would be required to pay central excise duty equal to the aggregate of duties of customs in view of proviso to Section 3(1) of the Central Excise Act, the effective rate of such duties being covered by Notification no.23/2003-CE Inter unit transfer/supply for EOU to other EOUs

Applicable GST would be payable on the transfer/supply of goods from one unit of EOU/EHTP/ STP/BTP to another

Chapter 7
Supplies made prior to the date of the operationalization of GST:
The supplies made to different deemed exports categories till the date prior to the date of the operationalization of GST, the benefits would be available as per the provisions existed till the date of the operationalization of GST.

Supplies after the date of the operationalization of GST:
Advance Authorization benefits under Chapter 4 shall be available for supplies under Chapter-7. The duty exemption benefits under AA would be limited to exemption from basic customs duty only. The exemption for items under Central Excise would be available for the items which continue under Schedule 4 of Central Excise Act, 1944 provided the items are eligible under the Advance Authorization.

Deemed Export Drawback:
The drawback as provided under Chapter 7 would be limited to the refund of basic customs duty only. In respect of eligible items covered under Schedule 4 of Central Excise Act, 1944 refund would also be covered under the drawback provided the item is eligible for such supply.

The TED refund:
TED refund would be available only if exemption is not available in respect of items covered under Schedule 4 of Central Excise Act, 1944 provided the items are eligible for supply under the said category of deemed exports

(Source: https://www.thedollarbusiness.com/news/changes-in-ftp-with-the-implementation-of-gst/50646 dated 1st July-2017)

Coinciding with Indian Prime Minister Modi's visit to Israel this week, business figures from the two countries are convening a joint forum aimed at increasing bilateral trade tenfold

Indian Prime Minister Narendra Modi, left, and Israeli Prime Minister Benjamin Netanyahu at the King David Hotel in Jerusalem, July 5, 2017.

Trade between Israel and India is rather small, amounting in 2016 to less than $2 billion (excluding diamonds). Israeli and Indian business leaders would like it to grow and are

pressing their leaders to reach a free-trade agreement to boost that figure substantially.

ShragaBrosh, the president of the Israel Manufacturers Association, and Pankaj Patel, president of the Federation of Indian Chambers of Commerce and Industry, an association of some 250,000 businesses in India, according to its website, will be inaugurating a forum of Israel-India CEOs on Thursday with the purpose of increasing the countries' bilateral trade tenfold, to around $20 billion a year.

Prime Minister Benjamin Netanyahu and Indian Prime Minister Narendra Modi, who is now on a visit to Israel, are both expected to attend the event.

The forum has actually already developed recommendations, which include the signing of a free-trade agreement between the two countries, agreements on protecting foreign investments and reexamining regulations that limit trade relations between the two countries.

The forum also proposes relaxing visa requirements for workers and increasing the number of flights between Israel and India. The recommendations also include proposals to unify quality standards and to boost tourism between the countries in both directions.

Israeli exports to India amounted to $1.5 billion in 2016, down 13 percent from the year before. Most Israeli exports, with the exception of diamonds, consisted of machinery, electrical equipment and chemicals. Indian exports to Israel totaled $800 million last year, a figure that was also 13 percent lower than 2015's figure, and consisted primarily of chemicals, textiles, plastics and rubber.

Eye on more deals
"What's it going to take to get Israeli money to take India seriously? Just open their eyes," Jon Medved, CEO of Israeli equity crowdfunding group OurCrowd said. "The problem is their eyes are ... blinded by the China opportunity," he added.

There have only been a handful of Indian investments in Israel over the past decade, as opposed to the $16.5 billion received from China in 2016 alone.

Our Crowd just closed three deals with India, joining with Reliance Industries for a hi-tech incubator that helps to grow young companies in Jerusalem, bringing Israeli technology to India with Reliance Capital, and collaborating with India's Lets Venture to invest in start-ups.

During Modi's visit, Zebra Medical Vision, a company from a kibbutz near Tel Aviv, and Bangalore-based Teleradiology Solutions will sign a partnership to use analytics in 150 health-care centres.

Looking to reorient Israel's economy toward Asia, Netanyahu hopes more deals will follow, setting a goal of increasing exports to India by 25 percent in the next four years. But it may take a while before the Modi-Netanyahu relationship sparks a serious expansion in investment and trade, both of which remain relatively negligible.

In many respects export-dependent Israel and India, which is focused on supplying its huge population, are complementary.

Israel is a global leader in water and food systems, two critical fields India needs to upgrade. India wants to strengthen its manufacturing base and is looking to do so with technologies coming from Israel. Both countries host major diamond trading and polishing hubs.

