Foreign trade also called , international

Trade

Trade among countries is normal &

desirable.

The fact remains that the natural

resources of earth are not evenly

distributed.

DEFINITION TRADE

The business of buying and selling commodities.The people working in or associated with a business or industry: a textile-exporting publication for the trade.The customers of a specified business or industryThe act or an instance of buying or selling; transaction.An exchange of one thing for another.An occupation, especially one requiring skilled labor; craft: the building trades, including carpentry, masonry, plumbing, and electrical installation.

TRADE POLICY

a government's policy controlling foreign trade Any policy affecting international trade, including especially tariffs and nontariff barriers.

The collection of national policies which affect the quantity and value of a nation's exports and imports. …

FOREIGN TRADE is significant for the

economic development of developing

countries

The process of industrialization

To reduce the scarcity of consumer

goods.

Foreign Trade Policy

27th August 2009 - 31st March 2014

Special Focus MARKET DIVERSIFICATION

To achieve diversification of Indianexports, following initiatives have been taken under thisPolicy –

(a) 26 new countries have been included within theambit of Focus Market Scheme.

(b) The incentives provided under Focus Market Schemehave been increased from 2.5% to 3%.

(c) There has been a significant increase in the outlayunder ‘Market Linked Focus Product Scheme’by inclusion of more markets and products. Thisensures support for exports to all countries in Africa and Latin America

TECHNOLOGICAL UPGRADATION

(a) EPCG Scheme at 0 duty has been introduced forcertain engineering products, electronic products,basic chemicals and pharmaceuticals, apparel andtextiles, plastics, handicrafts, chemicals and alliedproducts and leather and leather products.

(b) The existing 3 % EPCG Scheme has been considerablysimplified, to ease its usage by the exporters.

(c) To encourage value added manufacture export, aminimum 15 % value addition on imported inputsunder Advance Authorisation Scheme has beenstipulated.

(d) A number of products including automobiles andother engineering products have been included forincentives under Focus Product, and Market LinkedFocus Product Schemes.

(e) Steps to encourage Project Exports shall be taken.

SUPPORT TO STATUS HOLDERS

The Government recognized ‘Status Holders’contribute approx. 60% of India’s goods exports. Toincentivise and encourage the status holders, as wellas to encourage Technological upgradation of exportproduction, additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specifiedproduct groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition.

AGRICULTURE AND VILLAGE INDUSTRY

(a)Vishesh Krishi and Gram Udyog Yojana

(b) Capital goods imported under EPCG will be permittedto be installed anywhere in AEZ.

(c) Import of restricted items, such as panels, are allowedunder various export promotion schemes.

(d) Import of inputs such as pesticides are permittedunder Advance Authorisation for agro exports.

(e) New towns of export excellence with a thresholdlimit of Rs 150 crore shall be notified.

(f) Certain specified flowers, fruits and vegetables areentitled to a special duty credit scrip, in addition tothe normal benefit under VKGUY.

HANDLOOM(a) Specific funds are earmarked under MAI / MDA Scheme for promoting handloom exports.

(b) Duty free import entitlement of specified trimmings and

embellishments is 5 % of FOB value of exports during previous financial year.

c) Duty free import entitlement of hand knotted carpet samples is 1 % of FOB value of exports during previous financial year.

(d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted.

(e) New towns of export excellence with a threshold limit of Rs 150 crore shall be notified.

(f) Machinery and equipment for effluent treatment plants is exempt from customs duty.

HANDICRAFTS(a) Duty free import entitlement of tools, trimmings and embellishments is 5 % of FOB value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers.

(b) Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable.

(c) Specific funds are earmarked under MAI & MDA schemes for promoting Handicraft exports.

(d) CVD is exempted on duty free import of trimmings, embellishments and consumables.

(e) New towns of export excellence with a reduced threshold limit of Rs 150 crore shall be notified.

(f) Machinery and equipment for effluent treatment plants are exempt from customs duty.

(g) All handicraft exports would be treated as special focus products and entitled to higher incentives.

GEMS AND JEWELLRY(a) Import of gold of 8 k and above is allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content.

(b) Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of Consumables and Tools, for:

1.Jewellery made out of:(a)Precious metals (other than Gold & Platinum) – 2%(b) Gold and Platinum – 1%(c ) Rhodium finished Silver – 3%

2. Cut and Polished Diamonds – 1% (a) Duty free import entitlement of commercial samples shall be Rs. 300,000.(b) Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.(c) Import of Diamonds on consignment basis for Certification/ Grading & re-export by the authorized offices/agencies of Gemological Institute of America GIA) in India or other approved agencies will be permitted.(d) Personal carriage of Gems & Jewellery products in case of holding/participating in overseas exhibitions increased to US$ 5 million and to US$ 1 million in case of export promotion tours.(e) Extension in number of days for re-import of unsold items in case of participation in an exhibition in USA increased to 90 days.(f) In an endeavour to make India a diamond international trading hub, it is planned to establish “Diamond Bourse (s)”.

