INDIAN FOREIGN TRADERISHI KUMAR DM16136

VIDHIT BHATIA DM16159

RADHIKA PAREKH DM16235

SRIMATHI DM16247

FOREIGN TRADE

• Foreign trade in India includes all imports and exports to and from India.

• It is administered by the Ministry of Commerce and Industry at the level of Central Government.

• Export-Import Bank of India is the premier export finance institution in India, established in 1982 under the Export-Import Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment.

• In India, the import and export of goods is governed by the Foreign Trade (Development & Regulation) Act, 1992 and India’s Export Import (EXIM) Policy. India’s Directorate General of Foreign Trade (DGFT) is the principal governing body responsible for all matters related to EXIM Policy.

IMPORT SCENARIO IN INDIA

• Imports during June, 2015 were valued at US $33116.55 million.

• India is heavily dependent on crude oil imports, with petroleum crude accounting for about 34 percent of the total inward shipments. The country also imports: gold and silver (12 percent of the total imports), machinery (10 percent), electronic goods (7 percent) and pearls, precious and semi-precious stones (5 percent).

• Cumulative value of imports: April-January 2014-15 was USD 383.41 Billion (+2.17%)

• Oil imports: April-January 2014-15 were USD 124.75 billion (-7.9%)

• Non-oil imports: April-January 2014-15 was USD 258.66 billion (+7.8%)

EXPORT SCENARIO IN INDIA

• As of 2014, India is the 19th among the leading exporters in the world with exports worth $3.42 trillion.

• Exports during June, 2015 were valued at US $22289.43 million.

• The most important top five items that India exports are ‘Engineering goods’, ‘Petroleum Products’, ‘Gems and Jewellery’ , ‘RMG of all Textiles’ and ‘Drug, Pharmaceuticals & Fine Chemicals’ .

• The export values for the top 5 items as of 2011-12 are

1. ‘Engineering goods’ at 2.8 lakhs crores

2. ‘Petroleum Products’ at 2.68 lakhs crores

3. ‘Gems and Jewellery’ at 2.15 lakhs crores

4. ‘RMG of all Textiles’ at Rs. 65613 crores

5. ‘Drug, Pharmacutes & Fine Chemicals’ at Rs. 63554 crores.

• India’s merchandise exports reached a level of US $ 312.61 billion during 2013-14 and has set a target of US $340 billion for 2014-2015.

• Indian exports recorded a Compound Annual Growth Rate (CAGR) of 15.79 per cent from 2004-05 to 2013-14.

FOREIGN TRADE POLICY 1991

• EXPORT PROMOTION AND IMPORT LIBERALIZATION BY STRENGTHENING EXPORT INCENTIVE.

• REMOVING QUANTITATIVE RESTRICTIONS.

• CURRENT ACCOUNT AND TRADE ACCOUNT CONVERTIBILITY HAS BEEN INTRODUCED

• TARIFF STRUCTURE HAS BEEN RATIONAL

• CASH COMPENSATORY SUPPORT SYSTEM HAS BEEN REPLACED BY A SCHEME OF VALUE BASED ADVANCE LICENSING SYSTEM.

FOREIGN TRADE POLICY 2009 - 2014

• THE MAIN OBJECTIVE OF POLICY IS TO ACHIEVE AN ANNUAL EXPORT GROWTH OF 15% WITH AN ANNUAL EXPORT TARGET OF USD 200 BILLION BY MARCH 2011.

• IN THE REMAINING 3 YEARS OF FOREIGN TRADE POLICY UP TO 2014, COUNTRY SHOULD BE ABLE TO COME BACK ON THE HIGH EXPORT GROWTH OF AROUND 25% P.A

• BY 2014, EXPECT TO DOUBLE INDIA’S EXPORT OF GOODS AND SERVICES

• THE LONG TERM POLICY OBJECTIVE FOR THE GOVERNMENT IS TO DOUBLE INDIA’S SHARE IN GLOBAL TRADE IN 2020

FOREIGN TRADE POLICY 2015 - 2020

TALKING ABOUT THE NEW POLICY, WHICH AIMS AT BOOSTING INDIA'S EXPORTS, 'MAKE IN INDIA' AND 'DIGITAL INDIA' ARE BEING INTEGRATED WITH THE NEW FOREIGN TRADE POLICY.

THE GOVERNMENT IS PITCHING INDIA AS A FRIENDLY DESTINATION FOR MANUFACTURING AND EXPORTING GOODS, AND THE NEW POLICY IS BEING SEEN AS AN IMPORTANT STEP TOWARDS REALIZING THAT GOAL.

SOME KEY FEATURES OF THE NEW FOREIGN TRADE POLICY

• MERCHANDIZE EXPORTS FROM INDIA (MEIS) TO PROMOTE SPECIFIC SERVICES FOR SPECIFIC MARKETS FOREIGN TRADE POLICY

• FTP WOULD REDUCE EXPORT OBLIGATIONS BY 25% AND GIVE BOOST TO DOMESTIC MANUFACTURING

• FTP BENEFITS FROM BOTH MEIS & SEIS WILL BE EXTENDED TO UNITS LOCATED IN SEZS

• FTP 2015-20 INTRODUCES TWO NEW SCHEMES, NAMELY "MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS)" AND "SERVICES EXPORTS FROM INDIA SCHEME (SEIS)". SEIS IS FOR INCREASING EXPORTS OF NOTIFIED SERVICES.

