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Chapter 04
FOREIGN TRADE POLICIES
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OF INDIA
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 CHAPTER-04

FOREIGN TRADE POLICIES OF INDIA

Introduction

Foreign trade policy is also known as Export-Import policy or EXIM Policy.

The EXIM polices are adopted by any country regarding the exports and imports

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goods and services with other countries in the world. Trade policies can be of two
types, the free trade policy and the protective trade policy. In free trade policy there is
complete absence of restrictions on the exchange of goods and services among the
nations. There is also a complete absence of tariffs, quotas, taxes and subsides on
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productions, factors use and consumption. Theoretically, the free trade has several
advantages for mostly the developed countries but if we will talk about the developing
countries the free trade does not proved much productive or proved to be a
disadvantage. As earlier India has also a type of closed economy and free trade was
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also absent in India till 1980’s. After 1990, by the emergence of new industrial policy
Indian trade comes with the contact of foreign countries and became the part of
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liberalised economy or globalised economy after 1991.

Under protective trade policy a country manages to protect the domestic

economy from the competition of foreign goods which may threaten the domestic
goods and would definitely replace the domestic products from the markets leads
heavy losses to the domestic producers may also cause the situation of unemployment
in the domestic country and instead of the development of under developed economy.
The economy may also caught in the trap of unemployment, poverty and so on. Right
after the independence of India from 1950-1990 is also under the protective trade
policies but after 1991 Indian economy got free and LPG model was implemented on
Indian. By this model most of the protective sectors got free except some but many of
the under developed countries are still under the coverage of protectionism. There
may be outward and the inward trade policies. The outward looking trade policies not
only encourage the free trade but also the free movement of goods and services,
capital and the investment of foreign investor in your country through an open system

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communication. Correspondingly, the inward looking trade policy stresses to produce
all the goods and services for the purpose of growth and development within the
country. Under this policy there is a definite restriction of movement of goods and
services, capital and no kind of foreign investment can take place from foreigners. In
a good sense we can say that inward looking policy may prove the stimulator for the
domestic industries or weak industries and these kinds of policies provide a chance to
the weak industries of developing countries to get stable hand strong which may later
on face the foreign competition consistently.

Before 1991, India is also protected by inward looking policy only for the

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purpose of protecting weak industries of India or Indian markets from foreign
competition. India is also not interested in exporting and importing of goods and
services to foreign countries. The main objective of this policy was to ensure the
countries independent development. As a result India proved itself one of the closed
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economies at the end of 1980’s. India was a founding member of the General
agreements on tariffs and trade (GATT) in 1947 and also became the member of
(WTO) in 1995 and also regularly took part in the different negotiations. Despite
being one of the prominent founding member of Non-Alignment movement in 1961.
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India’s relations with the Soviet Union got much closed as a result proved the bitter
relationships between India and U.S.A.
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This chapter is particularly concerned with the analyses of the reason of an

export policy in the developing countries keeping in view of the deteriorating trade
balance resulting from their mounting expenditure. Regarding the analyses of the
Indian export policy the present chapter can be divided in to two parts:

1. The first part consists of the analysis of trade policies before the period of
Globalization (1991). From 1960 to 1990 the period is quite restrictive and the
protectionist policy was governing in India.

2. The second part consists of the opening of Indian economy in terms of trade
began in 1991 by the face of new economic policy or the model of (LPG). The
Indian economy got liberalized and then after the trade policies of Indian arise
with the membership of WTO and with the acceptance of Dunkel Psoposals.

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Principles of Indian foreign policies

1. Non-Alignment:- The policy of non-alignment is the most important

contribution of India to international community. Immediately after the
hostilities ended with the Second World War, a new and unprecedented
tension developed between the erstwhile friends and allies. The acute state of
tension came to be called cold war8. The division of the world into two blocs
led by United States and the former Soviet Union respectively caused the cold
war. India made up its mind not to join any of the power blocs.

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2. Panchsheel and Peaceful Co-existence:- Peaceful co-existence of nations of
diverse ideologies and interests is an important principle of our foreign
policy. Indian Philosophy of vasudhaiva Kutumbkam promotes the feeling of
'one world.' In practice it means the nations inhabited by peoples belonging to
different religions and having different social systems can co-exist, live
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together in peace, while each follows its own system. The five principles were
mentioned under the personable of the agreement are:

1. Mutual respect for each other’s territorial integrity and sovereignty;

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2. Mutual non- aggression;
3. Mutual non interference in each other internal affair;
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4. Equality and Mutual benefit; and

5. Peaceful co-existence.

3. Freedom of Dependent Peoples: Anti imperialism: -Anti-colonialism and

imperialism has been a matter of faith with India's Foreign policy makers.
Having been a victim of British imperialism for a long time, India divided to
oppose all forms of colonialism and Imperialism.

4. Opposition to Racial Dissemination: -India finally believes in equality of all

human beings. It policy is aimed to all forms of social discrimination.

5. Foreign economic aid and India's independent policy: - India firmly

believed that economics development of a country was an urgent necessity.
Soon after Independence India devoted its energies to a planned and rapid all
round development.

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6. Support to the United Nations: - India is one of the founder member of
United Nations organization and many of the international organization and
agencies

7. Peaceful settlement of international disputes: - Disputes among nations are

unavoidable; there can be only two methods of setting international disputes
war or peaceful settlements. War has been the most used method of deciding
disputes form the prehistoric days.

Reasons of trade policies in developing economies

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As it has been analysed that the free trade policy is not a fertile exercise for the
developing countries but still has the worse need of dynamic trade policy to promote
the economic development of developing economies for the number of reasons. It is
impossible to avoid that such countries confronted with the continuous definite in
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their trade balances arising out of their mounting expenditure for the sake of
development. To seek the development in the developing countries the countries call
for the increase in imports of capital goods, raw material and technology, but it is
impossible to meet out these imports by the increase in exports. The insistently
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repetitive deficits in the balance of trade have the definite potential to produce an
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adverse effect on the development of these types of economies.

On the other hand if the developmental expenditure is reduced from these

countries then it creates a long term development problems in the developing
countries.

There have been many studies regarding the persistent deficit in trade balance
which has been analysed empirically of the developing countries. Agogo Mawuli,
who analysed seventeen developing countries as a sample in his study and
experiences the deficit trade balance only because of the rapid accumulation of
capital. On the other hand, M.M Metwelly and Rick Tamaschke have also took the
reference of six developing countries and found the same problem of mounting
expenditure of developing countries for the sake of development. When after studying
or analysing both of them comes to the conclusion that these countries are unable to
meet out the imports to their exports as results the terms of trade is worsened day by
day and their position is deteriorating continuously. Due to less export of India or

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unmanageable export of India the country had mounting trade deficit and under
external debt. In 1996 the external debit on India was estimated as 28.90% of the
GDP in 1995-96. At the present time India still is facing a huge amount of shape of
external debt.

