Foreign Trade Policy

of india
introduction- The Government of India, Ministry of Commerce and Industry
announces Export Import Policy after every five years. EXIM policy, in general, aims at
developing export potential, improving export performance, encouraging foreign trade
and creating favorable balance of payments position
The Export Import Policy (EXIM Policy) is updated every year on the 31st of March and
the modifications, improvements and new schemes becomes effective from 1st April of
every year.
To become a major player in world trade, a comprehensive approach needs to be taken
through the Foreign Trade Policy of India . Increment of exports is of utmost
importance, India will have to facilitate imports which, are required for the growth
Indian economy. Rationality and consistency among trade and other economic policies
is important for maximizing the contribution of such policies to development. Thus,
while incorporating the new Foreign Trade Policy of India, the past policies should also
be integrated to allow developmental scope of India’s foreign trade. This is the main
mantra of the Foreign Trade Policy of India.

Foreign Trade Policy 2009 - 2014

The Foreign Trade Policy for the period 2009-2014 was announced on 27th August 2009
at a time when the world was emerging from the shadow of a challenging economic
period, the worst we have seen in the last 7 decades. Economies and markets across the
world were in turmoil, causing sharp contraction ininternational trade, adversely
impacting global investment flows, rendering over 50 million people jobless. The world
trade witnessed an unprecedented contraction of over 12%.
In this backdrop, the key objective for the Foreign Trade Policy was to arrest the
declining exports and reverse the trend. A multipronged strategy was adopted to provide
stability of policy and giving additional support, especially to employment intensive
sectors. Market diversification strategy under pinned our approach to reach out to non-
traditional destinations in Africa, Latin America and Asia since our traditional markets in
the developed world witnessed a sharp contraction in demand. We were also committed
to encourage technological upgradation of exports and undertake an exercise of
simplification of procedures for reducing transaction costs.
These constituted the key principles based on which the Policy was announced last year
and we can look back with a sense of satisfaction that we were able to achieve the
immediate objectives of our Policy. Exports which were steadily declining since October
2008 turned the corner in October 2009 and we ended last year with exports of US$
178.66 billion. In the first quarter of 2010-11, exports have grown by 32%, compared to
last year.
In the last one year, we have undertaken significant measures in reaching out to the world
and have been actively engaged in bilateral trade negotiations. As part of our Look East
policy, we concluded Trade in Goods Agreement with ASEAN and Korea and are now
currently engaged in negotiations with Malaysia, Japan and the EU.

Objectives of the Foreign Trade

Policy of India -

Trade propels economic growth and national development. The primary purpose is not
the mere earning of foreign exchange, but the stimulation of greater economic activity.
The Foreign Trade Policy of India is based on two major objectives, they are -
To double the percentage share of global merchandise trade within the next five years.
To act as an effective instrument of economic growth by giving a thrust to employment
generation.

SPECIAL FOCUS INITIATIVES

Special Focus 1B.1 With a view to continously increasing our percentageshare of global
trade and expanding employment opportunities, certain special focus initiativeshave
been identified/continued forMarketDiversification,TechnologicalUpgradation,
Support to status holders, Agriculture, Handlooms, Handicraft, Gems & Jewellery,
Leather, Marine, Electronics and IT Hardware manufacturing Industries, Green products,
Exports of products from North-East, Sports Goods and Toys sectors. Government of
India shall make concerted efforts to promote exports in these sectors bysp ec if ic
sectoral strategies that shall be notified from time to time.FurtherSectoralInitiatives in
other sectorswill also be announced from time to time.

(1) Market Diversification

Weaker demand in developed economies, triggered by falling asset prices and increased
economic uncertaintyhas pulled down the growth ofIndia¶s exports to developed
countries.T here are no clear signals astowhen the markets in developed countrieswould
revive.To insulateIndian exports from the decline in
demand from developed countries, in thisPolicy focus
is on diversification ofIndian exports to other markets,
specially those located inLatinAmerica,Africa, parts of
Asia and Ocenia. To achieve diversification of Indian

(2) Technological Upgradation

To usher in the next phase of export growth, India needs to move up in the value chain of
export goods.This objective is sought to be achieved by encouragingtechnological
upgradation of our export sector.A numberof initiativeshave been taken in thisPolicy to
focus ontechnological upgradation;

(3) Support to status holders

The Government recognized µStatus Holders¶contribute approx. 60%o f India¶s goods
exports.Toincentivise and encourage the statusholders, aswellas to encourage
Technological upgradation of exportproduction

( 4 )Electronics and IT Hardware Manufacturing Industries

(a) Expeditious clearance of approvals required from
DGFTshall be ensured.
(b) Exporters /Associations would be entitled to utilize
MAI & MDA Schemes for promoting Electronics
and IT HardwareManufacturing industry exports

Strategy of Foreign Trade

Policy of India -
(1)Removing government controls and creating an atmosphere of trust and transparency
to promote entrepreneurship, industrialization and trades.
(2) Simplification of commercial and legal procedures and bringing down transaction
costs. (3)
Simplification of levies and duties on inputs used in export products. Facilitating
development of India as a global hub for manufacturing, trading and services.
( 4 ) Generating additional employment opportunities, particularly in semi-urban and
rural areas, and developing a series of ‘Initiatives’ for each of these sectors.
(5 ) Facilitating technological and infrastructural upgradation of all the sectors of the
Indian economy, especially through imports and thereby increasing value addition and
productivity, while attaining global standards of quality. Neutralizing inverted duty
structures and ensuring that India's domestic sectors are not disadvantaged in the Free
Trade Agreements / Regional Trade Agreements / Preferential Trade Agreements that
India enters into in order to enhance exports
.(6)Upgradation of infrastructural network, both physical and virtual, related to the entire
Foreign Trade chain, to global standards. Revitalizing the Board of Trade by redefining
its role, giving it due recognition and inducting foreign trade experts while drafting Trade
Policy.
(7) Involving Indian Embassies as an important member of export strategy and linking
all commercial houses at international locations through an electronic platform for real
time trade intelligence, inquiry and information dissemination.

Partnership -

Foreign Trade Policy of India foresees merchant exporters and manufacturer exporters,
business and industry as partners of Government in the achievement of its stated
objectives and goals.

Road ahead of Indian foreign trade policy -

This Foreign Trade Policy of India is a stepping stone for the development of India’s
foreign trade. It contains the basic principles and points the direction in which it propose
to go. A trade policy cannot be fully comprehensive in all its details it would naturally
require modification from time to time with changing dynamics of international trade