Export means trade across the political boundaries of different nation. No Nation is self sufficient and had all the goods that it needs. This happens because of climatic variation & unequal distribution of natural resources. As a result, countries all over the world have become interdependent, which necessitated foreign trade. A developing country like India with its fast growing agricultural production to keep pace with the population to keep pace with the population growth and growing Industrial infrastructure
needs high-import and this can be sustained only with fast export growth. To meet the oil import bill, export is unavoidable. Thus, it is evident that export promotion continues to be a major thrust area for the government. Several measures have been under taken in the past for improving export performance of the country. In India, Govt. has come out from time to time with various policies on foreign trade to promote export thereby increasing the “Foreign Exchange Reserve”. These policies are termed as “Exim Policy”
Import export act was introduced by gov during second world war and it lasted for around 45 yrs and in June 1992 this act was superceded by the Foreign Trade (Development & Regulation Act), 1992. . The basic objective of this new act was to give effect to the new liberalized export and import policy of the Govt. till 1985 annual policies were made but from 1985-92, three yr policy was made and then 5 yr policy was made coinciding with 5 yr plans 1992-97, 1997-02, 2002-07.
What is Exim Policy?
It contains policies in the sphere of Foreign trade i.e. with respect to import & export from the country and more especially export promotion measures, policies and procedure related there to.
Export means selling abroad and import as bringing into India, any goods and services
Objective of Exim Policy
Accelerating the country’s transition to a globally oriented vibrant economy with a view to derive maximum benefits from expanding global market opportunities;
Stimulating sustained economic growth
Enhancing the technological strength and efficiency
Encouraging the attainment of internationally accepted standards of quality
Providing consumers with good quality products and services at reasonable prices.
General provisions regarding export import
Exports and Imports free unless regulated
Compliance with Laws
Interpretation of Policy
Exemption from Policy/ Procedure
Principles of Restriction
Terms and Conditions of a Licence
Importer-Exporter Code Number
Exemption from Bank Guarantee
Clearance of Goods from Customs
EXPORT PROMOTION MEASURES
Institutional set up.
Import Facilitation for Export Production.
Foreign Exchange Facilities.
Export production units
Import Facilitation for Export Production
Export Promotion Capital Goods Scheme
Special Import Licences
Duty Free Licences under Duty Exemption Scheme
Duty free licences are issued as :
(1) Advance licence
(2) Advance Intermediate licence.
(3) Special Imprest licence.
(4) Licence for jobbing, repairing etc. for re-export.
In 1966 ruppee was devalued by 36.5% By devaluation gov expressed the hope that the devaluation would lead to expansion in export earnings as indian goods will become cheaper in internatinal market on the other hands import would decline as price of imported goods would increase.
Because of a rigid itemization of permissible imports, an element of inflexibility in the pattern of utilization of imports was introduced. The transferability of licenses among same and different industries was not permissible. This gave rise to an expanding black market in import licenses. Therefore, the import allocation system was so designed as to eliminate the possibility of all competition, either domestic or foreign. The Govt of India has liberalized the import regime from time to time. At present, practically all controls on import have been lifted. Under the new EXIM policy 2002-07.
Comparison of Pre 90’s & Post 90’s Exim Policy Trade deficit was largely due to programmes of industrialization which gathered momentum and pushed up the imports of capital goods. No improvement in exports. -108 622 730 1951-56
Excess of Import due to-
Pent-up demand of war.
Shortage of food & raw material due to partition.
Import of capital goods due to starting of hydro-electric & other projects.
Rapid industrialization needs capital goods as raw material.
Defence needs had increased due to aggression by China & Pakistan.
Need of foodgrains due to failure of crops in 1965-66.
-477 747 1224 1961-66 Excess of import due to setting of steel plants,heavy expansion & renovation on railways & modernization of many industries. Export lower than occur in second plan which shows that export promotion drive did not materialize. -467 613 1080 1956-61 Trade Bal. (Cr.) Export (Cr.) Import (Cr.) Year
As a consequence of import restriction policies with vigorous export promotion measures ,during 1972-73 the country had favourable balance of trade for first time since independence. But several international factors pushed up the price of petroleum product,steel,fertilizers etc.results low magnitude of trade balance. -162 1810 1972 1969-74
Devaluation was resorted to essentially-
To reduce volume of import.
To boost export.
Create favourable balance of trade and balance of payment.
Decline in POL imports was more than by a big hike in non-POL imports as a consequence of import liberalization. Consequently, huge trade balance. -5935 9051 14,986 1980-85 Significant increase in export during every year of this period.Export of coffee,tea,cotton fabrics etc.recorded substantial increase in this period. But,Janta Government followed policy of haphazard import liberalization results decline trade balance from 1977-78. -810 4730 5540 1974-79 Trade Bal. (Cr.) Export (Cr.) Import (Cr.) Year
In 1990-91,push was given to export,but as a consequence of Gulf war government failed to curb imports. In1991-92, government introduced number of measures in trade policy allowing exim scripts,abolishing cash compensatory support(CCS) schemes as also a two-step devaluation of the rupee,but fail to boost up export. -7222 38,300 45,522 1990-92 Huge trade balance compelled the government to approach the World Bank/IMF for loan. The government was also forced to apply brakes on the licensing policy of imports. -10,841 18,033 28,874 1985-90 Trade Bal. (Cr.) Export (Cr.) Import (Cr.) Year
In 1992-01,slow down in exports due to-
Depressed nature of world markets.
Saturation of developed countries market for electronic goods which are dynamic export sectors.
Increased protectionism by industrialised countries in area of textile and clothing.
Increasing competition from China & Taiwan.
India underestimated the impact South-East Asian crisis
Non-Tarrif barriers have been created by developed counties to slow down Indian exports.
In 2000-01 export was largely due to rupee depreciation along with further trade liberalization,more openness to foreign investment in EOU sectors ike IT.
Rise in imports in 2002-03 was broadly based on oil imports,food &allied products(edible oil),capital goods.
Exim policy 2003-04gave massive thrust to exports by
Duty free import facility for service sector upto earning 10lakh foreign exchange.
Liberalization of Duty Exemption scheme.
Besides,all these measures trade balance in 2003-04 are high due to mainly on imports of POL products more.Currently, almost two-third of country crude oil requirements are imported.Besides import of POL, import of non POL items shot up by 17% in2002-03 to 26.2%in 2003-04.
Trade - On an All time High Source: Reserve Bank of India
India’s total external trade in goods and services grew by 41.5% in H12005-06 to US $ 153 billion . This is expected to go up to US $ 310 billion by the end of this year. This was just over US $ 74 billion in 1994.
The trade to GDP ratio, calculated at current prices, has risen to 29.36% in 2004-05 from 18.28% in 1993-94.
Economy is more Open than ever before Strong Export Growth
Exports have grown to US $ 57.05 billion during April-November 2005-2006. They are expected to grow at 26% during the current year to US$ 100 billion.
Strong Imports growth
Non-oil imports grew at over 28% during April - September 2005 led by demand for capital goods.
Strong Service Exports
Service Exports grew by 71% in 2004-05. India's IT-ITES exports have shown robust growth and are expected to grow by 32% this year to US $ 23 billion.