Israel's foreign direct investment in India totals only $100 million.

"It's nothing, it's a blip. Why hasn't the relationship grown to the level it should have?" said A. Didar Singh, secretary general of the Federation of Indian Chambers of Commerce.

Singh said more needed to be done to ease regulations, lower non-tariff barriers and solve licensing problems.

Incentives and lifting of red tape could help overcome what diplomats, lobbyists and business owners say is a cultural divide between the breakneck pace of Israel's start-up scene and India's more gradual approach.

(Source: http://www.haaretz.com/israel-news/1.799736 dated 5th July-2017)

And with PM Modi's his epic visit to Israel, it can be widely hoped that Israel will become a core partner for India’s economic modernization.

New Delhi: Since the establishment of diplomatic relations between India and Israel, the bilateral trade between both the countries has increased significantly from USD 200 million in 1992-93 to USD 6,034 million in 2012-13.

Since then, it has, however, stagnated around USD 4 - 4.5 billion with bilateral trade (excluding defence) for 2015 being USD 4.14 billion.

Indo-Israel trade reached to nearly USD 4.2 billion last year.

During the early years, the trade between two countries comprised primarily of diamonds but it has diversified in recent years to include sectors such as pharmaceuticals, agriculture, IT etc.

Major exports from India to Israel include diamonds and metals, chemical products and textiles.

Major imports by India from Israel also include diamonds and metals, chemicals (mainly potash) and machinery and transport equipment.

It is estimated that almost 75% of bilateral trade in services flow from India to Israel.

Trade

Israel was India's 38th-largest trading partner, with trade of USD 5.02 billion (Rs 33,634 crore) in 2016-17, down 18 percent over 2012-13. The trade balance stood in India's favour at USD 1.10 billion (Rs 7,370 crore) in 2016-17.

Mineral fuels and oils are India's leading export to Israel, worth USD 1.01 billion in 2016-17.

India's major imports from Israel in 2016-17 included natural or cultured pearls and precious stones, worth USD 1.11 billion.

Trade in diamonds accounts for nearly 54 percent of the bilateral trade. Nearly 40 diamond dealers from India have opened offices at the Israeli diamond exchange in Ramat-Gan. Some of these dealers have been active in Israel for nearly 30-40 years.

Investment

In addition to direct investments, FDI from Israel to India also flows through USA, Europe and Singapore.

Israeli companies have invested in India in energy, renewable energy, telecom, real estate, water technologies, and are also setting up R&D centres and production units in India. The presence of Israeli companies in India has grown to 300.

While official data about India’s investments in Israel is not available, significant investments from India in Israel include 100 percent acquisition of Israeli drip-irrigation company Naandan by Jain Irrigation, controlling stake in Taro Pharmaceuticals by Sun Pharma and Triveni Engineering Industries’investment in Israeli waste-water treatment company Aqwise.

TCS started operations in Israel in 2005, and the State Bank of India opened a branch in Tel Aviv in 2007. During the last two years, Indian IT majors such as Infosys, Wipro and Tech Mahindra have also made notable investments in Israel.

Agriculture

India and Israel have a bilateral agreement for cooperation in agriculture. The bilateral action plan for 2015-18 is currently operational.

10 out of the proposed 26 Centers of Excellence in agriculture being developed in India with Israeli help have already been commissioned across different states such as Haryana, Maharashtra, Rajasthan, Gujarat etc.

The two countries signed an MoU on Cooperation in Water Resources Management, as well as a Declaration of Intent to further cooperation in agriculture during the visit of President Rivlin to India in November 2016.

Foreign Trade Agreement

India and Israel have shown strong desire and political will to conclude an FTA. Seven rounds of negotiations have been held so far. The First round of negotiation was held on 26 May, 2010.

Israeli President Reuven Rivlin also visited India last year with the hope that the visit would pave the way for FTA that will foster economic growth in both the nations.

It is expected that an FTA would raise the annual trade volume between the two countries threefold upto USD 15 million.

Foreign Trade Agreement between India and Israel would prove beneficial to both sides. Israel’s demand covers the maximum scope of customs book that is, around 80-90%. They are negotiating products from various sectors such as pharmaceuticals, chemicals,

IT and agriculture.

An FTA will open the gates to those products which are not yet exported due to low competitiveness.

During Prime Minister Narendra Modi's unprecedented visit to Israel this week, India and Israel launched a five-year technology fund and agreed to holds talks for an investment protection treaty in a bid to boost trade and business ties. The two nations agreed to put USD 4 million a year for five years into the Israel India Innovation Initiative Fund, or I4F, said the statement issued after Modi's talks with his Israeli counterpart, Benjamin Netanyahu.