In 2012-13 the external debit on India stood at US $ 390.00 million. As a

result the large share of our export earnings are eaten up by this external burden and
the economy did not get rid of deficit of trade in balance.

India’s foreign trade policy

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Upto 1991 the Indian economy is under the coverage of heavy tariffs more
than 200 percent and there was extensive imposition of quantitative restrictions and
full protection on the foreign investment in India. In 1991 the India economy got
liberalized and almost in all the sectors the restrictive policies abolishes only under
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the conditions of extreme necessity. Since that time the trade has produced
remarkable achievement in the GDP of India which is increased from 15 percent from
1991 and in 2005 the percentage share of trade in the total GDP in 35 percent and
now in 2012-13 it is 43 percent.
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In the recent years India stand on the path of beneficial trade policies for the
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producers as well as the consumers and for the whole economy as well. With the
passage of time India is quite sensitive inits trade policies which are reflecting in the
recent trade policies. The trade policies of 2004-09 and 2009-14,in these policies it is
determined that India had to facilitate those imports which are required to stimulate
our economy.

Historical Background of Trade Policies of India

Before to discuss the history of trade policies of India towards the different
countries of the world in general and U.S.A in particular. Any countries trade policies
can be determined with their personal relations to one another. Thus each country has
its relations with the other nations of the world can be known as the strategic
relations. In this chapter with regard to the present study here we will discuss the
indo- US strategic dialogue. The basic improvement in the relations between INDIA
and U.S.A took place after the conclusion of the cold war as there was a

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misconception between the two countries. During the cold war both the countries
were motivated by different ideological orientations. As India and the other
developing countries has adopted the path of non- aligned which means India kept
itself away from the U.S.A as well as the soviet union but U.S.A with her global
influence followed the logic of cold war and doubted on India that India is bowing
towards soviet union which U.S.A don’t want to see at any cost as a result in 1971
U.S.A threatened India that she will mobilise her naval forces in support of Pakistan
set the mutually contradictory pattern of relationship between India and U.S.A which
continued the rest of cold war period. After that U.S.A and India has remained under

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the mode of contradictions on several international issues like disarmament, apartheid
in South Africa, soviet intervention in Afghanistan and so on. After the collapse of
soviet union in 1991 the relations between the two countries streamlined upto some
extent and the congenial atmosphere has been created officiallyby both the
countriesunder which the dialogues can took place between the two nations and then
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the concept of globalization has been released by the economic leaders of the world
like U.S.A which is than taken by India hand to hand and implemented on the Indian
economy in 1991 by the than government under the prime minister ship of P.V
Narsimharao. The interest of Indian government towards liberalising the its economy
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was welcomed and appreciated by the U.S.A and its western allies as if they viewed
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India’s opening economy as a new opportunity for their trade and investment. India
also needs the western technology to reap the benefits of globalized economy. After
the disintegration of the soviet union U.S.A remained only the superpower in the
world and India has no hesitation to come in a close contact with the U.S.A thus after
the end of cold war both the countries move closer to each other. Than new innings of
peace and prosperity started between India and U.S.A evidently after the end of cold
war both the countries begin with the high level consultation and after this in regular
intervals the president of U.S.A visited India to hold on various issues of mutual
interests.

Since it has been justified that India has always in disadvantage in the terms of
international trade. India’s trade is in deficit right from the time of its independence
upto now. Although to mend the balance of payment of India in 1991 India totally
lifted all the restrictions from trade for the sake of improvement in the balance of
payment position but still seen to be ineffective. Being a developing economy it is not

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possible for India to develop its industries without protection policies. Therefore, it
was necessary for India to impose restriction on its economy just as to develop its
industries on its own. On the other side the developed countries of the world were
searching for the largest markets like India where there is the highest consumption
class may available for the consumption of foreign foods. Although India has
launched the various trade policies from time to time from the period of 1950-1991
but the policies unable to respond accordingly. As a result in 1991 India has no option
rather to open its markets for the world’s competition. Under the Prime Minister Ship
of P.V. Narsimha Rao and Finance Minster of that time Dr. Manmohan Singh gave

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green signal to the Indian markets to work globally and Indian economy was set free
to play among the international players.

Making departure from all are policies which have been implemented before
1991. On July 24, 1991 the new industrial policy or the new economic policy came
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into existence with the lot of hopes and a mere relaxation for the Indian government
because at that time the government was at the stage of bankruptcy and there was no
foreign exchange at that time. The new model of (LPG), Liberalization, Globalization
and Privatization also born just after the announcement of this policy. The Indian
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economy got globalized with the terms and conditions of WTO, World Bank, IMF
and the economic leaders of the world. The policy of 1991 proved the double edged
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knife. On the one hand if the knife can cut vegetables for your cooking than on the
other hand it may also cut your hands. The policy of 1991 on the one hand improved
Indian depressed position but on the other hand it may also prove to be harmful for
the Indian weak industries or Indian producers.

The Main Objectives of New Industrial Policy of 1991

1. To consolidate the strengths build up during the last four decades of economic
planning.
2. To correct the distortions or weaknesses that may have crept in the industrial
structure.
3. To maintain a sustained growth in the productively and employment.
4. To attain international competitiveness.

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 Since independence, the Government of India has judiciously restricted the
foreign competition by using the import licensing, import quotas, import duties and in
extreme cases even banning import of specific goods. The policies of export import
are regulated by Director General of foreign track (DGFT) under the act of 1992. All
the guidelines are regarding trade of India are issued by (DGFT). Thus (DGFT) is the
main governing body in matters related to EXIM Policy of India. The main objectives
of the Foreign Trade Development and Regulation Act are to provide the facilitating
of imports and augmenting of exports from India.

Indian EXIM Policy contains various policy related decisions taken by the

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government in the sphere of foreign trade. The foreign trade policies are prepared to
keeping in view the import and especially the exports and exports promotion of a
country. In general the EXIM Policy is drafted to improve the export potential of
developing countries, encouraging foreign trade and creating favourable balance of
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payment position.

