ANALYSING INDIAS LABILITY FOR A

FRAMEWORK IN TRADE
SUBMITTED TO Mr.Animesh Das, Assistant Professor

Damodaram Sanjivayya National Law University

Submitted by Rao Vishwaja

Roll number- 201285
Semester- VI

DECLARATION
I, Rao Vishwaja hereby declare that the contents of this project titled Analysing
Indias liability for a framework in trade submitted by me to Assistant
Professor, Mr Animesh Das is an original piece of work undertaken by me as a
student of Damodaram Sanjivayya National Law Univeristy.

Vishwaja Rao
SemesterVI, 201285

ACKNOWLEDGMENT

I would like to thank my Assistant Professor Mr.Animesh Das for all his help and guidance
provided to me for the completion of my project. A work of this nature could not have been
possible without his encouragement and support.

OBJECTIVE
To analyse Indias existing legislations and identify its liabilities and suggest
a new framework for trade policy in India
QUESTION
Whether Indias Existing trade frame work needs to be done away with
HYPOTHESIS
Indias framework in trade has several liabilities due to its existence and
strategies to achieve exisiting objectives and a pathway for new framework is
recommended.
RESEARCH METHODOLOGY
I have used doctrinal method of research using secondary resources- books&
case laws.

TABLE OF CONTENTS

1. Declaration

11. Acknowledgement

111. Research Methodology

1V. Bibliography

20

Contents
INTRODUCTION...................................................................................................... 6
OBJECTIVES OF INDIAS FOREIGN TRADE POLICY....................................................8
SALIENT FEATURES OF INDIAS FOREIGN TRADE POLICY.......................................9
Foreign Trade (Development and Regulation) Act,1992.......................................11
FOREIGN EXCHANGE MANAGEMENT ACT, 1999...................................................13
CENTRAL EXCISE DUTIES DRAWBACKS RULES, 1995...........................................14
INDIA AND CHINAS TRADE POLICY COMPARISON................................................15
CONCLUSION....................................................................................................... 17

INTRODUCTION

Trade involves the transfer of the ownership of goods or services from one person or entity to
another in exchange for other goods or services or for money1. Foreign trade is exchange of
capital, goods, and services across international borders or territories 2. In most countries, it
represents a significant share of gross domestic product (GDP). While international trade has
been present throughout much of history, its economic, social, and political importance has
been on the rise in recent centuries.
Laws relating to regulation of trade are termed as trade policies. Foreign trade in India began
in the period of the latter half of the 19th century. The period 1900-1914 saw development in
India's foreign trade. The augment in the production of crops as oilseeds, cotton, jute and tea
was mainly due to a thriving export trade. In the First World War, India's foreign trade
decelerated. After post-war period, India's exports increased because demand for raw
materials was increased in all over world and there were elimination of war time restrictions.
The imports also increased to satisfy the restricted demand. Records indicated that India's
foreign trade was rigorously affected by the great depression of 1930s because of decrement
in commodity prices, decline in consumer's purchasing power and unfair trade policies
adopted by the colonial government. During the Second World War, India accomplished huge
export surplus and accumulated substantial amount of real balances. There was a huge
pressure of restricted demand in India during the Second World War. The import requirements
were outsized and export surpluses were lesser at the end of the war. Before independence,
India's foreign trade was associated with a colonial and agricultural economy. Exports
consisted primarily of raw materials and plantation crops, while imports composed of light
consumer merchandise and other manufactures. The structure of India's foreign trade
reflected the organized utilization of the country by the foreign leaders. The raw materials
were exported from India and finished products imported from the U.K. The production of
final products were discouraged. For instance, cotton textiles, which were India's exports,
accounted for the largest share of its imports during the British period. This resulted in the
decline of Indian industries. Since last six decades, India's foreign trade has changed in terms
of composition of commodities. The exports included array of conventional and nontraditional products while imports mostly consist of capital goods, petroleum products, raw
materials, intermediates and chemicals to meet the ever increasing industrial demands. The
export trade during 1950-1960 was noticeable by two main trends. First, among commodities
which were directly based on agricultural production such as tea, cotton textiles, jute
manufactures, hides and skins, spices and tobacco exports did not increase on the whole, and
secondly, there was a significant boost in the exports of raw manufactures such as iron ore. In
the period of 1950 to 1951, main products dominated the Indian export sector. These included
cashew kernels, black pepper, tea, coal, mica, manganese ore, raw and tanned hides and
skins, vegetable oils, raw cotton, and raw wool. These products comprised of 34 per cent of
the total exports3. In the period of 1950s there were balance of payments crunch. The export
proceeds were not enough to fulfil the emerging import demand. The turn down in agriculture
1 Oxford dictionary
2 supra

