Trend analyses of india's trade policy since 1991. mcom project work for students

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SYDENHAM COLLEGE OF COMMERCE & ECONOMICS
2015-16
Program under faculty of commerce
MASTER OF COMMERCE (EVENING)
Project Title:
TREND IN INDIA’S TRADE POLICY
IN PARTIAL FULLFILMENT OF THE REQUIRNMENT UNDER SEMESTER
BASED ON
CREDIT & GRADING SYSTEM FOR POST GRADJUATION SEMESTER – I
SUBMITTED BY:
CHINTAN CHIMANBHAI KANABAR
Roll no. 27 (Div – A)
PROJECT GUIDE:
Dr. Anil R Chougule

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DECLARATION
I, CHINTAN CHIMANBHAI KANABAR of Sydenham College of
commerce & economics ‘B’ Road, Church gate, Mumbai – 400020 currently
studying in M.com –I (Evening), Hereby declare that I have completed this
project on Trend in India’s Trade Policies for semester –I of the academic
year 2015-16. The information given under the project is true and fair to the
best of my knowledge.
Signature of Student:
.
CHINTAN C KANABAR
Roll No. 27 (DIV-A)

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CERTIFICATE
This is to certify that MR. CHINTAN CHIMANBHAI KANABAR of the M.COM – I
(Evening) Semester-I has successfully completed project on Trend in India’s Trade Policies
under the Guidance of Mr. Anil R Chougule
1. ProjectGuide. : Anil R Chougule
2. Internal Examiner :
3. External Examiner :
Date :
Time :

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INDEX

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AKNOWLEDGMENT
I would firstly like to thank “UNIVECITY OF MUMBAI” For giving us the liberty to se-
lectthe topic which will benefit to us in the future. I would like to thanks to the principle of
Sydenham College of commerce & economics Dr. Annasaheb Khemnar for giving me an
opportunity to study in the esteemed college and doing the course of accounting. I would like
to express my sincere gratitude and thanks to professor Dr. Anil R Chougule who is my
project guide , as he has been guiding light on this project and also provided me with the
best of his knowledge, advice and encouragement which helps in the successful completion
of my project.
My colleague and specially my parent who has also supported and encourages me the success
of this project to the large extant is also dedicated to them.
I would like to thanks all those who helped me but I forgotten to mention in this space.
Signature of Student:
.
CHINTAN C KANABAR
Roll No. 27 (DIV-A)

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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
Traditionally, the main objective of the Indian ForeignTrade Policy has been to protect
its market from foreign competition. Up until the 1980s, India was not interested in
exporting its goods and services abroad and not ready to open its economy to foreign
investments. The aim of its economic policy was to ensure the country’s independent
development (the swadeshi principle). At the end of the 1980s, India was one of the
most closed economies in the world. Its bilateral trade policy, heavily skewed toward
the former communist countries, was full of grand statements about technology transfer,
mutually advantageous relations and partnership for development to very little purpose.
SUGGESTIONS :
Government control import of non-essential items through the
EXIM Policy. At the same time, all-out efforts are made to promote exports. Thus,
there are two aspects of Exim Policy; the import policy which is concerned with
regulation and management of imports and the export policy which is concerned with
exports not only promotion but also regulation. The main objective of the Government's
EXIM Policy is to promote exports to the maximum extent. Exports should be
promoted in such a manner that the economy of the country is not affected by
unregulated exportable items specially needed within the country.

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Export control is, therefore, exercised in respect of a limited number of items whose
supply position demands that their exports should be regulated in the larger interests of
the country. In other words, the main objective of the Exim Policyis:
 To accelerate the economy from low level of economic activities to high level of
economic activities by making it a globally oriented vibrant economy and to
derive maximum benefits from expanding global market opportunities.
 To stimulate sustained economic growth by providing access to essential raw
materials, intermediates, components,' consumables and capital goods required
for augmenting production.
 To enhance the techno local strength and efficiency of Indian agriculture,
industry and services, thereby, improving their competitiveness.
 To generate new employment.
 Opportunities and encourage the attainment of internationally accepted standards
of quality.
 To provide quality consumer products at reasonable prices.

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OBSERVATIONS :
Import PolicyPrior to 1991
In the pre-reform period Indian import policy had two constituents:
Import Restrictions: In the initial phases of development, India had to import capital
equipment, machinery, spare parts, industrial raw material, etc. From time to time it had
to import food grains too, but because of stagnant exports, government had to decide to
import curtail. High import tariffs were used to control import.
Import substitution means reducing the dependability on imports, i.e., produce goods
that we are importing. Two broad objectives of the program of import substitution in
India were:
(i) To save scarce foreign currency for the import of more important goods,
(ii) To achieve self-reliance in the production of as many goods as possible.
EXIM POLICY OF INDIA
In order to maintain the balance of payments and to avoid trade deficit the government
of India has announced a trade policy for imports and exports. After every five years
the government of India reviews the import and export policy in view of the changing
international economic situation. The policy relates to promotion of exports and
regulation of imports so as to promote economic growth and overcome trade deficit.
Accordingly, the export-and import policies (EXIM Policy) were announced by the
government first in 1985 and then in 1988 which was again revised in 1990. All these
policies made necessary provision for import of capital goods and raw materials for
industrialization, utilization and liberalization of REP (Registered Exporters Policy)
licenses, liberal import of technology and policy for export and trading houses.

