“Service with a smile” always goes with the success of a service provider. With the world moving towards globalisation process, interaction by service providers amongst the new, traditional and potential markets is proving a boom for the Indian service industry. India India
WHO ARE SERVICE PROVIDERS:
Ø “SERVICE PROVIDERS” ARE THOSE WHO PROVIDE SERVICES IN THE ABOVE 161 TRADEABLE SERVICES UNDER THE GENERAL AGREEMENT ON TRADE IN SERVICES OF WTO. “SERVICE PROVIDER” MEANS:
Ø Supply of a ‘service’ from India
Ø Supply of a ‘service’ from India
other country in India
Ø Supply of a ‘service’ from India
presence in the territory of any other country.
Ø Supply of a ‘service’ in India
foreign exchange or in Indian Rupees which are otherwise
considered as having being paid for in free foreign exchange by
RBI.
Service providing facilities can be set up in any area.
161 TRADEABLE SERVICES COVERED BY WTO GENERAL AGREEMENT ON TRADE IN SERVICES:
LIST OF SERVICES
1. BUSINESS SERVICES
A. Professional Services
B. Computer and related services
C. Research and Development Services
D. Real Estate Services
E. Rental/Leasing Services without Operators
F. Other Business Services
2. COMMUNICATION SERVICES
A. POSTAL SERVICES
B. COURIER SERVICES
C. TELECOMMUNICATION SERVICES
D. AUDIOVISUAL SERVICES
E. OTHERS
3. CONSTURCTION AND RELATED ENGINEERING SERVICES
4. DISTRIBUTION SERVICES
5. EDUCATION SERVICES
6. ENVIRONMENTAL SERVICES
7. FINANCIAL SERVICES
8. HEALTH-RELATED AND SOCIAL SERVICES
(OTHER THAN THOSE LISTED UNDER 1.A.h-j.)
9. TOURISM AND TRAVEL-RELATED SERVICES
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES
(Other than audiovisual services)
11. TRANSPORT SERVICES
A. MARITIME TRANSPORT SERVICES
B. INTERNAL WATERWAYS TRANSPORT
C. AIR TRANSPORT SERVICES
D. SPACE TRANSPORT
E. RAIL TRANSPORT SERVICES
F. ROAD TRANSPORT SERVICES
G. PIPELINE TRANSPORT
H. SERVICES AUXILIARY TO ALL MODES OF TRANSPORT
12. OTHER SERVICES NOT INCLUDED ELSEWHERE
Apart from extending all possible facilities applicable to merchandise exports, the threshold limit for recognition as Service Export House etc. has been pegged at 1/3rd of the level prescribed for merchandise exports.
Definitions
“Services” include all the 161 tradeable services covered under the General Agreement on Trade in Services where payments for such services is received in free foreign exchange. A list of services is given in Appendix-54 of Handbook of Procedures (Vol.1).
EPCG Scheme
The service providers shall be eligible for the facility of EPCG Scheme. The provisions of paragraph 6.5(vii) of the Policy shall also extend to the service providers availing licences under this scheme.
EOU/EPZ/SEZ/STP Scheme
The service providers shall also be eligible for the facility of EOU/EPZ/SEZ/STP scheme.
Passenger Baggage
Service providers may import drawings, designs, integrated circuits and layout designs, software in diskettes and CDs related to their line of services as a part of passenger baggage without a licence.
Import of restricted items
Service providers shall be entitled to import restricted items upto 10% of the foreign exchange earned by them during the preceding licensing year for import of essential goods related to their line of business, including office and other equipment required for their own professional use.
The Govt. has framed special schemes for export promotion. These are briefly explained as under:
Status
The service providers are eligible for recognition as Service Export House, International Star Service Export House, International Super Star Service Export House on achieving the performance level as mentioned below:
Category Average free Free foreign Average net NFE
Foreign exchange exchange earning free foreign earned
Earning during during the preceding exchange earned during
The preceding licensing year, During the preceding the
Three licensing in Rupees three licensing years, preceding
Years, In Rupees in Rupees licensing
Year, in
Rupees
Service
Export
House 4 Crores 6 Crores 3 Crores 5 Crores
International
Service
Export House 20 Crores 30 Crores 15 Crores 25 Crores
International
Star Service
Export House 100 Crores 150 Crores 75 Crores 125 Crores
International
Super Star
Service
Export House 300 Crores 450 Crores 225 Crores 375 Crores
The service status holder indicated above are entitled to all the facilities mentioned in paragraph 12.10 of the Policy.
