Import - Export Policy

of India
Contents
Introduction
Why do we need export,brief history
Exim policy ,objectives
Export Promotion Measures
Import Control in India
Pre 90s Exim Policy of India
Post 90s Exim Policy of India


Why do we need export
Export means trade across the political
boundaries of different nation. No Nation is
self sufficient and had all the goods that it
needs. This happens because of climatic
variation & unequal distribution of natural
resources. As a result, countries all over the
world have become interdependent, which
necessitated foreign trade. A developing
country like India with its fast growing
agricultural production to keep pace with the
population to keep pace with the population
growth and growing Industrial infrastructure
needs high-import and this can be sustained only
with fast export growth. To meet the oil import
bill, export is unavoidable. Thus, it is evident that
export promotion continues to be a major thrust
area for the government. Several measures have
been under taken in the past for improving export
performance of the country. In India, Govt. has
come out from time to time with various policies
on foreign trade to promote export thereby
increasing the Foreign Exchange Reserve.
These policies are termed as Exim Policy
.
Import export act was introduced by gov
during second world war and it lasted for
around 45 yrs and in June 1992 this act was
superceded by the Foreign Trade
(Development & Regulation Act), 1992. .
The basic objective of this new act was to
give effect to the new liberalized export and
import policy of the Govt. till 1985 annual
policies were made but from 1985-92, three
yr policy was made and then 5 yr policy was
made coinciding with 5 yr plans 1992-97,
1997-02, 2002-07.

Brief history
What is Exim Policy?

It contains policies in the sphere of Foreign
trade i.e. with respect to import & export
from the country and more especially export
promotion measures, policies and procedure
related there to.
Export means selling abroad and import as
bringing into India, any goods and services
Objective of Exim Policy
Accelerating the countrys transition to a globally
oriented vibrant economy with a view to derive
maximum benefits from expanding global market
opportunities;
Stimulating sustained economic growth
Enhancing the technological strength and
efficiency
Encouraging the attainment of internationally
accepted standards of quality
Providing consumers with good quality products
and services at reasonable prices.

General provisions regarding export import
Exports and Imports free unless regulated
Compliance with Laws
Interpretation of Policy
Procedure:
Exemption from Policy/ Procedure
Principles of Restriction
Restricted Goods
Terms and Conditions of a Licence
Importer-Exporter Code Number
Exemption from Bank Guarantee
Clearance of Goods from Customs
EXPORT PROMOTION MEASURES
Policy measures
Institutional set up.
Import Facilitation for Export Production.
Cash subsidies.
Fiscal Incentives.
Foreign Exchange Facilities.
Export incentives
Export production units


Import Facilitation for Export
Production
Export Promotion Capital Goods Scheme
Special Import Licences
Duty Free Licences under Duty Exemption Scheme
Duty free licences are issued as :
(1) Advance licence
(2) Advance Intermediate licence.
(3) Special Imprest licence.
(4) Licence for jobbing, repairing etc. for re-
export.
(5) Licence under export production programme.
(6) Advance Release Order.
(7) Back to Back Inland Letter of Credit.
Export Incentives

Duty Exemption
Duty Drawback Scheme
DFRC (Duty free replenishment certificate)
DEPB( Duty entitlement pass book)
Deemed Exports

Export Production Units

Export Oriented Unit (EOU)
Special Economic Zones (SEZ)
Software Technology Parks (STP)
Electronic Hardware Technology Parks
(EHTP)
Cash subsidies
Marketing development assistance
Air freight subsidy
Spices export promotion scheme
Jute externel marketing assistance
Financial assistance scheme agriculture
&meat exports
Financial assistance to marine products
exports
Fiscal incentives
Exemption from payment of central excise duty &
simplified procedure for clearance.
Exemption from sales tax
Exemptions & deductions under income tax
act,1961.
Duty draw back Scheme (DDS)
Cash Compensatory Support ( CCS )
International Price Reimbursement Scheme
(IPRS)
Import control regime
1956-57, restrictions on imports started as lot of imports
were there as such gov even had to import foodgrains for
self fulfillment
Imports were classified into
Banned items ,Canalised items ,Restricted items, OGL
In 1966 ruppee was devalued by 36.5% By devaluation
gov expressed the hope that the devaluation would
lead to expansion in export earnings as indian goods
will become cheaper in internatinal market on the
other hands import would decline as price of
imported goods would increase.


Because of a rigid itemization of permissible
imports, an element of inflexibility in the pattern of
utilization of imports was introduced. The
transferability of licenses among same and
different industries was not permissible. This gave
rise to an expanding black market in import
licenses. Therefore, the import allocation system
was so designed as to eliminate the possibility of
all competition, either domestic or foreign. The
Govt of India has liberalized the import regime
from time to time. At present, practically all
controls on import have been lifted. Under the new
EXIM policy 2002-07.
Comparison of Pre 90s & Post
90s Exim Policy
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1948-51 650 647 -3
Excess of Import due to-
Pent-up demand of war.
Shortage of food & raw material due to
partition.
Import of capital goods due to starting
of hydro-electric & other projects.
1951-56 730 622 -108
Trade deficit was largely due to
programmes of industrialization which
gathered momentum and pushed up the
imports of capital goods.

