India’s Foreign Trade Policy

• Foreign trade in India is promoted and facilitated by the Directorate General of

Foreign Trade (DGFT), under the Ministry of Commerce and Industry (MoCI).

• The DGFT issues the authorization to exporters and monitors their corresponding
obligations through a network of 38 regional offices. The DGFT also implements
the Foreign Trade Policy of India.

• Foreign Trade Policy (FTP) is the prime policy that lays down simple and
transparent procedures which are easy to comply with and administer for efficient
management of foreign trade in India.
• The Policy aims at enhancing the country’s trade for economic growth and employment
generation. The Customs Tariff Act and the Central Excise Tariff Act are the other two
important Acts that lay down how the Customs and Excise duties shall be levied on trade,
respectively.
• India’s overall exports (Merchandise and Services combined) in June
2021 are estimated to be $49.85 bn, exhibiting a positive growth of
31.87% over the same period last year. Overall imports in June 2021 are
estimated to be $52.18 bn, exhibiting a positive growth of 73.65% over the
same period last year.

• The commodities and commodity groups that have recorded positive growth
during June 2021 over the last year are Other cereals, Petroleum products,
Man-made yarn/fabs./made-ups etc, Gems and jewellery, Meat, dairy
and poultry products. The estimated value of services export for June
2021 is $17.35 bn, exhibiting a positive growth of 9.16% compared to June
2020.
Department of Commerce

Vision and Mission

• The long-term vision of the Department is to make India a major player in the
world trade by 2020 and assume a role of leadership in the international trade
organizations commensurate with India’s growing importance.

• The medium term vision is to double India’s exports of goods and services by
2017-18 over the level of 2008-09 with a long-term objective of doubling India’s
share in Global trade.

• The policy tools being adopted in this context are: the Strategy Paper focusing on
the targeted commodity and country wise strategy in the medium term and the
Strategic Plan / vision and the Foreign Trade Policy in the long run.
Functions of Department of Commerce
• The Department formulates, implements and monitors the Foreign Trade Policy (FTP) which provides the basic
framework of policy and strategy to be followed for promoting exports and trade. The Trade Policy is periodically
reviewed to incorporate changes necessary to take care of emerging economic scenarios both in the domestic and
international economy. Besides, the Department is also entrusted with responsibilities relating to multilateral and bilateral
commercial relations, Special Economic Zones, state trading, export promotion and trade facilitation, and development and
regulation of certain export oriented industries and commodities
• The Department is functionally organized into the following 10 Divisions:
• International Trade Policy Divisions
• Foreign Trade Territorial Division
• Export Products Division
• Export Industries Division
• Export Services Division
• Economic Division
• Administration & General Service Division
• Finance Division
• Supply Division
• Logistics Division
• The various offices / organizations under the administrative control of the Department are: (A) two Attached Offices, (B)
ten Subordinate Offices, (C) ten Autonomous Bodies, (D) five Public Sector Undertakings, (E) one Advisory Body, (F)
fourteen Export Promotion Councils and (G) five Other Organizations.
www.commerce.gov.in
• Directorate General of Foreign Trade (DGFT) organization is an attached office of the Ministry of Commerce and Industry and is
headed by Director General of Foreign Trade.
• Right from its inception till 1991, when liberalization in the economic policies of the Government took place, this organization has
been essentially involved in the regulation and promotion of foreign trade through regulation.
• Keeping in line with liberalization and globalization and the overall objective of increasing of exports, DGFT has since been
assigned the role of "facilitator". The shift was from prohibition and control of imports/exports to promotion and
facilitation of exports/imports, keeping in view the interests of the country.

DGFT HQ Address
• Directorate General of Foreign Trade (DGFT) Udyog Bhawan, H-wing, Gate No-02, Maulana Azad Road, New Delhi -110011

This Directorate, with headquarters at New Delhi, is responsible for formulating and implementing the Foreign Trade Policy
with the main objective of promoting India's exports.

The DGFT also issues scrips/authorization to exporters and monitors their corresponding obligations through a network of 24 regional
offices. The regional offices are located at Ahmedabad, Bengaluru, Chennai, Coimbatore, Delhi, Ernakulam (Kochi), Guwahati,
Hyderabad, Indore, Jaipur, Jammu, Kanpur, Kolkata, Ludhiana, Mumbai, Nagpur, Panipat, Pune, Rajkot, Srinagar, Surat,
Vadodara, Varanasi and Visakhapatnam.

DGFT HQ and many of its regional offices are ISO 9000:2008 certified Organizations. All regional offices provide facilitation to
exporters in regard to developments in international trade, i.e. WTO agreements, Rules of Origin and anti-dumping issues, etc. to help
exporters in their import and export decisions in an internationally dynamic environment.
Foreign Trade Policy of India
• There is not much difference between Foreign Trade Policy and Exim Policy. They are basically two names
for the same policy. It was in 2004 that Commerce and Industry Minister Kamal Nath decided it would be
more appropriate to call the policy the foreign trade policy.
• He argued that it was necessary for the policy to go beyond exports and imports and have an integrated
approach to the developmental requirements of India’s foreign trade.
• Mandated that Annual revision of the policy is necessary. Since international trade is dynamic, market
conditions change frequently, requiring quick responses. Five years is a long period for a policy to be
continued without incorporating requisite changes. That is why it is now revised annually.
• Now, the trade policy is formulated under the supervision of the Commerce Ministry. While the commerce
ministry is the nodal ministry for formulating the policy, not much can move without the blessings of the
finance ministry.
• All export promotion, duty exemption and remission schemes require the approval of the finance
ministry.
• Also, the notifications for implementing most of the schemes which entail sacrifice of revenue are passed by
the department of revenue.
Foreign Trade Policy of India

• Foreign trade in India is regulated by the Foreign Trade (Development and Regulation) Act, 1992

• 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. The act has replaced the earlier law known as
the Imports and Exports (Control) Act 1947.

