EXIM Policy or Foreign Trade Policy:

EXIM Policy or Foreign Trade Policy is a set of guidelines and instructions established by the
Directorate General of Foreign Trade (DGFT) in matters related to the import and export of goods in
India. The DGFT is the main governing body in matters relating to Exim policy.

The Foreign Trade Policy of India is guided by the exports and impors of a country and is commonly
known as EXIM Policy of the Indian government, also is regulated by the Foreign Trade
(Development and Regulation) Act, 1992.

The main objective of the foreign trade development and Regulation Act is to provide the
development and regulation of foreign trade by facilitating imports into, and augmenting exports
from India.

India's Export Import Policy, which is also known as Foreign Trade Policy, in general, aims at:
1. Developing export potential,
2. Improving export performance,
3. Encouraging foreign trade,
4. Trade liberalization and promotion,
5. Simplifying the procedures governing exports and imports,
6. facilitating technological upgradation and modernisation of domestic production so as to facilitate
exports,
7. reducing imports through substitution and encouraging the conservation of Foreign Exchange
Reserves, and,
8. Creating favourable Balance of Payment position, etc.

After every 5 years the Government of India announces The Foreign Trade Policy i.e. The Export
Import Policy, with its main objective to boost the Exports of India.

# EXIM Policy deals in general provisions pertaining to-

1. Exports Promotion and Imports Substitution- To establish a framework for globalisation of India's
Foreign Trade by allowing import substitution i.e. rellacing foreign imports with domestic production
and promoting exports of the domestic country.

2. Promotional measures- To enhance export potential of India so as to gain a competitive

advantage as well as to accelerate economic growth.

3. Export promotion schemes- Focusing on the Export-oriented Unit (EOU) schemes for grant of
duty exemption on all goods required for export production.

4. Special economic zone (SEZ) programs- The basic purpose of the SEZ scheme is to provide an
internationally competitive environment with highly simplified procedures for the units existing in
these zones. Also the units in these zones are provided with special incentives and facilities to enable
the exporters to attain competitiveness at the global level.

An SEZis basically a duty-free enclave of business firms which are engaged in export production.
5. Measures promoting Agricultural Exports- The government has identified agricultural export
zones all over the country which seek to promote agricultural-based exports.
These zones are identified by the government for complete development, by increasing the
remuneration to farmers whose products are picked up by units in these zones for further
processing and exporting.

The policy also provides for transport subsidies for the export of floriculture, horticulture, poultry
and dairy farming products which are India's thrust products. It also provides for the removal of
export restrictions on a number of agricultural items.

# The EXIM Policies of India in recent years are discussed below:

Export Import policy 2004-2009:
The policy statement observes that trade is not an end in itself, but a means to economic growth and
national development. The primary purpose is not the mere earning of foreign exchange, but the
stimulation of greater economic activity.

The basic objectives of this Exim policy are:

1. To double our percentage share of global merchandise trade within the next five years,
2. To act as an effective instrument of economic growth and promote employment generation.
3. simplifying procedures and bringing down transaction costs.
4. facilitating development of India as a global hub for manufacturing, trading and services,
5. creating an atmosphere of trust and transparency to promote entrepreneurship.

EXIM Policy 2009-2014:

This Foreign Trade Policy focused on:
1. To obtain technological upgradation so as to improve the quality of goods and accelerate the
growth of exports.
2. To provide financial assistance for a range of export promotion activities implemented by export
promotion councils and Trade promotion organisations.
3. Export Promotion Capital Goods scheme (EPCG) provides additional flexibility for the fulfillment of
export obligation in order to reduce difficulties of exporters of goods and services, through
availability of incentives for technology upgradation.

The EXIM POLICY 2015-2020:

This policy states that it is in line with the initiatives such as 'Make in India','Digital India', and 'Skill
India' announced by the government from time to time. It aims at making the country a bigger
player in global trade in merchandise and services, by improving the business environment and
simplifying trade transactions.

Basic objectives:
1. Government proposed to give high level of rewards to products with high domestic content and
value addition in order to promote domestic capital goods manufacturing industry.
2. The government extended tax breaks to exporters of defence, pharma, and environment-friendly
products.
3. Export-oriented units(EOU) are allowed facilities to set up warehouse near the port of exports,
which will reduce the lead time for delivery of goods as well as costs.
4. Aims at raising India's share in the world exports during this period.
# Role of World Trade Organisation in international trade:
(Advantages of WTO)

9. Shift from bilateral trade to multilateral trade- Before WTO foreign trade was usually bilateral i.e.
between two countries. WTO has promoted multilateral trade i.e. trade among many nations.