In the early fifties (1950-1956) there was no clear trade policies of India and it
was quite difficult to analyse the balance of payment position of India at that time. As
the government of India stabilized in early sixties (1961) due to industrialization in
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the world, India also started to move towards industrialization as a result of which
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there was a imports of commodities which put heavy pressure on the balance of
payments of India. Being the world’s largest democracy and the second most popular
country of the world by has a very little share of foreign trade accounted about only 5
percent of GDP up to 1980. After the country achieved independence in 1948 its slow
moving economy did a very little participation in world trade. The economic leaders
of the country the adopted the policy of import substitution industrialization for the
sake of development of Indian economy at its own, but India was not in position to
export even a single commodity because of the member of reasons, high
manufacturing cost, low quantity etc. Thus it can be said that India was much closed
economy up to 1980. After 1980 everything changed with a high momentum. GDP
per casita which rose at an annual rate of only 1.3 percent from 1960 to 1980 is now
growing at 4 percent annually since 1980. After that India’s share in world trade goes
up rapidly as India later on in 1991 open its markets for international competition and
tariffs were brought down and the quotas were removed. By 2005 the exports and

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imports of India were 20.30 and 23.30 percent of GDP respectively and now the trade
of India reached US $ 7.30 trillion with the value growth of 24 percent.

In short, India has become a high performance economy. It’s still a very poor
country, but it is rapidly growing richer and has become the attractive destination for
may developed countries like China, U.S.A etc. The big question, of course in why
India’s growth rate has increased so dramatically. That question is the subject of
heated debate among the economists. Some economists have argued that trade
liberalization, which allowed India to participate in the global economy, was crucial.

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Other economist pointed out that India’s growth began accelerating around
1980, while the big changes in trade policy didn’t occur until the beginning of the
1990’s. Any now in late eighties India became one of most attractive business resort
for the developed nations and every developed country and even the leading Financial
agencies of the world wants to come in control with India by any means. Although
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India is also achieving good in every field but still was not sufficient to meet out the
demand of the large masses of the country. To meet out the consumption of large
population of India, India has to maintain the cordial relations with the other countries
of the world most preferably the developed countries because India almost has the
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need of technology, Foreign exchange and many other things which may help our
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country to come out of the depression and slow down which we have seen earlier.

With a view to strengthen the Trade Relations of India with the developed
world like U.S.A. The flexible and most acceptable Trade policies were announced by
the Indian government time to time and for thedevelopment of organisational
development a number of bodies were set up. Some of the import organisations
among them are the export promotion councils which will see the steps have been
taken to improve the promotions of exports time to time. These councils mostly works
on the plans and targets for exports. The export promotion councils also take care of
the quality, control, finance, marketing, packaging, shipping and diversification of
exports. The councils also work with the help of Federation of Indian Export
organisation.

To give force to exports, the export processing zones (EPZ) were setup which
provided the free trade environment for export production so as to make the Indian
products ready for foreign competition in the world markets. By 1990 there were

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seven EPZ’s in India, such as Noida, Cochin, Kandla, Santa Cruz, Falta, Madras and
Visakhapatnam. These export processing zones attracted the foreign private
investment which contributed a lot in the improvement of infrastructure and trade
facilitation, although the economic survey for 1989-90 was observed that “the
performance of EPZ’s has been far from satisfactory”. The Trading Housing or
Export Houses and star trading houses were set up for the convenient exports and
imports which shows exemplary performance in the EXIM Policy of 1990-93.

The Institute of foreign trade has also conducting the survey of markets for the
purpose to know about the nature of markets and then guide the different export

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promoting organisation to explore their export potential in this regard. The hearted
efforts have also been made by the Indian diplomatic mission to push the Indian
exports. Exhibition of Indian products were also organised in India and abroad the
country.
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India is know at the stage of its dynamism and was to be known for its
dynamic trade policies but still the frame work was week on the number of aspects.
As Dr. C. Rangarajan pointed out in his Frank Morass Memorial lecture, 15 June
1992 that for a significantly higher growth of export. The macroeconomic policy must
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favour export; there should be adequate sect oral co-ordination so that infrastructure
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and other facilities were appropriate besides detailed planning product wide and
country wise.

However, most of the economist or strategists believed that the infrastructural

weaknesses are mainly responsible for the slow growth of exports of India
sincen1996-97. Therefore to sort out the weakness in trade pattern of India and to
renovate these trade policies have been formulated for some definite periods are as
given below:

The Recent Trade Policy

After the announcement of new Industrial Policy in 1991 and opening of

Indian markets for free competition in the whole world and creates hope for the Indian
economy to came in the level of subsistence but only the New Industrial Policy is not
sufficient to recover the world’s largest economy as a result on 31 March, 1992, a
new trade policy was announced by the Government of India has marked the

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departure for all the previous trade policies because the previous trade policies does
not show such an value changes for the improvement of foreign trade position of
India. This policy is therefore important and unique because it has been announced
after the implementation of the New Industrial Policy of 1991 and rather than this
policy almost lifts all kinds of state control and regulations. It also abolishes the
previous licensing environment form the Indian economy.

In this policy except (Negative List) all the commodities can be imported with
out any kind of tariff imposition on them. The private sector is allowed to import the
commodities like raw material and capital goods without the intervention of

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government, but besides this the exports obligations must be fulfilled
correspondingly. This policy is based on the assumptions of liberalisation.

The steps were also taken to boost the domestic industrial productions. The
some more aspects of the EXIM policy of (1992-1997) include:
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 Introduction of the duty free exports promotion of capital goods (EPCG)
scheme.
 Strengthening of the advanced licensing system.
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 The creation of suitable frame work for integrating Indian foreign trade in to
the internal economy.
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 The Indian industrial products to achieve the best quality of products so that
they could stand in front of the high international standard of quality.
 The research and development should be promoted to attain the technological
modernisation and up gradation of Indian industries.

Any how the Indian government in order to liberalization the imports and
boosts the exports and to bring the stability and continuity the export promotion
policy of 1992-97 was made for the duration of five years. However, the government
also keep the public rights reserve for the welfare of the peoples in the exercise of the
powers conferred by the section-05 of the Act of 1992. Such amendment shall be
made by means of a notification published in the Gazette of India. This policy is
believed be a significant step towards the economic reforms of India and a great hope
for the positive BOP.

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EXIM Policy of 1997-2002

The policy of 1997-2002 has brought a new concept in the trade policies of
Indian and provide Indian economy a gateway to liberalization and modernisation by
which the Indian economy is able to integrate with the different and developed
economies of the world. The policy contains a number of significant features. The
most controversial (VABAL) value based license scheme has been abolished and 542
items have been transferred from the restricted list to special import license (SIL) and
freely importable list. The new Entitlement passbook scheme has also been
introduced.

