Foreign Trade Regulation in India

Anupam Singh
Gautam(10810012)
U.Kistaiah (10810064)

Agenda
History

of Foreign Trade in India

Foreign Trade Act
Foreign Trade Policy 2009-14
Incentives Schemes
New Initiatives
Organizational Setup

HISTORY OF FOREIGN TRADE IN INDIA

Import control was introduced in

1940
In 1946 the Emergency provisions
ordinance was promulgated to
continue the import trade control
Import and Export(control) Act
came into force with effect from 25th
march 1947
Finally the Import and
Export(control) act was replaced by
the Foreign Trade(Development and

FTDR Act
MAIN PROVISIONS:
1. Development and Regulation
2. Prohibition and Restriction
3. EXIM Policy
4. Director General of Foreign Trade
5. Importer - Exporter Code Number
6. Issue and Suspension/Cancellation of license
7. Search, Inspection and Seizure
8. Penalty for Contravention

Indias Foreign Trade

In the last few years, robust growth in
merchandise exports
From US$ 63 billion in 2003-04 to US $ 168
billion
in 2008-09.
Share of global trade (WTO estimates):
2003

2008

Merchandise trade

0.83%

1.45%

Commercial Services

1.4%

2.8%

Goods & Services

Trade

0.92%

1.64%

Source : Annual report of foreign trade policy

Indias Foreign Trade Exports &

Imports
(Figures in US$ billion)
Year

Export %
Imports %
Growth
Growth

2004-05

83.53

30.8

111.52

42.7

2005-06

103.09

23.4

149.17

33.8

2006-07

126.26

22.5

185.60

24.4

2007-08

162.90

29.0

251.65

27.0

2008-09

185.29

13.6

303.69

20.7

2009-10

178.75

-3.52

288.37

-5.01

Source: Ministry of commerce

REASONS FOR EXPORT DECLINE

Major Hurdles faced by Indian Exporters:
Rupee Appreciation by about 12% in the
year
2007-08
Global Economic Slowdown and Recession in
Developed Economies during 2008-09 and
its impact.
High Interest Rates
Ban on exports of certain food products
since 2007.
High Incentives provided by some of the
countries like China, Bangladesh etc.

Indias Foreign Trade

Major Export Destinations
Country

2008-09
($ bn)

% share in Total

USA

19.7

12%

United Arab Emirates

17.8

11%

China

8.5

5%

Singapore

7.6

5%

Hong Kong

6.4

4%

United Kingdom

6.2

4%

Germany

5.9

4%

Netherlands

5.9

4%

Saudi Arabia

4.8

3%

10

Belgium

4.3

3%
8

Indias Foreign Trade

Major Import Commodities
Commodity

2008-09
($ bn)

% share in Total

Petroleum, Crude and products

93.1

32.36%

Machinery, Electrical and non-electrical

24.3

8.44%

Electronic goods

21.5

7.48%

Gold and silver

19.5

6.76%

Fertilizer, crude and manufactured

13.6

4.72%

Pearls, precious and semi-precious

12.8

4.44%

Organic and inorganic chemicals

12.8

4.43%

Coal, coke and briquettes

10.5

3.64%

Iron & Steel

9.5

3.30%

10

Metaliferrous ores and metal scrap

8.3

2.89%
9

Foreign Trade Policy 2009-14

Short Term Objectives:

To arrest and reverse the declining trend of exports; and

To provide additional support to those sectors which have
been hit badly by recession in the Developed World.
Medium term Policy Objectives :

To achieve an Annual Export growth of 15% with an Annual

Export Target of US$ 200 billion by March 2011.
To achieve an Annual Export growth of around 25% by
2014.
To double Indias exports of goods and services by 2014.
Long Term Objective :

To double Indias share in Global Trade by 2020.

