FOREIGN TRADE POLICY IN

INDIA

PRESENTED BYRAJNI GUPTA

INTRODUCTION

Trade between two or more nations is called foreign

trade or international trade

Foreign trade is also known as external trade.

Foreign trade transactions are classified under three

categories:

Import Trade
Export Trade
Net Exports

FOREIGN TRADE POLICY

Long term objective of the FTP is to promote

exports and increase Indias competitiveness
globally, leading to employment generation
particularly in the labor-intensive sectors
Objective common to both the old and new
policies is to double Indias exports within 5
years

HISTORY

The Government of India, Ministry of Commerce and Industry

announced New Foreign Trade Policy on 27th August 2009 for the
period 2009-2014

Earlier this policy known as Export Import (EXIM) Policy.

Union Commerce Ministry, GOI announces integrated FTP every

five year.

The Export Import Policy (EXIM Policy) or Foreign Trade Policy is

updated every year on the 31st of March and the modifications,
improvements and new schemes becomes effective from
April month of each year

WHERE DOES INDIA STAND

GLOBALLY?

On a per capita income basis, India ranked 140th

by nominal GDP and 129th by GDP (PPP) in 2011.

India is the nineteenth largest exporter and tenth

largest importer in the world.

Economic growth rate stood at around 6.5% for the

201112 fiscal year.

Country

Exports

Imports

GDP

(US$ bn.)

(US$ bn.)

(US$ bn.)

Korea
197.6
175.5
China
438.3
393.6
Mexico
165.4
171.0
Russia
135.9
75.4
South Africa
38.7
35.0
Argentina
29.4
13.1
Brazil
73.1
48.3
India
57.0
74.3
Source: Economist Intelligence Unit

605.0
1446.9
626.1
433.5
160.1
129.7
492.1
588.8

Trade as % of GDP
61.7
57.5
53.7
48.7
46.0
32.8
24.7
22.3

Foreign Trade Policy 2009-14

Short Term Objectives:

arrest and reverse the declining trend of exports.
provide support to those sectors which have been hit
badly by recession.

Medium term Policy Objectives :

achieve an Annual Export growth of 15% by March 2013.
achieve Annual Export growth of around 25% by 2014.

Long Term Objective :

doubling Indias share in Global Trade by 2020.

ANNOUNCEMENTS FOR
FPS, FMS, MLFPS

26 New markets added under this scheme

Incentives under FMS raised from 2.5% to 3%
Incentives available under FPS raised from
1.25% to 2%
MLFPS expanded by inclusion of products like
pharmaceuticals , textile fabrics, rubber
products, glass products, auto components ,
etc

FOREIGN TRADE
POLICY 2009-14
HIGHLIGHTS

TECHNOLOGICAL UPGRADATION

EPCG Scheme at zero duty has been introduced

Jaipur , Srinagar Town of Export Excellence for Handicraft

Kanpur, Dewas and Ambur- Town Of Excellence for Leather

products

Malihabad- Town Of Excellence for Horticulture

E.P.C.G. SCHEME RELAXATIONS

More flexible

No restriction on second hand imported goods

AGRICULTURAL SECTOR

a single window system to facilitate export of perishable

agricultural produce has been introduced.

GEMS ANS JEWELLERY

planned to establish Diamond Bourses

import of cut & polished diamonds on
consignment basis
of personal carriage upto US $ 5 million value
units in case of participation in overseas exhibition

LEATHER SECTOR
re-port of unsold imported rawhides and skins and semi
finished leather
Enhancement of FPS rate to 2 %

STATUS HOLDERS
additional Duty Credit Script to Status holder @1% FOB value
of past exports
Transferability for the Duty Credit scripts being issued to
Status holder.

STATUS HOLDER

EXPORT PERFORMANCE
(F.O.B. BASIS)

1 star house

15 crores

2 star house

100 crores

3 star house

500 crores

4 star house

1,500 crores

5 star house

5,000 crores

AGRICULTURE SECTOR
To reduce transaction and handling cost, a single
window system to facilitate export of perishable
agricultural produce has been introduced.
E.O.U.
allowed to sell in DTA up to a limit of 90%
finished goods for consolidation along with
manufactured goods
CENVAT credit facility

D.E.P.B.
factoring of custom duty component on
Flexibility provided to exporters.
Simplification of procedures.
TEA
Minimum value addition for export reduced
from 100% to50%
DTA sale limit by EOU units increased to 50%

PHARMACEUTICALS SECTOR
Export obligation period increased to 36
months.
extensively covered under MLFPS
for countries in Africa & Latin America -some
countries in Oceania
HANDLOOM SECTOR
requirement of Handloom Mark for availing
benefits has been removed.

