EXIM POLICIES WITH RESPECT TO

FOREIGN TRADE POLICY 2015-2020

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OVER VIEW

 Composition & Direction of Foreign Trade

 Foreign Trade Policy
 India’s Foreign Trade Policy
 Foreign Trade Policy 2015 – 2020
 FERA & FEMA

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COMPOSITION & DIRECTION
OF FOREIGN TRADE
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 5

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Composition Of Foreign Trade

Composition of foreign trade means major commodity or

sectors in which India is doing export and import. India is a very old
participant in world trade. Its participation have been promoted by the
opening of Suez Canal and speedy development of the ship building
industry supplemented by the spread of industrial revolution in Europe
and fast expansion of Indian railways.
 Composition

Export Import

Fuels, capital goods, Manufactured goods

chemicals, food grains,
Petroleum products, Capital
goods ,Pearls and precious
gems, Iron and steel
Fertilizers ,edible oil
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textiles , Gems and
Jewellery, Handicraft,
Light machinery etc.
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 IMPORT
S
 It refers to goods that we buy from other countries.

 At times of independence India was an agrarian economy.

 Partition of our country has brought food shortage because
wheat growing regions vested with Pakistan.
 Hence India need to import in large quantities, food , cotton jute.
Etc
 With development of economy over these days, there occurred
changes in composition of imports.The development required setting
up of industries , modernization of agriculture etc.
 Now,Capital goods like machinery, chemicals, fertilizers ,metals
7
,m8/1i7n/20e1r5 als petroleum products etc. are
 EXPORT
S
 Exports means that we are selling commodities to other countries.

 At the time of independence our exports comprise of

agricultural products like tobacco, spices,
raw materials of cotton and jute etc.
 Due to industrialization the proportion of raw materials in our
exports declined.

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 Composition of Trade

Composition of exports
S. No Commodity Group Year 2010-11 ( in %age)
1 Agriculture and allied products 9.9
2 Ores and minerals ( excluding coal) 4.0
3 Manufactured Goods 68.0
4 Crude and petroleum products( Including coal) 16.8
5 Other and unclassified items 1.2
Total 100.0

• Source : Economic Survey 2011-12

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 Composition of Exports
1%

10%
17%
4
%

Agriculture and allied products

Ores and minerals(excluding

coal)
Manufactured Goods

Crude and petroleum products

68%
(including coal)

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 Composition of Imports
S. Commodity Year
Group 2010-11 Composition of Imports
N
o
1 Food and allied 2.9
products 3% Food and allied
products
2 Fuel 31.3 Fuel

3 Fertilisers 1.9 32% Fertilisers

49%
Paper Board
4 Paper Board, 0.6
manufacture and Capital Goods
newsprint
Others
5 Capital Goods 13.1 2%
13% 1%
6 Others 47.7

Total 100.0
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 DIRECTION OF INDIA’S FOREIGN
TRADE

 Direction means countries to which India exports its goods

and countries from which it imports.
 Direction of trade also helps to understand the diplomatic
relationship maintained by India with other countries of
trade.
 West Europe (28.1 per cent), America (25.4 per cent), Africa
(6.3 per cent) and East Europe (3.1 per cent).
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 Direction of foreign trade consists of destination of
exports and sources of our imports.

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 Prior to our Independence when India was under British
rule, much of our trade was done with Britain. Therefore,
UK used to hold the first position in India’s foreign trade.
 However, after Independence, new trade relationships
were established. Now USA has emerged as the most
important trading partner followed by Germany, Japan and
UK. India is also making efforts to increase the exports to
other countries
also the direction of India’s exports and imports. 13
 Group of countries to which India Exports

EASTERN
OECD OPEC ASEAN
EUROPE

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Organization for
Organization of
Economic Petroleum Developing
Co- Exporting Eastern Europe. Nations
operation & Countries
Development (OPEC)
(OECD).

• USA, • Kuwait, • Romania, • China,

Canada, Iran, Iraq, Russia and Hong Kong,
European Saudi others South
Union (EU), Arabia and Korea,
Australia others. Singapore
and Japan and
Malaysia.

