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 ÷


‡ Introduction
‡ Significance of Foreign Trade
‡ Bodies Monitoring International Trade
‡ GATT
‡ WTO
‡ Balance of Payments And Balance of Trade
‡ India¶s Foreign Trade Policy
‡ India¶s EXIM Policy Highlights
‡ Objectives of India¶s EXIM Policy
‡ Composition of Foreign Trade
‡ India¶s FOREX Reserves
‡ India¶s Dependence on Foreign Trade
‡ India¶s Trade Relations With Foreign Countries
‡ Strategies Adopted to Increase FOREX Reserves
‡ Conclusion
 p


‡ International trade is the exchange of capital, goods and services
across international boundaries or territories.
‡ Foreign trade is recognised across the world over as the significant
determinants of economic growth of the country

  
   

‡ Foreign Direct Investment inflows
‡ Loans from International financial institutions like IMF, World Bank
‡ Direct grants/ aids from other countries
‡ Investment by non residents
‡ Portfolio investment by foreign institutional investors
 á 
 p






: General Agreement on Tariffs and Trade

Memorandum was signed on 30th October 1947 and came into existence on
1st January 1948. Its headquarters is at Geneva and its main function was to
call international conferences to decide on trade liberalisation on a multilateral
basis. It merged in WTO on January 1,1995. There were almost 125 member
nations of GATT



‡ To follow unconditional 



 
principle
‡ To carry on trade on the principle of non:discrimination, reciprocity
an transparency
‡ To grant protection to domestic industry (through tariffs only)
‡ To liberalise tariff and non tariff measures through multilateral
negotiations
  : World Trade Organisation
The WTO came into being on January 1, 1995, and is the successor to the
General Agreement on Tariffs and Trade (GATT), which was created in 1947,
and continued to operate for almost five decades as a de facto international
organization. WTO has 128 members and India is one of the founder member.



‡ Overseeing the implementation, administration and operation of the covered
agreements.
‡ Providing a forum for negotiations and for settling disputes.
‡ Review the national trade policies, and to ensure the coherence and
transparency of trade policies through surveillance in global economic
policy:making.
‡ Assistance of developing, least:developed and low:income countries in
transition to adjust to WTO rules and disciplines through technical
cooperation and training.
‡ Regular assessments of the global trade picture in its annual publications
and research reports on specific topics are produced by the organization.
 á

 


á

 


á

 

á
The balance of payments or BOP measures the payment that flows between
any individual country and all other countries. It is used to summarize all
international economic transactions for that country during a specific time
period, usually a year. Balance of payments is one of the major indicators of a
country's status in international trade, with net capital outflow.

á

 
á
The balance of trade encompasses the activity of exports and imports.
The balance of trade is the difference between the monetary value of exports
and imports in an economy over a certain period of time. A positive balance of
trade is known as a trade surplus and consists of exporting more than is
imported; a negative balance of trade is known as a trade deficit or, informally,
a trade gap.
 p 
  

India has a very complicated Foreign Trade policy. Foreign trade in
India is divided into many categories such as:

‡ Software Industry ‡ Pharmaceutical Industry

‡ Investment Industry
‡ Banking Industry
‡ Insurance Industry
‡ Automobile Industry
‡ Cement Industry
‡ Metal Industry
‡ Paper and Pulp Industry
‡ Sugar Industry
‡ Commercial Vehicles
‡ Jute Industry
‡ Dairy Industry
‡ Fertilizer Industry
‡ Petrochemical Industry
 p 
p


‡DEPB scheme has been extended till May 2009.
‡Refund of service tax on almost all the services.
‡Income tax benefit to 100% EOU¶s has been extended by Government.
‡Split:up facility under DFIA Scheme introduced.
‡Duty free import of samples has been increased from Rs.75,000 to
Rs.1, 00,000.
‡Value of jeweller parcels, through Foreign Post Office is raised to US$ 75,000.
Earlier it was from US$ 50,000.
‡ EOU¶s shall be allowed to pay excise duty on monthly basis, instead of the
present system of paying duty on consignment basis.
‡Customs duty payable under EPCG Scheme has been reduced from 5% to
3%.
‡Setting up a new Export Promotion Council for Telecom Sector.
 
 p 
p

‡ To double the percentage share of global merchandise

trade within the next five years.
‡ To act as an effective instrument of economic growth by
giving a thrust to employment generation.
 ÷!
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›
  
 


› 
EXPORTS & IMPORTS (Provisional):
SEPTEMBER APRIL-SEPTEMBER
EXPORTS (including re-exports)
2007-2008 50243 296423
2008-2009 62641 405118
%Growth 2008-2009 / 2007-2008 24.7 36.7
IMPORTS
2007-2008 68616 456407
2008-2009 111085 661208
% Growth 2008-2009 / 2007-2008 61.9 44.9
TRADE BALANCE
2007-2008 -18373 -159984
2008-2009 -48444 -256090
*Figures for 2007-08 are the latest revised whereas figures for 2008-09 are provisional
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In the new millennium Indian economy has greatly developed with infusion of
more flexible and accepting policies. Over the years, the twin:objectives of
monetary policy in India have evolved as:
‡ maintaining price stability
‡ ensuring adequate flow of credit to facilitate the growth process.

Exports grew by 23.02 per cent during 2007:08 amounting to US$ 155.5 billion,
imports increased by 27.01 per cent to US$ 235.9 billion in the same period.
Further, exports in June 2008 amounted to US$ 14.6 billion while imports in
June 2008 amounted to US$ 24.4 billion.
 p 

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 5


÷

Since independence, India has always tried to
keep healthy relation with all the nations and
specially with neighbouring countries, when trading
is concerned. By 2016, India will be trading at zero
duty with a dozen more countries. Now we are
already enjoying free trade with Thailand and Sri
Lanka. Very soon we will enjoy the same with
China and Singapore.
 



!

 

+
‡ Overseas investment by an Indian party in all its Joint
Venture (JV)/ Wholly Owned Subsidiary (WOS)
‡ External Commercial Borrowings (ECB)
‡ Foreign Direct Investment (FDI)
 ÷ 
In view of the forgoing, the relevance of RBI and
its monetary policy for inducing growth is obvious.
This is what Indian monetary policy has aimed to
achieve.

The steep upward growth in investments,

entrepreneurial activities and innovations in this
decade definitely shows that we are indeed in the
right direction of attaining the objectives of
monetary policy as transparently expressed.