2. Agenda
History of Foreign Trade in India
Foreign Trade Act
Foreign Trade Policy 2009-14
Incentives Schemes
New Initiatives
Organizational Setup
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.
4. 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
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 0.92% 1.64%
Trade
Source : Annual report of foreign trade policy 5
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.
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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%
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9. India’s Foreign Trade
Major Import Commodities
Commodity 2008-09 % share in Total
($ bn)
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%
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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.
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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.
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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
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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
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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.
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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%.
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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.
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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
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19. ORGANISATIONAL SET UP
Ministry of commerce
Autonomous Public sector Attached and
Advisory body subordinate
bodies undertakings Office
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.
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
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
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.
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
