Assignment of Foreign

Trade Promotion

Submitted To : Dr. Anil Goray

Submitted By : Krati Gupta

Class : BBA VI sem

Section : A

Roll no. : MFT/18/2146

Date of Submission: 13 may 2021

Q 1.Discuss export promotion measures taken by Government with example.

Ans. Measures taken by Government are as follows:-

• SIDO technical assistance and training:- SIDO provides many services through its network for
small scale industries. Specialised services of Marketing, Export promotion and International co-
operation are also available through a series of schemes and incentives. To develop the techno-
managerial capabilities of the educated unemployed youth, the Institute, since its inception, has
been conducting skill oriented EDPs in various trades like General Engineering, Motor
Rewinding, Household Electric Appliances, A/C and Refrigeration etc. The Institute generally
conducts 16 EDPs in two phases every year. Apart from these, the Centre has also introduced
certain diploma and PG Diploma courses in Computer varying form 3 months to 12 months
duration on a self-sustaining basis. The Centre also organizes training for TRYSEM and PMRY
beneficiaries.
• International finance :-International Finance is an important part of financial economics. It
mainly discusses the issues related with monetary interactions of at least two or more countries.
International finance is concerned with subjects such as exchange rates of currencies, monetary
systems of the world, foreign direct investment (FDI), and other important issues associated
with international financial management.
Like international trade and business, international finance exists due to the fact that economic
activities of businesses, governments, and organizations get affected by the existence of
nations. It is a known fact that countries often borrow and lend from each other. In such trades,
many countries use their own currencies. Therefore, we must understand how the currencies
compare with each other. Moreover, we should also have a good understanding of how these
goods are paid for and what is the determining factor of the prices that the currencies trade
at.Note − The World Bank, the International Finance Corporation (IFC), the International
Monetary Fund (IMF), and the National Bureau of Economic Research (NBER) are some of the
notable international finance organizations.
• EPCs:-Export Promotion Councils are government-initiated authorities that promote and
support export firms in developing their overseas trade and presence by providing technical and
industry insights. Additionally, EPCs also promote government schemes, act as a data store and
conduct overseas tours and studies. They also act as an intermediary between the government
and the export industry and are critical in formulating the foreign policies of the country.These
Councils are registered as non-profit organizations under the Companies Act/ Societies
Registration Act. EPCs perform both advisory as well as executive functions. Export Promotion
Councils are responsible for country’s image abroad as a council of reliable suppliers of high
quality goods and services. The EPCs encourage and monitor the observance of international
standards and specifications by exporters. Each product has its own Export Promotion Council,
hence the promoter should register under a certain EPC as per their line of product.
• Indian Commodity Board :-The Government of India has set up the Commodity Board as a
separate organization to promote the export of commodities. It regards itself as a match to the
export promotion council. However, the following differences may be observed between Boards
 and the Export Promotion Council. It looks after the export promotion of primary and traditional
items of export. While the export promotion council is responsible for the promotion of non-
traditional items like engineering goods, computers, chemicals, etc. Apart from export
promotion, it takes up product development. Export promotion councils are concerned mainly
with the promotion of exports of respective products. They also advise the government on
policy matters such as fixing quotas for exports, entering into trade agreements with foreign
countries, etc.
• Trade Development authority:-India Trade Promotion Organization (ITPO) is the nodal agency of
the Government of India for promoting the country's external trade. ITPO, during its existence
of nearly three decades, in the form of Trade Fair Authority of India and Trade Development
Authority, has played a proactive role in catalyzing trade, investment and technology transfer
processes. Its promotional tools include organizing of fairs and exhibitions in India and abroad,
Buyer-Seller Meets, Visit of foreign trade delegations and Information Dissemination.
• IIFT:-The Ministry of Education, Government of India (GOI), has established National Testing
Agency (NTA) as an independent, autonomous and self-sustained premier organization under
the Societies Registration Act, 1860, registered as a self-reliant and self-sustained premier
testing organization.
The Indian Institute of Foreign Trade (IIFT) was established in 1963 as an autonomous body
under the Ministry of Commerce & Industry to contribute in the skill building for the external
trade sector of India. The Institute was granted “Deemed to be University” status in 2002. The
National Assessment and Accreditation Council (NAAC) has recognized IIFT as Grade ‘A’
Institution in 2005 as well as in 2015.
• EPZ:- An export processing zone, or EPZ, is an area set up to enhance commercial and industrial
exports by encouraging economic growth through investment from foreign entities. Incentives
such as tax exemptions and a barrier-free environment are the main attractions of an EPZ.
• EOU:- The full form of EOU is Export Oriented Units. Introduced in 1981, the scheme aims to
increase exports from India, to thereby increase foreign exchange earnings and create
employment. This scheme also complements other schemes such as Free Trade Zone (FTZ) and
Export Processing Zone EPZ in India. The provisions of Chapter 6 of the Foreign Trade Policy and
its procedures are applicable to EOU, as well as to Electronics Hardware Technology Parks
(EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs). In common
parlance, EOU/STP/EHTP/BTP are together called the EOU scheme. Units registered under the
EOU scheme are required to export 100% of their products unless they sell a portion of it to
Domestic Tariff Area (DTA).Free Trade Zone/foreign-trade zone is deemed to be a foreign
territory which is a uniquely designed infrastructure intended for importing and exporting of
goods sans hassle. The goods may be stored, handled, assembled, repackaged, and re-exported
within these areas with minimum involvement of the customs.
The duty is only charged on the part of shipment that moves out of the Free Trade Zone for DTA
(Domestic Tariff Area) sale. India was one of the first in Asia to recognize the effectiveness of the
Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla
in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity
of controls and clearances.
Q 2.Discuss new EXIM policy for next five years and measures taken to promote
Indian exports.