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The government announced its new EXIM policy for 2002-2007 which is mainly a
continuation of the EXIM policy of 1997-2002.
The new export-import policy for 2002-2007 aims at pushing up growth of exports to
12 per cent a year as compared to about 1.56 per cent achieved during the financial year
2001-2002.
RESEARCHMETHODOLOGY
DATA AND METHODOLOGY OF THE STUDY:-
In light of the objectives of the research, the paper has been designed to scrutinize the
recent trend in India’s trade policy for business. The information published in the
various newspapers and internet in recent times has been consulted in order to present
the latest trade and performance of Indian and Chinese economies. The gathered data
and information were then processed, charted and analyzed to present the findings in a
reasonable and objective manner.
Statistical tool Trend analysis and regression is tapped to project the export and import
of India from yr. 2015- 2016 to 2019- 2020 from 1990-91 to 2014-15 on export and
import is used.

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SCOPE AND LIMITATIONS :
ECONOMY OF INDIA :
The Economy of India is the seventh-largest in the world by nominal GDP and
the third-largest by purchasing power parity (PPP). The country classified as newly
industrialized country, one of the G-20 major economies, a member of BRICS and
a developing economy with approximately 7% average growth rate for the last two
decades. India's economy became the world's fastest growing major economy from the
last quarter of 2014, replacing the People's Republic of China.
The long-term growth prospective of the Indian economy is moderately positive due to
its young population, corresponding low dependency ratio, healthy savings and
investment rates, and increasing integration into the global economy, The Indian
economy has the potential to become the world's 3rd-largest economy by the next
decade, and one of the largest economies by mid-century.
And the outlook for short-term growth is also good as according to the IMF, the Indian
economy is the "bright spot" in the global landscape. India also topped the World
Bank’s growth outlook for 2015-16 for the first time with the economy having grown
7.3% in 2014-15 and expected to grow 7.5-8.3% in 2015-16.
India has the one of fastest growing service sectors in the world with annual growth rate
of above 9% since 2001, which contributed to 57% of GDP in 2012-13. India has
capitalized its economy based on its large educated English-speaking population to
become a major exporter of IT services, BPO services, and software services with
$167.0 billion worth of service exports in 2013-14. It is also the fastest-growing part of
the economy.

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The IT industry continues to be the largest private sector employer in India. India is
also the fourth largest start-up hub in the world with over 3,100 technology start-ups in
2014-15. The agricultural sector is the largest employer in India's economy but
contributes to a declining share of its GDP (17% in 2013-14).
India ranks second worldwide in farm output. The Industry sector has held a constant
share of its economic contribution (26% of GDP in 2013-14).
The Indian auto industry is one of the largest in the world with an annual production of
21.48 million vehicles in FY 2013-14. India has $600 billion worth of retail marketing
2015 and one of world's fastest growing E-Commerce markets.
India's two major stock exchanges, Bombay Stock Exchange and National Stock
Exchange of India, had a market capitalization of US$1.71 trillion and US$1.68 trillion
respectively as of Feb 2015, which ranks 11th & 12 largest in the world respectively
according to the World Federation of Exchanges. India also home to world's third
largest Billionaires pool with 97 billionaires in 2014 and fourth largest number of
ultra-high-net-worth households that have more than 100 million dollars.
India is a member of the Commonwealth of Nations, the South Asian Association for
Regional Cooperation, the G20,theInternational Monetary Fund, the World Bank,
the World Trade Organization, the Asian Infrastructure Investment Bank, the United
Nations and the New Development BRICS Bank.

