FOREIGN TRADE

Trade Policy, EXIM Policy

Foreign Trade
Also known as international trade.
It is business across international borders.
It is high in recent centuries , mainly
because of Industrialization, advanced
transportation, Globalization, MNCs, and
outsourcing.....

Definition
Foreign trade also called International
trade is the exchange of goods and
services across international borders.

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Import Vs Export
Import: commodities (goods or services)
bought from a foreign country
Export: commodities (goods or services)
sold to a foreign country

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Foreign Trade and Economic

Development
For Developing Nations
1. Provides plant, machinery & raw
materials in the initial stage of
development.
2. Provides technology
3. Provides consumer goods while
industrialisation
4. Import for controlling prices of essential
goods at home..
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Significance of Exports

To finance our imports

To increase forex reserve
For economies of scale
To pay foreign debts.

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Why Indian exports lagging

behind?
1. Weve Shortage of almost all products
2. Problem of quality of our goods
3. Weve not been able to create image as
a supplier of quality goods. e.g. our tea which holds a
large market share, was found adulterated with cow dung.

4. Lack of transportation/shipping facilities

5. Goods not up to international standards..

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Powers Of Central Government

1. Powers to make provisions relating to
imports and exports
2. To design Foreign ( EXIM) policy
3. Appointment of DGFT (Director General
Foreign Trade) and his functions .

Balance of Trade
Vs
Balance of Payments

Balance of Trade (BoT)

The difference between the total amount
of exports and imports for a country in one
year.
If Export > Import : favourable BoT
If Import > Export : unfavourable BoT

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Balance of Payments (BoP)

BoP is broader in its scope and include
both goods and services.
It is a systematic record of all international
economic transactions, visible or invisible,
of a nation during a given period generally
one year.
Hence presents a better picture between
one nation and the rest of the world over a
specific period of time.
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Export Processing Zones (EPZs)

A designated area where the entire
production of such a zone is for exports.
Created by govt. & provided with well
developed infrastructural facilities.
Objective is to earn foreign exchange.
They can import capital goods etc., for
export production without paying duty.
E.g. Santa Cruz Electronics EPZ, Mumbai
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Free Trade Zone (FTZ)

A FTZ is a part of a country where tariffs
and quotas are eliminated and
bureaucratic requirements lowered to
attract companies raise the incentives of
doing business there. (tax free area)
For Example: Kandla Free Trade Zone

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What is Foreign Trade Policy?

The Union Commerce Ministry, Government of India
announces the integrated Foreign Trade Policy FTP in
every five year.
This is also called EXIM policy. This policy is updated
every year with some modifications and new
schemes.
New schemes come into effect on the first day of
financial year i.e. April 1, every year.
The Foreign trade Policy which was announced on
August 28, 2009 is an integrated policy for the period
2009-14.

EXIM POLICY OF INDIA

Life Line for Development

INTRODUCTION
EXIM POLICY is a set of guide lines and instructions established
by DGFT in matters related the import and export of goods in India.
This policy is regulated by Foreign Trade Development and
Regulation Act1992.
Governing body Directorate General Of Foreign Trade.

EXIM POLICY DOCUMENT.

a) Handbook of Procedures Volume-1
b)Handbook of Procedures Volumes 2
c)ITC(HS) Classification of Export-Import Items
OBJECTIVES OF EXIM POLICY: to accelerate the economic growth
to provide access to essential raw material, intermediates,
components
to enhance technological strength and efficiency of Indian
agriculture, industry and services
to generate new employment
to encourage the attainment of internationally accepted standards
of quality

EXIMPOLICY(1992-1997)

Govt. of India for the first time introduced The Indian Exim policy on
April -1,1992.

First time to bring stability and continuity the Exim Policy was made
for the duration of five years.

But The Central Government reserves the right to make any

amendments to the trade policy in public interest.

This policy was thought to be a major step towards the economic

reforms of India.

EXIM POLICY(1997-2007)
HIGHLIGHTS OF THE POLICY
This policy was valid for five years instead of three years.
LIBERALISATION
Licensing, quantitative restrictions and other regulatory controls were substantially
eliminated.
IMPORT LIBERALISATION
Out of 542 items from the restricted lists 150 items was transferred to Special Import
License(SIL) and remaining 392 items have been transferred to Open General
license(OGL) List .
EPCG SCHEME
. Duty on imported capital goods reduced from 15% to 10%.
ADVANCED LICENCE SCHEME
Period for export obligation was extended from 12 months to 18 months.
DEPB SCHEME
An exporter may apply for credit as a specified percentage of FOB value of exports made
in freely convertible currency. This credit can be utilized for import of raw materials
,intermediates,components,parts,packaging materials etc

IMPACT OF EXIM POLICY(19972002)

GLOBALIZATION OF INDIAN ECONOMY
AGRICULTURE
Additional SIL of 1% for export of agro product introduced - allowing EOUs
and other units in EPZ in agriculture sectors to sell 50%of their outputs
in the domestic tariff area (DTA) on payment of duty.
100% Foreign Equity participation In the case of 100% EOU, and units
set up in EPZ.
QUALITY UP GRADATION
ISO 9000 certification has been increased from 2% to 5% of the FOB
value of exports. This has encouraged industries for R&D program.
IMPACT ON SELF RELIANCE
This policy encouraged domestic sourcing of raw materials in order to
build of a strong domestic production based.

EXIM POLICY(2004-2009)
General provisions regarding import and export
were formalized
Promotional measures were given importance.
Duty Exemptions/Remissions schemes.
Export promotion capital goods scheme.
Special Economic zones.
Free Trade and Ware housing zones.
Deemed exports

Objectives of Foreign Trade

Policy 2009-14
1. To arrest and reverse declining trend of exports is the main aim of
the policy.
2. To Double India's exports of goods and services by 2014.
3. To double India's share in global merchandise trade by 2020 as a
long term aim of this policy. India's share in Global merchandise
exports was 1.45% in 2008.
4. Simplification of the application procedure
5. To set in motion the strategies and policy measures which catalyse
the growth of exports
6. To encourage exports through a "mix of measures including
fiscal incentives, institutional changes, procedural rationalisation
and efforts for enhance market access across the world and
diversification of export markets.