Ans. Covid-19 was catastrophic for international trade. Indian exports fell by a record 60% and
imports by 59% in April 2020. Though the situation has improved, the road to recovery is long and
hard. That is why the new trade policy must deliver the goods. Based on inputs from traders, trade
associations, members of Parliament and a government-appointed high-level advisory group, some
key expectations are:

• WTO-compliant tax incentives: With incentives under MEIS and SEIS under a cloud,
the need of the hour is WTO-compliant tax benefits. To this end, the government has
announced the Remission of Duties or Taxes on Export Products (RoDTEP) scheme,
effective January 1, 2021. It replaces MEIS. Rates and conditions for the new scheme
are yet to be announced.
• Easy credit access: A long-standing demand of exporters, especially MSMEs, is credit
access. Formal financial institutions such as banks are reluctant to lend to MSMEs
due to their lack of adequate collateral. The policy can help open up alternate credit
avenues, such as finance technology start-ups. The advisory group suggests raising
borrowing limits at the Export Import Bank of India.
• Infrastructure upgrade: One reason why China is a manufacturing and export
powerhouse is its network of ports, highways and high-speed trains, which are
among the best in the world. India needs to learn from its neighbour and improve its
flagging infrastructure by upgrading existing ports, warehouses, quality testing and
certification centres and building new ones. The Trade Infrastructure for Export
Sector, a scheme for developing infrastructure to promote exports, was launched in
2017 for a period of three years. Many in the industry hope it will be extended.
• Less subsidy, more support: In 2020, Commerce Minister Piyush Goyal said quality,
technology and scale of production were the answers to India’s global ambitions, not
subsidies. Many in the industry agree, saying government support in the form of skill
development programmes and technological upgradation rather than subsidies
would help them become more competitive. Pharmaceuticals, biotechnology and
medical devices are some sectors that could do with upskilling. Similarly, the trade
policy could include incentives with a focus on research and development,
something the government has spoken of in the past. On the technology front, the
Amended Technology Upgradation Fund Scheme – which facilitates improvements in
investment, productivity, quality and exports in the textile industry through
technology upgrades – can be replicated for other sectors.
• Tax breaks: If India were to do away with subsidies, exporters would still need some
form of government support. Easier and lower taxes are a way of filling this gap. The
reduction of corporate tax rates and simplification of duty structures are long-
standing demands. The Confederation of Indian Industry suggests simplifying the
import duty structure by following “the general principle of higher duties on finished
 goods and lower/minimal duties on intermediates and raw material”. There are also
demands for an overhaul/improvement of existing schemes such as the EPCG and
Duty Drawback Scheme.
• Digitization and e-commerce: With Covid-19 disrupting traditional supply chains,
India needs modern trade practices. Digitization and e-commerce are two ways to go
about this. Digitization can start with making common import-export processes
paperless. Trade body Nass com, for example, recommends an online mechanism for
Importer Exporter Code (IEC) holders to change their particulars (mobile numbers, e-
mail IDs, etc). It also makes a case for encouraging e-commerce exports by a)
