IMPORT EXPORT STRATEGIES OF INDIA

FLOW OF THE PRESENTATION

Overview of the Foreign Trade Policy

Policy Framework evolution of the policy pre and post 1985

Current Foreign Trade Policy (2009-2014)

Structural and strategic changes in Indias foreign trade due to

the EXIM policies

Current strategies adopted by the government

FOREIGN TRADE POLICY - OVERVIEW

FOREIGN TRADE POLICY or EXIM POLICY is a set of guidelines and instructions and various policy decision taken by the government in the sphere of foreign trade i.e.

with respect to import and export of the country.

It is prepared and announced by the Ministry of Commerce. Initially it was introduced for the period of three years. After 1992, it is being made for 5 years.

POLICY FRAMEWORK

The Foreign Trade Policy can be divided into two parts:

1.

Trade policy before the adoption of EXIM policy in 1985.

2.

since adoption of EXIM policy in 1985.

TRADE POLICY BEFORE 1985

First phase(1951-52)

Restrictive import policy Encourage cash flow of paper notes(income earned through exports)

Less production, shortage of certain goods, restriction for export.

Second phase(1951-53 to 1956-57)

Liberalisation measures were taken in respect of import-export

To build foreign reserve and make a mark in foreign market To fulfil the requirements of capital goods Increased import led to a negative balance in foreign reserve

TRADE POLICY BEFORE 1985

Third phase(1956-57 to 1966)

To decrease foreign debt and to build up the foreign reserves

Fourth phase(June 1966 to 1975-76)

Devaluation of the rupee that boosted export and increase competitiveness.

Fifth phase (after 1975-76)

Adopted the policy of import liberalisation to encourage export promotion. New technology, raw materials of better quality and those which were not available within the country were imported.

TRADE POLICY AFTER 1985

EXIM Policy, 1985

EXIM Policy Committee appointed in 1962. Mr. V. P. Singh announced the EXIM Policy on the 12th of April, 1985 for a 3 year period.

Objectives:

To boost the export business in India.

To remove uncertainty so that industries could frame long term goals.

Major Implications:

201 items of industrial machinery were placed on OGL (Open General License). Import export pass book scheme was introduced Import of 67 items of raw materials & components was transferred to limited permissible list

TRADE POLICY AFTER 1985

EXIM policy ,1990

Announced on April 30, 1990 a new export import policy for a 3 year period. Objectives:

To encourage rapid and sustained growth in export. To streamline the procedures of import licensing and export promotion. To support research institution for building up scientific & technological capability.

Major Implications:

Import of certain raw materials have been canalized.

Automatic licensing upto 10% of the value of pre-imports introduced. Withdrawing the scheme of import-export pass book. Scheme of Star Trading House was introduced for exported with average annual of net foreign exchange earning of Rs. 75 crore in the preceeding three licensing period of the base period.

TRADE POLICY AFTER 1985

EXIM Policy 1992 -1997

In order to liberalize imports and boost exports, the Government of India introduced the Indian EXIM Policy on April 1, 1992 for a period of 5 years.

Major Implications:

The duty-free Export Promotion Capital Goods (EPCG) scheme was introduced.

Export processing zones (EPZ) and 100 % export oriented units (EOUs) were granted several concession.

The scheme of cash compensatory support (CCS) was abolished.

TRADE POLICY AFTER 1985

EXIM Policy 1997 -2002

Objectives:

To accelerate the economy from low level to high level of economic activities. To improve technological strength and efficiency of Indian business sectors. To create new employment. To give quality consumer products at practical prices.

Major Implications:

Imports Liberalization Export Promotion Capital Goods (EPCG) Scheme Duty Entitlement Pass Book (DEPB) Scheme It encourage foreign investment in India.

Fulfilled one of the Indias long terms objective of Self-reliance.