No improvement in exports.
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1956-61 1080 613 -467
Excess of import due to setting of steel
plants,heavy expansion & renovation on
railways & modernization of many
industries.
Export lower than occur in second plan
which shows that export promotion drive
did not materialize.
1961-66 1224 747 -477
Excess of import due to-
Rapid industrialization needs capital
goods as raw material.
Defence needs had increased due to
aggression by China & Pakistan.
Need of foodgrains due to failure of
crops in 1965-66.
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1966-69
(Annual-
plans)
5775 3708 -2067
Devaluation was resorted to essentially-
To reduce volume of import.
To boost export.
Create favourable balance of trade and
balance of payment.
1969-74 1972 1810 -162
As a consequence of import restriction
policies with vigorous export promotion
measures ,during 1972-73 the country
had favourable balance of trade for first
time since independence.
But several international factors pushed
up the price of petroleum
product,steel,fertilizers etc.results low
magnitude of trade balance.
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1974-79 5540 4730 -810
Significant increase in export during
every year of this period.Export of
coffee,tea,cotton fabrics etc.recorded
substantial increase in this period.
But,Janta Government followed policy of
haphazard import liberalization results
decline trade balance from 1977-78.
1980-85 14,986 9051 -5935
Decline in POL imports was more than
by a big hike in non-POL imports as a
consequence of import liberalization.

Consequently, huge trade balance.
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1985-90 28,874 18,033 -10,841
Huge trade balance compelled the
government to approach the World
Bank/IMF for loan.
The government was also forced to
apply brakes on the licensing policy of
imports.
1990-92 45,522 38,300 -7222
In 1990-91,push was given to
export,but as a consequence of Gulf
war government failed to curb imports.

In1991-92, government introduced
number of measures in trade policy
allowing exim scripts,abolishing cash
compensatory support(CCS) schemes
as also a two-step devaluation of the
rupee,but fail to boost up export.
Year Import
(Cr.)
Export
(Cr.)
Trade
Bal.(Cr.)
1992-01 140740 118252 -22,488
In 1992-01,slow down in exports due to-
Depressed nature of world markets.
Saturation of developed countries market
for electronic goods which are dynamic
export sectors.
Increased protectionism by industrialised
countries in area of textile and clothing.
Increasing competition from China &
Taiwan.
India underestimated the impact South-
East Asian crisis
Non-Tarrif barriers have been created by
developed counties to slow down Indian
exports.
In 2000-01 export was largely due to
rupee depreciation along with further
trade liberalization,more openness to
foreign investment in EOU sectors ike IT.
Year Import
(US
$million)
Export
(US
$million)
Trade
Bal.(US
$million)
2002 03


2003-04
65422


80177
52512


64723
-12910


-15454
Rise in imports in 2002-03 was broadly
based on oil imports,food &allied
products(edible oil),capital goods.

Exim policy 2003-04gave massive thrust
to exports by
Duty free import facility for service
sector upto earning 10lakh foreign
exchange.
Liberalization of Duty Exemption
scheme.
Besides,all these measures trade balance
in 2003-04 are high due to mainly on
imports of POL products
more.Currently, almost two-third of
country crude oil requirements are
imported.Besides import of POL, import
of non POL items shot up by 17%
in2002-03 to 26.2%in 2003-04.




Trade - On an All time High
Indias total external trade in goods and services grew
by 41.5% in H12005-06 to US $ 153 billion. This is
expected to go up to US $ 310 billion by the end of this
year. This was just over US $ 74 billion in 1994.
The trade to GDP ratio, calculated at current prices, has
risen to 29.36% in 2004-05 from 18.28% in 1993-94.
Economy is
more Open
than ever
before
Strong Export
Growth
Exports have grown to US $ 57.05 billion during April-
November 2005-2006. They are expected to grow at
26% during the current year to US$ 100 billion.
Strong Imports
growth
Non-oil imports grew at over 28% during April -
September 2005 led by demand for capital goods.
Strong Service
Exports
Service Exports grew by 71% in 2004-05. India's IT-ITES
exports have shown robust growth and are expected to
grow by 32% this year to US $ 23 billion.
Source: Reserve Bank of India
Trade Trends ..
India Exports - Goods and Services
0
50
100
150
200
96-
97
97-
98
98-
99
99-
00
00-
01
01-
02
02-
03
03-
04
04-
05
05-
06
(A)
U
S

$

b
i
l
l
i
o
n
Goods Services
India's Foreign Trade
0
50
100
150
200
250
300
350
1984 1994 2004-05 2005-06 (A)
U
S
$

m
i
l
l
i
o
n
Exports Imports Total Trade
Share of Asia
0
20
40
60
80
100
120
140
160
180
96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05
U
S

$

b
i
l
l
i
o
n
Asia Non Asia
Source: Reserve Bank of India
India Capital Good Imports
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05
U
S

$

b
i
l
l
i
o
n
Capital Goods Imports Total Imports