Objective of the EXIM Policy 1997-2002

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The principal objectives of the Export Import Policy 1997-2002 are as follows:
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(I) To accelerate the economy from low level of economic activities the high
level of economic activities by marketing it a globally oriented vibrant
economy and drive maximum benefits from expanding global market
opportunities.
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(II) To create new employment opportunities and encourage the attainment of
internationally accepted standards of quality.
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(III) To give quality consumer product at practical prices.

Highlights of the EXIM Policy 1997-2002

1. Period of the EXIM Policy: This policy is valid for five years instead of three
years as in the case of earlier policies. It is effective from 1st April 1937 to 31st
March.
2. Liberalization: A very important feature of the policy is liberalization. It has
substantially eliminated licensing, quantitative restrictions and other
regulatory and discretionary controls. All goods, except those coming under
negative list, may be freely imported or exported.
3. Imports liberalization: of 543 items from restricted list 150 items have been
transferred to special import license (SIL) list and remaining 392 items have
been transferred to open General License (OGL) list.

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4. Export promotion Capital Goods (EPCG) Scheme: The duty on imported
capital goods EPCG scheme has been reduced from 15 per cent to 10 per cent.
Under the zero duty EPCG scheme, the threshold limit has been reduced from
Rs. 20 crore to Rs. 5 crore for agricultural and allied sectors.
5. Advance License Scheme: Under advance License scheme, the period for
export obligation has been extended from 12 months to 18 months. A further
extension fro six months can be given on payment of 1 per cent of the value of
unfulfilled exports.
6. Duty Entitlement Pass (DEFB) Scheme: Under the DEFB, An exporter may

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apply for credit, as a specified percentage of FOB value of export, made in
freely convertible currency. Such credit can be utilized for import of raw
materials, intermediates, components, parts, packaging material etc. For export
purpose.
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Impact of EXIM Policy 1997-2002

(A) The EXIM Policy 1997-2002 proposed with an aim to prepare a framework
for globalization of Indian economy. This is evident from the very fast
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objective of the policy, which states. To accelerate the economy from the level
of economic activities to high level of economic activities by marketing it a
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globally market oriented vibrant economy and to derive maximum benefits

from expanding global market opportunities.

(B) Impact on Agriculture: Many encouraging steps have been taken in the
EXIM Policy 1997-2002 in order to give a boost to Indian agricultural sector.
These steps includes provision of additional SIL of 1 % for export of agro
products, allowing EOU’s and other units in EPZs in agriculture sectors to
50% of their output in the domestic tariff area (DTA) on payment of duty.

(C) Impact on foreign Investment: In order to encourage foreign investment in

India, the EXIM Policy 1997-2002 has permitted 100% foreign equity
participation in case of 100% EOU’s and units set up in EPZs.

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Export- Import Policy (2002-07)

Union commerce and industry Minister Mr. Murasoli Maran announced the
EXIM policy for the year period (2002-07) on March 31, 2002. The main thrust of the
policy was to push India’s exports aggressively by undertaking several measures
aimed at augmenting exports of farm goods, the small scale sector, textile, gems and
jewellery, electronic hardware etc.

Special Economic Zones: Indian banks were allowed to set up offshore banking units
(OBUs) in special economic zones. These units would act as magnets to attract

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foreign direct investment. These offshore banking units would be virtually foreign
branches of Indian banks, but located in India. OBUs would be exempt from cash
reserve ratio (CRR), statutory liquidity ratio (SLR) and would be give access to SEZ
developers to international finance at international rates. This measure was aimed to
make special economic zones internationally competitive.
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1. Employment Oriented Measures: EXIM (2002-07) policy initiated a number
of Measures which would help employment orientation. Among them were the

Following:
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(A) Agriculture- EXIM policy removed all quantitative restriction on all
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Agricultural products except a few sensitive items like jute and onions.
(B) Cottage Sector and Handicrafts:
(i) An amount of Rs. 5 crores under market access initiative (MAI)
were earmarked for promoting cottage sector export coming under
KVIC. The units under handicrafts could also access funds under MAI.
(ii) Under export promotion capital goods (EPCG) scheme, these
Units would not be required to maintain an average level of exports,
while calculating export obligation.
(iii) The units in handicraft sector would be entitled to duty free
Imports of an enlarged of items up to 30% of o.b. value of their
exports.
(C) Small Scale Industry: with a view to encouraging further development of
contress of economic and export excellences such as TIRPUR OF HOSIERY,

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 WOOLEN BLANKETS IN Panipat, woollen knitwear in Ludhiana, following
benefits would be available to small sector
1. Common service provides in these areas would be entitled to
the facility of export promotion capital Goods (EPCG) scheme.
2. Entitlement for the export houses status at Rs.5 crores instead
of Rs. 15 crores for others.

A big initiative to permit offshore banking units (OBUs) would help to

develop foreign branches of Indian Banks. The move was intended to provide
international finance at international rates. This would lower the cost of credit to our

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exporters and thus made them more competitive. This initiative, specially directed at
special economic zones was another healthy feature of the Exim policy.

Due to the change the central government, foreign trade policy (2002-07) was
to be scrapped and introduced new policy (2004-09) was announced.
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Foreign Trade Policy (2004-09)

Union commerce and industry Minister Mr. Kamal Nath announced the
foreing trade policy for the five year period (2002-09) on 31st August 2004 which
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aimed doubling Indias’s percentage share in global merchandise trade from 0.7 % in
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2003. To 1.5 % 2009. During 2003-04, India’s merchandise exports were valued at $
61.8 billion accounting for about 0.7% of world’s exports. If share was to doubled, it
would imply that the country’s exports would have to reach $ 195 billion by 2009,
assuming a 10% compound annual growth rate in world trade. For this purpose,
India’s exports should grow at the annual average growth rate of 26%. Besides this,
the service sector is also expected to increase its share in export of invisible to over $
100 billion. Together, the two sectors are expected to reach the target of $ 300billion
by 2009.

Main Elements of Exim Policy 2004-09

 The new Exim Policy 2004-09 has the following main elements:
 Legal Framework
 Board of Trade
 General Provision Regarding Imports and Exports

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 Export Promotion Capital goods Scheme
 Export Oriented Units (EOUs), Electronics Hardware technology Parks
(BTPs) (EHTPS), software, Technology Parks ((STPs) and Bio- Technology
(BTPs)
 Special Economic Zones
 Free trade and Warehousing Zones
 Deemed Exports
FREE EXPORTS: Incase an export of import that is permitted freely under
export import policy is subsequently subjected to any restriction of regulation,

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such imports or exports will ordinarily be permitted not withstanding such or
regulation. To keep under consideration to double the India’s trade share
globally which in turn will expand the employment opportunities and so many
other things which will enhance the Indian economy all over, and the special
focus has been identified for agriculture, gems and jewellery, leather and
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marine sectors. Government of India shall make efforts to promote exports to
these sectors by sectoral strategies shall be notified from time to time.

