TERM FOREIGN TRADE DEFINATION:

Exchange of goods and services between countries. The inclination for one country to trade with another is based in large part on the idea of comparative advantage--which says that any country, no matter how technologically disadvantaged it might be, can always find some sort of good that will let it enter the game of foreign trade. In this sense, foreign trade is just an extension of the production, exchange, and consumption that's a fundamental part of life. The only difference with foreign trade is that producers and consumers reside in separate countries Foreign trade can be considered a number of different things, depending on the type of trade one is talking about. Generally speaking, foreign trade means trading goods and services that are destined for a country other than their country of origin. Foreign trade can also be investing in foreign securities, though this is a less common use of the term Foreign trade is all about imports and exports. The backbone of any foreign trade between nations is those products and services which are being traded to some other location outside a particular country's borders. Some nations are adept at producing certain products at a cost-effective price. Perhaps it is because they have the labor supply or abundant natural resources which make up the raw materials needed. No matter what the reason, the ability of some nations to produce what other nations want is what makes foreign trade work.

In some cases, the products produced in a foreign trade situation are very similar to other products being produced around the world, at least in their raw form. Therefore, these products, known as commodities, are often pooled together in one mass market and sold. This is called trading commodities. The most common commodities often sold in foreign trade are oil and grain. There are a number of issues with imports and exports that must be taken into consideration when conducting foreign trade. For example, some countries have industries they may want to protect. These industries may be in competition with foreign companies for the opportunity to sell products domestically. To protect domestic trade, countries may institute tariffs, which are taxes on certain foreign goods. While this is a way to generate revenue, its real value lies in helping those domestic companies. For example, to encourage domestic production of ethanol in the United States, a tariff has been imposed on Brazilian ethanol. This protects the ethanol market in the United States, which would not otherwise be able to compete with Brazilian ethanol based on cost. In Brazil, ethanol is made from sugar, which produces far more ethanol gallons per acre than corn, the primary crop used for ethanol in the United States.

In addition to tariffs, currency issues are another factor in foreign trade. Some companies selling products overseas prefer to be paid in a certain type of currency, such as the US Dollar or Euro. This protects the company in case the country involved in a trade experiences a rapid devaluation in currency. Most foreign trade will always involve a relatively stable currency.

CONCEPT OF FOREIGN TRADE

Foreign trade is exchange of capital and goods across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While foreign trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization,advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing foreign trade is crucial to the continuance of globalization. Without foreign trade, nations would be limited to the goods and services produced within their own borders International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade.

The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labour are typically more mobile within a country than across countries. Thus foreign trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Then trade in goods and services can serve as a substitute for trade in factors of production. Foreign trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

CLASSIFICATION OF FOREIGN TRADE

we classified the foreign trade under three heads which are as follows: 1. Import Trade 2. Export Trade 3. Entrepot Trade
1.

Import Trade- It refers to purchase of goods from a foreign country. Countries import goods which are not produced by them either because of cost disadvantage or because of physical difficulties or even those goods which are not produced in sufficient quantities so as to meet their requirement. Export Trade- It means the sale of goods to a foreign country. In this trade the goods are sent outside the country Entrepot Trade- When goods are imported from one country and are exported to another country, it is called entrepot trade. Here the goods are imported not for consumption or sale in the country but for reexporting to a third country. So importing of foreign goods for export purposes is known as entrepot trade.

2.

3.

ADVANTAGES OF FOREIGN TRADE POLICY

There are various advantages of foreign trade i.e.Optimal use of natural resources Availability of all types of goods Specialisation Advantages of large-scale of production Stability in prices Exchange of technical know-how and establishment of new industries Increase in efficiency Development of the means of transport and communication International co-operation and understanding Ability to face natural calamities Increase the standard of living Benefits to consumers

REASONS OF FOREIGN TRADE

There are various reasons for conducting business on an international scale. Trade between countries arises because it is to their mutual advantage. If a country is enjoying a monopoly is the production of a certain commodity, it will have an absolute advantage in the production of that commodity over other countries. The other nations have to import that commodity. International trade arises because some countries have a comparative advantage in the production of some goods over other goods. Those countries concentrate on the production of those commodities and trade for other goods which they need from other countries. There are countries which are capable of producing raw material. The other nations have no other alternative but to import them. There are many goods which can be produced by sophisticated equipment

The countries which do not have advance technology are compelled to import such equipments from advanced industrial nations of the world. If a country exports goods to other countries it earns foreign exchange. The country utilizes this foreign exchange to pay the imports of goods and meet its production and development needs. There are many special incentives and privileges which are given by a government to an exporter. These privileges are not available to other traders

MIDDLEMEN IN FOREIGN TRADE

There are a number of middlemen in foreign trade. Because of complex and intricate procedures in foreign trade the role of middlemen is very important. Middlemen have become almost a necessity in foreign trade.

MIDDLEMEN IN IMPORTING COUNTRY

Clearing Agent- A clearing agent is appointed by an importer. He completes various formalities when goods reach the port. He gets the goods cleared by observing customs formalities and then despatches them to the destination of the importer either by road or by rail as the case may be. A clearing agent charges a commission for his services
I.

Import Agent- An import agent acts on behalf of the wholesaler. He completes the complicated procedure involved in importing goods on behalf of the wholesaler. He gets a fixed commission for his services and the risk involved in the business is to be borne by the wholesaler. An import agent has a specialised knowledge of the goods in which he deals.

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Wholesaler and Retailers- The person buying and selling goods in larg quantities is called wholesaler and on the other hand the person sells goods in small quantities to consumers is called retailer

MIDDLEMEN IN EXPORTING COUNTRY

I.

Export Agent- He acts on behalf of the foreign buyer. He collects goods as per the instructions of the foreign buyers and despatches them these goods after completing various formalities. He charge commission as per the agreement for his services. Forewarding Agents- Forewarding agent is appointed by the exporter to act on his behalf. He performs various export formalities and arranges for the export of goods and charges commission as per agreement.

II.