Besides getting Israeli technology firms to invest in India, the fund aims to spur Indian firms to open development centres in the Jewish state and invest in their technology ecosystem.

Huge opportunities exist in sectors like agriculture and pharma for India and Israel to boost their bilateral trade while businesses of both the sides can look at collaborations in sectors like solar, agriculture, irrigation and pharmaceuticals.

And with PM Modi's epic visit to Israel, it can be widely hoped that Israel will become a core partner for India’s economic modernization. (Source:-http://zeenews.india.com/economy/how-india-israel-bilateral-trade-relations-have-shaped-up-in-the-last-two-decades-2021733.html 6th July-2017)

In a significant relief for exporters who have been facing difficulties under the new tax regime, the Finance Ministry has now relaxed rules for Goods and Services Tax and has said that exports can continue under existing bonds and letters of undertaking till July 31. Exporters can now submit bonds or LUTs in the revised format for GST by the end of the month.

“Various communications have been received from the field formations and exporters that difficulties are being faced in complying with the procedure prescribed for making exports of goods and services without payment of integrated tax with respect to furnishing of bonds or LUT,” said the Central Board of Excise and Customs (CBEC) in a recent circular.

Under rule 96A of Central GST, exporters have to furnish a bond or LUT in Form GST RFD-11 instead of payment of integrated GST to release their consignments. The CBEC has clarified that exporters can submit a running bond instead of a consignment-wise bond, which would cover the amount of tax involved in the export as estimated by the exporter.

Further, the bank guarantee should not exceed 15 per cent of the bond amount and jurisdictional Commissioner can make a relaxation based on the track record of the exporter.

12-month validity

The CBEC has also said that the LUT will be valid for a period of 12 months. The CBEC has notified persons who are eligible to submit an LUT instead of a bond. These are status holders under the Foreign Trade Policy 2015-2020 or those who have received foreign inward remittances of over ₹1 crore in the preceding year. Urging Central tax officers to help exporters, the CBEC further said that exporters can submit the bond or LUT to the jurisdictional Deputy or Assistant Commissioner having jurisdiction over the principal place of business of the exporter.

“The exporter is at liberty to furnish the bond or LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented,” it has said. The existing practice of sealing containers with a bottle seal will also continue till September 1, it said.

“These clarifications bring much needed relief for the exporters with regard to export without payment of IGST… Now, the assessees can continue exports without payment of IGST under the relaxed procedure,” said PwC in a note.

The relaxations by the CBEC come after reports that exports were stuck at the factory gate due to a lack of procedural clarity on submitting the bond or LUT. The other option of payment of IGST (which is levied on exports and is refundable later) would have created cash flow problems. While the Commerce Ministry and CBEC were trying to ensure a smooth roll out for exporters, there were worries that the lack of clarity could also impact exports in the coming month.

(Source: http://www.thehindubusinessline.com/money-and-banking/cbec-relaxes-norms-on-bonds-under-gst-to-help-exports-take-off/article9756506.ece dated 9th July-2017)

The new system of indirect taxation “Goods and Service Tax (GST)” has become operative from 1st July, 2017. The new system entirely changes the eco system of import & export, as the word ‘exemption’ will now have a very limited meaning. Most of Foreign Trade Policy (FTP) schemes were revolving around the word exemption. Advance Authorisation (AA) offered exemption from all duties on import of inputs required for export production. EPCG scheme offered exemption from BCD, CVD, SAD & education cess coupled with time bound export obligation. EOU scheme offered exemption from all duties in respect of inputs & capital goods. Local procurement by EOU was without payment of excise duty. In addition, EOUs were entitled to exemption or refund from import duty & excise duty. In short, the entire policy was primarily for claiming exemptions there by reducing the blockage of funds & interest cost.

Schemes like MEIS/SEIS offered incentives in the form of tax credit which was allowed to be used for payment of indirect taxes i.e. customs duty, excise duty & service tax.

With introduction of GST, all the above schemes now offer exemption from BCD only. In turn MEIS/SEIS Scrips can be used only for payment of BCD.

What would be the impact on export transaction?

All exporters will be subject to payment of applicable GST in respect of their entire procurement (inputs & capital goods plus spares), which will add to cash outflow and interest cost. GST so paid will be available as input tax credit or will have to be taken back by way of refund, when finished goods are exported. Any refund mechanism requires compliances, and under GST regime compliances are time bound & online, hence, exporters will require knowledgeable workforce. Every serious exporter therefore, must understand the compliance issues & the skill sets required for the same. SMEs need to be particularly aware of the new requirement.