including e-commerce export platforms under Niryat Bandhu (a scheme for
mentoring entrepreneurs in international trade), b) establishing e-commerce export
promotion cells within export promotion councils, and c) establishing e-Commerce
Export Zones to promote MSMEs.
• Export awareness: At times, Indian exporters are defeated not by a lack of trade
opportunities but by lack of awareness of the same. The trade policy can make a
provision for government workshops and awareness programmes that educate and
inform traders about international laws and standards, global markets, intellectual
property rights, patents and geographical indication (GI).
• Import wishlist : While most of the expectations might be geared towards exports,
India’s import community has its wishlist too, which includes permission to import
capital goods on self-certification basis and to import prohibited items with the
approval of the Central government-approved Board of Approval or Inter-Ministerial
Standing Committee.

Some measures taken to promote export are

• Export Promotion Capital Goods Scheme (EPCG)
This scheme permits the import of capital goods at a concessional rate of customs duty,
subject to export obligation to be fulfilled over a period of time. The scheme is applicable to
service sector also. Second hand capital goods are allowed to be imported under certain
conditions. The importer has to obtain the EPCG licence.

• Import Replenishment (REP) Licenses

Under this scheme, the exporters are allowed to import raw materials and components
used in the manufacture of export products. The policy contains a list of items of import for
which REPs are to be granted. Deemed exporters are also granted REP license.

Deemed exports mean, producers who supply the inputs to final exporters. They are
considered as indirect exporters and are eligible for certain export benefits. Certain supplies
of import substitution are also termed as deemed exports. They qualify for grant of REP but
not other benefits.
In India, When there was an import restriction earlier, the Import Replenishment licenses
were sold at a premium. Now, with liberalization of imports, the scheme is no longer
attractive. The holder of REP license is permitted to import canalized items, capital goods,
samples and tools.

• Import – Export Pass Book Scheme

This scheme enables, the Export House, Trading Houses and manufacturer — exporters
having good track record of exports, to import duty free raw materials. The scheme has
extended its coverage even to well-established manufacturers.

• Duty Exemption Scheme

Duty exemption scheme allows the duty free import of certain components, raw materials,
consumables and spares for export production. It covers categories of advance license,
blanket advance license and advance customs clearance permits. It provides benefits to
indirect exporters. The license holder of this scheme is also eligible for REP license.

• 100% Export Oriented Units

These units are exempted from import licensing formalities. They are allowed to import
capital goods, raw materials, components, consumables and spares under the Open General
License on the condition that their entire production should be exported and operations are
carried out under customs bonded factory.

A 100% export oriented unit can be set up in Free Trade Zones (FTZs), promoted by
Government with infrastructure facilities. Examples are Madras Export Processing Zone
(MEPZ), Santacruz Electronic Processing Zone (SEPZ), besides similar zones are in Kandla
(Gujarat), Noida (Delhi), Cochin. Units in FTZ and 100% Export oriented units have been
given special status.