production and growing pace of development activity added pressure. The external factors
such as the closure of Suez Canal created tension on the domestic financial system. The
critical problem at that moment was that of foreign exchange scarcity. The Second Five Year
Plan with its emphasis on the development of industry, mining and transport had a large
foreign exchange factor. This tension on the balance of payments required the stiffening of
import strategy at a later stage.
Foreign Trade is the important factor in economic development in any nation. Foreign trade
in India comprises of all imports and exports to and from India. The Ministry of Commerce
and Industry at the level of Central Government has responsibility to manage such operations.
The domestic production reveals on exports and imports of the country. The production
consecutively depends on endowment of factor availability. This leads to relative advantage
of the financial system. Currently, International trade is a crucial part of development strategy
and it can be an effective mechanism of financial growth, job opportunities and poverty
reduction in an economy. According to Traditional Pattern of development, resources are
transferred form the agricultural to the manufacturing sector and then into services.

3 FOREIGN TRADE, Export-Import policy and trade Agreements by Vibha Mathur,

New Century Publications, 2012. P236-237

OBJECTIVES OF INDIAS FOREIGN TRADE POLICY

Trade propels economic growth and national development. The primary purpose is not the
mere earning of FOREIGN EXCHANGE, but the stimulation of greater economic activity.
The foreign trade policy of India is based on two major objectives, they are as follows:
1) To double the percentage share of global merchandise trade within the next five years.
2) To act as an effective instrument of economic growth by giving a thrust to employment
generation.4
Agriculture and industry has shown remarkable resilience and dynamism in contributing to a
healthy growth in exports. In the last five years the exports witnessed robust growth to reach
a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global
merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our
share of global commercial services export was 1.4% in 2003 it rose to 2.8% in 2008. Indias
total share in goods and services trade was 0.92% in 2003 it increased to 1.64% in 2008. On
the employment front, studies have suggested that nearly 14 million jobs were created
directly or indirectly as a result of augmented exports in the last five years.
The short term objective of the policy is to arrest and reverse the declining trend of exports
and to provide additional support especially to those sectors which have been hit badly by
recession in the developed world. The policy is empowered with objective of achieving an
annual export growth of 15% with an annual export target of US$ 200 billion by March 2011.
In the remaining three years of this Foreign Trade Policy i.e. upto 2014, the country should be
able to come back on the high export growth path of around 25% per annum. By 2014, policy
expects to double Indias exports of goods and services.
The long term objective of policy for the Government is to double Indias share in global
trade by 2020. In order to meet these objectives, the Government would follow a mix of
policy measures including fiscal incentives, institutional changes, procedural rationalization,
and enhanced market access across the world and diversification of export markets.
Improvement in infrastructure related to exports; bringing down transaction costs, and
providing full refund of all indirect taxes and levies, would be the three pillars, which will
support us to achieve this target. Endeavour will be made to see that the Goods and Services
Tax rebates all indirect taxes and levies on exports.5

4 Foreign Trade Policy and Trends in India by Vibha Mathur, Neha Publishers and
Distributors,2009. P126-128.
5 Excerpt taken from dgft.gov.in last retrieved on 22 nd march 2015

