International Monetary Fund

International Monetary Fund (IMF) is an organization of 185 countries that observes

global financial system by monitoring exchange rates and BOPs. It also offers financial
and technical assistance to the member countries. Its head quarters are located in
Washington. IMF was established to promote International monetary cooperation,
Exchange stability, orderly exchange agreements to foster economic growth and high
level of employment and to provide financial assistance to companies to meet with the
balance of payment requirements.

IMF came into life on Dec. 27, 1945 when the first 29 countries signed its article of
agreement. The statutory purposes of IMF today are the same as they were formulated in
1944.

Fast Facts on the IMF

• Membership: 186 countries

• Headquarters: Washington, DC
• Executive Board: 24 Directors representing countries or groups of countries
• Staff: approximately 2,478 from 143 countries
• Total quotas: $325 billion (as of 3/31/09)
• Additional pledged or committed resources: $500 billion
• Loans committed (as of 9/1/09): $175.5 billion, of which $124.5 billion have not
been drawn
• Biggest borrowers: Hungary, Mexico, Ukraine
• Technical assistance: Field delivery in FY2009—173 person years during
FY2009
• Surveillance consultations: Concluded in 2008—177 countries in 2008, of which
155 voluntarily published information on their consultation (as of 03/31/09)
• Original aims: Article I of the Articles of Agreement sets out the IMF’s main
goals:
o promoting international monetary cooperation;
o facilitating the expansion and balanced growth of international trade;
o promoting exchange stability;
o assisting in the establishment of a multilateral system of payments; and
o making resources available (with adequate safeguards) to members
experiencing balance of payments difficulties.

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IMF Members’ qualifications:

Any country many apply for the membership of IMF. The application is first considered
by IMF/s executive board. After its consideration the executive board will submit a report
to the Board of Governance (BoG) of the IMF with recommendations in the form of a
membership resolution. These recommendations cover the amount of quota in the IMF
and the form of payment of subscription as well as terms and conditions of the
membership. After the BoG has adopted the membership resolution, the applicants state
the needs to take the legal steps required to fulfill the obligations of membership. A
members quota in IMF determine the amount of its subscription its voting weight, its
approach to IMF financing and its allocation of special drawing rights.

A member cannot increase unilaterally its quota. Increases must be approved by the
executive board e.g. in 2001, China was prevented from increasing its quota as high as it
was proposed by china. Its contribution was allowed to be increased slightly further.

Data of SDR and Contribution:

Assistance provided by IMF for global development:

1. Monitoring national, global and regional and economic and financial

developments and advising member countries on their economic policies.
2. Lending hard currencies to member countries to support policy programmes
designed to correct balance of payment problems.
3. Offering technical assistance as well as training for government and central bank
officials.

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Efforts in assistance for financial global development:

1. Exchange Rate Stability: Countries which join IMF agree to adjust their
currency rates only with agreement with IMF. IMF has continued to develop new
initiatives and policies to help member countries to meet new challenges of cross
border financial flows.
2. Advise on policies and global oversight: When a country forms IMF, it agrees to
subject or modify to economic and financial policies incorporation of the
international community and the nation makes a commitment to pursue policies
for orderly economic growth and seasonable price stability to avoid manipulating
exchange ratios for unfair competitive advantage Nations also provide data and
information about its economy.
3. Crisis Preventions and resolution: IMF played a major role in Mexican Crises
of 1994-1995 and the Asian crisis of 1997-1998. IMF has emphasized the
importance of countries shock absorbers into their policies e.g. adequate foreign
exchange reserves efficient and diversified financial system, social safety and a
fiscal policy that allows the government to run higher deficits during difficult
times, IMF has introduced several initiatives designed to make countries
competent in crisis.
4. Macro economic and financial sector policies: IMF focuses on government’s
budget, the management of money and credit, exchange rate policies of the
country. It also monitors macro economic performance like government and
consumer spending, business investment, exports and imports, GDP employment
and inflation. It also sees the BOP i.e. the balance of country’s transaction with
the rest of the world. It also covers labor markets, energy sector and trade.
5. Loan terminology as assistance: Technically countries do not receive loans from
the IMF, they purchase foreign Exchange from the IMF’s reserve paying in their
own currency. Loan is considered repaid when the borrower repurchases its
currency from the IMF in exchange for reserve assets with IMF (quotas from
different countries)

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6. Lending to countries in difficulties: Any member country rich or poor can thurn
to IMF for financing if it has a BoP need i.e. if it cannot find sufficient financing
on affordable terms in the capital market to make its initial payment and maintain
appropriate level of resources. Loans given by IMF are intended to help its
member countries in BoP problems stabilizing their economies and for stable
economic growth.
7. IMF Lending Facilities: Stand by agreements:
a. Short term monetary requirements of the country
i. In 1997, IMF introduced supplementary reserve facilities.
ii. Large loans for short term are quickly provided
b. Extended Fund facility
i. For Long term monetary requirements
c. Facility for Poverty reduction and Growth: The IMF provides confessional
loans with an annual interest rate of 0.5% and maturity of 10 years to its
poorest member country.
8. Technical assistance and training: IMF shares its expertise with member
countries by providing technical assistance and training in a wide range of areas
such as central banking text policy and administration, monetary and exchange
rate policy and official statistics. The objective is to have the design and
implementation of member’s economic policy by strengthening skills in the above
mentioned areas.
9. Collaborating with other institutions: The IMF collaborates with world bank
Regional Development Banks, WTO, UN’s agencies and other international
bodies. Areas in IMF and World Bank collaborate include social policies,
assessment of member countries financial position, development of standards and
codes and improvement of quality, availability and coverage of data on external
debts. IMF is also a member of financial stability forum which brings together
government officials responsible for financial stability in the major international
centers.

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 10. Assistance in UN Millennium Development Goals: In 2000, the international
community agreed on a set of development targets known as UN Millennium
Goals upto 2050. IMF offers to its poorest members to help them in achieving
these goals. The goals are related to poverty and hunger, primary education,
gender equality and women empowerment, HIV AIDS and, other diseases,
environmental protection and global partnership for development

SDR: SPECIAL DRAWING RIGHT

THE ROLE OF THE SDR

SDRs are used as a unit of account by the IMF and several other international
organizations. A few countries peg their currencies against SDRs, and it is also used to
denominate some private international financial instruments. For example, the Warsaw
convention, which regulates liability for international carriage of persons, luggage or
goods by air, uses SDRs to value the maximum liability of the carrier.

