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India's Foreign trade policy
The document outlines India's foreign trade policy from 2015 to 2020, detailing its composition, direction, legal framework, and objectives aimed at enhancing exports and economic growth. It highlights key changes in India's trade dynamics since independence, shifts towards various trading partners, and strategic policy options such as free trade and protective trade policies. The policy aims to increase exports significantly, improve operational procedures, and support various sectors to boost India's global trade presence.
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India's Foreign trade policy
- 1. India’s Foreign TradePolicy © Harshit Ahuja
- 2. OVER VIEW Composition& Direction of Foreign Trade Foreign Trade Policy India’s Foreign Trade Policy Foreign Trade Policy 2015 – 2020
- 3. Composition Of Foreign Trade ►Composition of foreign trade means major commodity or sectors in which India is doing export and import. ► India is a very old participant in world trade. ► Its participation have been promoted by the opening of Suez Canal and speedy development of the ship building industry supplemented by the spread of industrial revolution in Europe and fast expansion of Indian railways.
- 4. Export Import Fuels Chemicals food grains Petroleumproducts Iron and steel Fertilizers Edible Oil Manufactured goods Textiles Gems and Jewellery Handicraft Light machinery etc.
- 5. IMPORTS It refersto goods that we buy from other countries. At times of independence India was an agrarian economy. Partition of our country has brought food shortage because wheat growing regions vested with Pakistan. Hence India need to import in large quantities, food , cotton jute. etc With development of economy over these years, there occurred changes in composition of imports. Now, Capital goods like machinery, chemicals, fertilizers, metals, minerals, petroleum products etc. are imported.
- 6. exPORTS Exports meansthat we are selling commodities to other countries. At the time of independence our exports comprise of agricultural products like tobacco, spices, raw materials of cotton and jute etc. Due to industrialization the proportion of raw materials in our exports declined.
- 7. DIRECTION OF INDIA’S FOREIGNTRADE Direction means countries to which India exports its goods and countries from which it imports. Direction of trade also helps to understand the diplomatic relationship maintained by India with other countries of trade. West Europe (28.1 per cent), America (25.4 per cent), Africa (6.3 per cent) and East Europe (3.1 per cent). Direction of foreign trade consists of destination of exports and sources of our imports.
- 8. DIRECTION OF INDIA’S FOREIGNTRADE Prior to our Independence when India was under British rule, much of our trade was done with Britain. Therefore, UK used to hold the first position in India’s foreign trade. However, after Independence, new trade relationships were established. Now USA has emerged as the most important trading partner followed by Germany, Japan and UK. India is also making efforts to increase the exports to other countries also the direction of India’s exports and imports.
- 9. Group of countriesto which India Exports OECD OPEC EASTERN EUROPE ASEAN
- 10. Organization for Economic Co-operation& Development (OECD). USA Canada European Union (EU) Australia Japan Organization of Petroleum Exporting Countries (OPEC) Kuwait Iran Iraq Saudi Arabia Eastern Europe Romania Russia Developing Nations China Hong Kong South Korea Singapore Malaysia
- 12. Trade Policy Trade policyrefers to the complete framework of laws, regulations, international agreements, and, negotiating stances adopted by a government to achieve legally binding market access for domestic firms. -Walter Goode The Government has set a long-term vision of making India a major player in world trade. Foreign Trade Policy (FTP) provides the basic policy framework of translating this vision into specific strategies, goals and targets.
- 13. STRTEGIC OPTIONS FORTRADE POLICY ► Free Trade Policy ӝ It does not impose any restriction on the exchange of goods and services between different countries. ӝ It involves complete absence of tariffs, quotas, exchange restrictions, taxes and subsidies on production, factor use and consumption. ► Protective Trade Policy ӝ It is pursued by a country seeks to maintain a system of trade restrictions with the objective of protecting the domestic economy from the competition of foreign products.
- 14. STRTEGIC OPTIONS FORTRADE POLICY ► Inward looking trade policy(import substitution) ӝ It stresses the need for a country to evolve its own style of development and to be the master of its own fate, with restrictions on the movement of goods, services and people in and out of the country. ӝ An inward looking trade policy encourages the development of indigenous technologies appropriate to a country’s resource endowment. ► Outward looking trade policy (export-led growth) ӝ It encourages not only free trade but also the free movement of capital, workers, enterprises and students, a welcome to the multinational enterprise, and an open system of communications.