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 TRADE POLICY
Trade policy refers to the complete framework
of laws ,regulations ,international
agreements, and, negotiating stances adopted
by a government to achieve legally binding
market access for domestic firms.
-Walter Goode

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The Government has set a long-term vision of making
India a major player in world trade.
Foreign Trade Policy (FTP) provides the basic policy
framework
of translating this vision into specific strategies, goals and
target

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 STRTEGIC OPTIONS FOR TRADE
POLICY
19

⚫ A Free trade policy is one which does not impose

any restriction on the exchange of goods and services
between different countries. A free trade policy involves
complete absence of tariffs, quotas, exchange
restrictions, taxes and subsidies on production, factor use
and consumption.

⚫ A Protective trade policy pursued by a country

seeks to maintain a system of trade restrictions with the
objective of protecting the domestic economy from the
competition of foreign products
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 An Inward looking trade policy(import substitution)
stresses the need for a country to evolve its own style of
development and to be the master of its own fate, with
restrictions on the movement of goods, services and

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people in and out of the country. An inward looking trade
policy encourages the development of indigenous
technologies
appropriate to a country’s resource endowment.


An Outward looking trade policy (export-led
growth)encourages not only free trade but also the free
movement of capital, workers, enterprises and students, a
welcome to the multinational enterprise, and an open
system of communications. 20
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INDIA’S FOREIGN TRADE POLICY

The foreign Trade of India is guided by the Export-Import (EXIM )
policy of the Government of India and is regulated by the Foreign
Trade (Development and Regulation ) Act,1992.

The Foreign Trade Policy contains various decisions taken by

the government in the sphere of Foreign Trade, i.e., with respect
to imports and exports from the country and more especially
export promotion measures, policies and procedures related
thereto.

It is the set of guidelines and instructions established by DGFT

(Directorate General of Foreign Trade ) in matters related to the
import and export of goods in India.

The present foreign trade policy is for the period of 5 years i.e.
from 2015 to 2020.
 FTP is the new
name for the

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earlier EXIM
policy. 31st august 2004

- To double our %
share of global
merchandise trade To act as an effective
within the next 5 instrument of economic
years growth by giving a thrust
to employment
generation. 22
⚫ The Union Commerce Ministry, Government of
India announces the integrated Foreign Trade Policy
FTP in every five year. This policy is updated every
year on the 31st of March 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
April 1,2015 is an integrated policy for the period 2015-
2020.

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Prior to 1985 , the Government of India used to
announce the EXIM policy annually.However,with a
view to have uniformity and stability in EXIM
policy,it was decided to give the policy a validity of
three years and the first three-year EXIM policy was
announced in 1985.

Since 1985, there was a moderate trend towards

trade liberalisation,which finally took shape in 1991.

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*DGFT (Directorate General of Foreign Trade) is the
main governing body in matters related to Exim Policy.

*This Policy is prepared and announced by the Central

Government (Ministry of Commerce) which aims at:
developing export potential, improving export
performance, encouraging foreign trade and creating
favorable balance of payments position, in general.

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LEGAL FRAMEWORK FOR FOREIGN TRADE OF
INDIA

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 Foreign Trade (Development and Regulation) Act, 1992,
 Foreign Trade (Regulation) Rules 1993

 Foreign Trade (Exemption) Order 1993

 Garments Export Entitlement Policy: 2000-2004,

 Export (Quality Control and Inspection) Act, 1963,

 Customs and Central Excise Duties Drawback Rules,

1995,
 Foreign Exchange Management Act, 1999

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 Customs and Central Excise Regulations
 Export and Import Policy - now called Foreign Trade Policy

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 Handbook of Procedures – Vol. I

 Handbook of Procedures – Vol. II incorporating the Standard

 Input Output Norms (SION)

 ITC (HS) Classification of Import and Export Policy

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 Objectives of
India’s Foreign Trade Policy
2015-20
• FTP 2015-20 provides a framework for increasing exports of
goods and services as well as generation of employment and
increasing value addition in the country, in line with the ‘Make in
India’ programme.
• The Policy aims to enable India to respond to the challenges of
the external environment, keeping in step with a rapidly evolving
international trading architecture and make trade a major
contributor to the country’s economic growth and development.
•To arrest and reverse declining trend of exports is the
main aim of the policy. This aim will be reviewed after two and half
years.
•Simplification of the application procedure for availing various
benefits.
 •To set in motion the strategies and policy measures which
catalyze the growth of exports.
•To encourage exports through a mix of measures including
fiscal incentives, institutional changes, procedural
rationalization and efforts for enhance market access across the
world and diversification of export markets.