10. Increase in the volume of World Trade- WTO has promoted foreign trade among all its member
Nations. It promotes trade in goods as well as services, by removing tariff and non-tariff barriers in
international trade.

11. Expansion of International trade in Textile and Clothing- WTO agreements with regard to trade in
Textiles and clothing provides for elimination of MFA (multi fibre arrangement), i.e., the elimination
of all non-tariff measures (quantitative restrictions) on imports of textiles and clothings, thereby
promoting international trade in textile and clothing.

12. Reduction in Trade Barriers- WTO provides for reduction in tariff barriers and non-tariff barriers
to international trade. It provides for removal of import duty, export subsidies, import quota, import
licensing, export quota, etc., and improves market access for international trade.

# Organisational structure of WTO includes:

1. Trade in Goods:
a) Trade in Agriculture-
WTO has urged its member nations to reduce subsidies on agriculture inputs and on agriculture
outputs given by developed countries.
Therefore, demand for variety of Indian food grains will rise in the international market. It will
further provide opportunities for India (developing nation) to increase its exports of Agricultural
Products.

b) Trade in Textile and Clothing-

The implementation of the agreement by the WTO on textile and clothing means the elimination of
(MFA) multi fibre agreement i.e. the elimination of all non-tariff measures (import
quota/quantitative restrictions) on textile and clothing industries, thereby promoting free trade.

Also the developing Nations are allowed to impose tariff and non tariff barriers such as import
restrictions to protect or safe guard their industries from imports if they possess a threat to them.

2. Trade related intellectual property rights (TRIP's)- This agreement is related to intellectual
property rights which can be with regard to Copyright, Trademark, Patents, etc. Under TRIP's the
owner of patent gets his patent registered for a particular period of time, and any person who wants
to use that patent can use it by paying royalty to the owner of the patent.

Therefore the intellectual property rights which are patented can be used by the
manufacturers/consumers by paying royalty to the patent holders.
3. Trade related investment measures (TRIM's)- These are investment related measures proposed
by WTO, to ensure free flow of investments all over the world.

TRIM's will help the underdeveloped countries by providing necessary capital in the form of foreign
investments and also help to solve their balance of payment problems.

In short, this provision of TRIM's opens up the opportunity to foreign investors to invest anywhere in
the world in any economic activity.

4. General agreement on trade in services (GATS)- The general agreement on trade in services is the
first multilateral agreement in services whose objectives is progressive trade in services. It provides
for free flow of services among the member nations on the same lines as it was for trade in goods
among the member nations. The agreement covers trade in all types of services like insurance,
travel, tourism, hotel, banking, telecommunication, media services, etc.

Therefore by allowing free entry to Foreign Services, advanced technology of the foreign service
sector will be available to developing countries for their growth.

5. Dispute Settlement Body (DSB)- For settlement of disputes relating to international trade, WTO
has set up a Dispute Settlement Body. In the first stage, DSB consults both the parties under dispute.
Then the Director General of WTO acts as a mediator for the dispute settlement. The complainant
country can also ask DSB to set up a panel for dispute settlement, this panel hears both parties
regarding dispute and gives its report within 6 months of its composition, but in case of agency this
time period is reduced to 3 months.

6. Anti-dumping Agreements- Dumping is a practice of selling a product abroad at an unreasonably

lower price. The objective of dumping is to sell the surplus production in the foreign market initially
at low price with a view to damage the domestic industry and later charge high prices.

The WTO agreements stipulate that dumping measures will be curbed and no country will be
allowed to dump its products in another country. But only if the volume of dumped imports from a
particular country is less than 1% of domestic market sale of that product, then this dumping will be
treated as insignificant and WTO will not entertain such complaint of dumping.

7. Trade Policy Review Body (TPRB)- The Trade Policy Review Mechanism (TPRM) provides for a
trade policy review body to popularly examine the economic and trade policies of member nations.

Every member has to report to TPRB popularly about the trade policies and practices pursued by it.
The trade policy and review body helps WTO members to evaluate the implementation of
agreements, as well as provide them with an early warning of future problems in their economic
policies. It also guides them in framing their future economic policies.