Foreign Trade Policy

1. COMPOSITION & DIRECTIONOF
FOREIGNTRADE
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2. 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.
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3. Composition
Export Import
Fuels, capital goods,
chemicals, food grains,
Petroleum products, Capital
goods ,Pearls and precious
gems, Iron and steel
Fertilizers ,edible oil
Manufactured goods
textiles , Gems and
Jewellery, Handicraft,
Light machinery etc.
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4. IMPORTS
 It refers to 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 days, there occurred
changes in composition of imports.The development required setting
up of industries , modernization of agriculture etc.
 Now,Capital goods like machinery, chemicals, fertilizers ,metals
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als petroleum products etc. are imported . 7

5. EXPORTS
 Exports means that 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.
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6. Composition of Trade
• Source : Economic Survey 2011-12
Composition of exports
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S. No Commodity Group Year 2010-11 ( in %age)
1 Agriculture and allied products 9.9
2 Ores and minerals ( excluding coal) 4.0
3 Manufactured Goods 68.0
4 Crude and petroleum products( Including coal) 16.8
5 Other and unclassified items 1.2
Total 100.0

7. 10%
4%
68%
17%
1%
Composition of Exports
Agriculture and allied products
Ores and minerals(excluding
coal)
Manufactured Goods
Crude and petroleum products
(including coal)
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8. Composition of Imports
3%
32%
2%
1%13%
49%
Composition of Imports
Food and allied
products
Fuel
Fertilisers
Paper Board
Capital Goods
Others
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S.
N
o
Commodity
Group
Year
2010-11
1 Food and allied
products
2.9
2 Fuel 31.3
3 Fertilisers 1.9
4 Paper Board,
manufacture and
newsprint
0.6
5 Capital Goods 13.1
6 Others 47.7
Total 100.0

9. DIRECTION OF INDIA’S FOREIGN
TRADE
 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).
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10.  Direction of foreign trade consists of destination of exports
and sources of our imports.
 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.
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11. Group of countries to which India Exports
OECD OPEC
EASTERN
EUROPE
ASEAN
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12. Organization for
Economic Co-
operation &
Development
(OECD).
• USA,
Canada,
European
Union (EU),
Australia
and Japan
Organization of
Petroleum
Exporting
Countries (OPEC)
• Kuwait,
Iran, Iraq,
Saudi
Arabia and
others.
Eastern Europe.
• Romania,
Russia and
others
Developing
Nations
• China,
Hong Kong,
South
Korea,
Singapore
and
Malaysia.
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14. Trade policy refers 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
TRADE POLICY
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15. 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 target
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16. STRTEGIC OPTIONS FOR TRADE
POLICY
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 AFree trade policy is one which does not impose any
restriction on the exchange of goods and services between
different countries.Afree trade policy involves complete
absence of tariffs, quotas, exchange restrictions, taxes and
subsidies on production, factor use and consumption.
 AProtective trade policy 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
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17. 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.
The present foreign trade policy is for the period of 5 years i.e. from
2015 to 2020.
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18. FTP is the new
name for the
earlier EXIM
policy. 31st august 2004
- To double our %
share of global
merchandise trade
within the next 5
years
To act as an effective
instrument of economic
growth by giving a thrust
to employment
generation.
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19.  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.
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20. Prior to 1985 , the Government of India used to
announce the EXIM policy annually.However,with a
view to have uniformity and stability in EXIM
policy,it was decided to give the policy a validity of
three years and the first three-year EXIM policy was
announced in 1985.
Since 1985, there was a moderate trend towards
trade liberalisation,which finally took shape in 1991.
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21. *DGFT (Directorate General of Foreign Trade) is the
main governing body in matters related to Exim Policy.
*This Policy is prepared and announced by the Central
Government (Ministry of Commerce) which aims at:
developing export potential, improving export
performance, encouraging foreign trade and creating
favorable balance of payments position, in general.
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22. LEGAL FRAMEWORK FOR FOREIGN TRADE OF
INDIA
 Foreign Trade (Development and Regulation) Act, 1992,
 Foreign Trade (Regulation) Rules 1993
 Foreign Trade (Exemption) Order 1993
 Garments Export Entitlement Policy: 2000-2004,
 Export (Quality Control and Inspection) Act, 1963,
 Customs and Central Excise Duties Drawback Rules,
1995,
 Foreign Exchange Management Act, 1999
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23.  Customs and Central Excise Regulations
 Export and Import Policy - now called Foreign Trade Policy
 Handbook of Procedures – Vol. I
 Handbook of Procedures – Vol. II incorporating the Standard
 Input Output Norms (SION)
 ITC (HS) Classification of Import and Export Policy
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24. COMMITTEES ON EXIM POLICY
Mudaliar committee(1962)
PC Alexander committee (1978)
Tandon committee (1980)
Abid hussain committee(1984)
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27. Objectives of India’s
Foreign Trade Policy 2015-20
• 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.
• 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.
•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.
• Simplification of the application procedure for availing various
benefits.

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•To set in motion the strategies and policy measures which
catalyze the growth of exports.
•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.

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30. Objectives
 To facilitate external trade and payments
 To promote the orderly development and
maintenance of foreign exchange market
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31. Foreign exchange transactions were regulated by
Foreign exchange regulation act (FERA), 1973
Following the liberalization ushered in 1991 some
amendments were made to FERA in 1993 there was
a lot demand to bring certain major changes in
FERA in the light of economic changes took place
Consequently a new act was formed to replace
FERA, known as Foreign exchange management
act (FEMA), 1999
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- The rules regulations and norms pertaining to many sections are laid down by
RBI in consultation with central Government.
Administration of the Act
- The Act requires central Government to appoint,
 Adjudicating Authorities for holding enquires related to the contravention of the
Act
 one or more Special Directors (appeals) to hear appeals against the order of the
Adjudicating authorities
- Central Government shall have to establish
1. An Appellate Tribunal for foreign Exchange to hear appeals against the
order of the Adjudicating Authorities and the Special Directors
2. A Director of Enforcement with a Director and such officers or class of officers
as it thinks fit for taking up for investigation the contravention under this Act

33. FERA V/s FEMA:-
1. In FEMA only the specified acts related to
foreign exchange are regulated while in FERA
anything and everything that has to do with
foreign exchange was controlled
2. The objective of FEMA is to facilitate trade while
that of FERA is to prevent misuse
3. FEMA is a much smaller enactment only 49
sections against 81 sections of FERA
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34. A thorough understanding of the country’s
trade policy and incentives are crucial for
the development of a successful
international business strategy.

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