SPECIAL ECONOMIC ZONES

Easing of land norms to set up special economic zones

(SEZs)
Transfer of ownership and sale of SEZ units allowed

The need for SEZ and Governments

policy

SEZ policy introduced on 1/4/2000 in India

To increase exports
SEZ can be set up by private, public, joint
sector or by the state government
Transform EPZ(Export Processing Zone) to
SEZ

Provisions under SEZ

100% FDI for

manufacturing
sector
Income tax benefit
Duty free import of
domestic goods
Applicability of
labour laws

Exemption from
Income tax on
investments
Enhanced limit of
2.4 crore for
managerial
remuneration

Performance of Units under SEZ

Zone

2003-2004
(Rs. in crores)

2004-2005
(Rs. in crores)

Kandla SEZ

1018.82

1060.14

SEEPZ-SEZ

7832.81

8298.59

Noida SEZ

1534.17

4266.00

Madras SEZ

1037.96

1376.91

Cochin SEZ

298.91

462.99

Falta SEZ

825.34

569.15

Visakhapatnam SEZ

435.67

579.27

Surat SEZ

869.90

1539.72

Manikanchan SEZ

---

95.54

Jaipur SEZ

---

5.27

Indore SEZ

---

55.02

Advantages of SEZ

Growth and development

Attracts FDI(Foreign Direct Investment)
Exposure to technology and global markets
Increase in GDP and economic model
Employment opportunities are created

EXIM BANK OF INDIA

Set up by an act of parliament in September 1981

Wholly owned by government of India

Commenced operations in March 1982

One of the topmost financial institutions

Objectives:
.......for providing financial assistance to importers and exporters, and for
functioning as the principal financial institution for coordinating the working of
institutions engaged in financial export and import of goods and services with a
view to promoting countrys international trade....
....shall act on business principles with due regard to public interest
(Export-Import Bank of India Act, 1981)

OPERATING GROUPS OF EXIM

BANK

Corporate Banking Group

Project Finance/Trade Finance Group
Small and Medium Enterprise
Export Services Group
Export Marketing Services Bank
Support Services Group

Financing Programmes

Export
Credit

credit opened by an
importer with a bank
in
an
exporter's
country to finance an
export operation

Import Credit

credit opened by
an importer at a
bank in his own
country

upon

which an exporter
may draw.

Loans for Exporting

Units

Provides loans for the exporting

units setup in the country

RECENT TRENDS

Q1(Quarter 1) of 2012-13, exports stood at US$ 75.2 bn and

showed a decline of 1.7 per cent as against an increase of 36.4

per cent during Q1 of 2011-12.

Q1 of 2012-13, imports declined by 6.1 percent over the

corresponding quarter of 2011-12 and stood at US$ 115.3
billion.

Lower growth in POL imports at 5.5 percent during Q1 of

2012-13 as compared with 52.5 percent during Q1 of 2011-12.

RECENT TRENDS

Imports of gold and silver, US$ 9.4 bn during Q1 of 2012-13

were 48.4 per cent lower than that in Q1 of 2011-12.

Non-oil non-gold imports during Q1 of 2012-13 at US$ 65.3

bn recorded a decline of 2.9 per cent as compared to an
increase of 18.9 per cent in Q1 of preceding year.

Trade deficit during Q1 of 2012-13 stood lower at US$ 40.1 bn

as compared with US$ 46.2 bn during Q1 of 2011-12.

Indias Foreign Trade

Growth is uncertain in coming months, given the worsening global
macroeconomic outlook and high interest rate in the domestic market.
During April-Sept 2011, India's imports expanded by 32.4% to $ 233.5

billion. The trade deficit during the April-Sept 2011 period stood at $
73.5 billion. Increasing Trade Deficit further depreciates Rupee.
Depreciation of rupee will also push up cost of imports leading to
wider trade deficit in coming times.

Export/Import Share of India as

(%) of GDP

Exports of Principal Commodities

Imports of Principal Commodities

India's Exports to Principal Regions

India's Imports from Principal Regions

Indias Foreign Trade

Last 10 Years Indias Export/Import

Performance

CONCLUSION
Composition of Indias Foreign Trade has
undergone a positive change. It is a
remarkable achievement that India has
transformed itself from a predominantly
primary goods exporting country into non
primary goods exporting country. Under
Imports also Indias dependence on food
grains and capital goods has declined.

References

http://www.eximkey.com
http://www.eximinfo.com
http://www.eximbankindia.in/
http://dgft.gov.in
http://finmin.nic.in/