STATE CONTROL OVER IMPORT AND EXPORT OF GOODS

Reserve Bank of India was established in 1935 to exercise control over banking and fiscal
activities. Foreign Exchange Regulation Act, 1947 was passed to control the difficult position
of foreign exchange. Industries (Development and Regulation) Act, 1951 provided for
industrial licensing and registration. MRTP Act was passed in 1969 to exercise control over
monopolies, unfair trade practices and restrictive trade practices. Sick Industrial Companies
(Special Provisions) Act, 1985 was passed as a solution to growing sickness in industries.

Securities and Exchange Board of India Act, 1992 was passed to establish a statutory body
(SEBI) to exercise control over rapidly growing capital market. As international business is
growing, importance of controls over foreign transactions is growing. So, Foreign Exchange
Regulation Act, 1973; Foreign Trade (Development and Regulation) Act, 1992; Foreign
contribution (Regulation) Act, 1976 and COFEPOSA, 1974 are of great emphasis.

The main purpose of economic legislation is

a. to support the economic policies of the Government.

b. to exercise control over economic activities.
c. to protect consumers from unscrupulous persons.
d. To prevent bad side effects of the development.

CONSTITUTIONAL PROVISIONS

Article 246 of Indian Constitution indicates bifurcation of powers to make laws,

between Union Government and State Governments. Parliament has exclusive powers to
make laws in respect of matters given in List I of the Seventh Schedule of the Constitution
(called Union List).

STATE LIST

State Government has exclusive powers to make laws in respect of matters in List-II
of seventh schedule to our Constitution. These items include Police, Public Health,
Agriculture, Land etc… Items in this list relevant to export and import are as follows:

Item No. 26 – Trade and commerce within the state subject to the provisions of entry 33 of
List III.
Item No. 52 – Taxes on the entry of goods into a local area for consumption, use or sale
therein.

CONCURRENT LIST

List III of Seventh Schedule called ‘Concurrent List’, includes matters where both Central
Government and State Government can make laws. This list includes items like Criminal law
and Procedure, Trust and Trustees, Civil procedures, economic and social planning, trade
unions, charitable institutions, price control, factories, etc.. Items in this list relevant to export
and import are as follows:

Item No. 19 – Drugs and poisons, subject to the provisions of entry 59 of List I with respect
to opium.

Item No. 33 – Trade and commerce in, and the production, supply and distribution of, -

a) the products of any industry where the control of such industry by the union is
declared by parliament by law to be expedient in the public interest, and imported
goods of the same kind as such products;
b) foodstuffs, including edible oilseeds and oils;
c) cattle fodder, including oilcakes and other concentrates;
d) raw cotton, whether ginned or unginned, and cotton seed; and
e) raw jute.

In India, exports and imports are regulated by Foreign Trade (Development and Regulation)
Act, 1992, which replaced the Imports and Exports (control) Act, 1947, and gave the
Government of India enormous powers to control it. Besides the FTDR Act, there are some
other laws which control the export and import of goods. These include :-

a) Tea Act, 1953

b) Coffee Act,1942
c) The Rubber Act, 1947
d) The Marine Products Export Development Authority Act, 1972
e) The Enemy Property Act, 1968
f) The Export (Quality Control and Inspection) Act, 1963.
g) The tobacco Board Act, 1975
Control over the import of the goods in to India is exercised by the Import Trade Control
Organisation, which functions under the ministry of commerce.

CUSTOMS ACT, 1962

Section 12(1) of the customs Act is the charging section which provides for imposition of a
duty called Customs duty levied as per the customs Tariff act 1975, or any other law for the
time being in force on the goods imported in to India or exported out of India. The objects of
Customs Act are

i) To regulate imports and exports.

ii) To protect domestic industries from dumping.
iii) To collect revenue in the form of customs duty and indirect tax.
iv) To assist allied legislations such as FTDR and FEMA.

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

The foreign exchange regulation Act 1973 was reviewed in the year 1993 as a part of ongoing
process of economic liberalization in foreign investment and foreign trade. Since 1993 there
has been substantial increase in our country’s foreign exchange reserves, growth in foreign
trade, realization of tariff, liberalization in investment, increased access to external
commercial borrowing by Indian companies. Therefore, the government repealed the FERA
and in its place brought FEMA, 1999.

