INDIAN FOREIGN

TRADE
RISHI KUMAR DM16136
VIDHIT BHATIA DM16159
RADHIKA PAREKH DM16235
SRIMATHI DM16247

FOREIGN TRADE

Foreign trade in India includes all imports and exports to and from India.
It is administered by the Ministry of Commerce and Industry at the level of Central
Government.
Export-Import Bank of India is the premier export finance institution in India, established
in 1982 under the Export-Import Bank of India Act 1981. Since its inception, Exim Bank of
India has been both a catalyst and a key player in the promotion of cross border trade and
investment.
In India, the import and export of goods is governed by the Foreign Trade (Development &
Regulation) Act, 1992 and Indias Export Import (EXIM) Policy. Indias Directorate General of
Foreign Trade (DGFT) is the principal governing body responsible for all matters related to
EXIM Policy.

IMPORT SCENARIO IN INDIA

Imports during June, 2015 were valued at US $33116.55 million.
India is heavily dependent on crude oil imports, with petroleum crude accounting
for about 34 percent of the total inward shipments. The country also imports: gold
and silver (12 percent of the total imports), machinery (10 percent), electronic
goods (7 percent) and pearls, precious and semi-precious stones (5 percent).
Cumulative value of imports: April-January 2014-15 was USD 383.41 Billion
(+2.17%)
Oil imports: April-January 2014-15 were USD 124.75 billion (-7.9%)
Non-oil imports: April-January 2014-15 was USD 258.66 billion (+7.8%)

EXPORT SCENARIO IN INDIA

As of 2014, India is the 19th among the leading exporters in the world with exports worth $3.42 trillion.
Exports during June, 2015 were valued at US $22289.43 million.
The most important top five items that India exports are Engineering goods, Petroleum Products,
Gems and Jewellery , RMG of all Textiles and Drug, Pharmaceuticals & Fine Chemicals .
The export values for the top 5 items as of 2011-12 are
1. Engineering goods at 2.8 lakhs crores
2. Petroleum Products at 2.68 lakhs crores
3. Gems and Jewellery at 2.15 lakhs crores
4. RMG of all Textiles at Rs. 65613 crores
5. Drug, Pharmacutes & Fine Chemicals at Rs. 63554 crores.
. Indias merchandise exports reached a level of US $ 312.61 billion during 2013-14 and has set a target of
US $340 billion for 2014-2015.
. Indian exports recorded a Compound Annual Growth Rate (CAGR) of 15.79 per cent from 2004-05 to 201314.

FOREIGN TRADE POLICY 1991

EXPORT PROMOTION AND IMPORT LIBERALIZATION BY STRENGTHENING
EXPORT INCENTIVE.
REMOVING QUANTITATIVE RESTRICTIONS.
CURRENT ACCOUNT AND TRADE ACCOUNT CONVERTIBILITY HAS BEEN
INTRODUCED
TARIFF STRUCTURE HAS BEEN RATIONAL
CASH COMPENSATORY SUPPORT SYSTEM HAS BEEN REPLACED BY A
SCHEME OF VALUE BASED ADVANCE LICENSING SYSTEM.

FOREIGN TRADE POLICY 2009 2014

THE MAIN OBJECTIVE OF POLICY IS TO ACHIEVE AN ANNUAL EXPORT
GROWTH OF 15% WITH AN ANNUAL EXPORT TARGET OF USD 200 BILLION
BY MARCH 2011.
IN THE REMAINING 3 YEARS OF FOREIGN TRADE POLICY UP TO 2014,
COUNTRY SHOULD BE ABLE TO COME BACK ON THE HIGH EXPORT
GROWTH OF AROUND 25% P.A
BY 2014, EXPECT TO DOUBLE INDIAS EXPORT OF GOODS AND SERVICES
THE LONG TERM POLICY OBJECTIVE FOR THE GOVERNMENT IS TO DOUBLE
INDIAS SHARE IN GLOBAL TRADE IN 2020

FOREIGN TRADE POLICY 2015 2020

TALKING ABOUT THE NEW POLICY, WHICH AIMS AT BOOSTING INDIA'S EXPORTS, 'MAKE IN
INDIA' AND 'DIGITAL INDIA' ARE BEING INTEGRATED WITH THE NEW FOREIGN TRADE POLICY.
THE GOVERNMENT IS PITCHING INDIA AS A FRIENDLY DESTINATION FOR MANUFACTURING
AND EXPORTING GOODS, AND THE NEW POLICY IS BEING SEEN AS AN IMPORTANT STEP
TOWARDS REALIZING THAT GOAL.
SOME KEY FEATURES OF THE NEW FOREIGN TRADE POLICY
MERCHANDIZE EXPORTS FROM INDIA (MEIS) TO PROMOTE SPECIFIC SERVICES FOR
SPECIFIC MARKETS FOREIGN TRADE POLICY
FTP WOULD REDUCE EXPORT OBLIGATIONS BY 25% AND GIVE BOOST TO DOMESTIC
MANUFACTURING
FTP BENEFITS FROM BOTH MEIS & SEIS WILL BE EXTENDED TO UNITS LOCATED IN SEZS
FTP 2015-20 INTRODUCES TWO NEW SCHEMES, NAMELY "MERCHANDISE EXPORTS FROM
INDIA SCHEME (MEIS)" AND "SERVICES EXPORTS FROM INDIA SCHEME (SEIS)". SEIS IS FOR
INCREASING EXPORTS OF NOTIFIED SERVICES.