PROCEDURE FOR GRANT OF RECOGNITION CERTIFICATE
Service provider eligible for recognition as Service Export House, International Service Export House, International Star Service Export House, International Super Star Service Export House should file an application in Appendix 19B of the Handbook of Procedures (Vol.I) alongwith the specified documents. An application for grant of status shall be made by the registered office in the case of a company and Head Office in the case of others. The application shall be accompanied by a C.A.
The eligibility criteria for such recognition shall be on the basis of the FOB/NFE value of export of goods and services, including software exports made directly, as well as on the basis of services rendered by the service provider during the preceding three licensing years or the preceding licensing year, at the option of the exporter. The exports made, both in free foreign exchange and in Indian Rupees, shall be taken into account for the purpose of recognition.
The exports made by a subsidiary of a limited company, having majority share holding the subsidiary, shall be counted towards export performance of the limited company for the purpose of recognition.
AGRO FOCUS ZONE
Service providers in certain identified agro focus zones, supplying services related to exports for agriculture, horticulture, floriculture and allied sectors may import equipments under EPCG Scheme. The export obligation may be offset by earning foreign exchange in lieu of services rendered.
POLICY AND PROCEDURE FOR CLAIMING IMPORT LICENCES, INCENTIVES AND BENEFITS:
SERVICE PROVIDERS REQUIRE IMPORTS OF:
Ø Capital Goods: means any plant, machinery, equipment or accessories and professional equipment required for rendering services by services providers.
Ø Furniture, consumables and other essential requirements related to the main activities of the service providers.
IMPORT OF CAPITAL GOODS: POLICY AND PROCEDURE:
EXPORT PROMOTION CAPITAL GOODS SCHEME
Ø Service providers are eligible to import capital goods.
Ø This scheme permits import of capital goods for pre production, production and post production. These goods can be imported in CKD/SKD form as well as computer software systems.
Ø Customs Duty leviable will be 5% against the normal rate of about 34.2%
Ø Free foreign exchange to be earned equivalent to 8 times of the customs duty saved over a period of 8 years reckoned from the date of issuance of licence.
Ø Where the customs duty saved is Rs.100 Crores or more, export obligation is to be fulfilled over a period of 12 years.
Ø Capital goods imported are subject to actual user condition till the export obligation is completed.
SPECIAL DUTY FREE IMPORT SCHEMES FOR SERVICE PROVIDERS:
DUTY FREE CREDIT ENTITLEMENT CERTIFICATE SCHEME FOR SERVICE PROVIDERS:
Ø All service providers who have a total foreign exchange earning of at least Rs.10 Lakhs in the preceding or current financial year are eligible to qualify for a duty credit entitlement. For individuals foreign exchange earned criteria is Rs.5 lakhs in the preceding financial year.
Ø All service providers other than hotels and restaurants are entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year.
Ø Hotels approved by Department of Tourism and other Service Providers in the tourism sector registered with the Department of Tourism are entitled to duty credit equivalent to 5% of the foreign exchange earned by them in the preceding financial year.
Ø Stand-alone restaurants are entitled to 20% duty credit of the foreign exchange earned by them in the preceding financial year.
Ø Capital goods including spares, office equipment and professional equipment, office furniture and consumables related to the main line of business of the service provider can be imported.
Duty Credit and the goods imported are non-transferable.
SPECIAL INCENTIVES FOR STAR EXPORT HOUSES AND STATUS HOLDERS:
PERFORMANCE DURING THE CURRENT PLUS THE PREVIOUS THREE YEARS:
[1] ONE STAR EXPORT HOUSE: Rs.15 Crores
[2] TWO STAR EXPORT HOUSE: Rs.100 Crores
[3] THREE STAR EXPORT HOUSE: Rs.500 Crores
[4] FOUR STAR EXPORT HOUSE: Rs. 1500 Crores
[5] FIVE STAR EXPORT HOUSE: Rs. 5000 Crores
Services rendered by units in NE States, Sikkim and J&K, exports to Latin America/CIS/Sub-Saharan Africa , Units having ISO 9000/ISO 14000 are eligible for double weightage.