• FTP 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.
FTP – Evolution

India was typically a colonial and agricultural economy during the time of independence and our
trade relationship were mainly limited to U.K. During the period 1950 – 1990.

India’s foreign trade suffered from strict administrative controls. Exports were largely neglected
during the first and the second five-year plans.

While the world merchandise exports were growing at 6.3 percent per annum during 1950s, exports
from India was in stagnation.
The share of India’s exports in world exports declined from 1.4 percent during 1950’s to 0.9
percent during the 1960s.

To offset this degradation in exports, Govt. of India adopted various measures for exports promotion,
due to which India’s exports experienced higher growth rates of 18.0 percent per annum during
1970s. But the exports boom during 1970s could not sustain during 1980s.
FTP – Evolution

Until July 1991, the government had adopted conservative macro-economic policies. The major
task of the govt. of India in the past was to put restriction on imports in order to reduce the
trade deficit and to give protection to domestic industries from foreign competitions.
Fiscal policies of the government aimed at mobilizing resources from private sector to finance
development programmes and public investment in infrastructure.
The imports were restricted by prohibition of imports of many items, import licensing, very high
import duties and foreign exchange restrictions. Thus foreign trade policies of India featured with
pessimism.
In July 1991, the Government of India introduced a series of economic reforms stated as New
Economic Policy-1991.
India opened the doors of its markets to the world. The new economic strategy included liberalisation,
globalisation, exports oriented strategies, importance to private investment, capital market reforms,
market determined price and economic growth and inducement to FDI and MNCs.
FTP – Evolution

The major trade policy changes in the post -1991 period included simplification of procedures,
removal of quantitative restrictions and substantial reduction in tariff rates.

During post reform periods new dynamism of India’s exports performance has been created with
supportive industrial policy, emphasizing international competitiveness, efficiency, technological up
gradation, inflow of foreign capital and liberal import policy ensuring more and easier access of
imported inputs.

Over and above, the entire policy regime in India with regard to liberalization of external sector has
witnessed perceptible change in the post -reform periods
Trade policy reforms

• Custom Duties reduced – Peak rate of Custom Duty – imposed on items under OGL (Open
General List – even items have been reduced)
• Negative list reduced – items those cannot be imported or exported
• Quantitative restrictions abolished on OGL list – 1991 1500 items – objected in WTO
• Scope of import licensing reduced – now only for few items
• 1994 – current account convertibility
• 1993 – Managed float – RBI can interfere
• Export promotion schemes introduced and increased e.g. duty draw back scheme – Some of the
excise and customs duty reimbursed on certain items
• Export promotion capital goods scheme – EPCG – exports can import or domestically procure
machinery with minimum tax/custom duty – tax saved – 6 times of it has to be export in 6 years.
• Focused product scheme – exporters of selected labour intensive commodity are provided with
duty credit scripts DCS – 3% the value of export and use this to pay customs or excise duty
• Focused market scheme
Foreign Trade Policy 2015-20:
• Objectives:
• It aims at doubling the overseas sales to $900 billion by 2019-20.
• It provides a framework for increasing exports of goods and services as well as generation of employment and
increasing value addition in the country, in line with the ‘Make in India’ programme.
• Integrating the foreign trade with “Make in India” and “Digital India” Programme.
• Salient features:
• MEIS scheme: A single Merchandise Exports from India Scheme(MEIS) has been formulated by merging five
existing schemes to promote merchandize exports.
• The incentives are to be provided in the form of duty scrips as % of FOB (free on board) value of exports.
• SEIS scheme: The Services from India Scheme(SFIS) has been replaced by Service Exports from India Scheme
(SEIS). SEIS will be only for India based service providers and will be based on net foreign exchange earned.
• Both the SEIS and MEIS schemes are applicable to SEZ units.
• In order to ensure trade facilitation and ease of doing business, Paperless Trade and Online filling of forms has
been provided.
• E-commerce export is applicable to items of worth upto Rs 25,000 per consignment.
• Provision for Export oriented units(EOUs), Export hardware technology park and software technology park.
• The Duty free scrips (form of credits) are provided to the exporters under various export promotion schemes of the
government. The scripts may be transferable or nontransferable.
Highlights of the Foreign Trade Policy (Exim Policy) 2015-20

Export from India Schemes:

• Merchandise Exports from India Scheme (MEIS)
• Service Exports from India Scheme (SEIS)
• Incentives (MEIS & SEIS) to be available for SEZs
• Duty credit scrips to be freely transferable and usable for payment of custom duty, excise duty and
service tax.
• Boost to "MAKE IN INDIA"
• Reduced Export Obligation (EO) for domestic procurement under EPCG scheme
• Higher level of rewards under MEIS for export items with high domestic content and value
addition.
• Online filing of documents/ applications and Paperless trade in 24x7 environment:
• Online inter-ministerial consultations
• Simplification of procedures/processes, digitization and e-governance
• Forthcoming e-Governance Initiatives
• New initiatives for EOUs, EHTPs and STPs
• Facilitating & Encouraging Export of dual use items (SCOMET).
• e-Commerce Exports
• Duty Exemption
• Additional Ports allowed for Export and import
• Duty Free Tariff Preference (DFTP) Scheme
• Quality complaints and Trade Disputes
• Vishakhapatnam and Bhimavaram added as Towns of Export Excellence