• Agricultural and village industry products to be supported across the globe at rates of 3% and 5% under MEIS.

• Industrial products to be supported in major markets at rates ranging from 2% to 3%

• Industrial products to be supported in major markets at rates ranging from 2% to 3%.

• Branding campaigns planned to promote exports in sectors where India has traditional Strength.

• Higher level of support for export of defence, farm Produce and eco-friendly products.

• Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months instead of 18 months

• Export obligation under EPCG scheme reduced to 75% to Promote domestic capital goods manufacturing

• Export promotion mission to take on board state Governments

BALANCE OF PAYMENTS

Record of all economic transactions between the residents of a country and the rest of the world in a particular period

It includes all external visible and non-visible transactions

It includes not only imports and exports of goods which are visible items but also such invisible items as shipping, banking, insurance, tourism, interest on investments, gifts, etc.

The balance of payments is one of the major indicators of a country's status in international trade.

COMPONENTS OF BOP:

Current Account: Current account refers to an account which records all the transactions relating to export and import of goods and services and unilateral transfers during a given period of time.Current account contains the receipts and payments relating to all the transactions of visible items, invisible items and unilateral transfers.

Capital Account: Capital account of BOP records all those transactions, between the residents of a country and the rest of the world, which cause a change in the assets or liabilities of the residents of the country or its government. It is related to claims and liabilities of financial nature.

Balance on current account and balance on capital account are interrelated.A. A deficit in the current account must be settled by a surplus on the capital account.B. A surplus in the current account must be matched by a deficit on the capital account.

Current Account Deficit is the amount by which the value of goods and services imported by the country exceeds the value of goods and services exported in a period.

During 1990-91, the current account deficit steeply hiked to $-9680 million while the capital account surplus was far below at $ 7188 million. This led to an ever time high deficit in BoP position of India.

The current account balance of India during 2011-12 is recorded to be $ - 78155 million, signifying a deficit eight times that of the figures of 2007-08. Huge negative debits and comparatively low positive credits caused for this negative value in current account.

Current Scenario of BoP:

The CAD for the entire fiscal ended March 31, 2015 also narrowed to 1.3 per cent of the country's Gross Domestic Product

India trade deficit narrowed 7.9 percent year-on-year to 10830 USD Million in June of 2015 Exports fell by 15.82 percent, Imports decreased 13.4 percent, driven by a 34.97 percent drop in

value of oil purchases and a 36.96 percent fall in gold imports The slump in exports was mainly due to global slowdown and softening of crude, metal and

commodity prices Balance of Trade in India averaged -2010.52 USD Million from 1957 until 2015, an all time high of

258.90 USD Million in March of 1977 and a record low of -20210.90 USD Million in October of 2012.

CRITICAL ISSUES RELATED TO INDIAN FOREIGN TRADE1. Imports and Exports June 2015 $55.40 billion

2. Imports and Exports June 2014 $64.72 billion

• The imported oil bill has declined 35% year on year to $8.7 billion which means layoffs in the import and export sectors.

• Also foreign trade is being severely affected by global economic slowdown as it is seen that the April-June Import Export for 2014 which was $193 has dropped to $165 in 2015. (in Million)

• Indian oil product business is sinking slowly creating huge losses for the industry. (from $6.1 to $2.9 Million)

OBSERVATIONS

• Due to the discovery and export of Shale gas by the USA, oil prices have been dropping steadily.

• Persistent weakness in global demand and the lower value of oil products led India's merchandise exports to fall for the sixth straight month in May.

• At present there is no import duty on wheat. But the Food Ministry has proposed 10 per cent import duty to curb cheaper shipments as the country already has surplus stock. Over the years the production of wheat has declined considerably.

• Higher borrowing rates – Indian businesses are losing competitiveness

• Consumer price inflation rose in June – as a result, cutting down interest rates is not going to happen in near term.

INITIATIVES BY THE GOVERNMENT

To boost the exports and to curb the imports:

• Branding for identified sectors (pumps & valves and electrical sector) initiated as a part of the strategy for popularizing “Indian Engineering” brand.

• Sensitizing key industries for mandating standards for products to discourage imports of sub-standard quality.

• Technology induction for export products

• Automotive industry – DoC is attempting policy/process interventions required for scaling up of the industry from USD 12 bn to USD 80 bn by 2026.

Service sector:

• Has taken steps to boost export of services in certain identified sectors

• They have organized two Service Conclave to identify the service sectors which are crucial to India

• In conclave:

• Barriers are identified, if any

• Issues related to reforms needed

• Identifying the new markets to export services

INITIATIVES BY THE GOVERNMENT CONTD.,

Ease of doing business

• Reducing no. of documents

• Enlarging the scope of electronic data inter-change (EDI)

• Promoting acceptance of e-info in the place of physical document

• Steps are also been taken to convert non-EDI to EDI to ensure speedier processing at Customs

RECOMMENDATIONS

• Trade is concentrated to small no. of countries (Brazil, Argentina, Chile, Venezuela, Colombia & Peru) – should explore new markets that region (Latin America)

• Should deepen our engagement with the countries within the South Asian and African regions given the huge potential. (China has already taken a lead in that direction)