EOUs will have more complications with reference to domestic tariff area (DTA) sales. As per Trade notice no. 11 dtd.30.06.2017 issued by DGFT, the calculation of duty would include paying back whole of the BCD enjoyed on import of inputs utilized, in the manufacturing of finished product sold in DTA. EOUs therefore will have to maintain proper account of utilization of inputs. Earlier they were paying 50% of applicable BCD on the finished products while selling in DTA and there was no need of establishment of co-relation. In the new system this will have to be monitored. Any transfer/supply of goods from one unit of EOU to another would also attract applicable GST.

While one can welcome the idea of GST in general, one has to remember that, the entire supply chain will have to be compliant. The refund mechanism must be robust & sensitive to needs of exporters. If refunds are delayed on account of interpretation, it would have serious impact on exports.

Another very important issue is mentioning the right HS codes in both the documents i.e. Bill of Entry and Shipping bill. In my experience, our knowledge on HS codes is lacking. We haven’t looked into this aspect seriously. There is over dependence on CHA community for deciding the HS code. GST system requires monitoring of HS codes as well.

In short, compliance is the key issue. I am also not very sure about the training of the people handling these issues on both sides. We need to learn expeditiously. Export growth is national priority. Since, exemptions are gone & everything revolves around refund mechanism, we also need change in attitude of revenue department. They should work as facilitators if GST has to be successful, particularly with reference to exports.

Let me try to make you understand GST & exports in a lighter manner.

GST & Marriage

• GST is an ECO SYSTEM, so is marriage. Everybody becomes “in-law” instantly, like father-in-law, mother-in-law, brother-in-law, sister-in-law etc. etc. ‘Law’ surrounds you wherever you go except for Honeymoon. And honeymoon is always for short duration worldwide (GST or No GST).
• GST requires periodic returns, so is marriage. Returns are to be reconciled in a time bound manner, otherwise there are penalties – no reconciliation is possible beyond a certain time limit – so be aware. Periodic returns are also online. So your experience of Facebook, LinkedIn etc. would be extremely useful. Only be aware of cyber security.
• GST says one country – one tax – but there are many rates – many components of tax like CGST/SGST/IGST etc, so is marriage – “one family” with many components. GST is going to stay, so is marriage – expected to stay. We believe marriages are made in heaven and expect them to last not only in this life but 7 more lives. Input tax credit is however limited to this life only.
• We believe GST will bring tax compliance and prosperity – so is marriage, we hope it will bring happiness and prosperity. When it comes to GST it is ‘belief’ and when it comes to marriage it is ‘hope’. ‘Belief’ and ‘Hope’ both are interesting words. They are wonderful but subject to realisation.

THE INDIAN CHEMICAL INDUSTRY

India is the 6thlargest producer of chemicals globally and third largest producer in Asia, in terms of output.The chemical industry is a key constituent of the Indian economy, contributing ~3% to the Indian GDP.The country is ranked 3rd in the production of agrochemicals and contributes ~ 16% to the global dyeintermediate production and dyestuff.

As per Nirmala Sitharaman, Union Minister of State (independent charge) of Commerce and Industry:

The Indian chemical industry has showcased tremendous flexibility during FY 2016

and is expected to reach USD 226 billion by 2020, growing at a brisk pace.

Although the exports, in terms of value, have showcased a decline of 7.8% from USD

12.66 billion in FY 2014-2015 to USD 11.67 billion in FY 2015-2016. However, in terms

of volume, the exports segment witnessed tremendous growth of 7.51%, reaching 56.9

lakh tones in FY 2015-2016 from 52.9 lakh tones in FY 2014-2015.

What are the major chemical categories in India deals with?

Chemical exports of India consistent of various groups namely –

• Dyes and Pigments
• Pesticides and Agrochemicals
• Fine and Specialty Chemicals
• Fertilizers
• Organic and Inorganic Chemicals
• Plastics and Petrochemicals
• Drugs and Pharmaceuticals

In 2014, among the above mentioned categories, organic chemicals and pharmaceuticals were the toptwo exports categories of India, and earned USD 12.1billion and USD 11.7 billion, respectively. The Indian chemical industry is made of large number of small, medium, and large scale companies in both privateand public sector companies. With the consistently growing demand for chemicals in the both thedomestic and international market, the chemical companies and chemical industry in India are expectedto witness growth in the coming years.

INDO-US CHEMICAL TRADE

India is at an all-time high, as the country continues to open the gateway for global companies by variouseconomic and entry reforms. The United States is the second largest trading partner with India afterEurope. According to the joint report of PWC and Indo American Chamber of Commerce, the bilateralrelationship between both the country has been cemented further and is anticipated to remain thesame in the near future. Targeted trade slab of USD 500 billion from the current market trade of over USD100 billion between India and the United States is projecting the cementing relationship between both thecountries.