Shipping Company- A shipping company may also act as an agent of the exporter. It despatches goods to the country of the importer by collecting them form the exporter

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BENEFITS OF FOREIGN TRADE

Foreign trade helps every country to make optimum use of its natural resources. Each country can concentrate on production of those goods, for which its resources are best suited. Wastage of resources is avoided in this way and people in general get a feeling that their government is concerned about them, their resources and their money. Foreign trade enables a country to obtain goods, which it cannot produce. Sometimes a country can produce goods but the production cost turns out to be very high. In such a scenario also, importing goods is a better option. Naturally, on such type of goods heavy import duty is not placed. This is done for the good of the public in general. Foreign trade leads to specialization and encourages production of different goods in different countries. Goods can be produced at comparatively low cost due to advantages of division of labor. Due to foreign trade, goods are produced not only for home consumption but for export to other countries also. Nations of the world, in this way, can dispose of those goods in the foreign market that they have in surplus.

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This also introduces an extra caution for maintaining quality that is able to meet the international standards. Such quality-control equipments and procedures thus become available to domestic producers also. The entire state of affairs ultimately benefits the customer.

Whats more foreign trade leads to production at large scale and thus the advantages of large scale production can be obtained by all the countries of the world that indulge in mutual trade. Foreign trade reduces wild fluctuations in prices to a large extent and in the process equalizes the prices of goods throughout the world.

Under developed countries can establish and develop new industries with the machinery, equipments and technical know-how imported from developed countries. This helps in the development of these countries and the economies of the world at large.

Due to foreign competition, the producers in a particular country attempt to produce better quality goods at the minimum possible cost. This increases the efficiency and benefits the consumers all over the world regardless of any national or international boundary.

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BARRIERS INVOLVED IN FOREIGN TRADE

A foreign trade barrier is any barrier that impedes a companys ability to trade in a foreign company. The most common trade barries are listed below:

Tariff and Customs, Service Barriers, Standards, testing, labeling, or Certification, Rules of Origin, Government Procurement Contracting, Intellectual Property Protection Problems, Excessive Government Requirements, Excessive Testing or Licensing Fees, Bribery, and Investment Barriers.

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FOREIGN TRADE POLICY IN INDIA

To become a major player in world trade, a comprehensive approach needs to be taken through the Foreign Trade Policy of India . Increment of exports is of utmost importance, India will have to facilitate imports which are required for the growth Indian economy. Rationality and consistency among trade and other economic policies is important for maximizing the contribution of such policies to development. Thus, while incorporating the new Foreign Trade Policy of India, the past policies should also be integrated to allow developmental scope of Indias foreign trade. This is the main mantra of the Foreign Trade Policy of India.

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OBJECTIVES OF FOREIGN TRADE POLICY IN INDIA

Trade propels economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The Foreign Trade Policy of India is based on two major objectives, they are

To double the percentage share of global merchandise trade within To act as an effective instrument of economic growth by giving a

the next five years.

thrust to employment generation.

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STRATEGY OF FOREIGN TRADE POLICY

Removing government controls and creating an atmosphere of trust Simplification of commercial and legal procedures and bringing down Simplification of levies and duties on inputs used in export products. Facilitating development of India as a global hub for manufacturing, Generating additional employment opportunities, particularly in semi-

and transparency to promote entrepreneurship, industrialization and trades. transaction costs.

trading and services. urban and rural areas, and developing a series of Initiatives for each of these sectors. Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through imports and thereby increasing value addition and productivity, while attaining global standards of quality.

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Free Trade Agreements / Regional Trade Agreements / Preferential Upgradation of infrastructural network, both physical and virtual, Revitalizing the Board of Trade by redefining its role, giving it due

Trade Agreements that India enters into in order to enhance exports. related to the entire Foreign Trade chain, to global standards. recognition and inducting foreign trade experts while drafting Trade Policy. Involving Indian Embassies as an important member of export strategy and linking all commercial houses at international locations through an electronic platform for real time trade intelligence, inquiry and information dissemination.

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ECONOMY OF INDIA
Social democratic policies governed India's economy from 1947 to 1991. The economy was characterized by extensive regulation, protectionism, public ownership, pervasive corruption and slow growth. Since 1991, continuing economic liberalization has moved the country towards a market-based economy. A revival of economic reforms and better economic policy in first decade of the 21st century accelerated India's economic growth rate. In recent years, Indian cities have continued to liberalize business regulations. By 2008, India had established itself as the world's second-fastest growing major economy. However, as a result of the financial crisis of 20072010, coupled with a poor monsoon, India's gross domestic product (GDP) growth rate significantly slowed to 6.7% in 200809, but subsequently recovered to 7.2% in 200910, while the fiscal deficit rose from 5.9% to a high 6.5% during the same period. Indias current account deficit surged to 4.1% of GDP during Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 20092010, according to the state Labour Bureau, was 9.4% nationwide, rising to 10.1% in rural areas, where two-thirds of the 1.2 billion population live.

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India's large service industry accounts for 57.2% of the country's GDP while the industrial and agricultural sectors contribute 28.6% and 14.6% respectively. Agriculture is the predominant occupation in India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%. However, statistics from a 2009-10 government survey, which used a smaller sample size than earlier surveys, suggested that the share of agriculture in employment had dropped to 45.5%. Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, information technology-enabled services and pharmaceuticals. The labour force totals 500 million workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. In 2009-2010, India's top five trading partners are United Arab Emirates, China, United States, Saudi Arabia and Germany.

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Previously a closed economy, India's trade and business sector has grown fast. India currently accounts for 1.5% of world trade as of 2007 according to the World Trade Statistics of the WTO in 2006, which valued India's total merchandise trade (counting exports and imports) at $294 billion and India's services trade at $143 billion. Thus, India's global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion, up by a record 72% from a level of $253 billion in 2004. India's total trade in goods and services has reached a share of 43% of GDP in 200506, up from 16% in 199091.

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EXTERNAL TRADE AND INVESTMENT GLOBAL TRADE RELATION:

22 India'
A map showing the global distribution of Indian exports in 2006 as a percentage of the top market (USA - $20,902,500,000).