These Star Export Houses are eligible for the following facilities:
Ø Licence/certificate/permission and customs clearances for both imports and exports on self-declaration basis.
Ø Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels.
Ø 100% retention of foreign exchange in Exchange Earner Foreign Currency account.
Ø Enhancement in normal repatriation period from 180 days to 360 days.
Ø Exemption from furnishing of Bank Guarantee in Schemes under Foreign Trade Policy.
Publications to be referred to:
Ø Foreign Trade Policy for 2004-2009: Policy for imports and exports
Ø Hand Book of Procedures Volume 1 for 2004-2009: Procedures for imports and exports
Ø Hand Book of Procedures Volume 2 (Parts 1 and 2) for 2004-2009: Standard Input-Output Norms for export products. It contains the description of export products covered by various export product groups with description, quantity and wastage norm of imported goods. This publication is to be consulted only by the exporters.
Ø Import Trade Control (Harmonised System) of Classification of Export and Import Items for 2004-2009: It contains the policy for import and export of all goods as to whether these are prohibited, restricted or freely importable for export and import.
The above publications can be referred to on the following website:
Ø commerce.nic.in
Ø dgft
Ø aayaat niryaat form
Publications on Customs and Central Excise:
Ø Customs Act, 1962: Regulations for clearance of
Ø imported and export goods.
Ø Customs Tariff 2005-2006: Regulates levy of customs duties on all imported goods.
Ø Customs Manual: Circulars clarifying the various sections and clauses relating to clearance of goods and the facilities available thereon.
Ø Central Excises and Salt Act, 1944: Regulates levy of central excise duties on goods manufactured in India
Ø Central Excise Tariff 2005-2006: Regulates central excise duty structure.
Ø Central Excise Manual: Contains instructions and circulars touching central excise regulations.
Publications on Foreign Exchange Management:
Ø Foreign Exchange Management Act
Ø RBI Circulars
Website: rbi.org.in
Publications on Income-tax:
Ø Income Tax Act, 1961
Ø Income Tax Circulars
GLOBAL SERVICES EXPORTS: INDIA
Since 1991, the services sector has been growing steadily at an annual average rate of 9%, contributing about 60% of the overall growth of the economy, and raising its share to over 50% of GDP. India
As per the latest RBI data and study by Federation of Indian Chambers of Commerce and Industry, the Indian economy has made a fundamental break through in the external sector with a doubling of services exports from $ 24.9 billion in 2003-2004 to $ 51.3 billion in 2004-05. This acceleration in services exports was mainly on account of the growth of exports in the following high value services:
v Communication services
v Construction services
v Financial services
v News agency services
v Royalty and copyright services
v License fee services
v Management services
Services exports of these aggregated high value categories strengthened by more than four folds from $ 4.7 billion in 2003-04 to $ 22.5 billion in 2004-05. Software exports went up by 41.8% to $ 17.3 billion in 2004-05, the highest increase over the last four years. Other important services where export improved sharply include travel and tourism, transportation services and insurance services. The rise in services exports recorded in 2004-05 is expected to continue in the financial year 2005-06 as exports of business and professional services join software exports as key foreign exchange earners. Even the tourism related services are likely to record a tremendous growth in the future as India
During the current year so far (April-June 2005), services exports have remained buoyant, reflecting the underlying dynamism in travel earnings, sustained pace of export of software and other business and professional services. Software exports remained on the high growth trajectory.
SERVICES EXPORTS FROM 1990 TILL 2004:
From the table given below, it is seen that share of India
(Value in $ billion)
| Year | Total world services export | | |
| 1990 | 807.01 | 4.60 | 0.57 |
| 1991 | 844.83 | 4.90 | 0.58 |
| 1992 | 960.79 | 4.90 | 0.51 |
| 1993 | 943.40 | 5.00 | 0.53 |
| 1994 | 1052.63 | 6.00 | 0.57 |
| 1995 | 1192.99 | 6.80 | 0.57 |
| 1996 | 1250.00 | 7.00 | 0.56 |
| 1997 | 1313.43 | 8.80 | 0.67 |
| 1998 | 1321.43 | 11.10 | 0.84 |
| 1999 | 1333.33 | 13.20 | 0.99 |
| 2000 | 1435.00 | 17.60 | 1.20 |
| 2001 | 1460.00 | 20.40 | 1.40 |
| 2002 | 1540.00 | 20.70 | 1.30 |
| 2003 | 1763.00 | 24.90 | 1.40 |
| 2004 | 2100.00 | 32.20 | 1.50 |
Source: WTO
FUTURE FOR INDIA
FOR INDIA
Growth in the western economies requires a new fuel – that of knowledge and skilled professionals. With the apparent shortage of this manpower, two clear ways of managing it would be by off-shoring or tapping into a skilled workforce from countries like India India
The globalisation of corporate business and workforce around the world among large hi-tech companies is a growing reality today. A global company needs a global employee base as well as a global presence.