India accounts for 7% of the global dyestuff and derivatives reactive, acid, vat, and direct dyes. Due to thelarge population of skilled, semi-skilled, and unskilled labor forces, the country is able to produce dyestuffcheaper than the global production rate. India is also the 4th largest producer of agrochemicals after theUnited States, Japan, and China, and United States is the major importer of agrochemicals from India,owing to the low production cost.

How the initiatives taken by the Indian Government and policies of the new president of the United Stateswill affect the Chemical Trade between the two nations?

The recent economic growth of India positioned the country as a major investment destination in theworld. As a result, the Indian government has taken several initiatives such as raising FDI limits upto 100%for chemical companies, dropping regulatory barriers, and licensing to position itself as a global businesshub over the past two years.

Presently, India’s per capita chemical consumption is 1/10th of the global average. A more lucrativeapproach from India, on FDI to increase the foreign currency flow in the country is allowing the Americanchemical manufacturers to easily penetrate into the Indian market at the regional level to grab thepotential opportunities in India, especially small and medium size enterprises.

The Union Budget of 2017-2018, focuses on boosting the chemical industry and reduction in corporatetax for MSMEs by 5%, and new Trade Infrastructure Export Scheme will aid exporters in reducingtransactions costs and making the domestic industry competitive at global level. Additionally, initiativessuch as Make in India, CBEC’s Single Window Interface for Facilitating Trade (SWIFT), relaxation of environmental norms for chemical industry, and the expected GST roll-out, will boost the growth of thechemical industry of the country.

However, actions taken by the newly elected President of America, such as the prompt cancellation of theTrance Pacific partnership (a mega free trade pact) is depicting a different story. The noticeable exclusionof India and China is likely to affect the India’s trade relation with the United States. Majority of economistsin the United States are pointing out the negative outcomes of this decision, as the low cost Indian and

Chinese products help the consumers to a certain extent.

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THE CHEMICAL INDUSTRY IN USA:

The chemical industry is one of the United States' largest manufacturing industries, serving both a sizeable domestic market and an expanding global market. It is also one of the top exporting sectors of U.S. manufacturing. Accounting for over 15 percent of global chemical shipments, the United States is a world leader in chemical production and exports.

The industry's more than 10,000 firms produce more than 70,000 products. In 2015, the U.S. chemical industry had final sales exceeding $800 billion and directly employed more than 810,000 workers, with additional indirect employment by industry suppliers of more than 2.6 million. With investments of $93 billion in research and development in 2015 and a record of strong enforcement of intellectual property rights, the chemicals industry accounts for a significant portion of patents granted in the United States.

Strong product identification and quality, access to low-cost natural gas, a highly educated workforce, world class research centers, protection for intellectual property, and a robust regulatory system make the United States a competitive home for chemicals firms from across the globe.

INDUSTRY SUBSECTORS

Basic Chemicals: These include organic and inorganic chemicals, plastic resins, dyes and pigments. Plastic resins, in particular, have experienced significant growth as a replacement for traditional materials in the automotive, construction, and packaging end-use markets.

Specialty Chemicals: These include adhesives and sealants, water treatment chemicals, plastic additives, catalysts and coatings. These chemicals are performance-oriented and typically include customer/technical servicing as an aspect of their sales.

Agricultural Chemicals: These play a crucial role in the farm economy and the food processing sector. Thanks to modern agriculture, farmers have doubled the production of world food supplies since 1960, tripled the output of foods like cooking oils and meats, and increased per capita food supplies in the developing world by 25 percent.

Pharmaceuticals: These include diagnostics, prescription drugs, vaccines, vitamins, and over-the-counter drugs for human and veterinary applications. This subsector also includes biotechnology products. Strategic investment in companies, facilities, and research and development is especially important for this subsector.

Consumer Products: These include soaps, detergents, and cleaners, as well as toiletries and cosmetics. While consumer products are an established segment of the industry, technological innovation and product development are important due to short product life cycles.

FEDERAL PROGRAMS & LEGISLATION

Manufacturing USA: Manufacturing USA – the National Network for Manufacturing Innovation - consists of linked manufacturing innovation institutes with common goals, but unique concentrations. Each institute is designed to be a public-private membership organization where industry, academia, and government partners are leveraging existing resources, collaborating, and co-investing to nurture manufacturing innovation and accelerate commercialization. In the chemicals area, the Institute for Advanced Composites Manufacturing Innovation (IACMI) was created in 2015 with membership from industry, academia, and the public sector. The IACMI will foster the creation and application of next-generation composites by accelerating the development and adoption of advanced manufacturing technologies in the industry with a focus on vehicles, wind turbines, and compressed gas storage.