SALIENT FEATURES OF INDIAS FOREIGN TRADE

POLICY
1) Increasing Share of Gross National Income:
Indias foreign trade plays an important role in the Gross National Income.
In 1990-91, share of Indias foreign trade (import export) in net national income was 17 per
cent which in 2006-07 rose to 25 per cent. In 2006-07 exports and imports as percentage of
GDP were 14.0 per cent and 21 per cent respectively.
2) Less Percentage of World Trade:
Share of Indias foreign trade in world trade has been declining. In 1950-51, Indias share in
total import trade of the world was 1.8 per cent and in export trade it was 2 per cent.
According to World Trade Statistics, Indias share in world trade has gone-up from 1.4 per
cent in 2004 to 1.5 per cent in 2006 and estimated to be 2 per cent in 2009.
3) Oceanic Trade:
Most of Indias trade is by sea, India has very little trade relations with its neighing countries
like Nepal, Afghanistan, Myanmar, Sri Lanka, etc. Thus, 68 per cent of Indias trade is
oceanic trade: Share of these neighing countries in our export trade was 21.8 per cent and in
import trade 19.1 per cent.
4) Dependence on a Few Ports: For its foreign trade, India depends mostly on Mumbai,
Kolkata, and Chennai ports. These ports are therefore, over-crowded. Recently, India has
developed Kandla, Cochin, and Visakhapatnam ports to lessen the burden on former ports.
5) Increase in Volume and Value of Trade:
Since 1990-91, volume and value of Indias foreign trade has gone up. India now exports and
imports goods which are several times more in value and volume. In 1990-91, total value of
Indias foreign trade was Rs 75,751 and in 2008-09, it rose to Rs 22, 15,191 crore. Of it,
value of exports was Rs 8, 40,755 crore and that of imports was Rs 13, 74,436 crore.
6) Change in the Composition of Exports:
Since independence, composition of export trade of India has undergone a change. Prior to
independence, India used to export agricultural products and raw materials, like jute, cotton,
tea, oil seeds, leather, food grains, cashew nuts, and mineral products. It also exported
manufactured goods. But now in its export kitty are included mostly manufactured items like,

machines, ready-made garments, gems and jewellery, tea, jute manufactures, Cashew
Kernels, electronic goods, especially hardwares and softwares which occupy prime place in
exports.

7) Change in the Composition of Imports:

Since Independence, composition of Indias import trade has also witnessed a sea change.
Prior to Independence, India used to import mostly consumption goods like medicines, cloth,
motor vehicles, electrical goods, iron, steel, etc. Now it has been importing mostly petrol and
petroleum products, machines, chemicals-, fertilizers, oil seeds, raw materials, steel, edible
oils, etc.
8) Direction of Foreign Trade:
It refers to the countries with whom a country trades. Main changes in the direction of foreign
trade are as under:
In the year 1990, in exports the maximum share, i.e., 17.9 per cent was that of Eastern
Europe, i.e., Romania, East Germany, and U.S.S.R., etc. In import trade, maximum share, i.e.,
16.5 per cent was that of OPEC, i.e., Iran, Iraq, Saudi Arabia, Kuwait, etc. In 2008-09, the
largest share in Indias foreign trade (both imports and exports) was that of European Union
(EU), i.e., Germany, Belgium, France, U.K., etc., and developing countries. Now, U.A.E.,
China and U.S.A. have occupied important place in Indias foreign trade. The importance of
England, Russia, etc., has declined.
9) Mounting Deficit in Balance of Trade:
Since 1950-51, Indias balance of trade has been continuously adverse except for two years,
viz., 1972-73 and 1976-77, besides it has been mounting year after year. In 1950-51 balance
of trade was adverse to the tune of Rs 2 crore and by 1990-1991 it rose to Rs 16,933 crore.
After the policy of liberalization, the country has witnessed a rapid increase in it. In 19992000 it rose to Rs 77,359crorc and in 2008-09 it amounted to 5, 33,680 crore. Fast rise in the
value of imports and slow rise in the value of exports accounted for this tremendous rise in
balance of trade deficit.
10) Trend towards Globalization:
Globalization and diversification mark the latest trend of Indias foreign trade. Indias foreign
trade is no longer confined or a few goods or a few countries. Presently, India exports 7,500
items to about 190 countries and in its import- kitty there are 6,000 items from 140 countries.
It unveiled the changing pattern of Indias foreign trade.
11) Changing Role of Public Sector:

Since 1991 the role of public sector in Indias foreign trade has undergone a change. Prior to
it, State Trading Corporation (STC), Minerals and Metals Trading Corporation (MMTC),
Handicraft and Handloom Corporation, Steel Authority of India Ltd. (SAIL), Hindustan
Machine Tools (HMT), Bharat Heavy Electrical Limited (BHEL), etc., used to play
significant role in Indias foreign trade. As a result of implementation of the policy of
liberalization, the importance of all these public sector enterprises has diminished.6

INDIAS FOREIGN TRADE POLICY

Foreign Trade (Development and Regulation)
Act,1992
In India, the main legislation concerning foreign trade is the Foreign Trade (Development and
Regulation) Act, 1992. The Act provides for the development and regulation of foreign trade
by facilitating imports into, and augmenting exports from, India and for matters connected
therewith or incidental thereto. As per the provisions of the Act, the Government:(i) may make provisions for facilitating and controlling foreign trade; (ii) may prohibit,
restrict and regulate exports and imports, in all or specified cases as well as subject them to
exemptions; (iii) is authorised to formulate and announce an export and import policy and
also amend the same from time to time, by notification in the Official Gazette; (iv) is also
authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act,
including formulation and implementation of the export-import policy.
Accordingly, the Ministry of Commerce and Industry has been set up as the most important
organ concerned with the promotion and regulation of foreign trade in India. In exercise of
the powers conferred by the Act, the Ministry notifies a trade policy on a regular basis with
certain underlined objectives. The earlier trade policies were based on the objectives of selfreliance and self-sufficiency. While, the later policies were driven by factors like export led
growth, improving efficiency and competitiveness of the Indian industries, etc.
With economic reforms, globalisation of the Indian economy has been the guiding factor in
formulating the trade policies. The reform measures introduced in the subsequent policies
have focused on liberalization, openness and transparency. They have provided an export
friendly environment by simplifying the procedures for trade facilitation. The announcement
of a new Foreign Trade Policy for a five year period of 2004-09, replacing the hitherto
nomenclature of EXIM Policy by Foreign Trade Policy (FTP) is another step in this direction.
It takes an integrated view of the overall development of Indias foreign trade and provides a
roadmap for the development of this sector. A vigorous export-led growth strategy of
doubling Indias share in global merchandise trade (in the next five years), with a focus on
the sectors having prospects for export expansion and potential for employment generation,
constitute the main plank of the policy. All such measures are expected to enhance India's
6 Excerpt taken from www.dgft.gov.in. retrieved on 22nd march 2015

international competitiveness and aid in further increasing the acceptability of Indian exports.
The policy sets out the core objectives, identifies key strategies, spells out focus initiatives,
outlines export incentives, and also addresses issues concerning institutional support
including simplification of procedures relating to export activities.7
The key strategies for achieving its objectives include:1. Unshackling of controls and creating an atmosphere of trust and transparency;
2. Simplifying procedures and bringing down transaction costs;
3. Neutralizing incidence of all levies on inputs used in export products;

4. Facilitating development of India as a global hub for manufacturing, trading and

services.
5. Identifying and nurturing special focus areas to generate additional employment
opportunities, particularly in semi-urban and rural areas.
6. Facilitating technological and infrastructural upgradation of the Indian economy,
especially through import of capital goods and equipment
7. Avoiding inverted duty structure and ensuring that domestic sectors are not
disadvantaged in trade agreements.
8. Upgrading the infrastructure network related to the entire foreign trade chain to
international standards.
9. Revitalizing the Board of Trade by redefining its role and inducting into it experts on
trade policy.
10. Activating Indian Embassies as key players in the export strategy.