Board of Trade EXIM Policy 2004-09

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BOT has a clear and dynamic role in the advising government on relevant
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issues connected with foreign trade.

1. In the light of emerging national and international economic scenarios to

advise government on policy measures for the preparation and
implementation of short term and long term plans for increasing exports.
2. To review the export performance of various sectors and to identify the
constraints and suggest industry specific measures to optimize export
earnings.
3. To review policy instruments and procedure for imports and exports and
suggest steps to rationalize such schemes for optimum use.
4. To examine issues which are considered relevant for the promotion of
Indias foreign trade and to strengthen international competitiveness of
Indian goods and services.

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 Permeable of Exim Policy 2004-09: It is a speech given by the Ministry of
Commerce Government of India has set up several institution whose main function
are to help an exporter in his work. It would be advisable for an exporter to acquaint
hi these institutions and the nature of the help that they can provide so that he can
initially contact them and have a clear picture of what help he can expect of the
organized sources in his export effort. Some of these institutions are as follows:

 Export Promotion Council

 Commodity Boards
 Marine Products Export Development Authority

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 Agriculture and Processed Food Products Export Development Authority
 Indian Institute of Foreign trade
 India Trade Promotion Organisation (ITPC)
 National Centre for trade Information (NCTI)
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 Export Credit Guarantee Corporation (ECGC)
 Export-Import Bank
 Export Inspection Council
 Indian Council of Arbitration
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 Federation of Indian Export Organisation
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 Department of commercial Intelligence and statistics

 Directorate General of Shipping
 Freight Investigation Bureau

India’s Foreign Trade Policy (2009-14)

Theforeign trade policy which was announced on August 28,2009 is an

integrated policy for the period (2009-14).

Objectives of foreign Trade Policy 2009-14

I) To arrest and reverse declining trend of export is the main aim of the policy.
This aim will be reviewed after two years.
II) To double India’s exports of goods and services by 2014.

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III) To double India share in global merchandise trade 2020 as a long term aim of
this policy. India’s share in global merchandise export was 1.45 percent in
2008. Simplification of the application procedure for availing various benefits.
IV) To set in motion the strategies and policy measures which catalyse the growth
exports.
V) To encourage exports through a mix of measures including fiscal incentives,
institutional changes, procedural rationalisation and efforts for enhance market
access across the world and diversification of export.

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Aim in General: The policy aims at developing export, improving export
performance, boosting foreign trade and earning valuable foreign exchange. FTP
assumes great significance this year as India’s exports have been battered by the
global recession. A fall in exports has led to the closure of several small and medium
scale export oriented units, resulting in large scale unemployment.
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Targets
 Export Target $200 billion for 2010-11.
 Export Growth Target: 15 % for next two year and 25% thereafter.
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EPCG
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1. Obligation under EPCG scheme relaxed.

2. To aid technological up gradation of export sector. EPCG scheme at Zero duty
has been introduced.
3. Export obligation ob import of spares, moulds etc. Under EPCG scheme has
been reduced by 50%.

Re-fixation of Annual Export Obligation:

Taking into account the decline in exports, the facility of re-fixation of annual
average export obligation for a particular financial year in which there is decline in
exports from the country, has been extended for the 5 year policy period 2009-14.
Support for the Green products and products from North East extended.

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 Announcements for FPS, FMS, MLFPS

1. 26 new market added in this scheme

2. Incentives under FMS rose from 2.5 % to 3 %.
3. 3. Incentive available under focus Product scheme (FPS) raised from 1.25% to
2%.
4. Extra products included in the scope of benefits under FPS.
5. Market linked focus product scheme (MLFPS) expanded by inclusion of
product like pharmaceutical, textile fabrics, rubber products, glass products,
auto components motor cars, bicycle and its parts etc. However, benefits to

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these products will be provided, if exports are made to 13 indentified markets
(Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico,
Ukraine, Vietnam, Cambodia, Australia and New Zealand).
6. Focus Product Scheme benefit extended for export of green products and some
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products from the North East.
7. A Common simplified application form has been introduced to apply for
benefits under FPS, FMS, MLFS, and VGUY.

Announcements for MDA and MAI

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Higher Allocation for market development assistance (MDA) and market
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access initiative (MAI) has been announced.

Towns of Export Excellence (TEE)

The following cities have been recognized as town of export excellence (TEE)

1. Handicraft : Jaipur and Srinagar and Anantnag

2. Leather Product: Kanpur, Dewas and Amur.
3. 3. Horticulture Products : Malihabad

Scheme for Status Holders: (Status Holders means Star status holders)

1. Additional Duty Credit Scrip shall be given to status holders@ 1% the fob
value of past export accelerate export and encourage technological up
gradation.

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2. This facility shall be available for sectors of leather (excluding finished
leather), textile and jute, handicraft, engineering (excluding Iron and steel and
non- ferrous metals in primary and intermediate form, automobiles and two
wheelers, nuclear reactors and parts and ship , boats and floating structure),
plastic and basic chemical (excluding pharma products).
3. This facility shall be available up to 31st March 2011.
4. Transferability for duty credit scraps being issued of status holders under
VKGUY scheme permitted only for the procurement of cold chain
equipments.

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5. Extension of Income to Exemption to EOU and STPI:
Income tax Exemption to 100% EOU and to STPI units under section 10B and 10A of
income tax act, has been already extended for the financial year 2010-11 in the
Budget 2009-10
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Extension of ECGC:

The adjustment assistance scheme initiated in December ,2008 to provide

enhanced ECGC cover at 95% to the adversely sectors, is continued till March 2010.
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Announcements for Marine sector:
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Fisheries exempted from maintenance of average EO under EPCG scheme

(along with 7 Sectors) however fishing Travellers , boats (TPS/Duty Free Certificate
of entitlement (DFCE) Scheme for the main sector.

Announcement for gem and jewellery sector:

1. Duty drawback is allowed on jewellery exports to neutralize duty incidence.

2. Plan to establish diamond Bourse(s) with an aim to make India an

International Trading hub announced.

3. Introduction of a new facility to allow import on consignment basis of cut and

polished diamonds for the purpose of grading/certification.