The SDR was created by the IMF in 1969 to support the Bretton Woods fixed
exchange rate system. A country participating in this system needed official reserves—
government or central bank holdings of gold and widely accepted foreign currencies—
that could be used to purchase the domestic currency in foreign exchange markets, as
required to maintain its exchange rate. But the international supply of two key reserve
assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of
world trade and financial development that was taking place. Therefore, the international
community decided to create a new international reserve asset under the auspices of the
IMF.

However, only a few years later, the Bretton Woods system collapsed and the major
currencies shifted to a floating exchange rate regime. In addition, the growth in
international capital markets facilitated borrowing by creditworthy governments. Both of
these developments lessened the need for SDRs.

The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim
on the freely usable currencies of IMF members. Holders of SDRs can obtain these
currencies in exchange for their SDRs in two ways:

first, through the arrangement of voluntary exchanges between members; and

second, by the IMF designating members with strong external positions to purchase
SDRs from members with weak external positions.

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In addition to its role as a supplementary reserve asset, the SDR, serves as the unit of
account of the IMF and some other international organizations.

Basket of currencies determines the value of the SDR

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold
—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the
Bretton Woods system in 1973, however, the SDR was redefined as a basket of
currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S.
dollar. The U.S. dollar-value of the SDR is posted daily on the IMF's website. It is
calculated as the sum of specific amounts of the four currencies valued in U.S. dollars, on
the basis of exchange rates quoted at noon each day in the London market.

The basket composition is reviewed every five years by the Executive Board to ensure
that it reflects the relative importance of currencies in the world's trading and financial
systems. In the most recent review (in November 2005), the weights of the currencies in
the SDR basket were revised based on the value of the exports of goods and services and
the amount of reserves denominated in the respective currencies which were held by
other members of the IMF. These changes became effective on January 1, 2006. The
next review will take place in late 2010.

The SDR interest rate

The SDR interest rate provides the basis for calculating the interest charged to members
on regular (non-concessional) IMF loans, the interest paid and charged to members on
their SDR holdings, and the interest paid to members on a portion of their quota
subscriptions. The SDR interest rate is determined weekly and is based on a weighted
average of representative interest rates on short-term debt in the money markets of
the SDR basket currencies.

SDR allocations to IMF members

Under its Articles of Agreement, the IMF may allocate SDRs to members in proportion
to their IMF quotas. Such an allocation provides each member with a costless asset.
However, if a member's SDR holdings rise above its allocation, it earns interest on the
excess; conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall.

There are two kinds of allocations:

General allocations of SDRs. General allocations have to be based on a long-term global

need to supplement existing reserve assets. Decisions to allocate SDRs have been made
three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in
1970-72 in yearly installments. The second allocation, for SDR 12.1 billion, was
distributed in 1979–81 in yearly installments.

The third general allocation was approved on August 7, 2009 for an amount of SDR
161.2 billion and will take place on August 28, 2009. The allocation would mean a

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simultaneous increase in eligible members' SDR holdings and in their cumulative SDR
allocation by about 74.13 percent of their quota.

Special allocations of SDRs. A proposal for a special one-time allocation of SDRs was
approved by the IMF's Board of Governors in September 1997 through the proposed
Fourth Amendment of the Articles of Agreement. Its intent is to enable all members of
the IMF to participate in the SDR system on an equitable basis and correct for the fact
that countries that joined the Fund after 1981—more than one-fifth of the current IMF
membership—have never received an SDR allocation. This allocation would increase
members' cumulative SDR allocations by SDR 21.5 billion using a common benchmark
ratio as described in the amendment.

The Fourth Amendment became effective for all members on August 10, 2009 when the
Fund certified that at least three-fifths of the IMF membership (112 members) with 85
percent of the total voting power accepted it. On August 5, 2009, the United States joined
133 other members in supporting the Amendment. The special allocation will be
implemented on September 9, 2009.

SDR Valuation
The currency value of the SDR is determined by summing the values in U.S.
dollars, based on market exchange rates, of a basket of major currencies (the
U.S. dollar, Euro, Japanese yen, and pound sterling). The SDR currency value
is calculated daily and the valuation basket is reviewed and adjusted every
five years.

Thursday, October 22, 2009

Percent change in
Currency exchange rate
Exchange U.S. dollar
Currency amount under against U.S. dollar
rate 1 equivalent
Rule O-1 from previous
calculation
Euro 0.4100 1.49720 0.613852 0.234
Japanese yen 18.4000 91.31000 0.201511 -0.515
Pound sterling 0.0903 1.65380 0.149338 -0.193
U.S. dollar 0.6320 1.00000 0.632000
1.596701
U.S.$1.00 = SDR 0.626291 2 -0.007 3
SDR1 = US$ 1.59670 4
Notes:

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 World Bank

During the Second World War, in the year 1944, a conference was held at Bretton Woods
(USA). It was attended by the representatives of 44 countries. India also participated in
this conference. It was decided in that conference that 2 institutions to be set up for
economic development of all countries. These institutions were IMF and International
Bank for reconstruction & Development (IBRD). The objective of IMF was to stabilize
exchange rates by removing temporary balance of payments deficit. On the other hand
the objective of IBRD was reconstruction of economies and provision for necessary funds
for the economic development of all developed and underdeveloped countries. The bank
started its function in 1945.

Objectives of World Bank:

1. Reconstruction and development

2. Encouragement to capital investment
3. Encouragement to international trade
4. Establishment peace time economy
5. Environmental protection
6. Infrastructural development
7. Loan for meeting deficit in BoPs

Membership of World Bank:

1. Any country that is a member of IMF will automatically become a member of

World Bank
2. Those countries, who accepted the membership of the Fund in 1945, were also
treated as the founder members of the World Bank.
3. In the year 2004-2005 184 countries were the members of World Bank.

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 4. A member can withdraw its membership at any time by giving a written notice.
5. If a country fails to observe the rules of the World Bank, its membership can be
terminated.