Manufacturing Extension Partnership: The Manufacturing Extension Partnership (MEP) helps U.S. firms by providing individually tailored services to help companies improve their productivity, economic competitiveness and technological capabilities. The program leverages money and resources in a cooperative effort with the federal government, state and local authorities, and the private sector. The MEP generates approximately $18 in new sales growth for manufacturers for every federal dollar invested.

Department of Energy’s Advanced Manufacturing Office: Through cost-shared projects, tools, training, and information, the Advanced Manufacturing Office (AMO) works with a broad spectrum of public-private partners to develop and commercialize technologies/materials and practices that will result in increased energy productivity and savings for U.S. industry. Two of the AMOs research and development projects have chemical-related initiatives: the Innovative Process and Materials Technologies Project and the Next Generation Materials Project.

(Source: https://www.selectusa.gov/chemical-industry-united-states )

U.S. CHEMICAL INDUSTRY - STATISTICS & FACTS

The chemical industry is one of the largest and most important industries worldwide. The United States is the largest national producer of chemical products globally. Including the pharmaceutical sector, its chemical output value was more than 797 billionU.S. dollars in 2015. According to the Bureau of Economic Analysis, the value added by U.S. chemistry in 2015 amounted to more than 377 billion U.S. dollars.

Chemical companies from the U.S. are among the industry’s leading global players. With a revenue of nearly 50 billion U.S. dollars in 2015, Dow Chemical is the largest U.S. chemical company, and the world’s number two behind German BASF. Other U.S. top companies are LyondellBasell, DuPont and Praxair. In 2016, several of the leading global chemical companies announced mergers, effectively changing the dynamics of the global chemical industry. The Dow Chemical and DuPont merger were cleared by European regulators in March 2017.

Besides Germany, the U.S. is the world’s top exporter of chemical goods. In 2015, chemical exports were worth some 184 billion U.S. dollars. Most of it was generated through exports to the Asia-Pacific region. The top countries of destination for chemical exports were Canada, Mexico and China. However, the U.S. also has a large demand for chemical imports. In 2015, these imports were worth around 205 billion U.S. dollars.

Corresponding with its dimension, the chemical industry is an important employer. About 810 thousand people work at chemical companies within the United States, including the pharmaceutical sector. This number is distinctly lower than in the late 1990s, when almost one million employees were reported. In 2015, an average U.S. chemical production worker had a working week of 42.6 hours, and an hourly wage of 21.76 U.S. dollars.

The U.S. chemical industry spends relevant amounts for research and development. In 2015, almost 93 billion U.S. dollars was spent for R&D purposes in the chemical industry. That means that R&D funds have almost doubled over the last decade. Accordingly, the United States is the global leader in developing new chemical and pharmaceutical entities.

(Source: https://www.statista.com/topics/1526/chemical-industry-in-the-us/ )

The outlook for the chemical industry in the United States has shifted dramatically in the space of only a few years. Revenues currently stand at approximately $820 billion, and are expected to exceed $1 trillion before the end of the decade. Accounting for more than 80% of the overall chemicals market in the North American Free Trade Agreement (NAFTA) region, comprising Canada and Mexico as well as the United States, the space is seeing what is being dubbed by the Boston Consulting Group as a “once-in-a-lifetime renaissance.”

The driver behind this reversal of fortunes is the shale gas revolution, which has provided the United States with a low cost feedstock to rival its main competitors in China and the Middle East, as well as helping to offset the decline in production from conventional gas reservoirs. Advancements in hydraulic fracturing and horizontal drilling technologies, more commonly known as fracking, have facilitated significant productivity increases. Although it was estimated that the United States was sitting on a host of untapped shale deposits during the time of the global financial crisis, it took another five years for the impact of the country’s abundance of natural gas reserves to make its way downstream: wells drilled in January 2014 produced more than nine times as much gas per day as five years previously, according to the U.S. Energy Information Administration (EIA). The EIA’s most recent projections for U.S. proved natural gas reserves are at a record high of 388 trillion cubic feet, with Texas, Pennsylvania, and Oklahoma taking the top three positions respectively. Texas’ own Barnett shale play is not only the largest in the country, but was also the first deposit to be drilled horizontally; Pennsylvania’s Marcellus shale reserve, which also runs through West Virginia and New York, saw an increase of 10.4 trillion cubic feet of proved reserves added in the last year, out of an additional 50.5 trillion cubic feet in total. The deposits in the Appalachian basin, which were previously thought to have been depleted, have the potential to satisfy demand for natural gas in the entire northeast of the country. Across the United States, shale gas reserves are expected to support requirements for almost a century.