4. 13 value limits of personal carriage have been increased from $2 million to US

$5 million in case of participation in overseas exhibition.

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5. The limit in case of personal carriage, as sample, for export promotion tours,
has also been increased from US$ 0.1 million to US$ 1 million.

6. Time limit of 60 days for re-import of exported gem and jewellery items for
participation in exhibition has been extended to 90 days in case of USA.

Announcement for Agro Exports:

1) Introduction of a single window system to facilitate export perishable

agricultural produce with an aim to reduce translation and handling cost.

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2) This system will involve creation of multi-functional nodal agencies.These
agencies will be accredited by APEDA.

Announcement for Leather Export:

On the payment of 50% applicable export duty. Leather sector shall be

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allowed re-export of unsold imported raw hides and skins and semi finished leather
from public bounded ware houses.

Announcement for Tea Exports:

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1. The existing minimum addition under advance authorization scheme for
export of tea is 100%.It has been reduced from the existing 100% to50%.
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2. DTA(Domestic Tariff Area) sale limit of instant tea by EOU units increased
from 30% to 50%.
3. Export of tea has been included under VKGUY Scheme benifits.

Announcement for Pharma Exports:

1. Export Obligation for advance authorization issued increased from existing 6

months to 36 months.
2. Pharma sector included under MLFPS for countries in Africa and Latin
America & some countries in Oceania and Far East.

Announcement for Handloom Exports:

The claims under focus Product Scheme, the requirement of Handloom mark
was required earlier. This has been removed.

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Scheme for Export Oriented Units

1. EOUs have been allowed to sell products manufactured by them in

DTA(Domestic Tariff Area) upto a limit of 90% instead of existing
75%,without changing the criteria of similar goods, within the overall
entitlement of 50% for DTA sell.(This means that instead of 75% these units
can sell up to 90% of these products in the domestic markets).
2. EOU allowed to procure finished goods for consolidation along with their
manufactured goods , subject to certain safeguards.
3. Extension off block period by one year for calculation of Net Foreign

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Exchange earnings of EOUs kept under consideration.
4. EOU allowed CENVAT Credit Facility.

Announcement for Value Added Manufacturing (VAM)

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To encourage Value Added Manufactured export, a minimum 15% value
addition on imported inputs Advance Authorization Scheme.

Announcement for Project Export:

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Project Exports and a large number of manufactured goods covered under FPS
and MLFPS.
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Announcement in DEPB Scheme:

Custom duty component on fuel where fuel is allowed as a consumable in

Standard Input-Output Norm included in factoring.

Easy Import of Sample:

Number of sample pieces has been increased form the existing 15 to 50. This
will facilitate the duty free import of samples by exporters.

Convertibility of Shipping Bills:

Greater flexibility has been permitted to allow conversion of Shipping Bills

form one Export Promotion scheme to other scheme. Customs shall now permit this
conversion within three months instead of the present limited period of only one
month.

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Reduction in Transaction Costs

1. Dispatch of imported goods directly from the Port to the site has allowed
under Advance Authorisation scheme for deemed supplies. Customs shall now
permit this conversion within three months, instead of the present period of
only one month.

2. Maximum applicable fee for 18 Authorisation licence application has been

reduced to Rs.100000 from the existing Rs. 150000 (for manual application)
and Rs. 50000 from the existing Rs. 75000(for EDI applications).

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3. No fee shall now be charge for grant of incentives under the schemes in FTP.

Disposal of Manufacturing Wastes

Disposal of manufacturing wastes/scrap will not e allowed after payment of

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applicable excise duty also before fulfilment of export obligation under Advance
Authorization and EPCG Scheme. Earlier it was allowed after fulfilment of export
obligation.
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Announcement for Sports Weapon:
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License for the imports of sports weapon will be issued now by Regional
Authorities provided a NOC (No Objection Certificate) is issued by Ministry of
Sports and Youth Affairs. Earlier DGFT Headquarter had to be approached for this.

Announcement for Medical Devices:

To solve the problem of medical device industry, the procedure for issue of
Free Scale Certificate has been simplified and the validity of each certificate has been
increased from 1 year to 2 years.

Trade Position of India with U.S.A during the Trade Policy Periods

Trade and Commerce form a crucial component of the rapidly expanding and
multifaceted relations between India and U.S.A. From a modest $ 5.6 billion in 1990,
the bilateral trade in merchandise goods has increased to $ 63.7 billion in 2013
representing an impressive 1037.5% growth in a span of 23 years.

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 India’s merchandise exports to U.S.A grew by 9.7% from $ 9.66 during the
period January – March 2013 to $ 10.60 billion during the period January – March
2014. US exports of merchandise to India fell by 9.7% from $ 5.17 billion during the
period January – March 2013 & $ 4.66 billion during the period January – March
2014. India – U.S bilateral merchandise trade stands at $ 15.26 billion during the
period January – March 2014.

1. India US bilateral Relations have developed into a global strategic partnership,

based on increasing convergence of interests on bilateral, regional and global
issues. Regular exchanges of high level political in its composed with wide

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ranging dialogue architecture has enabled sustained momentum to bilateral
cooperation and helped to establish a long term framework for India-U.S
global strategic partnership. Now the bilateral cooperation between India-
U.S.A has become broad based and multispectral coming almost all the
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aspects such as Trade and Investment, Defence and security, education,
Science and Technology, cyber security, high technology, civil nuclear
energy, space technology and applications, clean energy, environment,
agriculture and health.
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2. Ministerial level strategic dialogue has been launched between India and
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U.S.A , co-chaired by External affairs minister and the U.S secretary of state
in July 2009 which focuses on bilateral Relations along five pillars of mutual
interests, namely, Strategic Cooperation, Energy and Climate Change,
Education and Development, Economy, Health and Innovation, Science and
Technology.

The first round of Strategic Dialogue was held in Washington D.C in June
2010. The fourth meeting of strategic Dialogue was held in New Delhi in June
2013.

3. Foreign Office Consultations

Regular contacts at Political and Official level.

4. Civil Nuclear Cooperation

Begin the Implementation of Civil Nuclear Agreements.

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5. Defence Cooperation

In 2005 a new chapter regarding the Relations of India and U.S.A has come
into existence about Defence Cooperation in which both the sides are in
consultation to upgrade the defence Relationship by simplifying technology
transfer policies and exploring possibilities of co-development and
coproduction of defence system.

