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Contents • Introduction • Why do we need export,brief history • Exim policy ,objectives • Export Promotion Measures • Import Control in India • Pre 90’s Exim Policy of India • Post 90’s Exim Policy of India 3. 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 4. • 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” 5. Brief history • 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 during second world war and it lasted for around 45 yrs and in June 1992 this act was superceded by the Foreign Trade (Development & Regulation Act), 1992.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. 6. 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 7. Objective of Exim Policy • Accelerating the country’s 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. 8. 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 9. 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 10. 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. 11. Export Incentives • Duty Exemption • Duty Drawback Scheme • DFRC (Duty free replenishment certificate) • DEPB( Duty entitlement pass book) • Deemed Exports 12. Export Production Units • Export Oriented Unit (EOU) • Special Economic Zones (SEZ) • Software Technology Parks (STP) • Electronic Hardware Technology Parks (EHTP) 13. 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 14. 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) 15. 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. 16. • 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. 17. Comparison of Pre 90’s & Post 90’s Exim Policy Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Excess of Import due to- 1948-51 650 647 -3 •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. Trade deficit was largely due to 1951-56 730 622 -108 programmes of industrialization which gathered momentum and pushed up the imports of capital goods. No improvement in exports. 18. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Excess of import due to setting of steel 1956-61 1080 613 -467 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. Excess of import due to- 1961-66 1224 747 -477 •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. 19. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Devaluation was resorted to essentially- 1966-69 5775 3708 -2067 •To reduce volume of import. (Annual- •To boost export. •Create favourable balance of trade and plans) balance of payment. As a consequence of import restriction 1969-74 1972 1810 -162 policies with vigorous export promotion measures ,during 197273 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. 20. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Significant increase in export during 1974-79 5540 4730 -810 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. Decline in POL imports was more than 1980-85 14,986 9051 -5935 by a big hike in non-POL imports as a consequence of import liberalization. Consequently, huge trade balance. 21. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Huge trade balance compelled the 1985-90 28,874 18,033 -10,841 government to approach the World Bank/IMF for loan. The government was also forced to apply brakes on the licensing policy of imports. In 1990-91,push was given to 1990-92 45,522 38,300 -7222 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. 22. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) In 1992-01,slow down in exports due to- 1992-01 140740 118252 -22,488 •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. 23. Year Import Export Trade (US (US Bal.(US $million) $million) $million) Rise in imports in 2002-03 was broadly 2002 –03 65422 52512 -12910 based on oil imports,food &allied products(edible oil),capital goods. Exim policy 2003-04gave massive thrust to exports by 2003-04 80177 64723 -15454 •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. 24. India’ to tal e xte rnal trade in goods andλ Trade - On an All time High services grew s by 41.5% in H12005-06 to US $ 153 billio n. This is Ec o no my is expected to go up to US $ 310 billion by the end of this mo re Ope n year. The trade to GDPλ This w just over US $ 74 billion in 1994. as than e ve r ratio, calculated at current prices, has be fo re risen to 29.36% in 2004-05 Exports have grow to US $ 57.05 billion during Aprilλ from 18.28% in 1993-94. n S tro ng Expo rt Novem ber 2005-2006. They are expected to grow at Gro wth 26% Service Exports grewby 71% inλ during the current year to US$ 100 billion. 2004-05. India's IT-ITES S tro ng S e rvic e e xpo rts have show robust grow and are expected to n th Expo rts growby 32% this year to US $ 23 billion. S tro ng Non-oil im ports grew at over 28% during April - g ro wth Septem 2005λ Imports led by dem ber and for capital goods. Source: Reserve Bank of India 25. Trade Trends .. India Ex po rts - Go o ds and S e rv ic e s India 's Fo re ig n Trade 350 200 300 US $ billion 150 250 US$ million 200 100 150 50 100 0 50 96- 97- 98- 99- 00- 01- 02- 03- 04- 05- 0 97 98 99 00 01 02 03 04 05 06 1984 1994 2004-05 2005-06 (A) (A) Goods Services Exports Imports Total Trade S hare of As ia In d ia Cap ital Go o d Im p o rts 180 160 140 0 .0 140 120 0 .0 120 US $ billion 100 0 .0 US $ b illio n 100 80 0 .0 80 60 0 .0 60 40 40 0 .0 20 20 0 .0 0 0.00 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 96-97 97-98 98-99 99-00 0 1 0-0 01-02
02-03 03-04 04-05 Asia Non Asia Capital Goods Imports Total Imports Source: Reserve Bank of India
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