Salient features
In India, exports and imports are regulated by the Foreign Trade (Development and
Regulation) Act, 1992, which replaced the Imports and Exports(Control) Act,1947, and gave
the Government of India enormous powers to control it. The salient features of the Act are as
follows:1. It has empowered the Central Government to make provisions for development and
regulation of foreign trade by facilitating imports into, and augmenting exports from
India and for all matters connected therewith or incidental thereto.
2. The Central Government can prohibit, restrict and regulate exports and imports, in all
or specified cases as well as subject them to exemptions.
3. It authorizes the Central Government to formulate and announce an Export and
Import (EXIM) Policy and also amend the same from time to time, by notification in
the Official Gazette.

7 3.Foreign Trade Policy by R.K.Jain, Centax Publications,2014. P 99-112

4. It provides for the appointment of a Director General of Foreign Trade by the Central
Government for the purpose of the Act. He shall advise Central Government in
formulating export and import policy and implementing the policy.
5. Under the Act, every importer and exporter must obtain a 'Importer Exporter Code
Number' (IEC) from Director General of Foreign Trade or from the officer so
authorised.
6. The Director General or any other officer so authorised can suspend or cancel a
licence issued for export or import of goods in accordance with the Act. But he does it
after giving the licence holder a reasonable opportunity of being heard.
7. Besides the Foreign Trade (Development and Regulation) Act, there are some other
laws which control the export and import of goods. These include:a) Tea Act,1953
b) Coffee Act, 1942
c) The Rubber Act, 1947
d) The Marine Products Export Development Authority Act, 1972
e) The Enemy Property Act, 1968
f) The Export (Quality Control and Inspection) Act, 1963
g) The Tobacco Board Act, 19758

FOREIGN EXCHANGE MANAGEMENT ACT,

1999
The FOREIGN EXCHANGE Management Act, 1999 (FEMA) is an Act of the Parliament of
India "to consolidate and amend the law relating to foreign exchange with the objective of
facilitating external trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India".9
Salient Features1. Activities such as payments made to any person outside India or receipts from them,
along with the deals in foreign exchange and foreign security is restricted. It is FEMA
that gives the central government the power to impose the restrictions.
2. Restrictions are imposed on residents of India who carry out transactions in foreign
exchange, foreign security or who own or hold immovable property abroad.
3. Without general or specific permission of the MA restricts the transactions involving
foreign exchange or foreign security and payments from outside the country to India
the transactions should be made only through an authorised person.
4. Deals in foreign exchange under the current account by an authorised person can be
restricted by the Central Government, based on public interest generally.
5. Although selling or drawing of foreign exchange is done through an authorised
person, the RBI is empowered by this Act to subject the capital account transactions
to a number of restrictions.
8 Excerpt taken from www.dgft.gov.in retrieved on 20th march 2015
9 Excerpt taken from fema.rbi.org.in last retrieved on 22 nd march 2015

6. Residents of India will be permitted to carry out transactions in foreign exchange,

foreign security or to own or hold immovable property abroad if the currency, security
or property was owned or acquired when he/she was living outside India, or when it
was inherited by him/her from someone living outside India.10
7. Exporters are needed to furnish their export details to RBI. To ensure that the
transactions are carried out properly, RBI may ask the exporters to comply to its
necessary requirements.