Until the liberalisation of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve selfreliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment (FDI) was restricted by upper-limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for nearly 60% of new FDI in the industrial sector. The restrictions ensured that FDI averaged only around $200 million annually between 1985 and 1991; a large percentage of the capital flows consisted of foreign aid, commercial borrowing and deposits of non-resident Indians. India's exports were stagnant for the first 15 years after independence, due to general neglect of trade policy by the government of that period. Imports in the same period, due to industrialisation being nascent, consisted predominantly of machinery, raw materials and consumer goods. Since liberalisation, the value of India's international trade has increased sharply, with the contribution of total trade in goods and services to the GDP rising from 16% in 199091 to 43% in 200506. Indias major trading partners are the European Union, China, the United States and the United Arab Emirates. In 200607, major export commodities included engineering goods, petroleum

23 products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic

goods, gold and silver. In November 2010, exports increased 22.3% year-onyear to 85,063 crore (US$18.88 billion), while imports were up 7.5% at 125,133 crore (US$27.78 billion). Trade deficit for the same month dropped from 46,865 crore (US$10.4 billion) in 2009 to 40,070 crore (US$8.9 billion) in 2010. India is a founding-member of General Agreement on Tariffs and Trade (GATT) since 1947 and its successor, the WTO. While participating actively in its general council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of such matters as labour and environment issues and other non-tariff barriers to trade into the WTO policies

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BALANCE OF PAYMENTS
Cumulative Current Account Balance 19802008 based on IMF data

Since independence, India's balance of payments on its current account has been negative. Since economic liberalisation in the 1990s, precipitated by a balance of payment crisis, India's exports rose consistently, covering 80.3% of its imports in 200203, up from 66.2% in 199091. However, the global economic slump followed by a general deceleration in world trade saw the exports as a percentage of imports drop to 61.4% in 200809. India's growing oil import bill is seen as the main driver behind the large current account deficit, which rose to $118.7 billion, or 9.7% of GDP, in 200809. Between January and October 2010, India imported $82.1 billion worth of crude oil. Due to the global late-2000s recession, both Indian exports and imports declined by 29.2% and 39.2% respectively in June 2009. The steep decline was because countries hit hardest by the global recession, such as United States and members of the European Union, account for more than 60% of Indian exports. However, since the decline in imports was much sharper compared to the decline in exports, India's trade deficit reduced to 25,250 crore (US$5.61 billion).

25 India's reliance on external assistance and concessional debt has decreased since liberalisation of the economy, and the debt service ratio decreased to from 35.3% in 199091 to 4.4% in 200809. In India, External Commercial

Borrowings (ECBs), or commercial loans from non-resident lenders, are being permitted by the Government for providing an additional source of funds to Indian corporate. The Ministry of Finance monitors and regulates them through ECB policy guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act of 1999. India's foreign exchange reserves have steadily risen from $5.8 billion in March 1991 to $283.5 billion in December 2009.

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FOREIGN DIRECT INVESTMENT

Share of top five investing countries in FDI inflows. (20002010) Inflows Rank Country Inflows (%) (million USD) 1 Mauritius 50,164 42.00 2 Singapore 11,275 9.00 3 USA 8,914 7.00 4 UK 6,158 5.00 5 Netherlands 4,968 4.00

As the fourth-largest economy in the world in PPP terms, India is a preferred destination for FDI; India has strengths in telecommunication, information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies were a significant hindrance. However, due to positive economic reforms aimed at deregulating the economy and stimulating foreign investment, India has positioned itself as one of the front-runners of the rapidly growing Asia-Pacific region. India has a large pool of skilled managerial and technical expertise.

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During 200010, the country attracted $178 billion as FDI. The inordinately high investment from Mauritius is due to routing of international funds

through the country given significant tax advantages; double taxation is avoided due to a tax treaty between India and Mauritius, and Mauritius is a capital gains tax haven, effectively creating a zero-taxation FDI channel. India's recently liberalised FDI policy (2005) allows up to a 100% FDI stake in ventures. Industrial policy reforms have substantially reduced industrial licensing requirements, removed restrictions on expansion and facilitated easy access to foreign technology and foreign direct investment FDI. The upward moving growth curve of the real-estate sector owes some credit to a booming economy and liberalised FDI regime. In March 2005, the government amended the rules to allow 100% FDI in the construction sector, including built-up infrastructure and construction development projects comprising housing, commercial premises, hospitals, educational institutions, recreational facilities, and city- and regional-level infrastructure. Despite a number of changes in the FDI policy to remove caps in most sectors, there still remains an unfinished agenda of permitting greater FDI in politically sensitive

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areas such as insurance and retailing. The total FDI equity inflow

into India in 200809 stood at 122,919 crore (US$27.29 billion), a growth of 25% in rupee terms over the previous period. INDIAN EXIM POLICY ( FOREIGN TRADE, EXPORT AND IMPORT POLICIES OF INDIA) The Govt. of India, Ministry of Commerce and Industry announce Export Import Policy every five years. The current policy covers the period 20022007. The Export Import Policy (Foreign Trade Policy) is updated every year on the 31st of March and the modifications, improvements and new schemes are effective w.e.f. 1st April of every year.

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CONTENT OF NEW FOREIGN TRADE POLICY

Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. For India to become a major player in world trade, an all encompassing and comprehensive view needs to be taken for the overall development of the country's foreign trade. While increase in exports is of vital importance, we have also to facilitate those imports which are required to stimulate our economy. Coherence and consistency among trade and other economic policies is important for maximizing the contribution of such policies to development. Thus, while incorporating the existing practice of enunciating an annual Foreign Trade Policy, it is necessary to go much beyond and take an integrated approach to the developmental requirements of India's foreign trade.

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OBJECTIVES OF FOREIGN TRADE POLICY

To double our percentage share of global merchandise trade within the next five years; and To act as an effective instrument of economic growth by giving a thrust to employment generation.

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The new Exim-Policy is essentially a roadmap for the development of India's foreign trade. It contains the basic principles and points the direction

in which we propose to go. By virtue of its very dynamics, a trade policy cannot be fully comprehensive in all its details. It would naturally require modification from time to time. We propose to do this through continuous updating, based on the inevitable changing dynamics of international trade. It is in partnership with business and industry that we propose to erect milestones on this roadmap. With a view to doubling our percentage share of global trade within 5 years and expanding employment opportunities, especially in semi urban and rural areas, certain special focus initiatives have been identified for the agriculture, handlooms, handicraft, gems & jewellery and leather sectors.

