Import - Export

Policy of India
by Anul
Saurabh
Manandeep Singh
 Contents
• Introduction-Why do we need export, brief
history
• Exim policy ,objectives
• Export Promotion Measures
• Import Control in India
• Pre 90’s Exim Policy of India
• Post 90’s Exim Policy of India
• Final Announcement
 Why do we need export
• Export means trade across the political
boundaries of different nation. No Nation is
self sufficient and had all the goods that it
needs. This happens because of climatic
variation & unequal distribution of natural
resources. As a result, countries all over the
world have become interdependent, which
necessitated foreign trade. A developing
country like India with its fast growing
agricultural production to keep pace with the
population to keep pace with the population
growth and growing Industrial infrastructure
• needs high-import and this can be sustained only
with fast export growth. To meet the oil import
bill, export is unavoidable. Thus, it is evident that
export promotion continues to be a major thrust
area for the government. Several measures have
been under taken in the past for improving export
performance of the country. In India, Govt. has
come out from time to time with various policies
on foreign trade to promote export thereby
increasing the “Foreign Exchange Reserve”.
These policies are termed as “Exim Policy”
 Brief history
• Import export act was introduced by govt .
during second world war and it lasted for
around 45 yrs and in June 1992 this act was
superseded by the Foreign Trade
(Development & Regulation Act), 1992. .
The basic objective of this new act was to
give effect to the new liberalized export and
import policy of the Govt. till 1985 annual
policies were made but from 1985-92, three
yr policy was made and then 5 yr policy was
made coinciding with 5 yr plans 1992-97,
1997-02, 2002-07.
 What is Exim Policy?

• It contains policies in the sphere of Foreign

trade i.e. with respect to import & export
from the country and more especially
export promotion measures, policies and
procedure related there to.
• Export means selling abroad and import as
bringing into India, any goods and services
 Objective of Exim Policy
• Accelerating the country’s transition to a globally
oriented vibrant economy with a view to derive
maximum benefits from expanding global market
opportunities;
• Stimulating sustained economic growth
• Enhancing the technological strength and
efficiency
• Encouraging the attainment of internationally
accepted standards of quality
• Providing consumers with good quality products
and services at reasonable prices.
 EXPORT PROMOTION MEASURES

• Policy measures
• Institutional set up.
• Import Facilitation for Export Production.
• Cash subsidies.
• Fiscal Incentives.
• Foreign Exchange Facilities.
• Export incentives
• Export production units
 Import Facilitation for Export
Production
• Export Promotion Capital Goods Scheme
• Special Import Licenses
• Duty Free Licenses under Duty Exemption Scheme
• Duty free licenses are issued as :
• (1) Advance license
• (2) Advance Intermediate license.
• (3) Special Impress license.
• (4) License for jobbing, repairing etc. for re-export.
• (5) License under export production programmed.
• (6) Advance Release Order.
• (7) Back to Back Inland Letter of Credit.
 Export Incentives
• Duty Exemption
• Duty Drawback Scheme
• DFRC (Duty free replenishment certificate)
• DEPB( Duty entitlement pass book)
• Deemed Exports
 Export Production Units

• Export Oriented Unit (EOU)

• Special Economic Zones (SEZ)
• Software Technology Parks (STP)
• Electronic Hardware Technology Parks (EHTP)
 Cash subsidies
• Marketing development assistance
• Air freight subsidy
• Spices export promotion scheme
• Jute external marketing assistance
• Financial assistance scheme agriculture
&meat exports
• Financial assistance to marine products
exports
 Fiscal incentives
• Exemption from payment of central excise duty &
simplified procedure for clearance.
• Exemption from sales tax
• Exemptions & deductions under income tax
act,1961.
• Duty draw back Scheme (DDS)
• Cash Compensatory Support ( CCS )
• International Price Reimbursement Scheme
(IPRS)
 Import control regime
• 1956-57, restrictions on imports started as lot of imports
were there as such govt. even had to import food grains for
self fulfillment
• Imports were classified into
• Banned items ,Canalized items ,Restricted items, OGL
• In 1966 rupee was devalued by 36.5% By devaluation
govt expressed the hope that the devaluation would
lead to expansion in export earnings as Indian goods
will become cheaper in international market on the
other hands import would decline as price of
imported goods would increase.
• Because of a rigid itemization of permissible
imports, an element of inflexibility in the pattern
of utilization of imports was introduced. The
transferability of licenses among same and
different industries was not permissible. This gave
rise to an expanding black market in import
licenses. Therefore, the import allocation system
was so designed as to eliminate the possibility of
all competition, either domestic or foreign. The
Govt of India has liberalized the import regime
from time to time. At present, practically all
controls on import have been lifted. Under the new
EXIM policy.
Comparison of Pre 90’s & Post
90’s Exim Policy

Year Import Export Trade

(Cr.) (Cr.) Bal.(Cr.)
Excess of Import due to-
1948-51 650 647 -3 •Pent-up demand of war.
•Shortage of food & raw material due to
partition.
•Import of capital goods due to starting
of hydro-electric & other projects.
Trade deficit was largely due to
1951-56 730 622 -108 programmers of industrialization which
gathered momentum and pushed up the
imports of capital goods.