Management of WB
1. Board of Governors
2. Board of Executive Directors
3. Advisory council
4. Loan Committees
1. Board of Governance: It represents the general council of the bank. Every
member country appoints one governor, one alternative governor for 5 years. No
alternative governors can vote except when the governor is absent. The Board of
governors has following rights:
a) Admissions of new members
b) Termination of membership
c) change in the capital
d) Distribution of the income of the bank
e) Agreement with international institutions
f) Liquidation (Dissolving of Banks) of the banks.
2. Board of Executive Directors: It consists of 21 members out of these 5 members
are those which have the largest subscription. These members are America,
Britain, France, Germany and Japan. The remaining members are elected from
among the other members of the Bank 2 years.
3. Advisory Council: It consists of minimum 7 members. Their appointment is
made by board of executive directors. Members of this council are experts on
different subjects like banking, foreign trade, industry, labour and agriculture.
4. Loan Committees: It is appointed to sanction loans to member countries and
private enterprises. The applications for loan are referred to this committee by
Board of Directors.

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Capital of the World Bank:

At the time of establishment, the World Bank’s authorized capital was $ 1,000 crores
divided into 1 Lakh shares of $ 1,00,000 each. Every member country had to pay 20% of
its quote at the time of membership. Out of this 2% was to be paid in gold and remaining
18% in its own currency.
The balance 80% of the capital subscription can be called by the Bank as an when
required.

Functions of World bank:

1. To advance loans
Between 1945-2000 WB, sanctioned loan amount was $ 33853
a. Direct Loans
b. Guarantee Loans
c. Joint Loans in collaboration with other banks.
2. Technical Assistance
3. Training: In 1956, the World Bank established economic development Institute
for imparting training.
4. Coordination and assistance in development
5. Settlement of international disputes
6. Financial assistance to world welfare institutions
7. Conducts economic research
8. Establishing subsidiary institutions.
a. International Development Association
b. International Finance Corporation
c. Multinational Investment Guarantee Agency

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Importance of World Bank:

1. Giving Loans by enlarging capital: World Bank has increased its share capital
by about 19 times to increase his powers of giving loans for the development of
member countries.
2. Attention to developed and underdeveloped countries: Out of total loans and
advances by World Bank, about 70% loans have gone to the countries of Asia,
Africa and other underdeveloped countries for their economic development.
However, the Bank has also given large amount of loans to the developed
countries.
3. Loans for productive purpose: bank gives loans particularly for development of
electricity, power generation and transport the reason being that for the economic
development of the countries these facilities are a must.
4. Technical Assistance: World Bank provided technical assistance to all
underdeveloped countries of the world. Officials of many countries have received
advice from the World Bank experts.
5. Third Window Scheme: Loans given by World Bank and IDA (International
Development Association) were inadequate in order to make up this deficiency
both institutions jointly founded in 1975, a third window. The window has made
available loans to many countries like India, Pakistan, Sri Lanka etc.
6. Coordination of lending activities of the lender countries and other institutions
7. Settlement of disputes among nations: World Bank has set up an international
center for settlement of investment disputes.
8. Training: Bank arranges training for officials of members countries in the area of
economic planning, development policy, agriculture research, Healthcare, Power
Management, water management, railways etc.
9. Research: World bank has two publications
a. Finance and development report
b. World development report

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 The information provided by these publications helps in economic planning and
research projects of member countries.
10. Financial Assistance to Welfare Institutions
11. Establishment of Subsidiary institutions like:
a. IFC-International Finance Corporation
b. IDA-International Development Association
c. MIGA-Multinational Investment Guarantee Agency

Limitations of World Bank:

1. Inadequate Financial Help
2. Discriminating Behaviour
3. High rate of interest on commercial credit.
4. Defective Loan Policy
5. Loan for limited objectives
6. Interference in domestic affairs

World Trade Organization

GATT Rounds:

1st Round:
Held in 1947, 23 countries participated and agreed to cut tariffs on 45,000 products worth
$ 10 billion per annum.

2nd Round:
Held in 1949, 10 more countries had joined GATT, Customs and tariffs on 5000
additional items of international trade were reduced.

3rd Round:

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Held in 1950, by 38 members of GATT and they adopted tariff reduction on 8700 items.

4th Round:
Held in 1955, in this round, countries decided to further cut duties on goods and the value
was estimated of tariff cut was $ 2.5 billion

5th Round:
It took place in 1960-1962; Customs duties were cut with an amount of $ 5 billion on
4400 items.

6th Round:

It was held during 1964-1967, In this round over 50 countries participated and negotiated
on tariff reduction of approximately $ 40 billion covering 80% of the world trade.

7th Round:

It started in September, 1973 in Tokyo, Its objectives were laid down in Tokyo
declaration. The declaration set out a far reaching tariff reduction, reduction and
elimination of non tariff barriers, coordinated reduction of trade in selected sectors,
discussion on the multilateral, safeguard system, and trade liberalization in agricultural
sector.
• After the conclusion of Tokyo round on 12th April, 1979 no. of agreements came
into force from 1st January 1980. They are listed as:
• Agreement on subsidies and duties in case of industrial, agricultural, fishery and
forestry products
• Agreement on customs valuation, it provided a fair uniform and natural system
for valuation of goods for customs purpose.
• Agreement on government procurement
• Agreement on technical barriers like technical standards, rules and legal bindings
• Agreement on import licensing procedure

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 • Agreement on Dairy Products
• Agreement on meat Products
• Agreement on Trade in civil aircraft

99 participants agreed to cut customs duties by 20-50% on goods valued over $ 300
billion of the world trade.

8th Round
• This round started in 1986 and the final act was signed that was Dunkel Draft
Text.
• Text was signed by 125 countries by April 18, 1994.
• As a result of this, WTO was established
• The final text was over 400 pages document. Like a legal document, it was very
complex.
• It was very complex
• It was the result of a negotiation of 2631 days
• 117 countries participated in the negotiations
• 1000s of issues and debates were included related to the world trade.