- 15. INDIA’S FOREIGN TRADE POLICY ►The foreign Trade of India is guided by the Export-Import (EXIM) policy of the Government of India and is regulated by the Foreign Trade (Development and Regulation) Act,1992. ► The Foreign Trade Policy contains various decisions taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports from the country and more especially export promotion measures, policies and procedures related thereto. ► It is the set of guidelines and instructions established by DGFT (Directorate General of Foreign Trade) in matters related to the import and export of goods in India.
- 16. INDIA’S FOREIGN TRADE POLICY ►The present foreign trade policy is for the period of 5 years i.e. from 2015 to 2020. ► The Union Commerce Ministry, Government of India announces the integrated Foreign Trade Policy FTP in every five year. This policy is updated every year on the 31st of March with some modifications and new schemes. New schemes come into effect on the first day of financial year i.e. April 1, every year. ► The Foreign trade Policy which was announced on April 1,2015 is an integrated policy for the period 2015-2020.
- 17. Legal Framework forForeign Trade of India ӝ Foreign Trade (Development and Regulation) Act, 1992, ӝ Foreign Trade (Regulation) Rules 1993 ӝ Foreign Trade (Exemption) Order 1993 ӝ Garments Export Entitlement Policy: 2000-2004, ӝ Export (Quality Control and Inspection) Act, 1963, ӝ Customs and Central Excise Duties Drawback Rules, 1995, ӝ Foreign Exchange Management Act, 1999 ӝ Customs and Central Excise Regulations ӝ Export and Import Policy - now called Foreign Trade Policy
- 19. Pre 1991 TradePolicy Inward Looking Development Strategy- Import Substitution Strategy Second Year Plan- Highly Restrictive Policy. In 1960’s and 70’s, imports were partly liberalised with several conditions. In eighties, Export promotion schemes were implemented- Export Promotion Council, The trade Fair Authority of India, cash compensatory schemes etc.
- 20. 1991 Crisis National Income growingat 0.8 %. Inflation reached the height of 16.8 %. BoP crisis to the extent of 10,000 crores. India was paying 30,000 crores interest charges. Fiscal deficit more than 7.5 %. Deficit Financing was 3 %
- 21. Objectives of India’s ForeignTradePolicy 2015-2020 ӝ FTP 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in line with the ‘Make in India’ programme. ӝ The Policy aims to enable India to respond to the challenges of the external environment, keeping in step with a rapidly evolving international trading architecture and make trade a major contributor to the country’s economic growth and development. ӝ Simplification of the application procedure for availing various benefits.
- 22. Objectives of India’s ForeignTradePolicy 2015-2020 ӝ To arrest and reverse declining trend of exports is the main aim of the policy. This aim will be reviewed after two and half years. ӝ To set in motion the strategies and policy measures which catalyze the growth of exports. ӝ To encourage exports through a mix of measures including fiscal incentives, institutional changes, procedural rationalization and efforts for enhance market access across the world and diversification of export markets.
- 23. Highlights of India’s ForeignTrade policy 2015 - 2020 ӝ Increase exports to $900 billion by 2019-20, from $466 billion in 2013-14. ӝ Raise India's share in world exports from 2% to 3.5%. ӝ Merchandise Export from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) launched. ӝ FTP to be aligned to Make in India, Digital India and Skills India initiatives. ӝ Higher level of support for export of defence, farm Produce and eco- friendly products.
- 24. Highlights of India’s ForeignTrade policy 2015 - 2020 ӝ Online procedure to upload digitally signed document by Chartered Accountant/Company Secretary/Cost Accountant to be developed. ӝ E-Commerce exports of handloom products, books/periodicals, leather footwear, toys and customised fashion garments through courier or foreign post office would also be able to get benefit of MEIS (for values up to INR 25,000). ӝ Unlike annual reviews, FTP will be reviewed after two-and-Half years.
- 25. Policy measures tomanage Unfavourable Balance of payment Import Reduction And Substitution Export Promotion Tapping Invisibles Increasing Efficiency Encouragement of Tourist Traffic Bilateral Agreements Exchange Inflow of Foreign Capital Effective Implementation of FEMA 2000
- 26. CONCLUSION After the implementationforeign trade policy , the import and export among foreign countries have increased and have become more secured. Setting up of EPZ and SEZ have also increased foreign investors . Trading Housing have given a platform to both manufacturers and consumers to freely and easily trade between different countries. A thorough understanding of the country’s trade policy and incentives are crucial for the development of a successful international business strategy.
- 27.