India's foreign trade policy 2009 13 by jayant nannore(mba bf)

School Of Future Studies & PlanningDAVV, Indore

Discussion over“Foreign Trade Policy of India(2009-13)”

Submitted to: Presented By:Dr. Ajay Chhabariya Jayant Nannore

Faculty, DAVV MBA(BF)

What is “Foreign Trade”?

• Exchange of goods and services between the countries is known as foreign trade. The difference is the producer and consumers reside in separate countries.

• The foreign trade policy and regulation is a very important determinant of the business environment. The export-import policy, for example, can have significant impact on the competitive environment and the export sector.

• Import control was introduced in 1940• 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.

HISTORY OF FOREIGN TRADE IN INDIA

Key strategies for achieving its Objectives :-

•Simplifying procedures and bringing down transaction costs;•Facilitating development of India as a global hub for manufacturing , trading and services.•Identifying and nurturing special focus areas to generate additional employment opportunities , particularly in semi-urban and rural areas.•Facilitating technological and infrastructural upgradation of the Indian economy ,especially through import of capital goods and equipments.•Activating Indian embassies as key players in the export strategy.

Indian Foreign Trade Policy

•The Union Commerce Ministry, Government of India announces the integrated Foreign Trade Policy (FTP) in every five year. •This is also called EXIM policy. •The Foreign Trade Policy which was announced on August 28, 2009 is an integrated policy for the period 2009-14•This policy is updated every year with some modifications and new schemes. •New schemes come into effect on the first day of financial year i.e. April 1, every year.

Promotional Measures

• Assistance to States for Infrastructure Development of Exports (ASIDE): The State Governments shall be encouraged to participate in promoting exports from their respective States.

• Market Access Initiative (MAI): The Market Access Initiative (MAI) scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a country and product.

• Marketing Development Assistance (MDA): The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.

• Towns of Exports Excellence: The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products.

• Brand Promotion and Quality. • Target Plus Scheme: The objective of the scheme is to

accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth in exports

Organizational Setup

Government has established or sponsored a number of organizations to provide different types of assistance to the exporters.

• Ministry of Commerce• Autonomous Bodies• Public Sector Undertakings• Advisory Body

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, namely,(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.

Autonomous Bodies

1. Export Inspection Council2. Indian Institute of Foreign Trade3. Indian Institute of Packaging4. Export Promotion Councils, Commodity Boards and

Authorities5. Federation of Indian Export Organisations6. Indian Council of Arbitration7. India Trade Promotion Organisation

Public Sector Undertakings

• The following trading/service corporations are functioning under the administrative control of the Ministry of Commerce.

i. The State Trading Corporation of India and its subsidiaries

ii. The Minerals and Metals Trading Corporation of India and its subsidiary, viz., Mica Trading Corporation

iii. The spices Trading Corporationiv. The Export Credit Guarantee Corporation

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, advise Government on matters relating to :

i. Export and import policy programmeii. Operation of import and export trade controlsiii. Organisation and development of commercial services iv. Export Credit Guarantee Corporation

Marketing Assistance

• A number of steps have been taken to assist the exporters in their marketing effort.

• Market Development Assistance• Market Access Initiative• Trade Fairs and Exhibitions• Export Risk Insurance• Finance• Quality control and Preshipment Inspection• Institutional Assistance• India Brand Equity Fund

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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.

INDIA’S FOREIGN TRADE POLICY 2009-14


• Aim in General• The policy aims at developing

export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange.

• FTP assumes great significance this year for those sectors which job losses like textiles, leather, handicrafts etc. during recession.

• A fall in exports has led to the closure of several small- and medium-scale export-oriented units, resulting in large-scale unemployment.


• Targets:

• Export Target : $ 450 Billion for 2013-14

• Export Growth Target: 25 % every year

• Three pillars:i. Improvement in infrastructure

related to exports.ii. Reduction in transaction costs.iii. Provision of full refund of all

indirect taxes.


TECHNOLOGY UPGRADATIONEPCG Scheme

1. Obligation under EPCG scheme relaxed.

2. To aid technological up gradation of export sector, EPCG Scheme at Zero Duty has been introduced.

3. Export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced by 50%.

Re-fixation of Annual Average Export Obligation:

Taking into account the decline in exports, the facility of Re-fixation of Annual Average Export Obligation for a particular financial year in which there is decline in exports from the country, has been extended.

GREEN PRODUCTS & TECHNOLOGIES

Support for Green products and products from North East extended.

SPECIAL FOCUS INITIATIVES


Announcements for FPS, FMS.

• 26 new markets added in this scheme. (16 in Latin America, 10 in Asia-Oceania)

• Incentives under FMS raised from 2.5

% to 3 %

• Incentive available under Focus Product Scheme (FPS) raised from 1.25% to 2%.