 Agricultural and village industry products to be supported across the globe at

rates of 3% and 5% under MEIS.
Industrial products to be supported in major markets at rates ranging from
2% to 3%
Industrial products to be supported in major markets at rates ranging from 2%
to 3%.
Branding campaigns planned to promote exports in sectors where India has
traditional Strength.
Higher level of support for export of defence, farm Produce and eco-friendly
products.
Export obligation period for export items related to defence, military store,
aerospace and nuclear energy to be 24 months instead of 18 months
Export obligation under EPCG scheme reduced to 75% to Promote domestic
capital goods manufacturing
Export promotion mission to take on board state Governments

BALANCE OF PAYMENTS
Record of all economic transactions between the residents of a country and the rest of the world in a
particular period
It includes all external visible and non-visible transactions
It includes not only imports and exports of goods which are visible items but also such invisible items as
shipping, banking, insurance, tourism, interest on investments, gifts, etc.
The balance of payments is one of the major indicators of a country's status in international trade.

COMPONENTS OF BOP:
Current Account:
Current account refers to an account which records all the transactions relating to
export and import of goods and services and unilateral transfers during a given period
of time.
Current account contains the receipts and payments relating to all the transactions of
visible items, invisible items and unilateral transfers.
Capital Account:
Capital account of BOP records all those transactions, between the residents of a
country and the rest of the world, which cause a change in the assets or liabilities of
the residents of the country or its government. It is related to claims and liabilities of
financial nature.
Balance on current account and balance on capital account are interrelated.
A. A deficit in the current account must be settled by a surplus on the capital account.
B. A surplus in the current account must be matched by a deficit on the capital
account.

Current Account Deficit is the amount by which the value of goods and services
imported by the country exceeds the value of goods and services exported in a
period.
During 1990-91, the current account deficit steeply hiked to $-9680 million while
the capital account surplus was far below at $ 7188 million. This led to an ever
time high deficit in BoP position of India.
The current account balance of India during 2011-12 is recorded to be $ - 78155
million, signifying a deficit eight times that of the figures of 2007-08. Huge
negative debits and comparatively low positive credits caused for this negative
value in current account.
Current Scenario of BoP:
The CAD for the entire fiscal ended March 31, 2015 also narrowed to 1.3 per
cent of the country's Gross Domestic Product
India trade deficit narrowed 7.9 percent year-on-year to 10830 USD Million in
June of 2015
Exports fell by 15.82 percent, Imports decreased 13.4 percent, driven by a
34.97 percent drop in value of oil purchases and a 36.96 percent fall in gold
imports
The slump in exports was mainly due to global slowdown and softening of

CRITICAL ISSUES RELATED TO INDIAN

FOREIGN TRADE
1. Imports and Exports June 2015 $55.40 billion
2. Imports and Exports June 2014 $64.72 billion
. The imported oil bill has declined 35% year on year to $8.7 billion which means layoffs in the
import and export sectors.
. Also foreign trade is being severely affected by global economic slowdown as it is seen that
the April-June Import Export for 2014 which was $193 has dropped to $165 in 2015. (in
Million)
. Indian oil product business is sinking slowly creating huge losses for the industry. (from $6.1
to $2.9 Million)

OBSERVATIONS
Due to the discovery and export of Shale gas by the USA, oil prices have been
dropping steadily.
Persistent weakness in global demand and the lower value of oil products led
India's merchandise exports to fall for the sixth straight month in May.
At present there is no import duty on wheat. But the Food Ministry has proposed 10
per cent import duty to curb cheaper shipments as the country already has surplus
stock. Over the years the production of wheat has declined considerably.
Higher borrowing rates Indian businesses are losing competitiveness
Consumer price inflation rose in June as a result, cutting down interest rates is not
going to happen in near term.

INITIATIVES BY THE GOVERNMENT

To boost the exports and to curb the imports:
Branding for identified sectors (pumps & valves and electrical sector) initiated as a part of the strategy for
popularizing Indian Engineering brand.
Sensitizing key industries for mandating standards for products to discourage imports of sub-standard quality.
Technology induction for export products
Automotive industry DoC is attempting policy/process interventions required for scaling up of the industry from
USD 12 bn to USD 80 bn by 2026.

Service sector:
Has taken steps to boost export of services in certain identified sectors
They have organized two Service Conclave to identify the service sectors which are crucial to India
In conclave:

Barriers are identified, if any

Issues related to reforms needed

Identifying the new markets to export services

INITIATIVES BY THE GOVERNMENT CONTD.,

Ease of doing business

Reducing no. of documents
Enlarging the scope of electronic data inter-change (EDI)
Promoting acceptance of e-info in the place of physical document
Steps are also been taken to convert non-EDI to EDI to ensure speedier processing
at Customs

RECOMMENDATIONS

Trade is concentrated to small no. of countries (Brazil, Argentina, Chile, Venezuela,

Colombia & Peru) should explore new markets that region (Latin America)
Should deepen our engagement with the countries within the South Asian and
African regions given the huge potential. (China has already taken a lead in that
direction)