Import - Export

Policy of India

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Why do we need export

Export

means trade across the political

boundaries of different nation. No Nation is
self sufficient and had all the goods that it
needs.
This happens because of climatic
variation & unequal distribution of natural
resources. As a result, countries all over the
world have become interdependent, which
necessitated foreign trade.
A developing
country like India with its fast growing
agricultural production to keep pace with the
population to keep pace with the population
growth and growing Industrial infrastructure

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needs high-import and this can be sustained only

with fast export growth. To meet the oil import
bill, export is unavoidable. Thus, it is evident
that export promotion continues to be a major
thrust area for the government. Several
measures have been under taken in the past for
improving export performance of the country. In
India, Govt. has come out from time to time with
various policies on foreign trade to promote
export thereby increasing the Foreign Exchange
Reserve. These policies are termed as Exim
Policy
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Brief history

Import export act was introduced by gov

during second world war and it lasted for

around 45 yrs and in June 1992 this act was
superceded by the Foreign Trade
(Development & Regulation Act), 1992. .
The basic objective of this new act was to
give effect to the new liberalized export and
import policy of the Govt. till 1985 annual
policies were made but from 1985-92, three
yr policy was made and then 5 yr policy was
made coinciding with 5 yr plans 1992-97,
1997-02, 2002-07.

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What is Exim Policy?

It contains policies in the sphere of Foreign

trade i.e. with respect to import & export

from the country and more especially
export promotion measures, policies and
procedure related there to.
Export means selling abroad and import as
bringing into India, any goods and services

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Objective of Exim Policy

Accelerating the countrys transition to a globally

oriented vibrant economy with a view to derive

maximum benefits from expanding global market
opportunities;
Stimulating sustained economic growth
Enhancing the technological strength and
efficiency
Encouraging the attainment of internationally
accepted standards of quality
Providing consumers with good quality products
and services at reasonable prices.

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General provisions regarding export import

Exports and Imports free unless regulated

Compliance with Laws
Interpretation of Policy
Procedure:
Exemption from Policy/ Procedure
Principles of Restriction
Restricted Goods
Terms and Conditions of a Licence
Importer-Exporter Code Number
Exemption from Bank Guarantee
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7Clearance

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EXPORT PROMOTION MEASURES

Policy measures
Institutional set up.
Import Facilitation for Export Production.
Cash subsidies.
Fiscal Incentives.
Foreign Exchange Facilities.
Export incentives
Export production units

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Import Facilitation for Export

Production
Export Promotion Capital Goods Scheme
Special Import Licences
Duty Free Licences under Duty Exemption

Scheme

Duty free licences are issued as :

(1) Advance licence
(2) Advance Intermediate licence.
(3) Special Imprest licence.
(4) Licence for jobbing, repairing etc. for
re-export.
(5) Licence under export production
programme.
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(6) Advance Release Order.

Export Incentives
Duty Exemption
Duty Drawback Scheme
DFRC (Duty free replenishment certificate)
DEPB( Duty entitlement pass book)
Deemed Exports

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Export Production Units

Export Oriented Unit (EOU)
Special Economic Zones (SEZ)
Software Technology Parks (STP)
Electronic Hardware Technology Parks (EHTP)

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Cash subsidies
Marketing development assistance
Air freight subsidy
Spices export promotion scheme
Jute externel marketing assistance
Financial assistance scheme agriculture

&meat exports
Financial assistance to marine products
exports

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Fiscal incentives
Exemption from payment of central

excise duty & simplified procedure for

clearance.
Exemption from sales tax
Exemptions & deductions under income
tax act,1961.
Duty draw back Scheme (DDS)
Cash Compensatory Support ( CCS )
International Price Reimbursement
Scheme (IPRS)
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Comparison of Pre 90s & Post 90s

Exim Policy
Year

(Cr.)

(Cr.)

Trade
Bal.(Cr.)

1948-51

650

647

-3

Excess of Import due toPent-up demand of war.

Shortage of food & raw material due to
partition.
Import of capital goods due to starting
of hydro-electric & other projects.

1951-56

730

622

-108

Trade deficit was largely due to

programmes of industrialization which
gathered momentum and pushed up the
imports of capital goods.

14

Import Export

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No improvement in exports.

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Year

(Cr.)

(Cr.)

Trade
Bal.(Cr.)

1956-61

1080

613

-467

Excess of import due to setting of steel

plants,heavy expansion & renovation on
railways & modernization of many
industries.
Export lower than occur in second plan
which shows that export promotion drive
did not materialize.

1961-66

1224

747

-477

Excess of import due toRapid industrialization needs capital

goods as raw material.
Defence needs had increased due to
aggression by China & Pakistan.
Need of foodgrains due to failure of
crops in 1965-66.