LEATHER AND FOOTWEAR(a) Duty free import entitlement of specified items is 3% of FOB value of

exports of leather garments during preceding financial year.(b) Duty free entitlement for import of trimmings, embellishments and

footwear components forfootwear (leather as well as synthetic), gloves, travel bags and handbags

is 3 % of FOB value of exports of previous financial year. Such entitlement shall alsocover packing material, such as printed and nonprinted shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear.

(c) Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty.

(d) Re-export of unsuitable imported materials such 12 as raw hides & skins and wet blue leathers is permitted.

(e) CVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No 21/2002 dated 01.03.2002.

(f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

(g) Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 50% of the applicable export duty.

MARINE SECTOR

(a) Imports for technological upgradation under EPCG in fisheries sector (except fishing trawlers, ships, boats and other similar items) exempted from maintaining average export obligation.

(b) Duty free import of specified specialised inputs / chemicals and flavouring oils is allowed to the extent of 1% of FOB value of preceding financial year’s export.

(c) To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fish for tuna fishing at Nil duty.

(d) A self removal procedure for clearance of seafood waste is applicable subject to prescribed wastage norms.

(e) Marine products are considered for VKGUYscheme.

ELECTRONICS AND IT HARDWARE MANUFACTURING INDUSTRIES

(a) Expeditious clearance of approvals required fromDGFT shall be ensured.

(b) Exporters /Associations would be entitled to utilizeMAI & MDA Schemes for promoting Electronicsand IT Hardware Manufacturing industry exports.

SPORTS GOODS AND TOYS(a)Duty free import of specified specialised inputs allowed to

the extent of 3 % of FOB value of preceding financial year’s export.

(b) Sports goods and toys shall be treated as a Priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI /MDA Scheme for promoting exports from this sector.

(c) Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT.

(d) Sports Goods and Toys are treated as special focus products and entitled to higher incentives.

India & Global Trade:India & Global Trade: India had a significant share in the

world trade at the time of independence. However, since then there was a secular decline in India’s share in the world exports till 1980. since from 1950 to 1980 the percentage declined from 2 to 0.4. it has, how ever improved to about 0.8 by 1997 and is expected to reach one percent by 2000.

India’s Global shareFactor India’s share (percentage)

Area 2.47

Arable land 11.24

Population 16.78

GNP 1.50

GNP at purchasing power parity

5.45

FDI 0.5

Merchandise exports 0.7

Merchandise imports 0.8

Service exports 1.2

Service imports 1.4

•The value of foreign trade of our country

has been rising From year to year. It rose

from

Rs. 30,553 cr during 1985 – 86 to Rs.

8,38,575 cr during 2004 – 05, Representing

an increase of six times.

•It is because of the high stakes involved

in foreign Trade that the government of

India has assumed Sweeping powers of

control over our exports & imports.

Cont………..

EXPORTS as a % of national income

Year In %

1960-61 6.8

1970-71 3.8

1980-81 5.4

1990-91 7.2

1996-97 9.6

1997-98 8.4

1998-99 8.0

1999-00 8.5

2000-01 8.8

2001-02 8.7

2002-03 9.0

The break-up of foreign trade in terms of exports & import

Year Export Import TVOT BOT

1995-96 106353 122678 229031 -16325

1996-97 85623 97111 182734 -1488

1997-98 126286 151553 277839 -25267

1998-99 101850 132447 234297 -25267

2002-03 255137 297206 552343 -42067

2003-04 291582 353976 645558 -62394

2004-05 356625 481950 838575 -125190

•Exports help to finance imports

•Export earnings helps service external debt

•Exports would make our economy highly vibrant

EXPORTS: 5 FASTEST GROWING SECTORS (INDIA’S TOP EXPORT MARKET)

ITEMS 2003-04($bn)

2004-05($bn)

(%)change

Petroleum crude & products

3.57 6.79 90.34

Software 13.30 17.9 34.00

Gems & jewellery

10.57 13.71 29.62

Machinery 2.78 3.49 25.82

Drugs 3.31 3.71 12.14

•Imports will increase and to finance them, we need higher exports earning

•It is not advisable to depend on external assistance to finance imports

•Debt – servicing burden is ever mounting, necessitating increased export earning

5 FASTEST GROWING EXPORT DESTINATION

COUNTRY 2003-04($bn)

2004-05($bn)

(%)change

Singapore 2.12 3.80 78.63

China 2.96 4.59 55.20

UAE 5.13 7.10 38.48

US 11.49 13.27 15.45

Hong kong 3.26 3.65 11.94

TOP FIVE FASTEST GROWING NATIONS:

1994-95($ bn ) 2004-2005 ($bn)

US 5.02 EU 17.25

JAPAN 2.03 US 13.26

GERMANY 1.75 UAE 7.09

UK 1.69 CHINA 4.58

RUSSIA 0.81 SINGAPORE 3.80

TOP 5 EXPORTS,THEN & NOW

1994-95 2004-05($bn)