10

Promotional Measures/ Incentive

Schemes

Vishesh

Krishi and Gram Udyog

Yojana (VKGUY)
Focus Market Scheme (FMS)
Focus Product Scheme (FPS)
Market Linked Focus Product Scheme
(MLFPS)

11

Vishesh Krishi & Gram Udyog Yojana

(VKGUY)
To

promote exports of :
(i) Agricultural Produce and their value added
products
(ii) Minor Forest Produce and their value added
variants
(iii) Gram Udyog Products
(iv) Forest Based Products and
(v) Other Products, as notified from time to
time.

VKGUY

benefits are granted with an aim to

compensate high transport costs, and to offset
other disadvantages.
12

Focus Market Scheme

Objective

is to offset high freight

cost and other externalities to
select international markets with a
view to diversify the markets and to
enhance Indias export
competitiveness in these countries.

Currently

notified

109 markets have been

13

Focus Product Scheme

Objective

is to incentivize export of
such products which have high export
intensity / employment potential, so as
to offset infrastructure inefficiencies
and other associated costs involved in
marketing of these products.
Currently over 1000 Products covered
under FPS.
Example: Green Technology products
14

Market Linked Focus Product Scheme (MLFPS)

To

promote exports of products of

high export intensity but which
have a low penetration in countries

Currently

over 1550 products

covered under MLFPS.

15

Foreign Trade Policy 2009-14

New Initiatives
Higher Support for Market and
Product Diversification
26

new markets added under FMS

(16 in Latin America, 10 in AsiaOceania)
Incentive under FMS raised from
2.5% to 3%.
Incentive under FPS raised from
1.25% to 2%.
16

Foreign Trade Policy 2009-14

New Initiatives
Higher Support for Market and Product

Diversification (contd.)

New products under FPS :Engineering products, Plastic (value added

products),Technical Textiles, Green Technology products , vegetables, textiles and certain
Electronic items.

New products/markets under MLFPS : Pharmaceuticals, Synthetic textile

fabrics, value added rubber products, value added plastic goods, textile made ups,, glass
products, certain iron and steel products
. Benefits to these products will be provided, if exports are made to 13 identified markets
(Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam,
Cambodia, Australia and New Zealand).

The above markets also included for existing

Components, Motor cars, Bicycles & Parts, Apparels.

products

i.e.

Auto

17

Foreign Trade Policy 2009-14

New Initiatives
To Support Various Sectors
Like
Gems & Jewelers Sector
Pharmaceutical Sector
Agriculture Sector
Leather Sector
Handloom sector

18

ORGANISATIONAL SET UP
Ministry of commerce

MINISTRY OF COMMERCE
The Ministry of Commerce, Government
of India, is the most important organ
concerned with the promotion and
regulation of the foreign trade of the
country.
Matters related to foreign trade are
dealt with by eight divisions in the
Department of Commerce.
i) Administrative and General Division,
(ii) Finance Division, (iii) Economic
Division, (iv) Trade Policy Division, (v)
Foreign Trade Territorial Division, (vi)
Exports Products Division, (vii) Services
Division, and (viii) Industries Division.

DESCRIPTION OF AUTONOMOUS
BODIES
Export Inspection Council
Indian Institute of Foreign Trade
Indian Institute of Packaging
Export Promotion Councils, Commodity

Boards and Authorities

Federation of Indian Export

Organisation
Indian Council of Arbitration
India Trade Promotion Organisation

PUBLIC SECTOR UNDERTAKINGS

The State Trading Corporation of

India and its subsidiaries

The spices Trading Corporation

The Minerals and Metals Trading

Corporation
subsidiary

of

India

and

its

ADVISORY BODY
Central Advisory Council on Trade: The
Central Advisory Council on Trade,
consisting of representatives from different
organisations and individuals with business
standing and expertise in the field of trade
and commerce, and headed by Commerce
minister.

ATTACHED AND SUBORDINATE

OFFICES
Office of the Director General of Foreign

Trade(DGFT)
Office of Development Commissioners
Director General of Commercial

Intelligence and Statistics

Thank You