15

Import Export

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Year

(Cr.)

(Cr.)

Trade
Bal.(Cr.)

1966-69
(Annualplans)

5775

3708

-2067

Devaluation was resorted to essentiallyTo reduce volume of import.

To boost export.
Create favourable balance of trade and
balance of payment.

1969-74

1972

1810

-162

As a consequence of import restriction

policies with vigorous export promotion
measures ,during 1972-73 the country
had favourable balance of trade for first
time since independence.
But several international factors pushed
up
the
price
of
petroleum
product,steel,fertilizers etc.results low
magnitude of trade balance.

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Import Export

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Year

Import Export
(Cr.)

(Cr.)

Trade
Bal.(Cr.)

5540

4730

-810

Significant increase in export during

every year of this period.Export of
coffee,tea,cotton fabrics etc.recorded
substantial increase in this period.
But,Janta Government followed policy of
haphazard import liberalization results
decline trade balance from 1977-78.

1980-85 14,986 9051

-5935

Decline in POL imports was more than

by a big hike in non-POL imports as a
consequence of import liberalization.

1974-79

Consequently, huge trade balance.

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Year

Import Export
(Cr.)

(Cr.)

Trade
Bal.(Cr.)

1985-90

28,874 18,033 -10,841

Huge trade balance compelled the

government to approach the World
Bank/IMF for loan.
The government was also forced to
apply brakes on the licensing policy of
imports.

1990-92

45,522 38,300

In 1990-91,push was given to

export,but as a consequence of Gulf war
government failed to curb imports.

18

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-7222

In1991-92, government introduced

number of measures in trade policy
allowing exim scripts,abolishing cash
compensatory support(CCS) schemes as
also a two-step devaluation of the
rupee,but fail to boost up export.
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Year

Import Export
(Cr.)

1992-01

19

(Cr.)

Trade
Bal.(Cr.)

140740 118252 -22,488

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In 1992-01,slow down in exports due toDepressed nature of world markets.

Saturation of developed countries market
for electronic goods which are dynamic
export sectors.
Increased protectionism by industrialised
countries in area of textile and clothing.
Increasing competition from China &
Taiwan.
India underestimated the impact SouthEast Asian crisis
Non-Tarrif barriers have been created by
developed counties to slow down Indian
exports.
In 2000-01 export was largely due to
rupee depreciation along with further
trade liberalization,more openness to
foreign investment in EOU sectors
ike IT.
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Year

Import Export
(US
$million)

2002 03 65422

2003-04

20

80177

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(US
$million)

Trade
Bal.(US
$million)

52512 -12910

64723 -15454

Rise in imports in 2002-03 was broadly

based on oil imports,food &allied
products(edible oil),capital goods.
Exim policy 2003-04gave massive thrust
to exports by
Duty free import facility for service
sector upto earning 10lakh foreign
exchange.
Liberalization of Duty Exemption
scheme.
Besides,all these measures trade balance
in 2003-04 are high due to mainly on
imports of POL products more.Currently,
almost two-third of country crude oil
requirements
are
imported.Besides
import of POL, import of non POL items
shot up by 17% in2002-03 to 26.2%in
2003-04.
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Trade - On an All time High

Economy is
more Open
than ever
before

Strong
Export
Growth

Strong
Service
Exports

Strong
Imports
growth

Indias total external trade in goods and

services grew by 41.5% in H12005-06 to US $
153 billion. This is expected to go up to US $
310 billion by the end of this year. This was just
over US $ 74 billion in 1994.
The trade to GDP ratio, calculated at current
prices, has risen to 29.36% in 2004-05 from
18.28% in 1993-94.
Exports have grown to US $ 57.05 billion during
April-November 2005-2006. They are expected to
grow at 26% during the current year to US$ 100
billion.
Service Exports grew by 71% in 2004-05. India's
IT-ITES exports have shown robust growth and
are expected to grow by 32% this year to US $ 23
billion.
Non-oil imports grew at over 28% during April September 2005 led by demand for capital
goods.

Source: Reserve Bank of India

21

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Trade Trends ..
India's Foreign Trade

200
150

US$ million

US $ billion

India Exports - Goods and Services

100
50
0
9697

9798

9899

9900

0001

Goods

0102

0203

Services

0304

0405

0506
(A)

350
300
250
200
150
100
50
0
1984

Exports

2004-05
Imports

Total Trade

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00

96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05

Asia

Non Asia

96-97

97-98

98-99

99-00

00-01

Capital Goods Imports

01-02

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Total Imports

Source: Reserve Bank of India

7/7/15

2005-06 (A)

India Capital Good Imports

US $ billion

US $ billion

Share of Asia
180
160
140
120
100
80
60
40
20
0

1994

22

03-04

04-05