(Source:https://assets.kpmg.com/content/dam/kpmg/pdf/2016/02/global-business-reports-us-chemicals-2016.pdf)

The economy of the United States is the world's largest national economy in nominal terms and second largest according to purchasing power parity (PPP), representing 22% of nominal global GDP and 17% of gross world product (GWP). The United States' GDP was estimated to be $18.46 trillion in 2016. The U.S. dollar is the currency most used in international transactions and is the world's foremost reserve currency, backed by its science and technology, its military, the full faith of the US government to reimburse its debts, its central role in a range of international institutions since World War II and the petrodollar system. Several countries use it as their official currency, and in many others it is the de facto currency. The United States has a mixed economy and has maintained a stable overall GDP growth rate, a moderate unemployment rate, and high levels of research and capital investment. Its seven largest trading partners are Canada, China, Mexico, Japan, Germany, South Korea, and the United Kingdom.

The US has abundant natural resources, a well-developed infrastructure, and high productivity. It has the world’s ninth-highest per capita GDP (nominal) and tenth-highest per capita GDP (PPP) as of 2013. Americans have the highest average household and employee income among OECD nations, and in 2010 had the fourth highest median household income, down from second highest in 2007. It has been the world's largest national economy (not including colonial empires) since at least the 1890s.

The U.S. is the world's third largest producer of oil and natural gas. It is one of the largest trading nations in the world as well as the world's second largest manufacturer, representing a fifth of the global manufacturing output. The US not only has the largest internal market for goods, but also dominates the trade in services. US total trade amounted to $4.93T in 2012. Of the world's 500 largest companies, 128 are headquartered in the US.

The United States has one of the world's largest and most influential financial markets. The New York Stock Exchange is by far the world's largest stock exchange by market capitalization. Foreign investments made in the US total almost $2.4 trillion, while American investments in foreign countries total over $3.3 trillion. The economy of the U.S. leads in international ranking on venture capital and Global Research and Development funding. Consumer spending comprises 71% of the US economy in 2013. The United States has the largest consumer market in the world, with a household final consumption expenditure five times larger than Japan's. The labor market has attracted immigrants from all over the world and its net migration rate is among the highest in the world. The U.S. is one of the top-performing economies in studies such as the Ease of Doing Business Index, the Global Competitiveness Report, and others.

The US economy went through an economic downturn following the financial crisis of 2007–08, with output as late as 2013 still below potential according to the Congressional Budget Office. The economy, however, began to recover in the second half of 2009, and as of 2016, unemployment had declined from a high of 10% to 4.7%.

In December 2014, public debt was slightly more than 100% of GDP. Domestic financial assets totaled $131 trillion and domestic financial liabilities totaled $106 trillion.

TRADE REGULATIONS, CUSTOMS AND STANDARDS IN USA

Trade Policy

The US trade regime consists of a complex web of diverse regulatory and policy objectives. These goals are often inter-related and mutually reinforcing. Trade objectives must also co-exist with US foreign and domestic policy goals that address multiple political, economic, security and social considerations. These multi-layered objectives often require US legislators and Administration officials to balance conflicting goals, especially in the areas of international trade and homeland security.

US import policy is also characterised by a balancing act between trade and security concerns. In essence, the US government seeks to facilitate and expedite the inward flow of international goods and services while maintaining national security and ensuring that all pertinent laws and regulations are being observed. The US government is also tasked with ensuring that domestic industries and jobs are safeguarded against unfair trade practices, such as unfairly priced imports, illegally subsidised imports, or surging imports. Additionally, the US administers a range of uni-lateral, bi-lateral, regional and multi-lateral preferential trade arrangements; enforces a number of trade restrictions and restraints; and undertakes various other trade-related functions.

Quotas and Import Licensing

US import quotas may be divided into two types: absolute and tariff rate. Tariff‑rate quotas (TRQs) provide for the entry of a specified quantity of the product at a reduced rate of duty during a given period. There is no limitation on the amount of the product that may be entered during the quota period, but quantities entered in excess of the quota for that period are subject to higher duty rates. The US did not have in place any absolute import quotas or associated visa or licensing requirements as of 1 February 2015.

As provided in the Harmonized Tariff Schedule of the United States (HTSUS), some commodities such as beef, cocoa powder and cotton are subject to TRQ limitations in effect as of the date of publication of Guide to Doing Business with the US. Additionally, CBP administers a considerable number of TRQs that have been included in US trade preference programmes such as AGOA, ATPDEA, CBTPA and HOPE as well as in FTAs negotiated by the US.