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ECONOMIC DEVELOPMENT IN INDIA :
The economic development in India followed socialist-inspired policies for most of its
independent history, including state-ownership of many sectors; India's per capita
income increased at only around 1% annualized rate in the three decades after its
independence. Since the mid-1980s, India has slowly opened up its markets
through economic liberalization. After more fundamental reforms since 1991 and their
renewal in the 2000s, India has progressed towards a free market economy.
In the late 2000s, India's growth reached 7.5%, which will double the average income
in a decade. Analysts say that if India pushed more fundamental market reforms, it
could sustain the rate and even reach the government's 2011 target of 10%. States have
large responsibilities over their economies. The annualized 1999–2008 growth
rates for Tamil Nadu (9.9),Maharashtra (9.7%), Gujarat (9.6%), Haryana (9.1%)
,or Delhi (8.9%) were significantly higher than for Bihar (5.1%), Uttar Pradesh (4.4%),
or Madhya Pradesh (6.5%). India is the seventh-largest economy in the world and
the third largest by purchasing power parity adjusted exchange rates (PPP). On per
capita basis, it ranks 140th in the world or 129th by PPP.
The economic growth has been driven by the expansion of services that have been
growing consistently faster than other sectors. It is argued that the pattern of Indian de-
velopment has been a specific one and that the country may be able to skip the interme-
diate industrialization-led phase in the transformation of its economic structure. Serious
concerns have been raised about the jobless nature of the economic growth.
Favourable macroeconomic performance has been a necessary but not sufficient
condition for the significant reduction of poverty amongst the Indian population. The
rate of poverty decline has not been higher in the post-reform period (since 1991).

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The improvements in some other non-economic dimensions of social development have
been even less favourable. The most pronounced example is an exceptionally high and
persistent level of child malnutrition (46% in 2005–06).
The progress of economic reforms in India is followed closely. The World
Bank suggests that the most important priorities are public sector reform, infrastructure,
agricultural and rural development, removal of labor regulations, reforms in lagging
states, and HIV/AIDS. For 2015, India ranked 142nd in Ease of Doing Business Index,
which is setback as compared with China 90th, Russia 62nd and Brazil 120th.
According to Index of Economic Freedom World Ranking an annual survey on
economic freedom of the nations, India ranks 123rd as compared with China and
Russia which ranks 138th and 144th respectively in 2012.
At the turn of the century India's GDP was at around US$480 billion. As economic
reforms picked up pace, India's GDP grew five-fold to reach US$2.3 trillion in 2015 (as
per IMF estimates).
India's GDP growth during January–March period of 2015 was at 7.5% compared to
China's 7%, making it the fastest growing economy. During 2014-15, India's GDP
growth recovered marginally to 7.3% from 6.9% in the previous fiscal. During 2014-15,
India's services sector grew by 10.1%, manufacturing sector by 7.1% & agriculture by
0.2%. The Indian government has forecast a growth of 8.1-8.5% during 2015-
16.Favourable macroeconomic performance has been a necessary but not sufficient
condition for the significant reduction of poverty amongst the Indian population. The
improvements in some other non-economic dimensions of social development have
been even less favourable. The most pronounced example is an exceptionally high and
persistent level of child malnutrition (46% in 2005–06).

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The progress of economic reforms in India is followed closely. The World
Bank suggests that the most important priorities are public sector reform, infrastructure,
agricultural and rural development, removal of labor regulations, reforms in lagging
states, and HIV/AIDS. For 2015, India ranked 142nd in Ease of Doing Business Index,
which is setback as compared with China 90th, Russia 62nd and Brazil 120th.
GROWTH MODEL OF INDIA :
INDIA’S TRADE POLICY :
New Industrial Policy :
Under Industrial Policy, keeping in view the priorities of the country and its economic
development, the roles of the public and private sectors are clearly decided. Under the
New Industrial Policy, the industries have been freed to a large extent from the licenses
and other controls. In order to encourage modernization, stress has been laid upon the
use of latest technology. A great reduction has been effected in the role of the public
sector.
Efforts have been made to encourage foreign investment. Investment decision by com-
panies has been facilitated by ending restrictions imposed by the MRTP Act. Similarly,
Foreign Exchange Regulation Act (FERA) has been replaced with Foreign Exchange
Management Act (FEMA).
Some important points of the New Industrial Policyhave been highlighted here
i. Abolitionof Licensing:
Before the advent of the New Industrial Policy, the Indian industries were operating
under strict licensing system. Now, most industries have been freed from licensing
and other restrictions.

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ii. Contraction of Public Sector:
A policy of not expanding unprofitable industrial units in the public sector has been
adopted. Apart from this, the government is following the course of disinvestment
in such public sector undertaking. (Selling some shares of public sector enterprises
to private sector entrepreneurs is called disinvestment. This is a medium of privati-
zation.
iii. Free Entry of ForeignInvestment:
Many steps have been taken to attract foreign investment. Some of these are as fol-
lows: In 1991, 51% of foreign investment in 34 high priority industries was al-
lowed without seeking government permission.
Non-Resident Indians (NRIs) were allowed to invest 100% in the export houses,
hospitals, hotels, etc.
Foreign Investment Promotion Board (FIPB) was established with a view to
speedily clear foreign investment proposals.
Restrictions which were previously in operation to regulate dividends repatriation
by the foreign investors have been removed. They can now take dividends to their
native countries.
MRTP Restrictions Removed: Monopolies and Restrictive Trade Practices Act has
been done away with. Now the companies do not need to seek government permis-
sion to issue shares, extend their area of operation and establish a new unit.
FERA Restrictions Removed: Foreign Exchange Regulation Act (FERA) has been
replaced by Foreign Exchange Management Act (FEMA). It regulates the foreign
transactions. These transactions have now become simpler.