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THE THRUST SECTORS INDICATED BELOW SHALL BE EXTENTED THE FOLLOWING FACILITIES:

AGRICULTURE :

A new scheme called the Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme) for promoting the export of fruits, vegetables, flowers, minor forest produce, and their value added products has been introduced. Funds shall be earmarked under ASIDE for development of Agri Export Zones (AEZ). Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.

Import of capital goods shall be permitted duty free under the EPCG Scheme. Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.

Capital goods imported under EPCG shall be permitted to be installed anywhere in the AEZ.

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HANDLOOMS:

Specific funds would be earmarked under MAI/ MDA Scheme for promoting handloom exports.

 Duty free import entitlement of specified trimmings and embellishments shall be 5% of FOB value of exports during the previous financial year. Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of exports during the previous financial year. Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair shall be permitted. New towns of export excellence with a threshold limit of Rs 250 crore shall be notified.

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HANDICRAFTS:

 New Handicraft SEZs shall be established which would procure products from the cottage sector and do the finishing for exports. Duty free import entitlement of trimmings and embellishments shall be 5% of the FOB value of exports during the previous financial year. The entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers. The Handicraft Export Promotion Council shall be authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable Specific funds would be earmarked under MAI & MDA Schemes for promoting Handicraft exports.

CVD is exempted on duty free import of trimmings, embellishments and consumables.

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GEMS AND JEWELLERY:

Import of gold of 18 carat and above shall be allowed under the replenishment scheme.

Duty free import entitlement of consumables for metals other than Gold, Platinum shall be 2% of FOB value of exports during the previous financial year. Duty free import entitlement of commercial samples shall be Rs 100,000. Duty free re-import entitlement for rejected jewellery shall be 2% of the FOB value of exports.

Cutting and polishing of gems and jewellery, shall be treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act.

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LEATHER AND FOOTWEAR:

 Duty free import entitlement of specified items shall be 5% of FOB value of exports during the preceding financial year. The duty free entitlement for the import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), gloves, travel bags and handbags shall be 3% of FOB value of exports of the previous financial year. The entitlement shall also cover packing material, such as printed and non printed shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear. Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty. Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permittedCVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No 21/2002 dated 01.03.2002. CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC(HS).

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EXPORT PROMOTION SCHEME:

A. Target plus scheme to accelerate growth of exports. B. Vishesh krishi upaj yojna for agro-exports. C. Served from India scheme D. Additional flexibility under EPCG E. Import of fuel under DFRC entitlement allowed to be transferred to marketing agencies authorized by Min of Petroleum and Natural Gas. F. The DEFB scheme will be continued. G. EOUs shall be exempted from Service Tax in proportion to their exported goods and services. H. A scheme to establish Free Trade and Warehousing Zone is introduced to create trade-related infrastructure to facilitate import and export with freedom to carry out trade transactions in free currency. In order to showcase India's industrial and trade prowess to its best advantage and leverage existing facilities to enhance the quantity of space and service the govt plans to transform Pragati Maidan into a world-class complex with visitor friendliness ingress and egress system.

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SPECIAL ECONOMIC ZONE:

SEZ are growth engines that can boost manufacturing, augment exports and generate employment. The private sector has been actively associated with the development of SEZs. The proposed legislation on SEZs to be enacted in the near future would cover the concepts of the developer and co- developer, incorporate the provision of virtual SEZs, have fiscal concessions under the Income Tax and Customs Act, provide for Offshore Banking Units (OBUs) etc. Out of the 24 new Special Economic Zones (SEZs) approved for establishment (as on 31/3/2004), 3 SEZs at Salt Lake (Manikanchan), Indore and Jaipur have become operational and another two Zones are now ready for operation. The new SEZs are being set up largely by the State Governments or their agencies or by the private sector in association with the State Governments or by the private sector on their own. Periodic meetings are held by the Department of Commerce with the State

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Governments/promoters of the SEZs to expedite the projects. Eight SEZs at Kandla and Surat (Gujarat), Santa Cruz (Maharashtra), Cochin (Kerala), Chennai (Tamil Nadu), Vishakapatnam (Andhra Pradesh), Falta (West Bengal) and NOIDA (UP) converted from Export Processing Zones (EPZs) are operational.

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INDIAS FOREIGN TRADE

Foreign Trade is one of the significant macro fundamental variable of an economy. India till recently was predominantly a primary goods exporting and mainly an industrial goods importing country. In 1950s, India's share in the world trade was 1.78% which was decline to 0.59% in 1990 and continues to remain around 0.60% till now. India's share in world exports was 0.8% in 2006.

A. COMPOSITION OF INDIA IMPORT:

Britishers strongly believed that India was a country well suited to supply raw materials and other primary goods and a good market place for British manufacturers. So at the time of our independence our exports were predominantly of primary goods and imports were of manufacturers. At the time of independence agricultural commodities and light manufactured consumer goods dominated India's export basket. During the post independence period India's composition of exports changed. Now exports of India's are broadly classified into following four categories.

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The composition of India's export can be summarised as follows:1. Agricultural and Allied Products:The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. The share of agriculture exports was 19.5% in 1990-91. It came down to about 10.2% in 2005-06. The top items of agriculture exports include:1. Fish Products, 2. 3. 4. Rice, Oil Cakes, Fruits and Vegetables

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The most important export item in 'Agriculture and Allied products' group over the period 1991-92 to 2005-06 has been 'Fish and Fish Preparations'. From $ 585 millions in 1991-92 export earnings from fish and fish preparations rose to $ 1,589 millions in 2005-06. However, in percentage terms, their share fell slightly from 3.3 percent in 1991-92 to 1.5 percent in 2005-06. As far as agricultural exports are concerned, a significant development during the period since 1991 has been the considerable exports of rice in certain year. In fact, exports of rice were as high as $ 1,366 millions in 199596 which was 4.3 percent of total export earning in that year. In 2005-06, exports of rice were worth $ 1,405 millions which was 1.4 percent of total export earning in that year. 2. Ores and Minerals:The overall export performance of ores and minerals is not satisfactory. In percentage terms, the export performance of ores and mineral has increased from 4.4% in 199091 to 5.2% in 2005-06. A major share of ores and minerals exports comes from the export of iron ore.