Under Income Tax Act, there is complete tax holiday for 5 years for these units. The
EOU/EPZ scheme has been liberalized to include units which export 50% of their production
for agriculture, aquaculture, horticulture, floriculture, animal husbandry, poultry and
sericulture units.

The taxation system spells out a number of benefits to small-scale industries. Various tax
benefits are available to small business units, both at the Centre and State level. The Central
government levies direct taxes, whereas indirect taxes are levied by the State government.
State government provides benefits in sales tax, water tax, octroi duty and electricity tariff,
etc.

• Tax exemption on earnings

The profits earned on export earnings are deducted by 50% for calculation of tax. It can be
availed of by an individual or company. There are also deductions available for earnings in
foreign exchange by approved hotels or travel agents. There is a provision of deduction in
respect of expenditure incurred by the companies for promoting sales outside India.
 • Exemption of Sales Tax
There is an exemption from sales tax, excise duty and import duty for exports. Exemption of
excise duty can be obtained by way of rebate or duty drawback.When the exports earning
are negative, no duty drawback is paid on claims.

Q 3.Briefly explain objectives , functions and organization structure of World

Trade Organization .

The important objectives of WTO are:

1. To improve the standard of living of people in the member countries.

2. To ensure full employment and broad increase in effective demand.

3. To enlarge production and trade of goods.

4. To increase the trade of services.

5. To ensure optimum utilization of world resources.

6. To protect the environment.

7. To accept the concept of sustainable development.

The main functions of WTO are discussed below:

1. To implement rules and provisions related to trade policy review mechanism.

2. To provide a platform to member countries to decide future strategies related to trade and
tariff.

3. To provide facilities for implementation, administration and operation of multilateral and

bilateral agreements of the world trade.

4. To administer the rules and processes related to dispute settlement.

5. To ensure the optimum use of world resources.

6. To assist international organizations such as, IMF and IBRD for establishing coherence in
Universal Economic Policy determination.

Organizational structure of WTO

The highest authority of the WTO is the Ministerial Conference, which must meet at least every
two years.
In between each Ministerial Conference, the daily work is handled by three bodies whose
membership is the same; they only differ by the terms of reference under which each body is
constituted.

• The General Council

• The Dispute Settlement Body
• The Trade Policy Review Body
The General Council, whose Chair as of 2020 is David Walker of New Zealand, has the following
subsidiary bodies which oversee committees in different areas:
Council for Trade in Goods
There are 11 committees under the jurisdiction of the Goods Council each with a specific task.
All members of the WTO participate in the committees. The Textiles Monitoring Body is
separate from the other committees but still under the jurisdiction of the Goods Council. The
body has its chairman and only 10 members. The body also has several groups relating to
textiles.
Council for Trade-Related Aspects of Intellectual Property Rights
Information on intellectual property in the WTO, news and official records of the activities of
the TRIPS Council, and details of the WTO's work with other international organizations in the
field.
Council for Trade in Services
The Council for Trade in Services operates under the guidance of the General Council and is
responsible for overseeing the functioning of the General Agreement on Trade in
Services (GATS). It is open to all WTO members and can create subsidiary bodies as required.
Trade Negotiations Committee
The Trade Negotiations Committee (TNC) is the committee that deals with the current trade
talks round. The chair is WTO's director-general. As of June 2012 the committee was tasked
with the Doha Development Round.
The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS
rules, and specific commitments. The council has several different committees, working groups,
and working parties. There are committees on the following: Trade and Environment; Trade
and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements;
Balance of Payments Restrictions; and Budget, Finance and Administration. There are working
parties on the following: Accession. There are working groups on the following: Trade, debt and
finance; and Trade and technology transfer. As of 31 December 2019, the number of WTO staff
on a regular budget is 338 women and 285 men.