v Emphasis on education means that a large pool of resources is available.
v The existing population in the organized sector is making a concerted effort to augment its skills and move up the value chain.
v With much of the overseas population moving back home, and at the same time inflow of investments, there is a lot of knowledge flow happening in India
v India
v India
v India has a good education system, Indian institutes produce more technical manpower than the US
v India
v India
v Indians have been visible in the technology sector, primarily IT, Telecom, Engineering, Financial Services, Pharma, Biotech, Healthcare, ITES BPO, Advertising, Travel and Tourism, Hospitality, Aviation, Education and now infrastructure.
In the global working environment, both in developed and emerging markets, India India
LIST OF SERVICES
1. BUSINESS SERVICES
A. Professional Services
a. Legal Services
b. Accounting, Auditing and Bookkeeping Services
c. Taxation Services
d. Architectural Services
e. Engineering Services
f. Integrated Engineering Services
g. Urban Planning and Landscape Architectural Services
h. Medical and Dental Services
i. Veterinary Services
j. Services provided by Midwives, Nurses, Physiotherapists and Paramedical Personnel
k. Others
B. Computer and related services
a. Consultancy Services related to the installation of Computer Hardware
b. Software Implementation Services
c. Data Processing Services
d. Database Services
e. Others
C. Research and Development Services
a. R&D Services on Natural Sciences
b. R&D Services on Social Sciences and Humanities
c. Interdisciplinary R&D Services
D. Real Estate Services
a. Involving Own or Leased Property
b. On a Free or Contract Basis
E. Rental/Leasing Services without Operators
a. Relating to Ships
b. Relating to aircraft
c. Relating to other Transport Equipment
d. Relating to other Machinery and Equipment
e. Others
F. Other Business Services
a. Advertising Services
b. Market Research and Public opinion polling services
c. Management Consulting Services
d. Services related to Management Consulting
e. Technical Testing and Analysis Services
f. Services Incidental to Agricultural, Hunting and Forestry
g. Services Incidental to Fishing
h. Services Incidental to Mining
i. Services Incidental to Manufacturing
j. Services Incidental to Energy Distribution
k. Placement and Supply Services of Personnel
l. Investigation and Security
m. Related Scientific and Technical Consulting Services
n. Maintenance and Repair of Equipment (not including maritime vessels, aircraft or other transport equipment)
o. Building- Cleaning Services
p. Photographic Services
q. Packaging Services
r. Printing, Publishing
s. Convention Services
t. Others
2. COMMUNICATION SERVICES
A. POSTAL SERVICES
B. COURIER SERVICES
C. TELECOMMUNICATION SERVICES
a. Voice-Telephone Services
b. Packet-Switched Data Transmission Services
c. Circuit-Switched Data Transmission Services
d. Telex Services
e. Telegraph Services
f. Facsimile Services
g. Private Leased Circuit Services
h. Electronic Mail
i. Voice Mail
j. On-Line Information and Data Base Retrieval
k. Electronic Data Interchange (EDI)
l. Enhanced/Value-added Facsimile Services including Store and Forward, Store and Retrieve
m. Code and Protocol Conversion
n. On-Line Information and /or Data Processing (including transaction processing)
o. Others
D. AUDIOVISUAL SERVICES
a. Motion Picture and Video Tape Production and Distribution Service
b. Motion Picture Projection Services
c. Radio and Television Services
d. Radio and Television Transmission Services
e. Sound Recording
f. Others
E. OTHERS
3. CONSTURCTION AND RELATED ENGINEERING SERVICES
A. General Construction Work for Building
B. General Construction Work for Civil Engineering
C. Installation and Assembly Work
D. Building Completion and Finishing Work
E. Others
4. DISTRIBUTION SERVICES
A. Commission Agent’s Services
B. Wholesale Trade Services
C. Retailing Services
D. Franchising
E. Others
5. EDUCATION SERVICES
A. Primary Education Services
B. Secondary Education Services
C. Higher Education Services
D. Adult Education
E. Other Educational Services
6. ENVIRONMENTAL SERVICES A. Sewage Services
B. Refuse Disposal Services
C. Sanitation and Similar Services
D. Others
7. FINANCIAL SERVICES
A. All Insurance and Insurance-Related Service
a. Life, Accident and Health Insurance Services
b. Non-Life Insurance Services
c. Reinsurances and Retrocession
d. Services Auxiliary to Insurance (including brokering and agency services)
B. Banking and Other Financial Services (excluding insurance)
a. Acceptance of deposits and other repayable funds from the public
b. Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction
c. Financial Leasing
d. All payment and money transmission services
e. Guarantees and commitments
f. Trading for own account or for account of consumer, whether on exchange, in an over- the - counter market or otherwise, the following:
- money market instruments (cheques, bills, certificates of deposits, etc.)
