FOREIGN TRADE POLICY IN INDIA

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It introduces various policies under FTP 2009-14. It also includes the role of EXIM (Export Import Bank) in foreign trade. It introduces the concept of Special Economic Zones. Changing trends in foreign trade in India are also shown in the presentation in the form of graphs and tables.

Published in: Economy & Finance, Business

FOREIGN TRADE POLICY IN INDIA

  1. 1. FOREIGN TRADE POLICY IN INDIA PRESENTED BYRAJNI GUPTA
  2. 2. INTRODUCTION  Trade between two or more nations is called foreign trade or international trade  Foreign trade is also known as external trade.  Foreign trade transactions are classified under three categories:  Import Trade Export Trade Net Exports  
  3. 3. FOREIGN TRADE POLICY   Long term objective of the FTP is to promote exports and increase India’s competitiveness globally, leading to employment generation particularly in the labor-intensive sectors Objective common to both the old and new policies is to double India’s exports within 5 years
  4. 4. HISTORY  The Government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 27th August 2009 for the period 2009-2014  Earlier this policy known as Export Import (EXIM) Policy.  Union Commerce Ministry, GOI announces integrated FTP every five year.  The Export Import Policy (EXIM Policy) or Foreign Trade Policy is updated every year on the 31st of March and the modifications, improvements and new schemes becomes effective from April month of each year
  5. 5. WHERE DOES INDIA STAND GLOBALLY?  On a per capita income basis, India ranked 140th by nominal GDP and 129th by GDP (PPP) in 2011.  India is the nineteenth largest exporter and tenth largest importer in the world.  Economic growth rate stood at around 6.5% for the 2011–12 fiscal year.
  6. 6. Country Exports Imports GDP (US$ bn.) (US$ bn.) (US$ bn.) Korea 197.6 175.5 China 438.3 393.6 Mexico 165.4 171.0 Russia 135.9 75.4 South Africa 38.7 35.0 Argentina 29.4 13.1 Brazil 73.1 48.3 India 57.0 74.3 Source: Economist Intelligence Unit 605.0 1446.9 626.1 433.5 160.1 129.7 492.1 588.8 Trade as % of GDP 61.7 57.5 53.7 48.7 46.0 32.8 24.7 22.3
  7. 7. Foreign Trade Policy 2009-14   Short Term Objectives: arrest and reverse the declining trend of exports. provide support to those sectors which have been hit badly by recession.  Medium term Policy Objectives : achieve an Annual Export growth of 15% by March 2013. achieve Annual Export growth of around 25% by 2014.  Long Term Objective : doubling India’s share in Global Trade by 2020. 
  8. 8. ANNOUNCEMENTS FOR FPS, FMS, MLFPS     26 New markets added under this scheme Incentives under FMS raised from 2.5% to 3% Incentives available under FPS raised from 1.25% to 2% MLFPS expanded by inclusion of products like pharmaceuticals , textile fabrics, rubber products, glass products, auto components , etc
  9. 9. FOREIGN TRADE POLICY 2009-14 HIGHLIGHTS
  10. 10.  TECHNOLOGICAL UPGRADATION  EPCG Scheme at zero duty has been introduced  Jaipur , Srinagar – “Town of Export Excellence for Handicraft”  Kanpur, Dewas and Ambur- “Town Of Excellence for Leather products”  Malihabad- “Town Of Excellence for Horticulture”  E.P.C.G. SCHEME RELAXATIONS  More flexible  No restriction on second hand imported goods
  11. 11.  AGRICULTURAL SECTOR  a single window system to facilitate export of perishable agricultural produce has been introduced.  GEMS ANS JEWELLERY    planned to establish “Diamond Bourses” import of cut & polished diamonds on consignment basis of personal carriage upto US $ 5 million value units in case of participation in overseas exhibition
  12. 12. LEATHER SECTOR  re-port of unsold imported rawhides and skins and semi finished leather  Enhancement of FPS rate to 2 % STATUS HOLDERS  additional Duty Credit Script to Status holder @1% FOB value of past exports  Transferability for the Duty Credit scripts being issued to Status holder.
  13. 13. STATUS HOLDER EXPORT PERFORMANCE (F.O.B. BASIS) 1 star house 15 crores 2 star house 100 crores 3 star house 500 crores 4 star house 1,500 crores 5 star house 5,000 crores
  14. 14. AGRICULTURE SECTOR  To reduce transaction and handling cost, a single window system to facilitate export of perishable agricultural produce has been introduced. E.O.U.  allowed to sell in DTA up to a limit of 90%  finished goods for consolidation along with manufactured goods  CENVAT credit facility
  15. 15.        D.E.P.B. factoring of custom duty component on Flexibility provided to exporters. Simplification of procedures. TEA Minimum value addition for export reduced from 100% to50% DTA sale limit by EOU units increased to 50%
