TRADE: Trade is not an end in itself, but a way to economic growth and national development.

The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity.

As its name implies, foreign trade is the exchange of products, services, and money across national borders; essentially trade between countries. When consumers in the U.S. purchase Swiss-made watches, Chinese-made toys and electronics, and Japanesemanufactured automobiles, they experience the end result of international trade

It is a collection of rules and regulations relating to exports and imports in a country.

The purpose of the FTP is to help a nations international trade run more smoothly by setting clear standards and goals which can be understood by potential trading countries.

There are a number of issues with imports and exports that must be taken into consideration when conducting foreign trade.

For example, some countries have industries they may want to protect. These industries may be in competition with foreign companies for the opportunity to sell products domestically.
To protect domestic trade, countries may institute tariffs, which are taxes on certain foreign goods.

The Union Commerce Ministry, Government of India announces the Foreign Trade Policy every five years. The policy is updated every year The latest FTP for the period 2009-14 was announced on 28th August 2009.

To increase exports To provide additional support to the sectors which have been hit by recession To double Indias exports by 2014 To double Indias share in global trade by 2020

Burden of export promotion schemes Risk of importing outdated machinery Policy fails to take a holistic view of trade issues. Relative industry of the home market The nature or degree of state intervention Recessionary conditions in the global market.

Export Target : $ 200 Billion for 2010-11 Export Growth Target : 15% for next two years and 25% thereafter.

The EPCG (Export Promotion of Capital Goods) Scheme has been relaxed in the new FTP

To aid Technological Upgradation of Export Sector, EPCG Scheme at Zero duty has been introduced.
Export obligation on import of spares, moulds etc, under EPCG Scheme has been reduced by 50%.

DEPB stands for Duty Entitlement Pass Book. It is an export incentive scheme

It extended beyond 31-12-2009 till 31.12.2010 in the latest FTP

1.

Higher Support for Market Development Product Diversification Technological Upgradation

2. 3.

4. 5. 6. 7.

New Towns of Export Excellence

Status Holders
Marine Sector Gems and Jewellery Sector

8. 9.

Agriculture Sector

Leather Sector

10. Tea 11. Pharmaceutical

Sector

12. Handloom

Sector

13. Encouragement

manufacturing

to value added

14. Duty

Entitlement Passbook (DEPB)

15. Flexibility

to Exporters of Procedures

16. Simplification 17. Reduction

of Transaction Costs if Trade Remedy

18. Directorate

Measures

A five-year foreign trade policy regime was announced by the commerce and industry minister, Mr. Kamal Nath in the year 2004. It stated that, "For India to become a major player in world trade ...we have also to facilitate those imports which are required to stimulate our economy."

Our 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. On the employment front, studies have suggested that nearly 14 million jobs as a result of augmented exports in the last five years.

The earlier trade policies were based on the objectives of self-reliance and selfsufficiency. While, the later policies were driven by factors like export led growth, improving efficiency and competitiveness of the Indian industries, etc.

Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. India began to cautiously reform in the 1990s, liberalizing only under conditions of extreme necessity.

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. Since that time, trade reforms have produced remarkable results.

This 2009 Foreign Trade Policy comes at a challenging time as the world is facing unprecedented economic slowdown. But if the industry and government work in tandem we will be able to ensure that the Indian exports become globally competitive and we will able to achieve the target which we have set for ourselves.