GATT Vs WTO

Sr. No. GATT WTO

1 No legal status Legal status
2 No binding for agreements Binding for agreements
3 Only goods Services and Goods
4 No obligation in disputes and decisions Obligation
5 Small structure Large Structure
6 No proper time structure of Meeting rounds Proper time structure

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 EXPORT HOUSE AND STATUS HOLDERS

Press Releases
Back

STATUS HOLDER SCHEME REVAMPED

Date : 19 Apr 2007

Location : New Delhi

Responding to the demand of the status holders, Shri Kamal Nath, Minister of
Commerce & Industry, has re-christened them as Export House (earlier known as
One Star Export House), Star Export House (earlier known as Two Star Export
House), Trading House (earlier known as Three Star Export House), Star Trading
House (earlier known as Four Star Export House), and Premier Trading House
(earlier known as Five Star Export House). They will be granted such status on
achieving aggregate exports of Rs.20 crore, Rs.100 crore, Rs.500 crore, Rs.2500 crore
and Rs.10000 crore respectively over a period of four years.

Backgrounder on Status Holders / Star Export Houses

Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units

(EOUs) and Units located in SEZs, Agri Export Zones (AEZs), Electronic Hardware
Technology Parks (EHTP), Software Technology Parks (STPs), and Bio Technology
Parks (BTPs), are eligible for applying for status as Star Export Houses. Under this
scheme, the applicants are granted the status depending on the total FOB / FOR export
performance during the current plus previous three years as follows:

Old category Earlier performance New category New performance

criteria (Rs. Crore) criteria (Rs. Crore)

One Star 15 Export House 20

Export House

Two Star 100 Star Export 100

Export House House

Three Star 500 Trading House 500

Export House

Four Star 1500 Star Trading 2500

Export House House

Five Star 5000 Premier 10000

Export House Trading House

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Major Exports of India 2007-08 (Share and Growth Rate Commodity Wise)

Sr. No. 2007-

Commodity %Share %Growth
2008
1 MINERAL FUELS, MINERAL OILS 29,044.50 17.8205 53.76
AND PRODUCTS OF THEIR
DISTILLATION; BITUMINOUS
SUBSTANCES; MINERAL WAXES.
2 NATURAL OR CULTURED PEARLS, 19,821.35 12.1615 23.32
PRECIOUS OR SEMIPRECIOUS
STONES,PRE.METALS,CLAD WITH
PRE.METAL AND ARTCLS
THEREOF;IMIT.JEWLRY;COIN.
3 ORGANIC CHEMICALS 7,174.22 4.4018 25.2
4 ORES, SLAG AND ASH. 6,980.31 4.2828 43.3
5 NUCLEAR REACTORS, BOILERS, 6,797.52 4.1707 33.61
MACHINERY AND MECHANICAL
APPLIANCES; PARTS THEREOF.
6 IRON AND STEEL 6,559.94 4.0249 17.25
7 ARTICLES OF APPAREL AND 5,422.64 3.3271 2.71
CLOTHING ACCESSORIES, NOT
KNITTED OR CROCHETED.
8 ELECTRICAL MACHINERY AND 5,347.58 3.281 30.26
EQUIPMENT AND PARTS
THEREOF; SOUND RECORDERS
AND REPRODUCERS, TELEVISION
IMAGE AND SOUND RECORDERS
AND REPRODUCERS,AND PARTS.
9 ARTICLES OF IRON OR STEEL 5,210.59 3.197 53.38
10 COTTON. 5,147.56 3.1583 31.29
11 VEHICLES OTHER THAN RAILWAY 4,481.90 2.7499 19.11
OR TRAMWAY ROLLING STOCK,
AND PARTS AND ACCESSORIES
THEREOF.
12 ARTICLES OF APPAREL AND 4,275.85 2.6235 18.27
CLOTHING ACCESSORIES,
KNITTED OR CORCHETED.
13 PHARMACEUTICAL PRODUCTS 4,152.89 2.548 30.78
14 CEREALS. 3,667.14 2.25 116.5
15 COPPER AND ARTICLES 2,917.98 1.7903 -3.98
THEREOF.
16 PLASTIC AND ARTICLES THEREOF. 2,787.91 1.7105 1.77
17 OTHER MADE UP TEXTILE 2,379.27 1.4598 3.46
ARTICLES; SETS; WORN
CLOTHING AND WORN TEXTILE
ARTICLES; RAGS
18 RESIDUES AND WASTE FROM THE 2,065.88 1.2675 66.44
FOOD INDUSTRIES; PREPARED
ANIMAL FODER.
19 SHIPS, BOATS AND FLOATING 1,761.03 1.0805 71.12
STRUCTURES.

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Total 98 Commodity Categories (Selected more than 1% in Share)
% age increase in Exports 29.08 per cent

Major Imports of India 2007-08 (Share and Growth Rate Commodity Wise)

Sr. No. Commodity 2007-2008 %Share %Growth

1 MINERAL FUELS, MINERAL OILS AND 86,281.52 34.2983 39.59
PRODUCTS OF THEIR DISTILLATION;
BITUMINOUS SUBSTANCES; MINERAL
WAXES.
2 NATURAL OR CULTURED 26,453.61 10.5157 17.16
PEARLS,PRECIOUS OR SEMIPRECIOUS
STONES,PRE.METALS,CLAD WITH
PRE.METAL AND ARTCLS
THEREOF;IMIT.JEWLRY;COIN.
3 NUCLEAR REACTORS, BOILERS, 25,299.56 10.057 36.02
MACHINERY AND MECHANICAL
APPLIANCES; PARTS THEREOF.
4 ELECTRICAL MACHINERY AND EQUIPMENT 20,078.26 7.9814 37.92
AND PARTS THEREOF; SOUND
RECORDERS AND REPRODUCERS,
TELEVISION IMAGE AND SOUND
RECORDERS AND REPRODUCERS,AND
PARTS.
5 AIRCRAFT, SPACECRAFT, AND PARTS 13,312.29 5.2918 153.09
THEREOF.
6 IRON AND STEEL 9,093.25 3.6147 48.44
7 ORGANIC CHEMICALS 8,111.61 3.2245 34.41
8 ORES, SLAG AND ASH. 4,648.45 1.8478 -18.96
9 FERTILISERS. 4,585.90 1.823 71.37
10 SHIPS, BOATS AND FLOATING 4,321.29 1.7178 60.73
STRUCTURES.
11 OPTICAL, PHOTOGRAPHIC 4,227.62 1.6805 35.94
CINEMATOGRAPHIC MEASURING,
CHECKING PRECISION, MEDICAL OR
SURGICAL INST. AND APPARATUS PARTS
AND ACCESSORIES THEREOF;
12 PLASTIC AND ARTICLES THEREOF. 4,114.65 1.6356 39.19
13 ARTICLES OF IRON OR STEEL 3,296.52 1.3104 30.4
14 INORGANIC CHEMICALS; ORGANIC OR 2,831.14 1.1254 11.74
INORGANIC COMPOUNDS OF PRECIOUS
METALS, OF RARE-EARTH METALS, OR
RADI. ELEM. OR OF ISOTOPES.
15 ANIMAL OR VEGETABLE FATS AND OILS 2,765.75 1.0994 22.06
AND THEIR CLEAVAGE PRODUCTS; PRE.
EDIBLE FATS; ANIMAL OR VEGETABLE
WAXEX.