In 2013 a joint declaration on Defence Cooperation highlighted the deeping of

Indo-US relations. Then both the countries engaged in several bilateral

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institutional mechanism includes Defence Policy Group (DPG). Defence Joint
Working Group (DJWG), Senior Technology Security Group (STSG), Joint
Technical Group (JTG) etc.

6. Counter Terrorism
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7. Strategic Consultations

India and U.S have intensified and expanded their strategic consultations
recent years with dialogues covering East Asia, Central Asia and West Asia.
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8. Trade and Economics
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Total bilateral trade in goods touched USD 63.7 billion in 2013, registering
growth of about 1.7% our the last year. Indian exports accounted for USD 41.8
billion, whereas US exports stood at USD 21.9 billion. The merchandise trade
in first three months January to March 2014 was USD 15.26 billion growing at
2.94% over the same period last year. Total Trade in services in 2011 (the last
year for which the completed data is available) was USD 54.42 billion,
registering a growth Rate of 16.12%. In 2011, Indias exports to the United
States reached USD 26.80 billion and US exports to India accounted for USD
27.62 billion.

There are several Dialogue mechanism to strengthen bilateral

engagement an economic and trade issues including a ministerial Trade Policy
Forum (TPF) and a ministerial level Economic and Financial Partnership. The
last meeting of India-U.S Financial and Economic Partnership may held in

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 Washington in October 2013. India and U.S are negotiating a Bilateral
Investment Treaty (BIT).

 As a part of Economic Dialogue:

Commercial Dialogue has been set up to cover.

a) Trade Defence measures.

b) Small and Medium enterprises.
c) Capacity building on Intellectual Property Rights (IPR).

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In April 2014 both the countries have same extended the India-US
Commercial Dialogue for another two years until March 2016.

10. Mutual Investments

U.S is the fifth largest sources of FDI in India. As per the official statistics – of
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March 2014. The commutation FDI inflows from the US from April 2000 to
March 2014 amounted to about $ 11.92 billion constituting nearly 5.48% of
the total FDI into India.
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During the FY 2013-14 (From April 2013 to March 2014) the FDI inflows
from U.S.A into India were $ 806 million contributing 6% of the total FDI inflow
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during this period.

A recent study of 68 Indian companies which have invested in U.S conducted

by the Confederation of the Indian Industry (CII) has found that these companies
invested nearly US $ 17 billion in US and about one third of the companies are
actively engaged in (R&D) having spent over US $ 340 million in (R and D) .

Trade Organisations

Trade organisations are the associations that are establish to liberalize. The
trade among the member countries through voluntary participation. The various
treaties like SAFTA, NAFTA, SAARC, BRICS all have the aim to liberalize the trade
between the member countries smoothly. These tradeorganisations are established for
the specific purposes.

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List of some of the Trade organisations

 World Trade Organisation (WTO).

 International Organisation for Standardization (ISO)
 United Nations Conference on Trade and Development (UNCTAD).
 International Trade Centre.
 World Customs Organisation (WCO).
 World Fair Trade Organisation.

US looking at Reinvigoration India-US Relationship: Rhodes

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The U.S.A is excited about the prospect of “reinvigorating” Indo-US ties
under the new Indian Government and is looking forward to a meeting between
President Barack Obama and Prime Minister Narinder Modi, a top white house
official has said.
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Economy and Trade, energy and climate change, counter terrorism, regional
security and Asia Pacific region are expanded to be the focus area when Obama meets
Modi. This fall, which would also be an opportunity for the two leaders to establish
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personal equations for the years to come, Deputy National Security advisor Ben
Rhodes said.
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“We are very excited about the prospect of giving new shot of energy in the
US-India relationship. Having a strong Prime Minister who is now to office has
ambitions, I think would be helpful” Rhooks said.

Excited about a strong Modi Government in New Delhi the White House is
eagled looking at “Reinvigorating” the India-U.S.A Relationship.

Modi was clear in his conversation with the (US) President and his
conversation Publicity that the primary focus of his is going to be reinitialising the
Indian economy, which is good for the U.S.A.

As per the Prime Minister of India he is quite clear in his vision to accelerate
the economy of India as the basic contents like Trade, Investment and
Commerciality’s is going to be focus.

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 It is has also been stated by the US officials that we are very much support the
efforts that can be taken domestically within India to promote growth, because that
would definitely benefit the United States.

Bi-lateral Trade of India and U.S.A

In the present time India and U.S.A have come to play an increasingly
dominant role in the world economic affairs. Both the nations have posted
aggressivegrowthRatesandamongstotherthings. Today India-US relations have
becomes increasingly broad based covering cooperation in areas such as the trade and

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economic, defence and security, education, science and technology, high technology,
civil nuclear energy, space technology and applications, clean energy, environment
and health. Among all these Trade Relationis one of most preferable and fertile tie by
which all the other issues remain quite intact. Therefore in the present study it has
been tried that on the priority bases we must study the trade Relations of India with
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U.S.A. Further more people to people interaction provides further utility and strength
to the bilateral relationships. There have been regular contacts at political and official
levels and wide ranging dialogue architecture on bilateral regional and global issues
has been put in place.
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It is well known truth that economics is basically originated from Polity that is
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why we always feel the fragrance of politics in economy and we cannot also avoid it.
If we have a brief look over the historic trade Relations of India with U.S.A. Let us
have a brief look over the history of Indo-US trade.

India and the United States of America have had trade Relations for over two
hundred years. Indo-American trade had started in the eighteenth century when the
Yankee Clipper. Ships brought ice from Boston and reached Calcutta, and returned to
America carrying spices and textiles from India. Limited diplomatic Relations were
established in 1790 when US President George Washington appointed a consul at
Calcutta. India Freedom fighters received friendly help and encouragement from US
people from time to time. Inter-governmental exchanges, tourism and religions
experiences promoted friendly relations between the two countries. But as the time
changes the Indo-US Relations also seems to look somewhat under the influence of
irritation and an ear of cold war started between the two nations. Later on in (1992 –

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2000) the Clinton administration of the US took the initiative by advocating
confidence building measures. An important improvement in the Indo-US Relations
took place in the area of economic policies. The United States welcomed
liberalisation of Indian economy and India’s Policy of inviting more and more foreign
investment in industry and development projects.

In the recent years in the years 2009 the visit of the than Prime Minister Dr.
Manmohan Singh to Washington from 22 – 26 November 2009 as the first state Guest
of President Barack Obama reaffirmed the global strategic partnership between India
and the United States. President Obamas visit to India from 6 – 9 November 2010

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imparted further.