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 Highlights of Foreign Trade policy
2015 - 2020
Increase exports to $900 billion by 2019-20, from $466
billion in 2013-14.
 Raise India's share in world exports from 2% to 3.5%.
 Merchandise Export from India Scheme (MEIS) and
Service Exports from India Scheme (SEIS) launched.
 Served From India Scheme (SFIS) will be replaced with
Service Export from India Scheme (SEIS).
 For grant of rewards under MEIS, the countries have been
categorized into 3 Groups, whereas the rates of rewards
under MEIS range from 2 per cent to 5 per cent. Under
SEIS the selected Services would be rewarded at the rates
of 3 per cent and 5 per cent.
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FTP to be aligned to Make in India, Digital India and Skills
India initiatives.
Duty credit scrips made freely transferable and usable For
payment of custom duty, excise duty and service tax.
 Export promotion mission to take on board state
Governments
Unlike annual reviews, FTP will be reviewed after two-and-
Half years.
Higher level of support for export of defence, farm Produce
and eco-friendly products.
Nomenclature of Export House, Star Export House, Trading
House, Premier Trading House certificate changed to 1,2,3,4,5
Star Export House. The criteria for export performance for
recognition of status holder have been changed from Rupees to
US dollar earnings.
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 Online procedure to upload digitally signed document by
Chartered Accountant/Company Secretary/Cost Accountant
to be developed.
 Validity period of SCOMET export authorisation extended
from present 12 months to 24 months.
 Chapter-3 incentives extended to units located in SEZs.
 Export obligation under EPCG scheme reduced to 75%
to Promote domestic capital goods manufacturing.
 E-Commerce exports of handloom products,
books/periodicals, leather footwear, toys and customised
fashion garments through courier or foreign post office
would also be able to get benefit of MEIS (for values up to
INR 25,000).
 Inter-ministerial consultations to be held online for issue of
various licences.
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 No need to repeatedly submit physical copies of documents
available on Exporter Importer Profile.
 108 MSME clusters have been identified for focused
interventions to boost exports. Accordingly, ‘Niryat Bandhu
Scheme’ has been galvanised and repositioned to achieve
the objectives of ‘Skill India’.
Trade facilitation and enhancing the ease of doing business are
the other major focus areas in this new FTP. One of the major
objective of new FTP is to move towards paperless working in
24x7 environment.
Manufacturers, who are also status holders, will now be
able to self-certify their manufactured goods in phases,
as
originating from India with a view to qualifying for
preferential treatment under various forms of bilateral
and
36
aregional
c c esstrade
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agreements. This ‘Approved Exporter
to international
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Objectives
 To facilitate external trade and payments

 To promote the orderly development and

maintenance of foreign exchange market

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 Foreign exchange transactions were regulated by
Foreign exchange regulation act (FERA), 1973
 Following the liberalization ushered in 1991 some
amendments were made to FERA in 1993 there
was a lot demand to bring certain major changes
in FERA in the light of economic changes took
place
 Consequently a new act was formed to replace
FERA, known as Foreign exchange management
act (FEMA), 1999

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 Administration of the Act
40

- The rules regulations and norms pertaining to many sections are laid down by
RBI in consultation with central Government.
- The Act requires central Government to appoint,
⚫ Adjudicating Authorities for holding enquires related to the contravention of the
Act
⚫ one or more Special Directors (appeals) to hear appeals against the order of the
Adjudicating authorities

- Central Government shall have to establish

1. An Appellate Tribunal for foreign Exchange to hear appeals against the
order of the Adjudicating Authorities and the Special Directors

2. A Director of Enforcement with a Director and such officers or class of officers

as it thinks fit for taking up for investigation the contravention under this Act

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 FERA V/s FEMA:-
1. In FEMA only the specified acts related to
foreign exchange are regulated while in FERA
anything and everything that has to do with
foreign exchange was controlled

2. The objective of FEMA is to facilitate trade while

that of FERA is to prevent misuse

3. FEMA is a much smaller enactment only 49

sections against 81 sections of FERA

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A thorough understanding of the country’s
trade policy and incentives are crucial for
the development of a successful
international business strategy.
AT A GLANCE

 Composition & Direction of Foreign Trade

 Foreign Trade Policy
 India’s Foreign Trade Policy
 Foreign Trade Policy 2015 – 2020
 FERA & FEMA

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