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Total 98 Commodity Categories (Selected more than 1% in Share)
% age increase in Exports 35.54 per cent

ORGANISATIONAL SET UP AND FUNCTIONS

The mandate of the Department of Commerce is regulation, development and promotion

of India’s international trade and commerce through formulation of appropriate
international trade & commercial policy and implementation of the various provisions
thereof. The basic role of the Department is to facilitate the creation of an enabling
environment and infrastructure for accelerated growth of international trade. The
Department formulates, implements and monitors the Foreign Trade Policy which
provides the basic framework of policy and strategy to be followed for promoting exports
and trade. The Trade Policy is periodically reviewed to incorporate changes necessary to
take care of emerging economic scenarios both in the domestic and international
economy. Besides, the Department is also entrusted with responsibilities relating to
multilateral and bilateral commercial relations, Special Economic Zones, state trading,
export promotion & trade facilitation, and development and regulation of certain export
oriented industries and commodities.

The Department is headed by a Secretary who is assisted by four Additional Secretaries,

including an Additional Secretary & Financial Adviser, eleven Joint Secretaries and Joint
Secretary level officers and a number of other senior officers. The Department is
functionally organized into the following eight Divisions:

1. Administration and General Division

2. Finance Division
3. Economic Division
4. Trade Policy Division
5. Foreign Trade Territorial Division
6. State Trading & Infrastructure Division
7. Supply Division
8. Plantation Division.

The various offices/ organizations under the administrative control of the Department are:
(A) two Attached Offices, (B) eleven Subordinate Offices, (C) ten Autonomous
Bodies, (D) five Public Sector Undertakings, (E) Advisory Bodies, (F) fourteen
Export Promotion Councils (EPCs) and (G) other Organizations. A complete list of
these offices/ organizations along with the postal addresses is given in Annexure-II.
The broad organizational set up and major role and functions of these bodies are
discussed below:

Authorisation, Duty Free Import Authorisation (DFIA), Duty Entitlement Passbook

(DEPB), Deemed Export Duty Drawback and Terminal Excise Duty (TED) refund,

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 Export Promotion Capital Goods (EPCG) and incentive schemes like Focus Market,
Focus Product, Vishesh Krishi & Gram Udyog Yojana and Served From India.

(A) Attached Offices

(i) Directorate General of Foreign Trade (DGFT)

DGFT through its various offices provides facilitation to exporters in regard to

developments in the area of international trade, i.e. WTO agreements, Rules of Origin
and SPS requirements, Anti-Dumping issues, among others, to help the exporters to
strategize their import and export decisions in an internationally dynamic environment.
DGFT also issues authorisations to exporters/ importers and monitors their corresponding
obligations through a network of 34 Regional Offices. These Regional Offices are located
at the following places:-

1. Ahmedabad 2. Amritsar
3. Bangalore 4. Baroda (Vadodara)
5. Bhopal 6. Chandigarh
7. Chennai 8. Cochin (Ernakulam)
9. Coimbatore 10. Cuttack
11. Dehradun 12. Guwahati
13. Hyderabad 14. Jaipur
15. Kanpur 16. Kolkata
17. Ludhiana 18. Madurai
19. Moradabad 20. Mumbai
21. New Delhi 22. Panaji (Goa)
23. Panipat 24. Patna
25. Pondicherry 26. Pune
27. Raipur 28. Rajkot
29. Shillong 30. Srinagar (functioning at Jammu)
31. Surat 32. Thiruvananthapuram
33. Varanasi 34. Vishakhapatnam

ii) Directorate General of Supplies and Disposal (DGS&D)

The DGS&D, with headquarters at New Delhi, is headed by the Director General. It
functions as the executive arm of the Supply Division of the Department of Commerce
for conclusion of Rate Contracts for common user items, procurement of stores,
inspection of stores, shipment and clearance of imported stores/ cargo. It has three
Regional Offices located at Chennai, Mumbai and Kolkata. The functions of DGS&D are

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carried out through its functional wings and supporting service wings. The functional
wings are the Supply Wing and the Quality Assurance Wing. The supporting service
wings include Administration, Vigilance, Complaints and Public Relations, Co-
ordination, Internal Work Study, Management Information Services, Litigation, etc.

The Supply Wing has commodity-wise Purchase Directorates such as Information

Technology, Electrical Stores, Mechanical Engineering, Automobiles, Steel & Cement,
Structural Engineering, Hardware, Workshop & Machine Tools, Wool & Leather, Paper
& Paper Products, Oil & Chemicals. The handling of commodity-wise work facilitates
maintenance of data bank on prices, vendors, specifications, market trends, etc. The
Quality Assurance Wing has 27 offices / sub-centres spread all over the country.

((B) Subordinate Offices

(i) Directorate General of Commercial Intelligence and Statistics (DGCI&S)

This Directorate, with its office located at Kolkata, is headed by the Director General. It
is entrusted with the work of collecting, compiling andpublishing/disseminating trade
statistics and various types of commercial information required by the policy makers,
researchers, importers, exporters, traders as well as overseas buyers. The Directorate
brings out a number of publications mainly on inland and coastal trade statistics, revenue
statistics, shipping & air cargo statistics, among others, which are utilised by the
Government Departments as well as by trading communities and researchers. The foreign
trade data generated by the Directorate are disseminated through (i) Monthly Press
Release, (ii) Foreign Trade Statistics of India by Principal Commodities & Countries, (iii)
Monthly Statistics of Foreign Trade of India, and (iv) Statistics of Foreign Trade of India
by Countries. The DGCI&S also maintains a commercial library for the use of traders,
manufacturers, businessmen, industrialists, technologists, government officials, students,
teachers and researchers from India and abroad.