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3. Manufactured Goods:-

The share of manufactured items in the total export earnings of India is on the increase. In 1990-91, the share of manufactured items in the total export earnings was about 73% of the total export earnings. In 2005-06, the share of manufactured items in the total export earnings of India remained stagnant at 72%. The top manufactured export items include 1. 2. 3. 4. Engineering Goods, Gems and Jewellery, Chemicals and Allied products, and Readymade Garments

The export of engineering goods increased from $ 2,234 millions in 1991-92 to $ 21,315 million in 2005-06. In percentage terms the share of engineering goods rose from 12.5% in 1991-92 to 20.7% in 2005-06. Over the period 1991-92 to 2002-03, engineering goods occupied the second position in India's export earnings after gems and jewellery. However, thereafter engineering goods have occupied the first place. In 2005-06 they contributed 20.7% (i.e. one-fifth) of total export earnings.

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For most of the period since 1991, largest export earnings came from the exports of gems and jewellery. The share of gems and jewellery in India's

total export was 15.3% in 1991-92 and 15.1% in 2005-06. However, gems and jewellery industry is a highly import intensive industry requiring large amount of imports of pearls and precious stones Exports of chemicals and allied products rose significantly from $ 1,583 millions in 1991-92 to $ 11,935 millions in 2005-06. In percentage terms, their share stood at 11.6% in 2005-06 and they occupied the third place in India's export earnings in this year. In percentage terms, readymade garments maintained an almost constant share all through the period since 1991. They contributed 12.3% of export earnings in 1991-92 and 12.5% of export earnings in 2000-01. In 2003-04, their share fell to 9.8% and in 2005-06 to 8.3%.

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4. Mineral Fuel and Lubricants:-

There has been an improvement in the export of mineral fuels and lubricants both in terms of value and in terms of percentage. In percentage terms, its share has increased from less than 2.9% in 1990-91 to 11.5% in 2005-06. Some other facts regarding structural change in India's export since 1991 are as follows :1. There are indication that during 1990s, some of Indian exports have moved upwards in value addition chain whereby instead of exporting raw materials, the country has switched over to export of processed goods. 2. There were significant compositional shift within the major manufactured product groups such as engineering. goods, chemicals and allied products, etc.

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B. COMPOSITION OF INDIA IMPORT

In 1947-48 the main items of India's imports were machineries, oil, grains, cotton, cutlery, hardware implements, chemicals, etc. They constituted 70% of India's imports. After that due to the emphasis on industrialisation during the second 5-Year plan necessitated the imports of capital goods. Table below shows composition of India's import from 1990-91 to 2005-06.

The composition of India's imports can be summarised as follows:-

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1. Petroleum Products:Imports of petroleum oil and lubricants rose significantly from $ 5364 millions in 199192 to $ 43,963 millions i.e. more than eight times. Due to high price of crude oil, the POL imports jumped to $ 15,650 millions in 2000-01. In 1990-91, petroleum products accounted for nearly 25% of total imports of India. In 2005-06, it has further increased to nearly 31% of the total import bill of India. 2. Capital Goods:The imports of capital goods were $ 3,610 millions in 1991-92. In 1995-96 due to sharp rise in non-electrical machinery imports, the imports of capital goods jumped up to $ 8,458 millions. However due to slowing domestic demand imports of capital goods fell subsequently. The capital goods and related items were 24.1% of the total imports of India in 1990-91, which has come down slightly in 2005-06 to about 22.3%. 3. Pearls and Precious Stones:To meet the requirements of the gems & jewellery industry pearls and precious stones are imported in large quantities. In 1990-91, the share of pearls and precibus stones was 8.7% which has reduced in percentage terms to 6.4% in 2005-06.

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4. Iron and Steel:-

The imports of iron and steel have declined over the years in percentage terms. In 1990-91, the share of iron and steel imports was 5%, which has come down to 3% in 2005-06. This is because a good amount of iron ore is now extracted in India which has reduced imports. 5. Fertilizers:Import of fertilizers in 1991-92 stood at $ 954 millions. In 2003-04 expenditure on import of fertilizers was $ 635 millions. The import of fertilizers has declined, which indicates less dependence of India on imported fertilizers. The share in total imports of fertilizers was 4.1% in 1990-91, which came down to 1.5% in 2005-06.

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HIGHLIGHTSOF ANNUAL SUPPLEMENT 2010-11 TO FOREIGN TRADE POLICY 2009-14

Higher support for market and product diversification 1. Additional benefit of 2% bonus, over and above the existing benefits of 5% / 2% under Focus Product Scheme, allowed for about 135 existing products, which have suffered due to recession in exports. Major sectors include all Handicrafts items, Silk Carpets, Toys and Sports Goods (all of which were earlier eligible for 5% benefits); Leather Products and Leather Footwear, Handloom Products and Engineering Items including Bicycle parts and Grinding Media Balls (all of which were earlier eligible for 2% benefit). 2. 256 new products added under FPS (at 8 digit level), which shall be entitled for benefits @ 2% of FOB value of exports to all markets. Major Sectors / Product Groups are Engineering, Electronics, Rubber & Rubber Products, Other Oil Meals, Finished Leather, Packaged Coconut Water and Coconut Shell worked items.

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3. Instant Tea and CSNL Cardinol included for benefits under VKGUY @ 5% of FOB value of exports. 4. Nearly 300 products (at 8 digit level) from the readymade garment sector incentivised under MLFPS for further 6 months from October, 2010 to march, 2011 for exports to 27 EU countries. Support for technological up gradation: 5. Zero duty EPCG scheme, introduced in August 2009 and valid for only two years up to 31.3.2011, has been extended by one more year till 31.3.2012. In addition, to give a boost to technological up-gradation for additional sectors as well, the benefit of the scheme has been expanded to cover paper & paperboard and articles thereof, ceramic products, refractories, glass & glassware, rubber & articles thereof, Plywood and allied products, marine products, sports goods and toys and additional engineering products. 6. Additional Towns of Export Excellence (TEEs) announced viz. Barmer (Rajasthan) for Handicrafts; Bhiwandi (Maharashtra) for Textiles; and Agra (Uttar Pradesh) for Leather Products.