No improvement in exports.
Year Import Export Trade
(Cr.) (Cr.) Bal.(Cr.)
Excess of import due to setting of steel
1956-61 1080 613 -467 plants, heavy expansion & renovation on
railways & modernization of many
industries.
Export lower than occur in second plan
which shows that export promotion drive
did not materialize.
Excess of import due to-
1961-66 1224 747 -477 •Rapid industrialization needs capital
goods as raw material.
•Defense needs had increased due to
aggression by China & Pakistan.
•Need of food grains due to failure of
crops in 1965-66.
Year Import Export Trade
(Cr.) (Cr.) Bal.(Cr.)
Devaluation was resorted essentially-
1966-69 5775 3708 -2067 •To reduce volume of import.
(Annual- •To boost export.
•Create favorable balance of trade and
plans) balance of payment.

As a consequence of import restriction

1969-74 1972 1810 -162 policies with vigorous export promotion
measures ,during 1972-73 the country
had favorable balance of trade for first
time since independence.
But several international factors pushed
up the price of petroleum
product,steel,fertilizers etc.results low
magnitude of trade balance.
Year Import Export Trade
(Cr.) (Cr.) Bal.(Cr.)
Significant increase in export during
1974-79 5540 4730 -810 every year of this period. Export of
coffee,tea,cotton fabrics etc.recorded
substantial increase in this period.
But,Janta Government followed policy of
haphazard import liberalization results
decline trade balance from 1977-78.
Decline in POL imports was more than
1980-85 14,986 9051 -5935 by a big hike in non-POL imports as a
consequence of import liberalization.

Consequently, huge trade balance.

Year Import Export Trade
(Cr.) (Cr.) Bal.(Cr.)
Huge trade balance compelled the
1985-90 28,874 18,033 -10,841 government to approach the World
Bank/IMF for loan.
The government was also forced to
apply brakes on the licensing policy of
imports.

In 1990-91,push was given to export,

1990-92 45,522 38,300 -7222 but as a consequence of Gulf war
government failed to curb imports.

In1991-92, government introduced

number of measures in trade policy
allowing exim scripts, abolishing cash
compensatory support(CCS) schemes as
also a two-step devaluation of the rupee,
but fail to boost up export.
Year Import Export Trade
(Cr.) (Cr.) Bal.(Cr.)
1992-01 140740 118252 -22,488
In 1992-01,slow down in exports due to-
•Depressed nature of world markets.
•Saturation of developed countries market
for electronic goods which are dynamic
export sectors.
•Increased protectionism by industrialized
countries in area of textile and clothing.
•Increasing competition from China &
Taiwan.
•India underestimated the impact South-
East Asian crisis
•Non-Tariff barriers have been created by
developed counties to slow down Indian
exports.
•In 2000-01 export was largely due to
rupee depreciation along with further
trade liberalization, more openness to
foreign investment in EOU sectors like
IT.
Year Import Export Trade
(US (US Bal.(US
$million) $million) $million)
Rise in imports in 2002-03 was broadly
2002 –03 65422 52512 -12910 based on oil imports, food &allied
products(edible oil),capital goods.

2003-04 80177 64723 -15454 Exim policy 2003-04gave massive thrust

to exports by
•Duty free import facility for service
sector up to earning 10lakh foreign
exchange.
•Liberalization of Duty Exemption
scheme.
Besides, all these measures trade balance
in 2003-04 are high due to mainly on
imports of POL products more.
Currently, almost two-third of country
crude oil requirements are imported.
Besides import of POL, import of non
POL items shot up by 17% in2002-03 to
26.2%in 2003-04.
 Trade - On an All time High
 India’s total external trade in goods and services grew by
41.5% in H12005-06 to US $ 153 billion. This is expected to
Economy is go up to US $ 310 billion by the end of this year. This was just
more Open than over US $ 74 billion in 1994.
ever before  The trade to GDP ratio, calculated at current prices, has risen
to 29.36% in 2004-05 from 18.28% in 1993-94.

 Exports have grown to US $ 57.05 billion during April-

Strong Export November 2005-2006. They are expected to grow at 26%
Growth during the current year to US$ 100 billion.
 Service Exports grew by 71% in 2004-05. India's IT-ITES
Strong Service exports have shown robust growth and are expected to grow
Exports by 32% this year to US $ 23 billion.

Strong Imports  Non-oil imports grew at over 28% during April - September
growth 2005 led by demand for capital goods.

Source: Reserve Bank of India

Final Announcement by the Govt.
on some sectors…
• For Leather Industry -On the payment of
50% applicable export duty, Leather sector
shall be allowed re-export of unsold
imported raw hides and skins and semi
finished leather from public bonded ware
houses.
• For Pharma - Export Obligation Period for
advance authorizations issued increased from
existing 6 months to 36 months.
Contd…

• For handloom exports - The claims under

Focus Product Scheme, the requirement of "
Handloom mark" was required earlier. This
has been removed.
• Some others sectors also included like Tea
Export, Agro export, Marine sector, Gems
& jewellery sector etc.
 THANK YOU…
&
HAPPY DIWALI !!!