Import Tariff

All goods imported into the US are either subject to duty or duty‑free, depending on their classification under the applicable items in the HTSUS. When goods are dutiable, ad valorem, specific or compound rates may be assessed.

The country of origin of merchandise imported into the customs territory of the US can affect, among other things, the rate of duty, eligibility for special programmes, admissibility, quota, procurement by government agencies and marking requirements.

Rates of duty for imported merchandise may also vary depending upon the country of origin. Most merchandise is dutiable under the most favoured nation (MFN) — now referred to as normal trade relations (NTR). Duty‑free status is available under various exemptions (e.g., GSP, FTA partners, preference programme beneficiaries, and other exemptions listed in HTSUS Chapter 98).

Customs Procedures

The Customs and Border Protection (CBP) is the unified border agency within the Department of Homeland Security (DHS). Although the primary focus of CBP has shifted heavily towards security since 11 September 2001, CBP has the twin goals of guarding and securing US borders while facilitating the legitimate flow of goods and people. CBP uses multiple strategies and employs the latest technology to accomplish these goals. For example, CBP has developed several collaborative programmes designed to enhance the security of cargo entering the US by eliminating or minimising vulnerabilities throughout the supply chain. These programmes include the Customs-Trade Partnership against Terrorism (C-TPAT) and the Container Security Initiative (CSI).

Goods brought into the US are subject to import duties except from some preference-beneficiary countries. Import licences are generally not required. Imports are usually subject ad valorem and/or specific import duties. Regular rates are applied on imports from countries enjoying NTR or formerly MFN status. CBP has the authority on tariff classification for duty rates purposes. US tariff rates and HS commodities classification can be searched online via the Tariff Information Center of the US International Trade Commission.

Product Safety

Any consumer product offered for importation will be refused admission if it (a) fails to comply with an applicable product safety standard or regulation or with a specified labelling or certification requirement, or (b) is determined to present a substantial product hazard. These requirements are administered by the CPSC.

In order to improve consumer product safety compliance rates, the CPSC strongly recommends that manufacturers fully comply with both CPSC mandatory standards and private sector voluntary standards. Although private sector standards are conceived as voluntary requirements, products that fail to comply with them are nonetheless regarded as substandard in design and may be considered to present a “substantial product hazard” for that reason alone. Any product that presents a substantial product hazard will be refused entry into the US and, if the product is already in circulation, subject to a CPSC recall. Click here for the list of regulated products provided by the CPSC.

Marking and Labelling Requirements

US customs laws require each imported article produced abroad to be marked in a conspicuous place, as legibly, indelibly and permanently as the nature of the article permits, with the English name of the country of origin to indicate to the ultimate purchaser in the US the name of the country in which the article was manufactured or produced. Articles specifically exempted from individual marking are an exception to this rule.

The research report titled Guide to Doing Business with the US contains special labelling and marking requirements for a wide range of consumer goods such as watch and apparel imported into the US.

Anti-dumping Duties and Countervailing Duties

The US rigorously enforces laws on dumping. When the US Department of Commerce (DOC) determines that a class of foreign goods in the US at less than its fair value, an anti-dumping (AD) duty investigation may be conducted. If all the determinations are affirmative, the DOC will issue a duty order. On the other hand, countervailing (CV) duty orders provide relief from the adverse price impacts of imports that receive foreign government subsidies. CV duty orders impose extra duties on those imports under Sections 701-709 of the Tariff Act.

Documentary Requirements

Entry documents must be filed within 15 calendar days of the date that the shipment arrives at a US port of entry, unless an extension is granted. Entry documents include the following:

A bill of lading, airway bill, or carrier’s certificate (naming the consignee for customs purposes) as evidence of the consignee’s right to make entry.

A commercial invoice obtained from the seller, which shows the value and description of the merchandise. A pro forma invoice may be submitted when the commercial invoice cannot be produced. Entry Manifest (CBP Form 7533) or Entry / Immediate Delivery (CBP Form 3461).

Packing lists, if appropriate, and other documents necessary to determine whether the merchandise may be admitted.

(Source: http://hong-kong-economy-research.hktdc.com/business-news/article/Small-Business-Resources/Trade-Regulations-of-USA/sbr/en/1/1X000000/1X006N12.htm )



The United States has free trade agreements in force with 20 countries. These are:

Australia Bahrain Canada Chile Colombia Costa Rica Dominican Republic El Salvador Guatemala Honduras Israel Jordan Korea Mexico Morocco Nicaragua Oman Panama Peru Singapore

Product: 28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals.

List of supplying markets for a product imported by United States of America

Product: 29 Organic Chemicals

US Dollar Million