Trade and Economic Relations

Trade and Economic Partnership between the US and India has been as way
component of the bilateral relationship. A new US Financial and Economic
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Partnership to strengthen bilateral engagement or macroeconomic, financial and
investment related issues was launched in New Delhi in April 2010 by the than
Finance Minister Mr. Pranab Mukherjee and US Treasury secretary Timothy
Geithner. The second meeting of India-US Financial and Economic Partnership was
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held in Washington D.C. in June 2011.
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The Indo-US Trade Policy Forum

The Indo-US Trade Policy Forum was established in July 2005 to discuss
issues related to trade. The last and seventh meeting of the TPF took place in
Washington D.C from September 21 – 22 (2010). An agreement on framework for
cooperation on Trade and investment was signed during the visit of the than Minister
of Commerce and Industry Mr. Anand Sharma to U.S.A in March 2010. As part of the
economic Dialogue, a separate Commercial Dialogue has been set up to cover:
a) Trade – Defence measures.
b) Small and Medium Enterprises and
c) Capacity building on intellectual Property Rights (IPRs)

For the greater investment of the private sector in discussion on issues

involving and investments the bilateral India-US CEO’s Forum was reconstituted in
2009. The fourth round of the reconstituted CEO’s Forum to facilitate a structured

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dialogue between the industry and the government was held on 22 September 2011 at
Washington D.C. Separately a Private Sector Advisory Group (PSAG) has also been
created consisting of Prominent Indian and international trade exports to provide
strategic recommendations and insights to the US-India Trade Policy Forum.

The India-US aviation Cooperation Programme (ACP)

The India – US aviation Cooperation Programme was establish in 2007 to
further cooperation as a Public Private Partnership between the Indian Ministry of
Civil Aviation and US Federal Aviation Administration, the US Trade and
Development Agency (USTDA) other US government agencies and US aviation

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companies. Bilateral trade has diversified and encompasses a wide range of products,
services and technology. An expanding and vibrant architecture of dialogue on
Commercial, economic and technology related issues has given a fillip to this
cooperation. India U.S total merchandise trade was US $ 57.80 billion in 2011. The
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two way services trade was US $ 42.50 billion in 2009. The two governments have
resumed technical level negotiations on a bilateral investment trends. A totalization
agreement has also been under discussion for sometimes.

Negotiations of WTO and India

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Right from the data of membership of India with WTO India have the great
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negotiation history with WTO in turn comes to an end with the definite modifications
regarding the trading environment of India with the world. The main also of these
negotiations are to entrance the trading relationship between different countries of the
world as so the India has also made her stance on various trade issues in front of
WTO from time to time. The Recent negotiation of India with WTO was held in Bali
in the ninth ministerial conference of WTO in Indonesia from 3 to 7 December 2013,
strengthened the credibility of the WTO as an institution. The outcome ensured that
the development dimension remains the central focus in the Doha Round. It
reaffirmed India’s leadership role amongst the developing countries and demonstrated
its constructive approach in the negotiations.
India played a Key Role in arriving at a breakthrough and sharing the
agreement. India ensured an outcome which secures its supreme national interests. It
was made amply clear that while being fully preformed to engage, India will never

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compromise on fundamental issues pertaining to food security, livelihood security and
the welfare of its poor.

Recent Trade Policy Measures:

From time to time the different Trade Policies of India has been announced to
boost the exports in the Foreign Trade. On 18th of April 2013 besides the union
budget 2013-14 as has the RBI in its monetary and credit policies.
There are some of the Recent Policy Measures Related to budget area as under:-
- Specified machinery for manufacture of leather and leather goods including
foot wear the duty reduced to 5 percent from 7.5 percent.

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- Duty on Pre-forms, Precious and Semi-Precious stones reduced to 2 percent
from 10 percent.
- For Readymade garment industry, zero excise duty at fibre stage for cotton
and a duty of 12 percent at the fibre stage for spun yarn made of manmade
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fibre. The excise is totally lifted over from the handmade carpets and textile
floor coverings of coir and jute.
- Ships and Vessels exempted from the excise duty.

Credit Related
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- For availing of trade credit, the period of trade credit should be linked to the
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operating cycle and trade transaction.

- The enhanced period of realization and repatriation to India of full export of
goods or software exports was brought down from 12 months to nine months
from the date of export.
- The units located in Special Economic Zones (SEZ) should realize and
repatriate full value of goods / software / services to India within a period of
12 months from the date of export.

Foreign Trade Policy Measures in 2013-14

- The Rupee Export credit interest Rate Subvention Scheme expanded to 101
tariff lines of the engineering sector and six tariff lines of the textile sector.
The validity of this scheme was extended upto 31 March 2014. The Rate of
interest subvention also increased from 2 percent to 3 percent w.e.f. 01-08-
2013.

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- Around 130 new products added for duty credit @ 2 percent to 5 percent of
7.0.b value of exports which included engineering, electronics, chemicals,
pharma and textiles.
- Around 57 new products and two new countries have been added under the
Market Linked Focus Product Scheme (MLFPS). The (MLFPS) extended till
31 March 2014 for export to U.S.A in respect of number of items like textiles
and clothing. It is further extended from 1-4-2014.
- Incremental Exports Incentivization scheme has been extended for the year
2013-14 with 53 Latin American and African Countries added to list w.e.f. 1-

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4-2013.
- For the payment of Service Tax the scripts of Focus Product Scheme (FPS),
Focus Market Scheme (FMS) and Vishahs Krishi and Gram Udyog Yojana
(VKGUY) can be used now.
- Three new towns have been declared as towns of export excellence (TEE).
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These are Gurgaon (textiles), morbi (ceramic tiles and sanitryware) and
Toothkudi (Marine).
- Around the new products including 153 hi-tech products added for duty credit
@ 2 eprcent of f.o.b value of exports on 10-07-2013 (effective from 15-08-
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2013).
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- Thirteen Products have been added under the MLFPS, allowing 2 percent
additional benefit.

Special Economic Zones (SEZ’S)

In a span of eight years the SEZ Act and Rubs were notified in February 2006.
The formal approval has been granted to set up 566 SEZ’s out of which 388 have
been notified. At present the total of 184 special economic zones are exporting on 31
March 2014 the total number of persons employed in the Special Economic Zones are
12, 83309. The physical exports from the SEZ’s increased from Rs. 4, 76159 crores in
2013-13 to Rs. 4, 94, 77 crores in 2013-14 which registered a growth of 4.0 percent in
rupee terms. The approximate investment including the newly notified SEZ’s after the
SEZ Act 2005 is Rs. (570042) crores. Through the automatic route the SEZ are
facilitated with the 100 percent FDI in them.

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