CENTRAL EXCISE DUTIES DRAWBACKS RULES,

1995
Under Duty Drawback Scheme relief of Customs and Central Excise Duties suffered on the
inputs used in the manufacture of export product is allowed to Exporters. The admissible duty
drawback amount is paid to exporters by depositing it into their nominated bank account.
Section 75 of the Customs Act, 1962 and Section 37 of the Central Excise Act, 1944,
empower the Central Government to grant such duty drawback. Customs and Central Excise
Duties Drawback Rules, 1995 have been framed outlining the procedure to be followed for
the purpose of grant of duty drawback (for both kinds of duties suffered) by the Customs
Authorities processing export documentation.
Under Duty Drawback Scheme, an exporter can opt for either All Industry Rate (AIR) of
Duty Drawback Scheme or brand rate of Duty Drawback Scheme. Major portion of Duty
Drawback is paid through AIR duty Duty Drawback Scheme which essentially attempts to
compensate exporters of various export commodity for average incidence of customs and
Central Excise duties suffered on the inputs used in their manufacture. Brand rate of duty
drawback is granted in terms of rules 6 & 7 of Customs and Central Excise Duties Drawback
Rules, 1995 in cases where the export product does not have any AIR or duty drawback rate,
or where the AIR duty drawback rate notified is considered by the exporter insufficient to
compensate for the Customs/Central Excise duties suffered on inputs used in the manufacture
of export products. For goods having an AIR the brand rate facility to particular exporters is
available only if it is established that the compensation by AIR is less than 80% of the actual
duties suffered in the manufacture of the export goods.
Duty Drawback facilities on re-export of duty paid goods is also available in terms of
Section 74 of Customs Act, 1962. Under this Scheme part of the customs duty paid at the
time of import is remitted on re-export of the goods subject to identification and prescribed
procedure being followed.
11

10 Foreign Trade Policy Input-Output Norms by R.K.Jain, Centax

publications,2013. P156-157
11 Excerpt taken from www.cbec.gov.in retrieved on 20th march 2015

INDIA AND CHINAS TRADE POLICY COMPARISON

It may be useful to make Indias trade policy comparison with China because both the
countries are of comparable sizes and both have a history of inward-looking trade policies.
Further, Chinas selective liberalization amounted to a release from a command economy,
while Indias reform occurs in the context of a controlled economy. Moreover, Chinas trade
is characterized by a high fraction of re-exports, in particular via Hong Kong, so that trade
volume measures may not capture Chinas true level of openness. Despite these drawbacks,
Indias trade policy regime with Chinas yields useful policy lessons. The reduction in
average tariffs is a general phenomenon in both India and China. In India, the biggest
reduction occurred in the immediate aftermath of the 1991 BOP crises and trend towards
reduction in average tariffs was reversed in 1998. Indian tariffs increased slightly since then,
as the result of conversion of non-tariff barriers to tariff barriers, in line with the Article XI of
GATT. Indias average tariff in 1999, 32.5 per cent (against Chinas 16.3 per cent in 2000)
and 28.3 percent in 2004 (as against Chinas 9.8 per cent in 2004), remained higher than
Chinas tariff.
A simple un weighted tariff, suggests that India is much more restrictive to trade as compared
to China. Of course, simple consideration of un weighted average tariffs is not enough to
characterize Indias trade policy. tariff rates, therefore, goes some way towards reducing the
peak rates of effective protection. Part of Indias trade liberalization has consisted of a
reduction in the dispersion of tariff rates. Another way to assess the magnitude of tariffs,
weighted by the volume of imports, is to examine the ratio of import tax revenue to total
imports. This may provide a less accurate picture of the state of current policy, since the
figures do not refer to statutory rates. But they may provide another notion of the degree of
openness of trade regime, perhaps closer to the actually enforced average tariff rate. For both
the countries,the ratio has fallen over time. Indias import duties to total imports is much
greater than that of Chinas (21.67 per cent for India versus 2.76 per cent for China in
1998).12
The tariff rates in India since 1999 reveal a tendency for average tariffs to rise. This is
particularly pronounced for primary products, but holds also for manufactured products. This
is largely the result of the conversion of quantitative restrictions to tariff barriers, required
because of GATTs Article XI. Higher tariffs substituting for phased-out QRs were possible
in the context of high negotiated tariff bound rates under theUruguay Round agreement.Many
trade defensive measures were put in According to the WTOs Trade Policy Review of India
in April 1998, under the Uruguay Round, India has bound 67 percent of all its tariff lines,
whereas prior to that only 6% of tariff lines were bound. increase use of the anti-dumping
12 Foreign Trade Policy Input-Output Norms by R.K.Jain, Centax publications,2013
p 133-152