Section.7 of the FEMA deals with export of goods and services. Section7. (1) Every exporter
of goods shall—

a) furnish to the Reserve Bank or to such other authority a declaration in such form and
in such manner as may be specified, containing true and correct material particulars,
including the amount representing the full export value or, if the full export value of
the goods is not ascertainable at the time of export, the value which the exporter,
having regard to the prevailing market conditions, expects to receive on the sale of the
goods in a market outside India;
b) furnish to the Reserve Bank such other information as may be required by the

Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such
exporter.
 Section 7(3) exporters of service shall furnish in the prescribed format the true and correct
particulars in relation to payment of such services. The SOFTEX form is filed by exporters of
services under this provision, as unlike the physical export of goods where the exporter has to
file GR form before the customs authorities, the export takes place through web/internet
where the customs are not involved.

Rule 9 of FEM (Export of goods) Regulations 2000 – exporter to furnish value of

goods/software realized within 6 months of export. 2nd proviso to Rule 9, RBI can extend
time on sufficient/reasonable cause being shown. The exporter to produce evidence for
reasonable and positive steps taken to realize the proceeds. When reasonable efforts are made
no penalty shall be levied under FEMA.

Sec.13 deals with Penalties: Sec.13 (1) says if any person contravenes provisions of the
act/rules/regulations/notifications/conditions of RBI…

a) Upon adjudication of the contravention is liable to pay penalty up to thrice the sum
involved (if quantifiable).
b) Upon rupees two lakhs if not quantifiable.

If the penalty is not paid by the person, then he will be liable to Civil Imprisonment.

Export Import Policy, or Exim Policy, is a collection of guidelines and instructions

governing the import and export of products. Section 5 of the Foreign Trade (Development
and Regulation Act) of 1992 gives the Indian government the authority to announce its Exim
Policy for five years. Each year on March 31, import and export policies in India have
amendments, enhancements, and new programs take effect on April 1. In collaboration with
the Directorate General of Foreign Trade, the Ministry of Finance, and its network of regional
offices, the Union Minister of Commerce and Industry announces any changes or
amendments to the Exim Policy.

What are the objectives of the Exim Policy?

 To increase India’s export and import growth.

 To stimulate long-term economic growth by increasing access to intermediates, components,
consumables, essential raw materials, and capital goods.
 To improve the competitiveness of the agriculture industry and services, create new
employment opportunities and encourage the attainment of internationally accepted quality
standards.
 To supply high-quality services and goods at an affordable cost. Canalization is a critical
component of Exim Policy, as it restricts the import of certain goods to designated agencies.
For example, only SBI and a few foreign banks or recognised organisations may import gold
in bulk.

The impacts of EXIM policy

From the perspective of developing economies, India’s foreign trade policy is critical. If we
did not have a foreign trade policy, it would be a daunting and costly task. For example,
India’s Iron and Coal reserves are well-established business opportunities, but we must
import technical know-how from countries that pioneered it to expand this sector.

Another area that could bring our country to a standstill is our inability to meet the demand
for petroleum products. The absence of a foreign trade policy would severely impede our
country’s economic growth.

For some time now, India has been one of the world’s most important financial and political
players. The current trade policies, economic reforms, and India’s inherent strengths are all
factors that contribute to this rise in global demand for Indian products and services. The
country is also investing in infrastructure and technological advancements, which are likely
to positively impact the economy in the years to come.

Conclusion

The Foreign Trade Development and Regulation Act, 1992 guides India’s export-import
policies. India’s Foreign Trade Development and Regulation Act regulates and promotes
foreign trade. A new Foreign Trade Act replaced the 1947 Imports and Exports Act, and the
DGFT is the main governing body for Exim Policy.

India’s Export Import Policy, also known as the foreign trade policy, aims to boost export
performance, promote foreign trade, and maintain a favourable balance of payments. Exports
and imports from India and policies and procedures for export promotion are part of the
Indian EXIM Policy, a collection of various government decisions in foreign trade. The
central government prepares and announces trade policy.