(ii) Office of Development Commissioner of Special Economic Zones (SEZs)

The main objective of SEZ s is to provide certain common facilities, a hassle free trading
environment and a duty free environment for exporters. All laws of India are applicable
in SEZs unless specifically exempted as per the SEZ Act/ Rules. Each Zone is headed by
a Development Commissioner and is administered as per the SEZ Act, 2005 and SEZ
Rules, 2006. There are currently eight Development Commissioners of SEZs.

Units may be set up in the SEZ for manufacturing, trading or for service activity. The
units in the SEZ have to be net foreign exchange earners but they are not subjected to any
predetermined value addition or minimum export performance requirements. Sales in the
Domestic Tariff Area from the SEZ units are treated as if the goods are being imported
and are subject to payment of applicable customs duties.

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(iii) Pay and Accounts Office (Supply)

The payment and accounting functions of Supply Division, including those of DGS&D,
are performed by the Chief Controller of Accounts (CCA) under the Departmentalized
Accounting System. Payment to suppliers across the country is made through this
organization.

(iv) Pay and Accounts Office (Commerce & Textiles)

The Pay and Accounts Office, common to both the Department of Commerce and the
Ministry of Textiles, is responsible for the payment of claims, accounting of transactions
and other related matters through the four Departmental Pay & Accounts Offices in
Delhi, two in Mumbai, two in Kolkata and two in Chennai. These Departmental Pay and
Accounts Offices are controlled by the Principal Accounts Office at Delhi with the Chief
Controller of Accounts (CCA) as the Head of the Department of the Accounts Wing.

C) Autonomous Bodies
(i) Coffee Board

The Coffee Board was set up under Section (4) of the Coffee Act, 1942. The Board is
headed by a Chairman and functions from Bangalore. The Board administers four
Regional Coffee Research Stations, a Coffee Research Institute, a number of Regional
Field Stations and Coffee Demonstrations Farms. The primary functions of the Board
include formulating and implementing programmes and projects for growth and
development of the coffee industry; promoting coffee consumption in India and exports
in the international market; supporting research; extension and developmental activities
for raising productivity; evolving pest and disease resistant varieties; and prescribing and
enforcing quality standards at all stages.

(ii) Rubber Board

The Rubber Board was set up under Section (4) of the Rubber Act, 1947. The Board is
headed by a Chairman with head quarters at Kottayam. It has four Zonal Offices, forty
Regional Offices, a number of Field Stations, Rubber Development Centers and Regional
Nurseries. The Board is responsible for the development of the rubber industry by way of
assisting and encouraging scientific, technical and economic research; supplying
technical advice to rubber growers; training growers in improved methods of planting,
cultivation and manuring and collecting statistics from the owners of estates, dealers,
manufacturers.

(iii) Tea Board

The Tea Board was constituted as a Statutory Body on 1st April, 1954 under Section (4)
of the Tea Act, 1953. The Board is headed by a Chairman with head office at Kolkata. As
an apex body for the tea industry in India, the Board has fifteen Regional and Sub-

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Regional Offices spread over different parts of India and three foreign offices in London,
Moscow and Dubai. The primary functions of the Board include rendering financial and
technical assistance for cultivation, manufacture, marketing of tea; promoting tea exports;
aiding research and developmental activities for augmentation of tea production and
improvement of tea quality; encouraging and assisting the unorganized small growers
sector financially and technically and collecting & maintaining statistical data and its
publication for the benefit of growers, processors and exporters.

(iv) Tobacco Board

The Tobacco Board was constituted as a Statutory Body on 1st January, 1976 under
Section (4) of the Tobacco Act, 1975. The Board is headed by a Chairman, with
headquarters at Guntur, Andhra Pradesh, and is responsible for the development of the
tobacco industry. The Board also has a Directorate of Auctions at Bangalore. The
primary functions of the Board include regulating the production and curing of Virginia
Tobacco; keeping a constant watch on the Virginia Tobacco market in India and abroad;
ensuring fair and remunerative prices to growers; maintaining and improving existing
markets and developing new markets abroad by devising appropriate marketing
strategies. The Board is entrusted with the task of recommending to the Central
Government the minimum prices that may be fixed; regulating tobacco marketing in
India with due regard to the interest of growers, manufacturers and dealers; propagating
information useful to growers, traders and manufacturers and purchasing Virginia
Tobacco from the growers when the same is considered necessary for protecting the
interests of growers.

(v) Spices Board

The Spices Board was constituted as a Statutory Body on 26th February, 1987 under
Section (3) of the Spices Board Act, 1986. The Board is headed by a Chairman with its
head office at Kochi and is responsible for the development of cardamom industry and
promoting the export of all the 52 Spices listed in the Spices Board Act, 1986. The
primary functions of the Board include increasing the production and productivity of
small and large cardamom; development, promotion and regulation of export of spices;
assisting and encouraging studies and research for improvement of processing, grading
and packaging of spices; striving towards stabilization of prices of spices for export and
upgrading quality for export. In regard to cardamom, the Board also provides financial
and other assistance for cultivation and processing of cardamom; monitoring prices;
increasing domestic consumption; improving marketing; undertaking, assisting or
encouraging scientific, technological and economic research and improving quality. The
Board also implements programmes for development of exotic and high value spices like
vanilla, herbal spices and organic spices. It also supports programmes aimed at better
post harvest practices.

(vi) Export Inspection Council (EIC)

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The Export Inspection Council was set up as a Statutory Body on 1st January, 1964 under
Section 3 of the Export (Quality Control and Inspection) Act, 1963 to ensure sound
development of export trade of India through Quality Control and Inspection and for
matters connected therewith. The Council is an advisory body to the Central Government,
with its office located at New Delhi and is headed by a Chairman. The Executive Head of
the EIC is the Director of Inspection & Quality Control who is responsible for the
enforcement of quality control and compulsory pre-shipment inspection of various
commodities meant for export and notified by the Government under the Export (Quality
Control and Inspection) Act, 1963. The Council is assisted in its functions by the Export
Inspection Agencies (EIAs), which are field organizations located at Chennai, Delhi,
Kochi, Kolkata and Mumbai and have state-of-art laboratories for quality certification
activities.