measures, has moved india to the most active user of anti dumping meausres. In contrast,
China has initiated a few antidumping measures since 199516. It has however, been the target
of these measures17. In fact, roughly, 20 per cent of Indias antidumping measures were
directed towards China; by far China has become Indias main target. Perhaps because of the
increase in Indias use of anti-dumping measures, she has herself become the target of such
measures Antidumping, thus, appears to be a prime policy substitute used by India to These
measures comprise all quantitative restrictions (prohibitions, quotas, nonautomatic licensing,
VERs and MFA), price control measures (minimum, reference orbasic import price systems,
price surveillance and voluntary export price restraints), additional customs formalities and
other entry control measures, local content requirements, but excludes Para-tariff measures,
automatic licensing and import surveillance, advance payment of duties and import deposits
and anti-dumping and countervailing actions.

CONCLUSION
The objective of the Foreign Trade Policy is to twofold India percentage share of global
merchandise trade and to act as an effectual instrument of economic growth by giving a thrust
to employment generation, especially in semi-urban and rural areas. The growth performance
of exports has been a result of watchful effort of the Government to lessen transaction costs
and assist trade. The guidelines of the Foreign Trade Policy (2004-09) for a five year period
clearly articulate objectives, strategies and policy initiatives that has been involved in putting
exports on a higher growth line.
There are numerous challenges and issues in foreign trade. These include burden of export
promotion schemes, danger of circular trading, and risk of importing outdated machinery.
Sometimes policy fails to take a holistic view of trade issues. Other issue is relative
importance of the home market, the nature or the degree of State intervention and
recessionary conditions in the global market. India's exports have suffered due to structural
constraints operating both on the demand and supply side. On the demand side exports have
continued to undergone the problems of adverse world trading environment, protectionist
sentiments in the developed countries in the guise of technical standards, environmental and
social concerns and tariff differentials in imports by the developed countries. At the supply
end, the factors that have constrained exports from India include infrastructure constraints,
high transaction costs, inflexibilities in labour laws, quality problems, constraints in attracting
FDI in the export sector,etc.
It is summarized that foreign trade has significant function in the fiscal development of any
nation. India has made strong foreign trade policies and reformed these from time to time
with the process of globalisation and liberalization. Since 1991, India's foreign trade
considerably transformed. India's major exports include manufacturing and engineering
goods. India has good trading relations with all developed countries in the world. More than
fifty percent of India's total export trade is with Asia and ASEAN region and about sixty
percent of India's total imports is with the same countries. India's wealth previously was
agricultural economy. India's major requirement use to be food grains and other goods in
import with fast industrialization, the composition of India's imports goods changed and
needed chemicals, fertilizers and machinery which were required to meet the developmental
requirements of country. In the composition of export; country sells agricultural products
such as tea, spices, and other raw materials. However, with the industrialization of the

financial system, compositions of exports changed. Currently, India exports products such as
machinery chemicals and marine products. This may enhance the fiscal condition of India.

BIBLIOGRAPHY
The information presented in this project has been collected from the following textual
sources1. Mathur Vibha, FOREIGN TRADE, Export-Import policy and trade Agreements , New
Century Publications, 3RD edition ,2012
2. Mathur Vibha ,Foreign Trade Policy and Trends in India , Neha Publishers and
Distributors,2nd Edition, 2009
3. Jain R.K, Foreign Trade Policy, Centax Publications, 5th Edition,2014
4. Jain R.K, Foreign Trade Policy Input-Output Norms, Centax publications, 2ND
edition, 2013
The information presented in this project has been taken from the following web sources1.
2.
3.
4.

www.worldbank.org
www.nbaindia.org
www.dgft.gov.in
www.commerce.nic.in

000