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Increase in the Importance of Small Industries: Efforts have been made to give
importance to the small industries in the economic development of the country.
New Trade Policy :
Trade policy means the policy through which the foreign trade is controlled and
regulated. As a result of liberalization, trade policy has undergone tremendous
changes. Especially the foreign trade has been freedfrom the unnecessary controls.
The age-old restrictions have been eliminated at one go. Some of the chief
characteristics of the New Trade Policyare as follows:
i. Reduction in Restrictions of Export-Import:
Restrictions on the exports-imports have almost disappeared leaving only a few
items.
ii. Reduction in Export-Import Tax:
Export-import tax on some items has been completely abolished and on some
other items it has been reduced to the minimum level.
iii. Easy Procedure of Export-Import:
Import-export procedure has been simplified.
iv. Establishment of ForeignCapital Market:
Foreign capital market has been established for sale and purchase of foreign ex-
change in the open market.
v. Full ConvertibilityonCurrent Account:
In 1994-95, full convertibility became applicable on current account.
Here it is important to clarify the meaning of current account and full
convertibility. Therefore, this has been done as follows:

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Current Account:
Transactions with the foreign countries are placed in two categories:
(i) transaction with current account, for example, import-export,
(ii) Capital account transactions, like investment.
(iii) Full Convertibility:
In short, full convertibility means unrestricted sale and purchase of for-
eign exchange in the foreign exchange market for the purpose of pay-
ments and receipts on the items connected with current account. It means
that there is no government restriction on the sale and purchase of foreign
exchange connected with current account.
On the other hand, sale and purchase of foreign exchange connected with capital
account can be carried on under the rates determined by the Reserve Bank of In-
dia (RBI),
vi. Providing Incentive for Export:
Many incentives have been allowed to Export- oriented Units (EOU) and Export
ProcessingZones (EPZ) for increasing export trade.
vii. Fiscal Reforms:
The policy of the government connected with the income and expenditure is
called fiscal policy. The greatest problem confronting the Indian government is
excessive fiscal deficit. In 1990-91, the fiscal deficit was 8% of the GDP. (It is
important to understand the meaning of fiscal deficit and GDP.)
Gross Domestic Product (GDP):
The GDP is the sum total of the financial value of all the produced goods and
services during a year in a country. Generally, the financial deficit is calculated
in the form of GDP’s percentage. Presently, the government of India is making
efforts to take it to 4%.

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Solutions of Fiscal Deficit:
In order to handle the problem of fiscal deficit, basic changes were made in the
tax system. The following are the major steps taken in this direction:
 The rate of the individual and corporate tax has been reduced in order to
bring more people in the tax net.
 Tax procedure has been simplified.
 Heavy reduction in the import duties has been implemented.
viii. Monetary Reforms :
Monetary policy is a sort of control policy through which the central bank con-
trols the supply of money with a view to achieving the objectives of the general
economic policy. Reforms in this policy are called monetary reforms. The major
points with regard to the monetary reforms are given below:
 Statutory Liquidity Ratio (SLR) has been lowered. (A commercial bank has
to maintain a definite percentage of liquid funds in relation to its net demand
and time liabilities. This is called SLR. In liquid funds, cash investment in
permitted securities and balance in current account with nationalised banks
are included.)
 The banks have been allowed freedom to decide the rate of interest on the
amount deposited.
 New standards have been laid down for the income recognition for the banks.
(By recognition of income, we mean what is to be considered as the income
of the bank. For example, should the interest on the bad debt be considered as
the income of the bank directions have been issued in this context.

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 Permission to collect money by issuing shares in the capital market has been
granted to nationalize banks.
ix. Permissionto open banks inthe private sector has also been granted :.
Capital Market Reforms
The market in which securities are sold and bought is known as the capital mar-
ket. The reforms connected with it are known as capital market reforms. This
market is the pivot of the economy of a country.
The government has taken the following steps for the de velopment of this
market:
 Under the Portfolio Investment Scheme, the limit for investment by the NRIs
and foreign companies in the shares and debentures of the Indian companies
has been raised. (Portfolio Investment Scheme means investing in securities.)
 In order to control the capital market, the Securities and Exchange Board of
India (SEBI) has been established.
 The restriction in respect of interest on debentures has been lifted. Now, it is
decided on the basis of demand and supply.
 The office of the Controller of Capital Issue which used to determine the
price of shares to be issued has been dispensed with.
 Now, the companies are free to determine the price of the shares.
 Private sector has been permitted to establish Mutual Fund.
 The registration of the sub broker has been made mandatory.

