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The Regulatory Frame Work
The Regulatory Frame Work
Export Import Policy or Exim Policy or Foreign Trade Policy is a set of guidelines and instructions related to
the import and export of goods.
Various Objectives of Exim Policy are :-
To facilitate sustained growth in exports from India and import in India.
To stimulate sustained economic growth by providing access to essential raw materials, intermediates,
components, consumables and capital goods scheme required for augmenting production and
providing services.
To enhance the technological strength and efficiency of Industry Agriculture industry and services,
thereby improving their competitive strength while generating new employment opportunities, and to
encourage the attainment of internationally accepted standards of quality.
To provide clients with high-quality goods and services at globally competitive rates.
Canalization is an important feature of Exim Policy under which certain goods can be imported only
by designated agencies. For an example, an item like gold, in bulk, can be imported only by specified
banks like SBI and some foreign banks or designated agencies
EXIM policy aims to accelerate the country’s transaction to an internationally oriented economy in order to
derive maximum benefit from the expanding global market.
Various policy objectives are achieved through three legislations. These are:
1. Foreign Trade (Development & Regulation) Act, 1993 administered by Director General, Foreign Trade
(DGFT) replacing the earlier legislation Import & Export (Control) Act, 1947, administered by the Chief
Controller of Imports & Exports (CCIE).
2. Foreign Exchange Management Act, 1999 administered by the Department of Economic Affairs, Ministry
of Finance and the Exchange Control Development of the Reserve bank of India. FEMA has been brought in
place of Foreign Exchange Regulation Act.
3. Indian Customs and Excise Act, 1962 administered by Central Board of Excise and Custom.
The rules and operational procedures and changes relating to imports are framed by the Foreign Exchange
Dealers Association of India (FEDAI). In addition, Uniform Customs & Practice for Documentary Credit
(UPDC) formulated by International Chamber of Commerce, Paris which has a global acceptance, is
indispensible to cover transactions under documentary credits.
All member countries of World Trade Organization need to follow a certain framework of obligations while
formulating the import policy so that the policy does not have a discriminatory and restrictive dimension.
As such, India’s import policy is formulated with WTO’s framework. Any restrictions on imports imposed in
India, are therefore in line with the ones allowed under WTO regime. The WTO Agreements also contain
special provisions which give developed countries the possibility to treat developing countries more favourably
than other WTO Members. In line with these, India has signed several trade arrangements with some South
Asian Countries.
Physical control over imports is exercised by DGFT and the Customs Deptt. RBI exercise financial controls
through the guidelines provided to authorize dealers. Of late, tariffs rather than quantitative restrictions are
being used to regulate import trade.
Under the present policy, all goods, except those appearing on Negative list can be freely imported in India.
For goods included in the restricted or banned list, import license may be issued by the Director General of
Foreign Trade. An import license is an authorization which includes a customs clearance permit (CCP)
indicating inter alia, quantity description and value of the goods, actual user conditions if any, the minimum
export value if any, export obligation, if any, and value addition obligation, if any. Import licenses which are
issued on C.I.F. basis, are given in duplicate viz. Customs Copy (for clearance from customs) and Exchange
Control copy for remittances.
For exporting units, certain special facilities have been provided under the present policy. Under the Export
Promotion Capital goods (EPCG) Scheme, capital goods can be imported at a concessional rate of custom
duty, subject to an export obligation to be fulfilled within a specified period of 5-8 years. Under the Duty
Exemption Scheme, the government permits import raw materials, intermediates, components, consumables,
spare parts, accessories, packing materials and computer software required for direct use in the product to be
exported duty free under different categories of licenses. Advance license is issued for inputs needed for export
production. It can be issued for physical exports, intermediate supply and deemed exports
Appraisal for issue of guarantees or loans is similar to term finance. For importing under deferred payment, the
importer should have sufficient cash generated to pay the due installments. He should arrange for payment of
advance and down payments from his own resources which would cover bank's margin requirement. Imported
machinery has to be hypothecated to the bank and the importer should counter guarantee the transaction.
Payment under foreign credit may be made under (a) letter of commitment method or (b) reimbursement
method. Under the letter of commitment procedure, remittances from India for the relative imports are not
permitted. The importer in India obtains a letter of commitment from the Government of India after furnishing
a bank guarantee for payment of rupee equivalent of the import value. The importer furnishes the letter of
commitment to the bank opening L/C. Then the usual procedure follows. The shipping documents are delivered
to the importer on payment / acceptance. Where no L/C is opened at all and on receipt of document covering
imports rupee deposits are made to Government account by the importer through the bank.
Under the reimbursement method, the aid giving the country makes available to the Government of India on
production of evidence of payment of imports. Hence, payment to the suppliers is made by the L/C opening
bank through the normal banking channels and reimbursement is by the Government of India by submitting the
required documents.
EXIM bank also finances such imports into India which are required for future exports or are export -relatedfor
eg. imports by Export Oriented Units, import of computer systems for development and export of software,
import of plant, machinery, technology for upgradation/expansion of production capability for export markets.
Exim Bank also finances bulk imports of consumable inputs and canalized items. Under this scheme,
promissory notes drawn in favour of commercial banks by their importer borrowers are discounted, Exim bank
will issue letter of commitment for finance on request from commercial bank indicating its requirement. The
quantum of finance depends on the condition that import order should not be less than Rupees one Crore.