These Agencies have a network of thirty eight sub-offices and laboratories located at
different ports or major industrial centres to back up the pre-shipment inspection and
certification activities.

(vii) Indian Institute of Foreign Trade (IIFT)

The Indian Institute of Foreign Trade was registered in May, 1963 under the Societies
Registration Act, 1860. The Institute, with its head office at New Delhi and one regional
branch at Kolkata, is headed by a Director. The Institute has been conferred “Deemed
University” status and is engaged in the following activities:-

• Running academic courses leading to issue of degrees in International Business &

Export Management;
• Training of personnel in international trade;
• Organising research on issues in foreign trade, marketing research, area surveys,
commodity surveys, market surveys; and
• Dissemination of information arising from its activities relating to research and
market studies.

(viii) Indian Institute of Packaging (IIP)

The Indian Institute of Packaging was registered in May, 1966 under the Societies
Registration Act, 1860. The Institute, with its office located at Mumbai and branch
offices at Delhi, Chennai, Kolkata and Hyderabad, is headed by a Director. The main
function of the Institute is to undertake research on raw materials for the packaging
industry, organise training programmes on packaging technology and stimulate
consciousness of the need for good packaging.

(ix) The Marine Products Export Development Authority (MPEDA)

The Marine Products Export Development Authority was set up as a Statutory Body in
1972 under an Act of Parliament (No.13 of 1972). The Authority, with its headquarters at

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Kochi and field offices in all the Maritime States of India, is headed by a Chairman. The
Authority is responsible for development of the marine industry with special focus on
marine exports. Besides, it has Trade Promotion Offices at Tokyo (Japan) and New York
(USA).

(x) Agricultural and Processed Food Products Export Development Authority

(APEDA)

The Agricultural and Processed Food Products Export Development Authority was set up
in 1986 as a Statutory Body under an Act of Parliament of 1986. The Authority, with its
headquarters at New Delhi, is headed by a Chairman. The Authority has five Regional
Offices at Guwahati, Hyderabad, Kolkata, Bangalore & Mumbai and is entrusted with the
task of promoting agricultural exports, including the export of processed foods in value
added form. APEDA has also been entrusted with monitoring of export of non-scheduled
products such as Basmati Rice, Wheat and Coarse Grains. Import of sugar is also
monitored by APEDA.

The concept of Agri Export Zones (AEZs) was introduced in 2001 and APEDA was
nominated the nodal agency to coordinate the efforts on the part of Central Government.
The AEZs are developed by a coordinated effort of the Central Government, APEDA and
the concerned State Government. It takes a comprehensive vision about a particular
produce/ product integrating all the activities involved right from production to the
market. It involves developing and sourcing the raw materials, their processing/
packaging and other activities till the final exports.

(D) Public Sector Undertakings (PSUs)

(i) State Trading Corporation of India Limited (STC)

STC was set up on 18th May, 1956, primarily with a view to undertake trade with East
European Countries and to supplement the efforts of private trade and industry in
developing exports from the country. The Corporation is registered as an autonomous
company under the Companies Act, 1956. By virtue of infrastructure and experience
possessed by the Corporation, it plays an important role in arranging import of essential
items into India and developing exports of a large number of items from India.

(ii) MMTC Limited

The MMTC Limited, formerly known as the Minerals and Metals Trading Corporation
was created in 1963 as an individual entity on separation from State Trading Corporation
of India Ltd. primarily to deal in exports of minerals and ores and imports of non-ferrous
metals. In 1970, MMTC took over imports of fertilizer raw materials and finished
fertilizers. Over the years import and exports of various other items like steel, diamonds,
bullion, etc. were progressively added to the portfolio of the company. Keeping pace with

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the national economic development, MMTC over the years has grown to become the
largest trading Organisation in India.

(iii) PEC Limited

The PEC Ltd., formerly known as the Project and Equipment Corporation of India, was
carved out of the STC in 1971-72 to take over the canalized business of STC’s railway
equipment division, to diversify into turn-key projects specially outside India and to aid
& assist in promotion of exports of Indian engineering equipment. With effect from
23.05.1990, PEC became a subsidiary of the then newly formed Holding Company,
Bharat Business International Ltd. Thereafter, w.e.f. 27.03.1991, PEC became an
independent company directly owned by Government of India.

(iv) Export Credit Guarantee Corporation of India Ltd. (ECGC)

The Corporation was established in 1957 as the Export Risk Insurance Corporation of
India Ltd. Keeping in view the wider role played by the Corporation, the name was
changed to Export Credit Guarantee Corporation of India Ltd. (ECGC). The ECGC is the
premier organization in the country, which offers credit risk insurance cover to exporters,
banks, etc. The primary objective of the Corporation is to promote the country’s exports
by covering the risk of export on credit. It provides (a) a range of insurance covers to
Indian exporters against the risk of non-realisation of export proceeds due to commercial
or political causes and (b) different types of guarantees to banks and other financial
institutions to enable them to extend credit facilities to exporters on liberal basis.

(v) India Trade Promotion Organization (ITPO)

India Trade Promotion Organisation has been formed by merging erstwhile Trade
Development Authority (TDA) with Trade Fair Authority of India (TFAI) with effect
from 1st January 1992. India Trade Promotion Organisation is the premier trade
promotion agency of India and provides a broad spectrum of services to trade and
industry so as to promote India’s exports. These services include organization of trade
fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion
Programmes apart from information dissemination on products and markets.

(E) Export Promotion Councils (EPCs)

Presently, there are fourteen Export Promotion Councils under the administrative control
of the Department of Commerce. Names of these Councils are given in Appendix – II.
These Councils are registered as non-profit organizations under the Companies Act/
Societies Registration Act. The Councils perform both advisory and executive functions.
The role and functions of these Councils are guided by the Foreign Trade Policy, 2004-
09. These Councils are also the registering authorities for exporters under the Foreign
Trade Policy 2004-09.

