Lectures Delivered by Dr. Tabrez Ahmad on Foreign Trade Regulations

1. Foreign Trade Regulation in India
Dr. Tabrez Ahmad
Professor of Law
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
1

2. Agenda
 History of Foreign Trade in India
 Foreign Trade Act
 Foreign Trade Policy 2009-14
 Incentives Schemes
 New Initiatives
 Organizational Setup
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
2

3. History Of Foreign Trade In India
• Import control was introduced in 1940
• In 1946 the Emergency provisions ordinance was promulgated to
continue the import trade control
• Import and Export(control) Act came into force with effect from 25th
march 1947
• Finally the Import and Export(control) act was replaced by the
Foreign Trade(Development and Regulation) Act in 1992.
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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4. Foreign Trade Development Regulation Act
MAIN PROVISIONS:
1. Development and Regulation
2. Prohibition and Restriction
3. EXIM Policy
4. Director General of Foreign Trade
5. Importer - Exporter Code Number
6. Issue and Suspension/Cancellation of license
7. Search, Inspection and Seizure
8. Penalty for Contravention
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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5. India’s Foreign Trade
In the last few years, robust growth in
merchandise exports
From US$ 63 billion in 2003-04 to US $ 168 billion
in 2008-09.
Share of global trade (WTO estimates):
2003
2008
Merchandise trade
0.83%
1.45%
Commercial Services
1.4%
2.8%
Goods & Services
Trade
0.92%
1.64%
Dr. Tabrez Ahmad,
Source : Annual report of foreign trade policy
http://corpolexindia.blogspot.com
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6. India’s Foreign Trade Exports & Imports
(Figures in US$ billion)
Year
Export %
Imports %
Growth
Growth
2004-05
83.53
30.8
111.52
42.7
2005-06
103.09
23.4
149.17
33.8
2006-07
126.26
22.5
185.60
24.4
2007-08
162.90
29.0
251.65
27.0
2008-09
185.29
13.6
303.69
20.7
2009-10
178.75
-3.52
288.37
-5.01
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
Source: Ministry of commerce
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7. Reasons for Export Decline
Major Hurdles faced by Indian Exporters:
Rupee Appreciation by about 12% in the year
2007-08
Global Economic Slowdown and Recession in
Developed Economies during 2008-09 and its
impact.
High Interest Rates
Ban on exports of certain food products since
2007.
High Incentives provided by some of the
countries like China, Bangladesh etc.
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
7

8. India’s Foreign Trade
Major Export Destinations
Country
2008-09
($ bn)
% share in
Total
1
USA
19.7
12%
2
United Arab Emirates
17.8
11%
3
China
8.5
5%
4
Singapore
7.6
5%
5
Hong Kong
6.4
4%
6
United Kingdom
6.2
4%
7
Germany
5.9
4%
8
Netherlands
5.9
4%
9
Saudi Arabia
4.8
3%
10
Belgium
4.3
3%
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
8

9. India’s Foreign Trade
Major Import Commodities
Commodity
2008-09
($ bn)
% share
in Total
1
Petroleum, Crude and products
93.1
32.36%
2
Machinery, Electrical and non-electrical
24.3
8.44%
3
Electronic goods
21.5
7.48%
4
Gold and silver
19.5
6.76%
5
Fertilizer, crude and manufactured
13.6
4.72%
6
Pearls, precious and semi-precious
12.8
4.44%
7
Organic and inorganic chemicals
12.8
4.43%
8
Coal, coke and briquettes
10.5
3.64%
9
Iron & Steel
9.5
3.30%
10
Metaliferrous ores and metal scrap
8.3
2.89%
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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10. Foreign Trade Policy 2009-14
Short Term Objectives:
 To arrest and reverse the declining trend of exports; and
 To provide additional support to those sectors which have been
hit badly by recession in the Developed World.
Medium term Policy Objectives :
 To achieve an Annual Export growth of 15% with an Annual
Export Target of US$ 200 billion by March 2011.
 To achieve an Annual Export growth of around 25% by 2014.
 To double India’s exports of goods and services by 2014.
Long Term Objective :
 To double India’s share in Global Trade by 2020.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
10