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BENEFITS TO STATUS HOLDER

7. Status Holders contribute to a substantial part of our exports. To support them to upgrade their technology, 1% Status Holder Incentive Scheme (SHIS) introduced in August 2009 and valid for only two years upto 31.3.2011, has been extended by one more year for 2011-12 exports. In addition, to give a boost to technological up-gradation for additional sectors as well, the benefit of the scheme has been expanded to cover chemical & Allied products, paper, paperboard and articles thereof, ceramic products, refractories, glass & glassware, rubber & articles thereof, plywood and allied products, electronics products, sports goods and toys and additional engineering products. 8. Additional flexibility provided for transferability of Duty Credit Scrips being issued to Status Holders under paragraph 3.13.4 of FTP under VKGUY scheme by allowing transfer of scrip for import of cold chain equipments to unit(s) in the Food Park.

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CONTINUITY OF FOREIGN TRADE POLICY

9. The popular and exporter friendly Duty Entitlement Passbook (DEPB) scheme has been extended beyond 31.12.2010 till 30.06.2011. 10. Availability of concessional Export Credit: Interest subvention of 2% for pre-shipment credit for export sectors namely, Handloom, Handicraft, Carpet and SMEs for all export sectors, have been allowed till 31.3.2011 in the budget 2010-11. This facility has now been extended to a number of additional products pertaining to sectors like Engineering, leather, textiles, Jute. 11. Advance Authorization for Annual Requirement shall also be exempted from payment of anti-dumping & Safeguard duty in line with the underlying principle that goods and services should be exported and not the taxes and levies.

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PROCEDURAL SIMPLIFICATION AND REDUCTION OF TRANSACTION COST:

12. Exporters shall now have the flexibility to get a high value EPCG authorisation by filing their EPCG application on Annual basis, without the need to file the application for individual capital goods from time to time. It will reduce transaction time and cost. 13. Exporters shall now have the flexibility to Club Advance authorisation with Advance Authorisation for Annual Requirement for the purpose of account closure. 14. To impart flexibility to exporters and to facilitate smooth clearance of consignments, a Single customs notification for the two variants of Advance Authorization scheme namely advance authorisation for physical exports & deemed exports shall be issued. It will also eliminate the ambiguity in clubbing of such exports. 15. Adhoc Norms ratified under Advance Authorisation scheme shall henceforth apply to all cases for the same export product up to one year not only prospectively but also retrospectively. 16. Clarification on the availability of 4% SAD refund benefit, as given by DOR in terms of customs Notification No. 102/2007, only to trader importers, to be also extended to manufacturers, who sell the imported items like traders.

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17. Chartered Engineer Certificate for Advance Authorisation on self declared basis has been dispensed with. This will reduce documentation and the transaction cost.

EDI INITATIVES:
18. To reduce the transaction cost and time, the scope and domain of EDI is endeavoured to be continuously broadened. To remove redundancy of repeated submissions of RCMC, an e-RCMC initiative has been commenced. Under this, the Export Promotion Councils would upload the RCMC data of their members on DGFTs website only once, thus reducing the procedural burden of repeated submissions and associated cost and time. 19. Facility of a data preparation module for Advance Authorization and Export Promotion Capital Good (EPCG) has been provided on an offline mode, which would reduce the need of continuous online interaction for long and address the connectivity and server response issues significantly. 20. In order to provide wider choice to the users and enlarge access for online filing, additional licenced certifying authorities for digital signatures and banks for electronic fund transfer (EFT) operations have been included in the gamut of EDI operations.

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21. The online message exchange for Annual Advance Authorization and Duty Free Import Authorization (DFIA) shall also be made operational with Customs w.e.f. 1.12.2010

LEATHER SECTORS:
22. Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi-finished leather from Public bonded warehouses, without payment of any export duty. This will facilitate the logistics for establishment of such warehouses and easy access to raw material for the leather sector. 23. Finished Leather export shall be entitled for Duty Credit Scrip @ 2% under FPS. 24. Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme would significantly benefit the Leather Sector. HANDLOOM SECTORS: 25. Duty free import of specified trimmings, embellishments etc. shall be available on Handloom made-ups exports @ 5% of FOB value of exports. 26. Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme would significantly benefit the Handloom Sector.

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TEXTILE SECTORS:
27. Duty free import of specified trimmings, embellishment etc shall be available @ 3% on exports of polyester made-ups in line with the facility available to sectors like Textiles & Leather. It will promote export of products such as micro cloth, which has become popular in home textiles. 28. Readymade Garment sector granted enhanced support under MLFPS for a period of further 6 months from October, 2010 to March, 2011 for exports to 27 EU countries.

GEMS & JEWELLERY:

29. The list of items allowed for duty free import by Gems & Jewellery sector has been expanded by Inclusion of additional items such as Tags and labels, Security censor on card, Staple wire and Poly bag. This will reduce the cost of the product to some extent.

HANDICRAFT SECTORS:
30. The facility of duty free import of tools under Duty Free Import scrips for Handicraft sector shall be made operational. 31. Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme will significantly benefit the Handicrafts and Silk Carpets sectors.

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SERVICE SECTORS:
32. Scrips issued under Served from India Scheme (SFIS) can now be used for payment of duty on import of Vehicles, which are in the nature of professional equipment.

AGRICULTURE AND PLANTATION:

33. Instant Tea and CSNL Cardinol included for benefits under VKGUY @ 5% of FOB value of exports. 34. Oil Meals (Cotton, rape seed and groundnut), Castor Oil derivatives, Packed Coconut Water and Coconut Shell worked items shall be entitled for benefits @ 2% of FOB value of exports to all markets under FPS.

ENGINNERING AND ELECTRONICS:

35. Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme will significantly benefit Bicycle parts and Grinding Media Balls exporters. 36. Additional items of Engineering, namely, Pipes & Tubes, Electric Generating Sets, Cast Articles of Iron & Steel, Ferro Manganese and Ferro Silicon shall now be entitled for benefit @ 2% under FPS.