(F) Advisory Bodies

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(i) Board of Trade (BOT)

The Board of Trade was set up on 5th May, 1989 with a view to providing an effective
mechanism to maintain continuous dialogue with trade and industry in respect of major
developments in the field of International Trade. The Board is currently headed by Dr.
Kumar Mangalam Birla, and has 39 members. Its role is to, inter-alia, advise the
Government on measures connected with the Foreign Trade Policy and how to achieve
the desired objective of boosting India’s exports. The terms of reference of the Board are
-

• To advise the Government on Policy measures for preparation and

implementation of both short and long term plans for increasing exports in the
light of emerging national and international economic scenario;
• To review export performance of various sectors, identify constraints and suggest
industry specific measures to optimize export earnings;
• To examine the existing institutional framework for imports and exports and
suggest practical measures for further streamlining to achieve the desired
objectives;
• To review the policy instruments and procedures for imports and exports and
suggest steps to rationalize and channelise such schemes for optimum use;
• To examine issues which are considered relevant for promotion of India’s foreign
trade, and to strengthen the international competitiveness of Indian goods and
services; and
• To commission studies for furtherance of the above objectives.

The Board is required to meet at least once every quarter and make recommendations to
Government on issues pertaining to its terms of reference. The Board has the power to set
up sub-committees and to co-opt experts to these and to make recommendations on
specific sectors and objectives.

(ii) Export Promotion Board (EPB)

The Export Promotion Board functions under the Chairmanship of the Cabinet Secretary
to provide policy and infrastructural support through greater coordination amongst
concerned Ministries for boosting exports. All Ministries directly connected with
facilitating foreign trade are represented on the Board by their Secretaries. This, inter-
alia, includes Secretaries of Department of Commerce; Ministry of Finance; Department
of Revenue; Department of Industrial Policy & Promotion; Ministry of Textiles;
Department of Agriculture & Cooperation; Ministry of Civil Aviation and Ministry of
Surface Transport.

(iii) Inter State Trade Council

The Inter State Trade Council was set up on 24th June, 2005 with a view to ensure a
continuous dialogue with State Governments and Union Territories which, inter-alia,
advises the Government on measures for providing a healthy environment for

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international trade in the States with a view to boost India’s exports. The Council is
represented by Chief Ministers of the States or State Cabinet Ministers nominated by
Chief Ministers, Lt. Governors or Administrators of the Union Territories or their
nominees, Secretaries of the Departments of Commerce, Revenue, Industrial Policy &
Promotion, Agriculture & Cooperation, Shipping, Road Transport & Highways,
Ministries of External Affairs and Power and Chairman, Railway Board. It also co-opts
the Chairman-cum-Managing Director of Export Credit Guarantee Corporation,
Managing Director of EXIM Bank, Deputy Governor of Reserve Bank of India,
Chairman of Agricultural and Processed Food Products Export Development Authority,
Chairman of Marine Products Export Development Authority and Presidents of CII,
FICCI, FIEO, ASSOCHAM and Export Promotion Council for EOUs/SEZs.

(G) Other Organizations

(i) Federation of Indian Export Organizations (FIEO)

The Federation of Indian Export Organizations is an apex body of various export

promotion organizations and institutions with its major regional offices at Delhi,
Mumbai, Chennai and Kolkata. It provides the content, direction and thrust to India’s
global export effort. It also functions as a primary servicing agency to provide integrated
assistance to its members comprising professional exporting firms holding recognition
status granted by the Government, consultancy firms and service providers. The
Federation organizes seminars and arranges participation in various exhibitions in India
and abroad. It also brings out ‘FIEO News’, for creating awareness amongst its member
exporters and importers.

(ii) Indian Council of Arbitration (ICA)

The Indian Council of Arbitration was set up under the Societies Registration Act, 1860.
The Council, with its office located at New Delhi, promotes arbitration as a means of
settling commercial disputes and popularizes the concepts of arbitration among the
traders, particularly those engaged in international trade. The Council, a non-profit
service organization, is a grantee institution of the Department of Commerce and is
eligible for assistance under the Marketing Development Assistance (MDA) Scheme of
the Department. The main objectives of the Council are to promote the knowledge and
use of arbitration and provide arbitration facilities for amicable and quick settlement of
commercial disputes with a view to maintaining the smooth flow of trade, particularly,
export trade on a sustained and enduring basis.

(iii) Indian Diamond Institute (IDI)

With the objective of enhancing the quality, design and global competitiveness of the
Indian Jewellery, the Indian Diamond Institute was established as a Society in 1978 with
its office located at Surat. The Institute is sponsored by the Department of Commerce and
patronized by the Gems and Jewellery Export Promotion Council. The Institute
conducted various diploma and other courses related to diamond trade and industry. The

27
Institute also has certification services for diamonds, coloured stones and gold jewellery.
IDI has a Gem Testing Lab (GTL), which is recognised by Government of India as an
approved Diamond Grading / Certification Institution for cut and polished diamonds up
to weight of 0.25 carat. It also has an Assayizng and Hallmarking Centre (AHMC) which
is approved by Bureau of Indian Standards (BIS), Government of India. The Institute also
has Sardar Vallabhbhai Patel Centre of Jewellery Design and Manufacture (SVJDM)
which offers advanced courses in Jewellery Design and Manufacture.

(iv) Footwear Design & Development Institute (FDDI)

Footwear Design and Development Institute was set up in 1986 as a Society registered under the
Societies Act, 1860 for Infrastructure Development for the footwear industry and Human
Resource Development. The Institute conducts wide range of long term and short term
programmes in the area of Retail Management, Fashion, Footwear Design, Technology,
Management, Fashion Merchandising, Marketing, Creative Designing & CAD/CAM, Leather
Goods & Accessories Design etc. The long-term programmes are of two to three years duration
while short-term programmes are of one-year duration. All programmes offered by the Institute
meet the international standards.

Directorate General of Anti-Dumping & Allied Duties (DGAD)

The Directorate General of Anti-Dumping & Allied Duties was constituted in April, 1998
and is headed by the Designated Authority of the level of Additional Secretary to the
Government of India who is assisted by a Joint Secretary, Adviser (Cost) and Additional
Economic Adviser. Besides, there are twelve Investigating and Costing Officers to
conduct investigations. The Directorate is responsible for carrying out investigations and
to recommend, where required, under Customs Tariff Act, the amount of anti-dumping
duty/ countervailing duty on the identified articles which would be adequate to remove
injury to the domestic industry.

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