11. Promotional Measures/ Incentive Schemes
 Vishesh Krishi and Gram Udyog Yojana (VKGUY)
 Focus Market Scheme (FMS)
 Focus Product Scheme (FPS)
 Market Linked Focus Product Scheme (MLFPS)
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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12. Vishesh Krishi & Gram Udyog Yojana
(VKGUY)
 To promote exports of :
(i) Agricultural Produce and their value added products
(ii) Minor Forest Produce and their value added variants
(iii) Gram Udyog Products
(iv) Forest Based Products and
(v) Other Products, as notified from time to time.
 VKGUY benefits are granted with an aim to compensate high
transport costs, and to offset other disadvantages.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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13. Focus Market Scheme
 Objective is to offset high freight cost and other
externalities to select international markets with a
view to diversify the markets and to enhance India’s
export competitiveness in these countries.
 Currently 109 markets have been notified
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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14. Focus Product Scheme
 Objective is to incentivize export of such products
which have high export intensity / employment
potential, so as to offset infrastructure
inefficiencies and other associated costs involved
in marketing of these products.
 Currently over 1000 Products covered under FPS.
Example: Green Technology products
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
14

15. Market Linked Focus Product
Scheme (MLFPS)
 To promote exports of products of high export intensity but which
have a low penetration in countries
 Currently over 1550 products covered under MLFPS.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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16. Foreign Trade Policy – 2009-14
New Initiatives
Higher Support for Market and Product Diversification
 26 new markets added under FMS
(16 in Latin America, 10 in Asia-Oceania)
 Incentive under FMS raised from
2.5% to 3%.
 Incentive under FPS raised from
1.25% to 2%.
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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17. Foreign Trade Policy – 2009-14
New Initiatives


.

Higher Support for Market and Product
Diversification (contd.)
New products under FPS :Engineering products, Plastic (value
added products),Technical Textiles, Green Technology products ,
vegetables, textiles and certain Electronic items.
New products/markets under MLFPS : Pharmaceuticals, Synthetic
textile fabrics, value added rubber products, value added plastic
goods, textile made ups,, glass products, certain iron and steel
products
Benefits to these products will be provided, if exports are made to
13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa,
Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia
and New Zealand).
The above markets also included for existing products i.e. Auto
Components, Motor cars, Bicycles & Parts, Apparels.
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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18. Foreign Trade Policy – 2009-14
New Initiatives
To Support Various Sectors Like





Gems & Jewelers Sector
Pharmaceutical Sector
Agriculture Sector
Leather Sector
Handloom sector
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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19. ORGANISATIONAL SET UP
Ministry of commerce
Autonomous
bodies
Public sector
undertakings
Advisory body
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
Attached and
subordinate
Office
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20. Ministry Of Commerce
• The Ministry of Commerce, Government of India, is the most
important organ concerned with the promotion and regulation of the
foreign trade of the country.
• Matters related to foreign trade are dealt with by eight divisions in
the Department of Commerce.
• i) Administrative and General Division, (ii) Finance Division, (iii)
Economic Division, (iv) Trade Policy Division, (v) Foreign Trade
Territorial Division, (vi) Exports Products Division, (vii) Services
Division, and (viii) Industries Division.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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21. Description Of Autonomous Bodies
• Export Inspection Council
• Indian Institute of Foreign Trade
• Indian Institute of Packaging
• Export Promotion Councils, Commodity Boards and Authorities
• Federation of Indian Export Organisation
• Indian Council of Arbitration
• India Trade Promotion Organisation
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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22. Public Sector Undertakings
•
The State Trading Corporation of India and its subsidiaries
•
The spices Trading Corporation
•
The Minerals and Metals Trading Corporation of India and its
subsidiary
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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23. Advisory Body
Central Advisory Council on Trade: The Central Advisory Council on
Trade, consisting of representatives from different organisations and
individuals with business standing and expertise in the field of trade
and commerce, and headed by Commerce minister.
Dr. Tabrez Ahmad,
http://corpolexindia.blogspot.com
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24. Attached And Subordinate Offices
• Office of the Director General of Foreign Trade (DGFT)
• Office of Development Commissioners
• Director General of Commercial Intelligence and Statistics
Dr. Tabrez
Ahmad, http://corpolexindia.blogspot.com
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25. Dr. Tabrez Ahmad
http://corpolexindia.blogspot.in
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26. Dr. Tabrez Ahmad
http://corpolexindia.blogspot.in
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27. Dr. Tabrez Ahmad
http://corpolexindia.blogspot.in
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