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x. Phasing out Subsidies :
Cash Compensatory Support (CCS) which was earlier given as export subsidy
has been stopped. CCS can be understood with the help of an example.
If an exporter wants to import some raw material which is available abroad for
100, but the same material is available in India for 120 and the governments
wants the raw material to be purchased by the exporter from India itself for the
protection of indigenous industries, the government is ready to pay the differ-
ence of 20 to the exporter in the form of subsidy.The payment of 20 will be con-
sidered as CCS. In addition to this, the CCS has been reduced in case of fertiliz-
ers and petro products.
xi. Dismantling Price Control
The government has taken steps to remove price control in case of many prod-
ucts. (Price Control means that the companies will sell goods at the prices de-
termined by the government.) The efforts to remove price control were mostly in
respect of fertilizers, steel and iron and petro products. Restrictions on the import
of these products have also been removed.

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INDIA’S TRADE POLICY (2015-20):
A. SIMPLIFICATION & MERGER OF REWARD SCHEMES
Export from India Schemes:
i. Merchandise Exports from India Scheme (MEIS) :
(a) Earlier there were 5 different schemes (Focus Product Scheme, Market
Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure
Incentive Scrip, VKGUY) for rewarding merchandise exports with different
kinds of duty scrips with varying conditions (sector specific or actual user
only) attached to their use. Now all these schemes have been merged into a
single scheme, namely Merchandise Export from India Scheme (MEIS) and
there would be no conditionality attached to the scrips issued under the
scheme. The main features of MEIS, including details of various groups of
products supported under MEIS and the country groupings are at Annexure-
1.
(b) Rewards for export of notified goods to notified markets under ‘Merchan-
dise Exports 2 from India Scheme (MEIS) shall be payable as percentage of
realized FOB value (in free foreign exchange). The debits towards basic cus-
toms duty in the transferable reward duty credit scrips would also be al-
lowed adjustment as duty drawback. At present, only the additional duty of
customs / excise duty / service tax is allowed adjustment as CENVAT credit
or drawback, as per Department of Revenue rules.
ii. Service Exports from India Scheme (SEIS) :
(a) Served From India Scheme (SFIS) has been replaced with Service Exports
from India Scheme (SEIS). SEIS shall apply to ‘Service Providers located in
India’ instead of ‘Indian Service Providers’. Thus SEIS provides for rewards
to all Service providers of notified services, who are providing services from
India, regardless of the constitution or profile of the service provider. The
list of services and the rates of rewards under SEIS are at Annexure-2.
(b) The rate of reward under SEIS would be based on net foreign exchange
earned. The reward issued as duty credit scrip, would no longer be with ac-
tual user condition and will no longer be restricted to usage for specified
types of goods but be freely transferable and usable for all types of goods
and service tax 3 debits on procurement of services / goods. Debits would be
eligible for CENVAT credit or drawback.

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iii. Incentives (MEIS & SEIS) to be available for SEZs :
It is now proposed to extend Chapter -3 Incentives (MEIS & SEIS) to units lo-
cated in SEZs also.
iv. Duty credit scrips to be freely transferable and usable for payment of cus-
tom duty, excise duty and service tax :
(a) All scrips issued under MEIS and SEIS and the goods imported against
these scrips would be fully transferable.
(b) Scrips issued under Exports from India Schemes can be used for the fol-
lowing:-
(i) Payment of customs duty for import of inputs / goods including capi-
tal goods, except items listed in Appendix 3A.
(ii) Payment of excise duty on domestic procurement of inputs or goods,
including capital goods as per DoR notification.
(iii) Payment of service tax on procurement of services as per DoR noti-
fication.
(c) Basic Customs Duty paid in cash or through debit under Duty Credit
Scrip can be taken back as Duty Drawback as per DoR Rules, if inputs so
imported are used for exports.
v. Status Holders :
(a) Business leaders who have excelled in international trade and have success-
fully contributed to country’s foreign trade are proposed to be recognized as
Status Holders and given special treatment and privileges to facilitate their
trade transactions, in order to reduce their transaction costs and time.
(b) The nomenclature of Export House, Star Export House, Trading House,
Star Trading House, Premier Trading House certificate has been changed to
One, Two, Three, Four, Five Star Export House.
(c) The criteria for export performance for recognition of status holder have
been changed from Rupees to US dollar earnings. The new criteria is as
under :-