TRADE POLICY AFTER 1985

EXIM Policy 2002 2007

Objectives:

To facilitate sustained growth in exports to attain a share of atleast 1% of global

merchandise trade.

Major Implication:

The contribution of agriculture and allied sector increased to exports.

EXIM Policy 2004 2009

Objectives:

To double Indias share of global merchandise trade from 0.7% to 1.5%.

To give a thrust to employment generation in semi-urban or rural areas.

Major Implications:

Target plus scheme acted as an incentive to exporter. All goods and services were exempted from service tax.

CURRENT POLICY (2009 2014)

Objectives:

To achieve an annual growth rate of 15% with a target of $200mn by 2011.

To come back to a growth rate of 25% pa by 2014. To double export of goods and services by 2014 To double Indias share in global trade by 2020. To promote Brand India through 6 or more Made in India shows To accelerate growth in the export of services

CURRENT POLICY (2009 2014)

Measures of Export Promotion:

DEPB: Duty Entitlement Passbook (DEPB) Scheme

MDAS: The Marketing Development Assistance Scheme MAS: The Market Access Initiative (MAI) Scheme VKGUY: Vishesh Krishi Upaj Yojana Scheme Zero Duty EPCG Scheme 2% Interest Subvention Scheme Reward-Incentive Schemes

ANNUAL SUPPLEMENT OF FTP 2009 - 14

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

1950s

balance of payments crunch.

The crucial problem of foreign exchange shortage. A progressive tightening up of import policy took place in 1957.

1960-61

Government and private imports increased. Government set up 12 Export Promotion Councils.

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

1964-65

Balance of payments once again under pressure

The devaluation of Rupee in the face of financial crisis in June 1966.

Late 1970s and early 1980s

The trade regime was based on a complex system of licensing. Indias trade policy heavily relied on quotas rather than on tariffs There was a slow and sustained relaxation of import controls with the export-import Policy of 1977-78.

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

Reforms post 1991

Main areas were tariffs, exchange rates, non-tariff barriers and capital flows.

The tariff protection reduced, relaxed and simplified the restrictive

import licensing regime.

Import licensing on all intermediate inputs and capital goods were abolished.

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

Reforms post 1991

Internal reforms included reduced control over locational restrictions

and industrial licensing.

The policy focus was on liberalization of capital goods and inputs for industry, to encourage domestic and export-oriented growth.

The major task set for 1990s and beyond has been to lower tariff rates and lifting of foreign exchange control.

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

Reforms post 1991

In February 1992, a dual exchange rate system was introduced. From February 1994, many current account transactions were permitted at the market exchange rate.

Rupee was officially convertible on current account. Restrictions on FDI and portfolio investment were eased. Measures were taken to relax control over foreign trade. Private sector was encouraged to enter into foreign market.

STRUCTURAL CHANGES IN INDIA'S FOREIGN TRADE

Trade initiative has moved towards the Special Economic Zones (SEZ) to enable exporters to avoid bureaucratic red tape governing

transactions and the restrictive labour laws.

With respect to trade policy, India has been a proponent of multilateralism. However, in recent years, it has entered into bilateral

and regional negotiations.

There has been opening up of the service sector to private participation, both domestic and foreign.

Many services have been placed on automatic approval route for FDI.

RECENT MEASURES BY GOVERNMENT

The key strategies outlined to achieve the recent foreign trade policy modifications are:
1.

Unshackling of controls and creating an environment of trust and transparency to unleash the capabilities of enterprises;

2.

Neutralizing incidence of all levies and duties on inputs used in export of products;

3.

Nurturing special focus areas which will generate additional

employment opportunities, especially in semi-urban and rural areas

4. 5.

Simplifying the procedures and bringing down transaction costs; Facilitating technological and infrastructure up gradation of all

sectors.
6.

Emphasis on focused market and product scheme.

PRESENTED BY Anand Tiwari Bhumi Shah Geeta Honrao Siddhartha Shetty

03 07 10 27

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