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37. A number of engineering items namely, Machine Tools, Compressors, Iron & Steel Structures including Transmission Towers and Scaffolding, LPG Cylinders, Ductile Tubes & Pipes shall now be entitled for benefits @ 2% of FOB value of exports to all markets under FPS instead of their exports to specific markets under MLFPS earlier. 38. Telecom Equipments, Colour TVs, Audio Systems, Optical Media, Semi-conductors, Capacitors, Resistors, PCBs, LEDs, Conductors, Desktops and Notebooks shall now be entitled for benefits @ 2% of FOB value of exports to all markets under FPS instead of their exports to limited market under MLFPS earlier.

TOYS AND SPORTS GOODS:

39. Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme will significantly benefit the Toys and Sports Goods Sector. 40. Benefits under Zero duty EPCG and SHIS schemes will significantly promote technological upgradation of Toys and Sports Goods sectors.

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RESEARCH METHODOLOGY
According to Advance Learner dictionary of current English, lays down the meaning of research i.e., a careful investigations or enquiry especially through search for new facts in any branch of knowledge. Type of DataSecondary Data collection from magazines, journals, papers, booklet

EXPERT OPINION ON FOREIGN TRADE POLICY

Expert Opinion: Master INCOTERMS to export your wines with ease (June 30, 2010) Developed by the ICC (International Chamber of Commerce), INCOTERMS (International Commercial Terms) have the aim of standardising the most commonly used commercial terms in foreign trade in general: they clearly also apply to the wine trade.

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These terms define the responsibilities and obligations of a buyer and seller within the framework of foreign trade contracts, notably with respect to shipping, transport, mode of transport, insurance and delivery. Their first function is the division of transportation costs. The second role of incoterms is to define the place of risk transfer, that is whether the seller or the buyer will bear the damages in case of a problem in transportation. The third and most important function in contemporary foreign trade, incoterms determine the obligations of delivery which fall, in terms of delay, on the seller.

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DATA ANALYSIS
TRADE PERFORMANCE
Exports crossed the landmark figure of US $ 100 billion to reach US $ 103 billion during 2005-06. During the current year 2006-07 exports are expected to reach the target of US $ 125 billion if the present rate of growth of exports is maintained during the last quarter of the year. The sustained growth of merchandise exports at more than 20 per cent during the last few years is more than twice the growth of Gross Domestic Product (GDP). If this trend continues the export target of US $ 150 billion set in the Foreign Trade Policy for 2009 is likely to be achieved quite comfortably as can be senate

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The growth performance of exports has been an outcome of a conscious and concerted effort on the part of the Government to bring down transaction costs and facilitate trade. The vision and the roadmap provided by the Foreign Trade Policy (2004-09) for a five year period with clearly enunciated objectives, strategies and policy initiatives has been instrumental in putting exports on a higher growth trajectory. The export target during 2004-05 at around US $ 75 billion was sought to be doubled to US $ 150 billion by the terminal year of the Foreign Trade Policy, i.e. 2008-09. For the first time in the history of planning doubling of exports in less than five years is being seen as an achievable target. What is even more significant is that exports have been conceived of as an engine for generating additional economic activity for employment generation with special focus on rural and semi-urban areas. Exports are projected to touch the target of US $ 125 billion by the end of the current financial year 2006-07 if the present rate of growth is maintained during the last quarter of the year. The export growth in India is partly on account of a favorable international environment resulting from a sustained world GDP growth at

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around 5 per cent since 2003. This has led to booming trade volumes and rising commodity prices in the world market. However, this alone does not entirely explain the 250 unprecedented growth performances. Exports from India also responded to numerous reform measures and policy initiatives. The Government made a conscious and concerted effort to reduce trade barriers, bring down transaction costs and facilitate trade. For the first time in the history of planning doubling of export activity within five years was set as a concrete target of the Foreign Trade Policy of the Government. During the first nine months of the current financial year ( April December 2006-07) exports stood at US $ 89 billion while imports were valued at US $ 131 billion. Trade deficit was estimated at US $ 42 billion. The aggregate foreign trade data in US Dollar and Rupee terms for the period AprilDecember 2005-06 and April- December 2006-07 are given below in Table 2.1.

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EXPORT BY PRINCIPAL COMMOODITIES

According to disaggregated data of exports by Principal Commodities available for the period April - October 2006-07, the export growth was mainly driven by petroleum products, engineering

Year 2002-03 2003-04 2004-05 2005-06 2005-06(AprDec) 2006-07(P) (Apr-Dec)

Exports 255137 293367 375340 456418 324572.34

Growth Rate 22.1 15.0 27.9 21.6

Imports 297206 359108 501065 660408 464866.02 598286.68

Growth Rate 21.2 20.8 39.5 31.8

Trade Deficit -42069 -65741 -125725 -203990 -140293.68

408394.10 25.83

28.70 -189892.58

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Year

Exports

2002-03 2003-04 2004-05 2005-06 2005-06(Apr73362.28 Dec) 2006-07(P) 89489.08 21.98 (Apr-Dec)

Growth Rate 52719 20.3 63843 21.1 83536 30.8 103090 23.4

Imports 61412 78150 111517 149166 105118.68 131212.46

Growth Rate 19.4 27.3 42.7 33.8

Trade Deficit -8693 -14307 -27981 -46076 -31756.40

24.82 -41723.88

PLANTATION CROPS
Export of plantation crops grew by 26.74 per cent in rupee terms compared with the corresponding period of the previous year. Export of coffee registered a growth of 33.86 per cent from Rs. 893.06 crore to Rs. 1,195.44 crore and export of tea registered a growth of 20.53 per cent from Rs. 1,023.72 crore to Rs. 1233.91 crore.

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AGRICULTURE AND ALLIED PRODUCTS

Agriculture and Allied Products include Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guargum Meals, Castor Oil, Shellac, Sugar & Molasses, Processed Food, Meat & Meat Products, etc. During AprilOctober, 2006, exports of commodities under this group registered an average growth of 25.29 per cent with the value of exports rising from Rs. 16,547.74 crore in the previous year to Rs. 20,733.06 crore during the current year.