• Extra products included in the scope of benefits under FPS

INDIA’S FOREIGN TRADE POLICY 2009-14Announcements

• Market Linked Focus Product Scheme (MLFPS) expanded by inclusion of products like pharmaceuticals, textile fabrics, rubber products, glass products ,auto components, motor cars, bicycle and its parts.etc. However , 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).

• A common simplified application form has been introduced to apply for the benefits under FPS, FMS, MLFPS


Announcements for MDA & MAI:

• Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced.

Towns of Export Excellence (TEE)• The following cities have been recognized as towns of export excellence

(TEE)• Handicrafts : Jaipur, Srinagar and Anantnag • Leather Products : Kanpur,Dewas and Ambur • Horticultural Products: Malihabad


Extension of Income Tax Exemption to EOU • Income Tax exemption to 100% EOUs units under Section 10B and

10A of Income Tax Act, has been already extended for the financial year 2010-11 in the Budget 2009-10.


• Announcements For Marine sector :

• Fisheries exempted from maintenance of average EO under EPCG Scheme (along with 7 sectors) however Fishing Trawlers, boats, ships and other similar items shall not be allowed for this exemption.

• Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for the marine sector.


Announcements for Gems & Jewellery Sector: • Duty Drawback is allowed on Gold

Jewellery exports to neutralize duty incidence.

• Plan to establish "Diamond Bourse (s) with an aim to make India and International Trading Hub announced.

• Introduction of a new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification.


Announcements for Agro Exports:

• Introduction of a single window system to facilitate export of perishable agricultural produce with an aim to reduce transaction and handling cost.

• This system will involve creation of multi-functional nodal agencies.


• Announcements for Leather Exports :

• On the payment of 50 % applicable export duty, Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses.


• Announcements for Tea Exports: • The existing Minimum value

addition under advance authorization scheme for export of tea is 100 %. It has been reduced from the existing 100% to 50%.

• DTA (Domestic Tariff Area) sale limit of instant tea by EOU units increased from 30% to 50%.


• Announcements for Pharma Exports :

• Export Obligation Period for advance authorizations issued increased from existing 6 months to 36 months.

• Pharma sector included under MLFPS for countries in Africa and Latin America & some countries in Oceania and Far East.


Scheme for Export Oriented Units:

• EOUs have been allowed to sell products manufactured by them in DTA (Domestic Tariff Area) upto a limit of 90% instead of existing 75%, without changing the criteria of ‘similar goods’, within the overall entitlement of 50% for DTA sale. (This means that instead of 75% these units can sell up to 90 % of their products in the domestic markets)

• EOU allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards.

• Extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs kept under consideration.


Announcements for Value Added Manufacturing (VAM)• To encourage Value Added Manufactured export, a minimum 15% value

addition on imported inputs under Advance Authorization Scheme.

Announcements for Project Exports:• Project Exports and a large number of manufactured goods covered under

FPS and • MLFPS.


Reduction in Transaction Costs:

• Maximum applicable fee for 18 Authorizations/ license applications has been reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications).

Dollar Credits • There is a provision for state-run banks to provide dollar credits


Announcements for Medical Devices

• To solve the problem of medical device industry, the procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years.

Announcements for Automobile Industry

• Those Automobile industries which have their establishment will be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which are not manufactured in India. Simplification in EPCG for automobile industry.


Announcements for EDI Initiatives

• Export Promotion Councils & Commodity Boards have been advised to issue RCMC through a web based online system.

• It is expected that issuance of RCMC would become EDI enabled before the end of 2009.

Set up of Directorate of Trade Remedy Measures Announced

• A Directorate of Trade Remedy Measures shall be set up, which will enable support to Indian industry and exporters, especially the Micro Small & medium Enterprises MSMEs in availing their rights through trade remedy instruments

Conclusion(FTP)

• After the implementation foreign trade policy , the import and export among foreign countries have increased and have become more secured.

• Setting up of EPZ and SEZ have also increased foreign investors .

DISCOVERING

21480

Bulk Cargo Handled During 2011

New Mangalore

Tuticorin

Chennai

MBPTJNPT

Kolkata Dock SystemHaldia

Cochin

Kandla

Visakhapatnam

Paradip57282

42438

64597

57154

15810

36019Mormugao35128

5703955756

64893

‘000 Tons57%

43%

Mundra110

GangavaramKakinada

Krishnapatnam262616662

8209

2500 Pipavav

Highly Developed

Developed

Internal issues

Developing

Center of Action

La infografía

Business

India's foreign trade policy 2009 13 by jayant nannore(mba bf)