  16. 16.      PHARMACEUTICALS SECTOR Export obligation period increased to 36 months. extensively covered under MLFPS for countries in Africa & Latin America -some countries in Oceania HANDLOOM SECTOR requirement of “Handloom Mark” for availing benefits has been removed.
  17. 17.  SPECIAL ECONOMIC ZONES  Easing of land norms to set up special economic zones (SEZs) Transfer of ownership and sale of SEZ units allowed 
  18. 18. The need for SEZ and Government’s policy     SEZ policy introduced on 1/4/2000 in India To increase exports SEZ can be set up by private, public, joint sector or by the state government Transform EPZ(Export Processing Zone) to SEZ
  19. 19. Provisions under SEZ     100% FDI for manufacturing sector Income tax benefit Duty free import of domestic goods Applicability of labour laws   Exemption from Income tax on investments Enhanced limit of 2.4 crore for managerial remuneration
  20. 20. Performance of Units under SEZ Zone 2003-2004 (Rs. in crores) 2004-2005 (Rs. in crores) Kandla SEZ 1018.82 1060.14 SEEPZ-SEZ 7832.81 8298.59 Noida SEZ 1534.17 4266.00 Madras SEZ 1037.96 1376.91 Cochin SEZ 298.91 462.99 Falta SEZ 825.34 569.15 Visakhapatnam SEZ 435.67 579.27 Surat SEZ 869.90 1539.72 Manikanchan SEZ --- 95.54 Jaipur SEZ --- 5.27 Indore SEZ --- 55.02
  21. 21. Advantages of SEZ      Growth and development Attracts FDI(Foreign Direct Investment) Exposure to technology and global markets Increase in GDP and economic model Employment opportunities are created
  22. 22. EXIM BANK OF INDIA  Set up by an act of parliament in September 1981  Wholly owned by government of India  Commenced operations in March 1982  One of the topmost financial institutions  Objectives: “.......for providing financial assistance to importers and exporters, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financial export and import of goods and services with a view to promoting country’s international trade....” “ ....shall act on business principles with due regard to public interest” (Export-Import Bank of India Act, 1981)
  23. 23. OPERATING GROUPS OF EXIM BANK       Corporate Banking Group Project Finance/Trade Finance Group Small and Medium Enterprise Export Services Group Export Marketing Services Bank Support Services Group
  24. 24. Financing Programmes Export Credit credit opened by an importer with a bank in an exporter's country to finance an export operation Import Credit credit opened by an importer at a bank in his own country upon which an exporter may draw. Loans for Exporting Units Provides loans for the exporting units setup in the country
  25. 25. RECENT TRENDS  Q1(Quarter 1) of 2012-13, exports stood at US$ 75.2 bn and showed a decline of 1.7 per cent as against an increase of 36.4 per cent during Q1 of 2011-12.  Q1 of 2012-13, imports declined by 6.1 percent over the corresponding quarter of 2011-12 and stood at US$ 115.3 billion.  Lower growth in POL imports at 5.5 percent during Q1 of 2012-13 as compared with 52.5 percent during Q1 of 2011-12.
  26. 26. RECENT TRENDS  Imports of gold and silver, US$ 9.4 bn during Q1 of 2012-13 were 48.4 per cent lower than that in Q1 of 2011-12.  Non-oil non-gold imports during Q1 of 2012-13 at US$ 65.3 bn recorded a decline of 2.9 per cent as compared to an increase of 18.9 per cent in Q1 of preceding year.  Trade deficit during Q1 of 2012-13 stood lower at US$ 40.1 bn as compared with US$ 46.2 bn during Q1 of 2011-12.
  27. 27. India’s Foreign Trade •Growth is uncertain in coming months, given the worsening global macroeconomic outlook and high interest rate in the domestic market. •During April-Sept 2011, India's imports expanded by 32.4% to $ 233.5 billion. The trade deficit during the April-Sept’ 2011 period stood at $ 73.5 billion. Increasing Trade Deficit further depreciates Rupee. •Depreciation of rupee will also push up cost of imports leading to wider trade deficit in coming times.
  28. 28. Export/Import Share of India as (%) of GDP
  29. 29. Exports of Principal Commodities
  30. 30. Imports of Principal Commodities
  31. 31. India's Exports to Principal Regions
  32. 32. India's Imports from Principal Regions
  33. 33. India’s Foreign Trade
  34. 34. Last 10 Years India’s Export/Import Performance
  35. 35. CONCLUSION Composition of India’s Foreign Trade has undergone a positive change. It is a remarkable achievement that India has transformed itself from a predominantly primary goods exporting country into non primary goods exporting country. Under Imports also India’s dependence on food grains and capital goods has declined.
  36. 36. References      http://www.eximkey.com http://www.eximinfo.com http://www.eximbankindia.in/ http://dgft.gov.in http://finmin.nic.in/

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