Gems & jewellery

4.50 Software 17.20

Readymade garments

2.28 Engineering goods

14.58

Cotton yarn, fabrics,

made-ups

2.23 Gems & jewellery

13.70

Marine products

1.13 Chemicals& related

products

12.67

Leather 1.06 Textiles 12.01

•Shortage of supply hampers growth

•Quality of goods and service

•Efficient trade information is non-existence

•Lack of competitive advantage too impedes exports

•The value of imports has increased from rupees 608 cr in 1950-51 to rupees 353976 cr in 2003-04

•In relation to national income, the imports during the first 30 years of planning varied between 6.5% and 8.5% of GDP the variation being minimal

•Again since 1979-80 this percentage varied between 8 & 12 signifying that ratio to GDP has been fairly stable

Rank Name of Commodity

Apr 2006 - Feb 2007

Export Value of Goods

%Growth %Share

Value (INR in Crores) Value (INR in Crores)

Value (INR in Crores)

1 India Import Of –crude oils

236,601.84 34.47 32.10

2 India Import Of –electronic goods

65,281.46 25.32 8.86

3 India Import Of - GOLD

58,704.81 37.35 7.97

4 India Import Of machinery

56,216.24 43.37 7.63

5 India Import Of –pearls n jewel

30,061.51 -21.37 4.08

Top Import (Products)

6 India Import Of – IRON & STEEL

24,413.75

40.20 3.31

7. India Import Of - ORGANIC

CHEMICALS

22,405.24

18.93 3.04

8. India Import Of - COAL, COKE &

BRIQUITTES etc

18,363.64

19.77 2.49

9. India Import Of - OTHER

COMMODITIES

18,258.34

-22.47

2.48

10 India Import of- Wheat

1,417.61 - 0.19

Foreign Trade 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

Exports            

Rs in Crore 82674 (18.52)

106353 (28.64)

118817 (11.71)

130101 (9.49)

141604 (8.84)

162925(15.06)

US$ in Million 26330 (18.40)

31797 (20.76)

33470 (4.50)

35006 (4.60)

33659 (-3.84)

37599 (11.70)

Imports            

Rs in Crore  89971 (23.04)

122678 (36.35)

138920 (11.69)

154176 (10.98)

176099 (14.21)

204583 (16.17)

US$ inMillion

28654 (22.94)

36678 (28.0)

39133 (6.70)

41484 (6.00)

41858 (0.90)

47212 (12.79)

Forex ** Reserves

           

Rs in Crore* 66006 (39.58)

58446 (-11.45)

80368 (37.50)

102507 (27.54)

124412 (22.34)

152924(21.94)

US$ in Million 20809 (38.10)

17044 (-18.09)

22367 (31.23)

25975 (16.13)

29522 (13.65)

35058(18.75)

INDIA’S EXPORT-IMPORT STATISTICS

•1 crore = 10 million 

** Excluding US$ 2800 million of gold and US$ 2 million of Special Drawing Rights (SDRs) reserves as on November 24, 2000.

** Including US$ 5500 million deposit mobilized by the State Bank of India through India Millennium Deposit.

Figures in bracket indicate year-on-year difference

32.1

8.86

4.083.04 2.49

0

5

10

15

20

25

30

35

Petroleum Electronic Perals Organic Che coal, cokee

% of Share

Growth competitiveness

Govt Regulatory standard

Export promotion

Average tariff

Investment rates

Overall infrastructure

Technological sophistication

E- commerce

India 49 19 49 5 59 14 54 38 51

USA 1 25 5 26 15 41 7 1 1

Singapore 2 13 15 1 2 4 1 8 10

Finland 6 52 8 43 17 46 2 2 7

Canada 7 42 12 7 29 47 11 13 3

Hong Kong 8 2 25 45 1 11 8 18 20

UK 9 40 10 16 26 54 22 15 8

Switzerland 10 38 11 44 10 43 4 9 13

Indices of Global Competitiveness

Factor India’s share (percentage)

Area 2.47

Arable land 11.24

Population 16.78

GNP 1.50

GNP at purchasing power parity

5.45

FDI 0.5

Merchandise exports 0.7

Merchandise imports 0.8

Service exports 1.2

Service imports 1.4

India’s Global share

India’s RankFactor Rank Factor Rank

Population 2 Milk production 1

Area 7 Butter and ghee production

1

Arable land 2 Sugar production 2

Irrigation area 1 Merchandise exports 31

Tractors in use 2 Merchandise imports 26

Nitro fertiliser consumption 2 Service exports 22

Rice production 2 Service imports 19

Wheat production 2 GNP 12

Tobacco production 2 GNP at purchasing power parity

4

Tea production 1

India’s share of Developing Countries

Factor India’s share (performance)

Population 19.72

GNP 7.43

GNP at purchasing power parity

12.13

FDI 1.6

Merchandise exports 2.42

Merchandise imports 3.07

•The foreign trade (DEVELOPMENT AND REGULATION),ACT 1992 , empowers to regulate imports and augment exports

•The government announces its foreign trade policy once in 5 years popularly called EXIM POLICY

•The latest policy was announced in march 2007

SOURCE - Website: dgft.gov.in google.co.in