ORES AND MINERAL

Exports of Ores and Minerals were estimated at Rs. 15,415,05 crore during April-October, 2006 registering a growth of 13.20 per cent over the same period of the previous year. All sub groups viz. Processed Minerals, other Ores and Minerals, and Coal have recorded positive growth of 34.91 per cent, 47.76 per cent and 35.22 per cent respectively except Iron ore.

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LEATHER AND MANUFACTURES LEATHER

Export of Leather and Leather Manufactures recorded during April October, 2006 a growth of 9.06 per cent. The value of export increased to Rs. 7,451.72 crore from Rs. 6,832.80 crore during the same period of the previous year. Exports of Leather Manufactures and Leather Footwear registered a growth of 3.43 per cent and 18.40 per cent respectively.

GEMS AND JEWELLERY

The export of Gems and Jewellery during April-October, 2006 increased to Rs. 41,877.01 crore from Rs. 41,834.12 crore during the corresponding period of last year showing a growth of 0.1 per cent.

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CHEMICALS AND RELATED PRODUCTS

The value of exports of Chemicals and Allied Products increased to Rs. 44,621.64 crore from Rs. 36,907.79 crore during the same period of the previous year registering a growth rate of 20.90 per cent. Basic Chemicals, Pharmaceuticals & Cosmetics, Rubber, Glass & Other Products and Residual Chemicals and Allied Products and Plastic & Linoleum registered positive growth.

ENGINNERING PRODUCTS
Exports of items under this group consist of Machinery, Iron & Steel, and Other Engineering items. Export from this sector during the period AprilOctober, 2006 stood at Rs. 66,267.62 crore compared with Rs. 45,912.18 crore during the same period of the previous year, registering an overall growth of 44.34 per cent.

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ELECTRONIC GOODS AND COMPUTER SOFTWARES IN PHYSICAL FORM

Exports of Electronic Goods were estimated at Rs. 7,138.46 crore compared with Rs. 5,285.41 crore during the corresponding period of last year, registering a growth of 35.06 per cent. Computer Software in Physical form has shown a negative growth of 62.72 per cent.

TEXTILES AND HANDICRAFTS

The value of Textiles exports was estimated at Rs. 41,373.98 crore compared with Rs. 37,543.63 crore in the corresponding period of the previous year, recording a growth of 10.20 per cent. The export of Readymade Garments, Cotton, Yarn, Fabrics, Made Ups, etc., Manmade Textiles & Made Ups and Coir & Coir Mfrs recorded a growth of 8.08 per cent, 12.69 per cent, 18.81 per cent and 7.74 per cent respectively. Export items of Handicrafts include Metal Art ware, Textiles (hand printed), Wood wares and Zari goods. Exports of Handicrafts declined to Rs. 874.37 crore from Rs. 1,265.81 crore during the corresponding period of the previous year

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registering a negative growth of 30.92 per cent. Export of carpets increased to Rs. 2,331.38 crore from Rs. 2,046.39 crore during the same period last year registering a growth of 13.93 per cent.

PRODUCTS GOODS
The export of Project Goods recorded a decline of Rs. 169.87 crore from Rs. 335.90 crore during the period April-October, 2006 registering a negative growth of 49.43 per cent.

PETROLEUM PRODUCTS
Export of Petroleum Products increased by Rs.51,856 crores during the current year 2006-07 (April-October) compared with Rs.26,811 crores during the same period last year recording a growth of 93.4 per cent. As a a result of this the share of Petroleum Products in total exports increased to almost 16 per cent.

COTTON RAW INCLUDING WASTE

There was a very significant growth of Cotton Raw including Waste from Rs.664 crores during April-October 2005-06 to Rs.1,681 crores during 200607 April-Oct. The rate of growth of exports of this item at 153.4 per cent was the highest recorded by any group of Principal Commodities during the current year.

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FACTS AND FINDING:

Foreign trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

Foreign trade is all about imports and exports by which it affect the growth rate of country. In most countries, it represents a significant share of gross domestic product (GDP).

Foreign trade helps every country to make optimum use of its natural resources. Wastage of resources is avoided in this way and people in general get a feeling that their government is concerned about them, their resources and their money.

Foreign trade is generating additional employment opportunities, particularly in semi-urban and rural areas, and developing a series of Initiatives for each of these sectors.

Foreign trade helps to removing government controls and creating an atmosphere of trust and transparency to promote entrepreneurship, industrialization and trades.

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SUGGESTIONS
1.

Simplifications of Procedures:-The procedures can be simplified through more use of automation and information technology. It is also essential to have better coordination among different government agencies dealing with exports and imports. Reduction of Transaction Costs:- India should take measures to reform and upgrade their customs systems and procedures. In spite of our phenomenal growth of information technology sector, the international trade is largely administered through paper-based system and face-to face contacts. India should make use of its internationally recognised IT sector to modernise the customs procedures.
3. Liberalisation of Regulator Framework:- The FTP 2004-09 has

2.

identified certain priority sectors to promote trade such as agriculture, handicrafts, leather etc. All these are labour-intensive activities and can help in employment generation in both rural and urban areas. However, in the

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absence of a proper regulator we may not be able to achieve our desired objectives. The regulatory framework must ensure that the country

should be able to increase labour intensive exports, as it will have maximum impact on employment generation and achieving the pro-poor objectives.

LIMITATION:
The project is supported by secondary data. It was costly in nature.

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CONCLUSION
Composition of India's foreign trade has undergone a positive change. It is a remarkable achievement that India have transformed itself from a predominantly primary goods exporting country into a non-primary goods exporting country. Under import too India's dependence on food grains and capital goods has declined. The trend indicates structural transformation of Indian economy. Significant changes have taken place in the direction of India's foreign trade since 1991, and more particularly during the last two-three years. What's most significant is the emergence of China, Singapore, Hong Kong, South Korea & Malaysia as important trading partners of India from the Asian region, Switzerland from OECD countries, and UAE & Indonesia (which left OPEC in 2008) from OPEC countries.

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BIBLOGRAPHY
www.wikipedia.com

www.foreigntradepolicy.com
www.indianindustry.com

www.indiastat.com BOOKS: Business Environment by Rosy Joshi Structure of Commerce by R. K. Sharma

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