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Status category Export Performance
FOB / FOR (as converted)
Value (in US $ million) during current
and previous two years
One Star Export House 3
Two Star Export House 25
Three Star Export House 100
Four Star Export House 500
Five Star Export House 2000
(d) Approved Exporter Scheme - Self certificationby Status Holders :
Manufacturers who are also Status Holders will be enabled to self-certify
their manufactured goods as originating from India with a view to qualify
for preferential treatment under different Preferential Trading Agreements
[PTAs], Free Trade Agreements [FTAs], Comprehensive Economic
Cooperation Agreements [CECAs] and Comprehensive Economic
Partnerships Agreements [CEPAs] which are in operation. They shall be
permitted to self-certify the goods as manufactured as per 6 their Industrial
Entrepreneur Memorandum (IEM) / Industrial Licence (IL)/ Letter of Intent
(LOI).
vi. Reduced Export Obligation (EO) for domestic procurement under EPCG
scheme:
Specific Export Obligation under EPCG scheme, in case capital goods are
procured from indigenous manufacturers, which is currently 90% of the normal
export obligation (6 times at the duty saved amount) has been reduced to 75%, in
order to promote domestic capital goods manufacturing industry.
vii. Higher level of rewards under MEIS for export items with high domestic content
and value addition:

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It is proposed to give higher level of rewards to products with high domestic
content and value addition, as compared to products with high import content
and less value addition.
viii. Online filing of documents/ applications and Paperless trade in 24x7
environment :
a) DGFT already provides facility of Online filing of various applications under
FTP by the exporters/importers. However, certain documents like Certificates
issued by Chartered Accountants/ Company Secretary / Cost Accountant etc.
have to be filed in physical forms only. In order to move further towards
paperless processing of reward schemes, it has been decided to develop an
online procedure to upload digitally signed documents by Chartered
Accountant / Company Secretary / Cost Accountant. In the new system, it
will be possible to upload online documents like annexure attached to ANF
3B, ANF 3C and ANF 3D, which are at present signed by these signatories
and submitted physically.
b) Henceforth, hardcopies of applications and specified documents would not be
required to be submitted to RA, saving paper as well as cost and time for the
exporters. To start with, applications under Chapter 3 & 4 of FTP are being
covered (which account for nearly 70% of total applications in DGFT).
Applications 8 under Chapter-5 would be taken up in the next phase.
c) As a measure of ease of doing business, landing documents of export con-
signment as proofs for notified market can be digitally uplo aded in the
following manner:-
(i) Any exporter may upload the scanned copy of Bill of Entry under his
digital signature.

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(ii) Status holders falling in the category of Three Star, Four Star or Five
Star Export House may upload scanned copies of documents.
ix. Online inter-ministerial consultations :
It is proposed to have Online inter-ministerial consultations for approval of
export of SCOMET items, Norms fixation, Import Authorizations, Export
Authorization, in a phased manner, with the objective to reduce time for
approval. As a result, there would not be any need to submit hard copies of
documents for these purposes by the exporters.
x. Simplificationof procedures/processes, digitisationand e-governance :
a) Under EPCG scheme, obtaining and submitting a certificate from an
independent Chartered Engineer, confirming the use of spares, tools,
refractory and catalysts imported for final redemption of EPCG
authorizations has been dispensed with.
b) At present, the EPCG Authorization holders are required to maintain records
for 3 years after redemption of Authorizations. Now the EPCG Authorization
Holders shall be required to maintain records for a period of two years only.
Government’s endeavor is to gradually phase out this requirement as the
relevant records such as Shipping Bills, e-BRC are likely to be available in
electronic mode which can be archived and retrieved whenever required.
c) Exporter Importer Profile: Facility has been created to upload documents in
Exporter/Importer Profile. There will be no need to submit copies of
permanent records/ documents (e.g. IEC, Manufacturing licence, RCMC,
PAN etc.) repeatedly with each application, once uploaded.

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d) Communication with Exporters/Importers: Certain information, like mobile
number, e-mail address etc. has been added as mandatory fields, in IEC data
base. This information once provided by exporters, would help in better
communication with exporters. SMS/ email would be sent to exporters to
inform them about issuance of authorizations or status of their applications.
e) Online message exchange with CBDT and MCA: It has been decided to have
on line message exchange with CBDT for PAN data and with Ministry of
Corporate Affairs for CIN and DIN data. This integration would obviate the
need for seeking information from IEC holders for subsequent amendments/
updating of data in IEC data base.
f) Communication with Committees of DGFT: For faster and paperless
communication with various committees of DGFT, dedicated e-mail address-
es have been provided to each Norms Committee, Import Committee and
Pre-Shipment Inspection Agency for faster communication.
g) Online applications for refunds: Online filing of application for refund of
TED is being introduced for which a new ANF has been created.
xi. Forthcoming e-Governance Initiatives :
DGFT is currently working on the following EDI initiatives:
 Message exchange for transmission of export reward scrips from DGFT
to Customs.
 Message exchange for transmission of Bills of Entry (import details) from
Customs to DGFT.
 Online issuance of Export Obligation Discharge Certificate (EODC).