- derivative products including, but not limited to, futures and options
- exchange rate and interest rate instruments, including products such as swaps, forward rate agreements, etc. transferable securities
- other negotiable instruments and financial assets, including bullion
g. Participation in issue of all kinds of securities, including under writing and placement as agent (whether publicly or privately) and provision of service related to such issues Money binding
h. Money binding
i. Asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial depository and trust services
j. Settlement and clearing services for financial assets, including securities, derivative products and other negotiable instruments
k. Advisory and other auxiliary financial services on all the activities listed in article 1B of MTN, TNC/W/50, including credit reference and analysis, investment and portfolio research and advise, on acquisitions and own corporate restructuring and strategy
l. Provision and transfer of financial information and financial data processing and related software by providers of other financial services.
C. Other
8. HEALTH-RELATED AND SOCIAL SERVICES
(OTHER THAN THOSE LISTED UNDER 1.A.h-j.)
A. Hospital Services
B. Other Human Health Services
C. Social Services
D. Other
9. TOURISM AND TRAVEL-RELATED SERVICES
A. Hotels and Restaurants (including catering)
B. Travel Agencies and Tour Operators Services
C. Tourist Guides Services
D. Others
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES
(Other than audiovisual services)
A. Entertainment Services (including theatre, live bands and circus services)
B. New Agency Services
C. Libraries, Archives, Museums and other Cultural Services
D. Sporting and other Recreational Services
E. Others
11. TRANSPORT SERVICES
A. MARITIME TRANSPORT SERVICES
a. Passenger Transportation
b. Freight Transportation
c. Rental of Vessels with Crew
d. Maintenance and Repair of Vessels
e. Pushing and Towing Services
f. Supporting Services for Maritime Transport
B. INTERNAL WATERWAYS TRANSPORT
a. Passenger Transportation
b. Freight Transportation
c. Rental of Vessels with Crew
d. Maintenance and Towing Services
e. Supporting Services for Internal Waterways Transport
C. AIR TRANSPORT SERVICES
a. Passenger Transportation
b. Freight Transportation
c. Rental of Aircraft with Crew
d. Maintenance and Repair of Aircraft
e. Supporting Services for Air Transport
D. SPACE TRANSPORT
E. RAIL TRANSPORT SERVICES
a. Passenger Transportation
b. Freight Transportation
c. Pushing and Towing Services
d. Maintenance and Repair of Rail Transport Equipment
e. Supporting Services for Rail Transport Services
F. ROAD TRANSPORT SERVICES
a. Passenger Transportation
b. Freight Transportation
c. Rental of Commercial Vehicles with Operator
d. Maintenance and Repair of Road Transport Equipment
e. Supporting Services for Road Transport Services
G. PIPELINE TRANSPORT
a. Transportation of fuels
b. Transportation of other Goods
H. SERVICES AUXILIARY TO ALL MODES OF TRANSPORT
a. Cargo-Handling Services
b. Storage and Warehouse Services
c. Freight Transport Agency Services
d. Others
12. OTHER SERVICES NOT INCLUDED ELSEWHERE
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