27. 27
 Message exchange with Ministry of Corporate Affairs for CIN & DIN.
 Message exchange with CBDT for PAN.
 Facility to pay application fee using debit card / credit card.
 Open API for submission of IEC application.
 Mobile applications for FTP
xii. New initiatives for EOUs, EHTPs and STPs :
a) EOUs, EHTPs, STPs have been allowed to share infrastructural facilities
among themselves. This will enable units to utilize their infrastructural
facilities in an optimum way and avoid duplication of efforts and cost to
create separate infrastructural facilities in different units.
b) Inter unit transfer of goods and services have been allowed among EOUs,
EHTPs, STPs, and BTPs. This will facilitate group of those units which
source inputs centrally in order to obtain bulk discount. This will reduce
cost of transportation, other logistic costs and result in maintaining
effective supply chain.
c) EOUs have been allowed facility to set up Warehouses near the port of
export. This will help in reducing lead time for delivery of goods and will
also address the issue of un-predictability of supply orders.
d) STP units, EHTP units, software EOUs have been allowed the facility to
use all duty free equipment/goods for training purposes. This will help
these units in developing skills of their employees.

28. 28
e) 100% EOU units have been allowed facility of supply of spares/
components up to 2% of the value of the manufactured articles to a buyer
in domestic market for the purpose of after sale services.
f) At present, in a period of 5 years EOU units have to achieve Positive Net
Foreign Exchange Earning (NEE) cumulatively. Because of adverse
market condition or any ground of genuine hardship, then such period of
5 years for NFE completion can be extended by one year.
g) Time period for validity of Letter of Permission (LOP) for EOUs/EHTP/
STPI/BTP Units has been revised for faster implementation and
monitoring of projects. Now, LOP will have an initial validity of 2 years
to enable the unit to construct the plant and install the machinery. Further
extension can be granted by the Development Commissioner up to one
year. Extension beyond 3 years of the validity of LOPS, can be granted,
in case unit has completed 2/3rd of activities, including the construction
activities.
h) At present, EOUs/EHTP/STPI units are permitted to transfer capital
goods to other EOUs, EHTPs, STPs, SEZ units. Now a facility has been
provided that if such 14 transferred capital goods are rejected by the
recipient, then the same can be returned to the supplying unit, without
payment of duty.
i) A simplified procedure will be provided to fast track the de-bonding / exit
of the STP/ EHTP units. This will save time for these units and help in
reduction of transaction cost.

29. 29
j) EOUs having physical export turnover of Rs.10 crore and above, have
been allowed the facility of fast track clearances of import and domestic
procurement. They will be allowed fast tract clearances of goods, for
export production, on the basis of pre-authenticated procurement
certificate, issued by customs / central excise authorities. They will not
have to seek procurement permission for every import consignment.
xiii. Facilitating & Encouraging Export of dual use items (SCOMET) :
(a) Validity of SCOMET export authorization has been extended from the
present 12 months to 24 months. It will help industry to plan their
activity in an orderly manner and obviate the need to seek revalidation or
relaxation from DGFT.
(b) Authorization for repeat orders will be considered on automatic basis
subject to certain conditions.
(c) Verification of End User Certificate (EUC) is being simplified if
SCOMET item is being exported under Defense Export Offset Policy.
(d) Outreach programs will be conducted at different locations to raise
awareness among various stakeholders.
xiv. Facilitating & Encouraging Export of Defense Exports :
(a) Normal export obligation period under advance authorization is 18
months. Export obligation period for export items falling in the category
of defense, military store, aerospace and nuclear energy shall be 24
months from the date of issue of authorization or co-terminus with

30. 30
contracted duration of the export order, whichever is later. This provision
will help export of defense items and other high technology items.
(b) A list of military stores requiring NOC of Department of Defence
Production has been notified by DGFT recently. A committee has been
formed to create ITC (HS) codes for defence and security items for
which industrial licenses are issued by DIPP.
xv. E-Commerce Exports :
(a) Goods falling in the category of handloom products, books / periodicals,
leather footwear, toys and customized fashion garments, having FOB
value up to Rs.25000 per consignment (finalized using e-Commerce
platform) shall be eligible for benefits under FTP. Such goods can be
exported in manual mode through Foreign Post Offices at New Delhi,
Mumbai and Chennai.
(b) Export of such goods under Courier Regulations shall be allowed
manually on pilot basis through Airports at Delhi, Mumbai and Chennai
as per appropriate amendments in regulations to be made by Department
of Revenue. Department of Revenue shall fast track the implementation
of EDI mode at courier terminals.
xvi. Duty Exemption :
(a) Imports against Advance Authorization shall also be eligible for
exemption from Transitional Product Specific Safeguard Duty.
(b) In order to encourage manufacturing of capital goods in India, import
under EPCG Authorisation Scheme shall not be eligible for exemption

31. 31
from payment of anti-dumping duty, safeguard duty and transitional
product specific safeguard duty.
xvii. Additional Ports allowedfor Export and import :
Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been notified as
registered ports for import and export.
xviii. Duty Free Tariff Preference (DFTP) Scheme :
India has already extended duty free tariff preference to 33 Least Developed
Countries (LDCs) across the globe. This is being notified under FTP.
xix. Quality complaints and Trade Disputes :
(a) In an endeavour to resolve quality complaints and trade disputes,
between exporters and importers, a new chapter, namely, Chapter on
Quality Complaints and Trade Disputes has been incorporated in the
Foreign Trade Policy.
(b) For resolving such disputes at a faster pace, a Committee on Quality
Complaints and 18 Trade Disputes (CQCTD) is being constituted in 22
offices and would have members from EPCs/FIEOs/APEDA/EICs.
xx. Vishakhapatnam and Bhimavaram added as Towns of Export Excellence :
Government has already recognized 33 towns as export excellence towns. It has
been decided to add Vishakhapatnam and Bhimavaram in Andhra Pradesh as
towns of export excellence (Product Category– Seafood).

32. 32
Following are some of the diagrams and chart which indicates the increase in
india’s export revenue:-
(Rs. In crores)
S.No Year Exports %Growth Imports %Growth Trade
Balance
1 2004-2005 3,75,340 27.94 5,01,065 39.53 -1,25,725
2 2005-2006 4,56,418 21.6 6,60,409 31.8 -2,03,991
3 2006-2007 5,71,779 25.28 8,40,506 27.27 -2,68,727
4 2007-2008 6,55,864 14.71 10,12,312 20.44 -3,56,448
5 2008-2009 8,40,755 28.19 13,74,436 35.77 -5,33,680
6 2009-2010 8,45,534 0.57 13,63,736 -0.78 -5,18,202
7 2010-2011 11,42,922 35.17 16,83,467 23.45 -5,40,545
8 2011-2012 14,65,959 28.26 23,45,463 39.32 -8,79,504
9 2012-2013 16,34,319 11.48 26,69,162 13.8 -10,34,843
10 2013-14(P) 18,94,182 15.9 27,14,182 1.69 -820,000
400
350
300
250
US$BILLION
200
150
100
50
0
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
13
2013
14
75 100 125 160 200 175 200 300 360 325
83.54 103.09 126.41 163.13 185.30 178.75 251.14 305.96 300.40 312.61

33. 33
CONCLUSION :
Clearly, the determinants of export performance are numerous and the
complexity of this issue requires an empirical investigation. This relationship
needs to be explored in greater detail in future work which takes into account the
various industry-specific factors discussed above alongside important macroeco-
nomic factors such as the state of the world economy, the exchange rate, and the
policy environment.
In particular, it would be interesting to examine the role of exchange rate move-
ments in influencing India’s export competitiveness given the periodic bouts of
appreciation of the Indian Rupee typically on account of rapid inflows of foreign
capital and the concerns such movement typically raises in exporting sectors of
the economy. For instance, during 2007, driven by a surge in FII inflows, the In-
dian Rupee appreciated significantly against the US dollar, reaching the Rs
40/dollar threshold.
This led to demands from Indian industry to prevent further appreciation and
calls for intervention by the RBI to prevent an adverse impact on their exports.
Again, more recently, in the aftermath of the 2008 global financial crisis, similar
concerns about the adverse effects on exports were voiced when the rupee tem-
porarily appreciated against the dollar.
Hence, in a future study which delves deeper into the micro as well as macro
level factors that shape export competitiveness for Indian manufactures, it would
be worth testing through rigorous empirical analysis whether and to what extent
exchange rate movements really affect India’s export competitiveness. To date,
empirical evidence in this regard is limited and there seems to be a presupposed
conclusion that a depreciated rupee is good for India’s exports.

34. 34
However, given the diverse nature of India’s exports, the various structural,
regulatory, industry-specific and other factors that influences competitiveness, as
highlighted in this paper,
Can one expect such a clear cut relationship between exchange rates and export
competitiveness to hold for India?
How important are these other factors compared to the exchange rate?
Are the implications similar across manufacturing and services, across different
manufacturing industries, and for import-intensive exports which might benefit
from cheaper imports following appreciation?
A subsequent working paper under this same research project will empirically
examine these issues and attempt to arrive at some firm conclusions on the
relative importance of industry-specific versus macroeconomic factors in
shaping India’s export competitiveness and specifically on the role of exchange
rate movements in this context.