foreign trade policy in india
DESCRIPTION
It introduces various policies under FTP 2009-14. It also includes the role of EXIM (Export Import Bank) in foreign trade. It introduces the concept of Special Economic Zones. Changing trends in foreign trade in India are also shown in the presentation in the form of graphs and tables.TRANSCRIPT
FOREIGN TRADE POLICY IN INDIA
PRESENTED BY-
RAJNI GUPTA
INTRODUCTION
Trade between two or more nations is called foreign trade or international trade
Foreign trade is also known as external trade.
Foreign trade transactions are classified under three categories:
Import Trade Export Trade Net Exports
FOREIGN TRADE POLICY
Long term objective of the FTP is to promote exports and increase India’s competitiveness globally, leading to employment generation particularly in the labor-intensive sectors
Objective common to both the old and new policies is to double India’s exports within 5 years
HISTORY
The Government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 27th August 2009 for the period 2009-2014
Earlier this policy known as Export Import (EXIM) Policy.
Union Commerce Ministry, GOI announces integrated FTP every five year.
The Export Import Policy (EXIM Policy) or Foreign Trade Policy is updated every year on the 31st of March and the modifications, improvements and new schemes becomes effective from April month of each year
WHERE DOES INDIA STAND GLOBALLY?
On a per capita income basis, India ranked 140th by nominal GDP and 129th by GDP (PPP) in 2011.
India is the nineteenth largest exporter and tenth largest importer in the world.
Economic growth rate stood at around 6.5% for the 2011–12 fiscal year.
Country Exports Imports GDP Trade as % of GDP(US$ bn.) (US$ bn.) (US$ bn.)
Korea 197.6 175.5 605.0 61.7
China 438.3 393.6 1446.9 57.5
Mexico 165.4 171.0 626.1 53.7
Russia 135.9 75.4 433.5 48.7
South Africa 38.7 35.0 160.1 46.0
Argentina 29.4 13.1 129.7 32.8
Brazil 73.1 48.3 492.1 24.7India 57.0 74.3 588.8 22.3
Source: Economist Intelligence Unit
Foreign Trade Policy 2009-14
Short Term Objectives: arrest and reverse the declining trend of exports. provide support to those sectors which have been hit
badly by recession.
Medium term Policy Objectives : achieve an Annual Export growth of 15% by March
2013. achieve Annual Export growth of around 25% by 2014.
Long Term Objective : doubling India’s share in Global Trade by 2020.
ANNOUNCEMENTS FOR FPS, FMS, MLFPS
26 New markets added under this scheme Incentives under FMS raised from 2.5% to 3% Incentives available under FPS raised from
1.25% to 2% MLFPS expanded by inclusion of products like
pharmaceuticals , textile fabrics, rubber products, glass products, auto components , etc
FOREIGN TRADE POLICY 2009-14 HIGHLIGHTS
TECHNOLOGICAL UPGRADATION EPCG Scheme at zero duty has been introduced Jaipur , Srinagar – “Town of Export Excellence
for Handicraft” Kanpur, Dewas and Ambur- “Town Of Excellence for Leather
products” Malihabad- “Town Of Excellence for Horticulture”
E.P.C.G. SCHEME RELAXATIONS More flexible No restriction on second hand imported goods
AGRICULTURAL SECTOR a single window system to facilitate export of perishable
agricultural produce has been introduced.
GEMS ANS JEWELLERY planned to establish “Diamond Bourses” import of cut & polished diamonds on consignment
basis of personal carriage upto US $ 5 million value units
in case of participation in overseas exhibition
LEATHER SECTOR re-port of unsold imported rawhides and skins and semi
finished leather Enhancement of FPS rate to 2 %
STATUS HOLDERS additional Duty Credit Script to Status holder @1% FOB
value of past exports Transferability for the Duty Credit scripts being issued to
Status holder.
STATUS HOLDER EXPORT PERFORMANCE(F.O.B. BASIS)
1 star house 15 crores
2 star house 100 crores
3 star house 500 crores
4 star house 1,500 crores
5 star house 5,000 crores
AGRICULTURE SECTOR To reduce transaction and handling cost, a
single window system to facilitate export of perishable agricultural produce has been introduced.
E.O.U. allowed to sell in DTA up to a limit of 90% finished goods for consolidation along with
manufactured goods CENVAT credit facility
D.E.P.B. factoring of custom duty component on Flexibility provided to exporters. Simplification of procedures. TEA Minimum value addition for export
reduced from 100% to50% DTA sale limit by EOU units increased to
50%
PHARMACEUTICALS SECTOR Export obligation period increased to 36
months. extensively covered under MLFPS
for countries in Africa & Latin America -some countries in Oceania
HANDLOOM SECTOR requirement of “Handloom Mark” for
availing benefits has been removed.
SPECIAL ECONOMIC ZONES Easing of land norms to set up special economic
zones (SEZs) Transfer of ownership and sale of SEZ units
allowed
The need for SEZ and Government’s policy
SEZ policy introduced on 1/4/2000 in India
To increase exports SEZ can be set up by private, public,
joint sector or by the state government Transform EPZ(Export Processing Zone)
to SEZ
Provisions under SEZ
100% FDI for manufacturing sector
Income tax benefit
Duty free import of domestic goods
Applicability of labour laws
Exemption from Income tax on investments
Enhanced limit of 2.4 crore for managerial remuneration
Performance of Units under SEZ
Zone 2003-2004 (Rs. in crores)
2004-2005(Rs. in crores)
Kandla SEZ 1018.82 1060.14
SEEPZ-SEZ 7832.81 8298.59
Noida SEZ 1534.17 4266.00
Madras SEZ 1037.96 1376.91
Cochin SEZ 298.91 462.99
Falta SEZ 825.34 569.15
Visakhapatnam SEZ 435.67 579.27
Surat SEZ 869.90 1539.72
Manikanchan SEZ --- 95.54
Jaipur SEZ --- 5.27
Indore SEZ --- 55.02
Advantages of SEZ
Growth and development Attracts FDI(Foreign Direct Investment) Exposure to technology and global
markets Increase in GDP and economic model Employment opportunities are created
EXIM BANK OF INDIA
Set up by an act of parliament in September 1981 Wholly owned by government of India Commenced operations in March 1982 One of the topmost financial institutions Objectives:
“.......for providing financial assistance to importers and exporters, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financial export and import of goods and services with a view to promoting country’s international trade....”
“ ....shall act on business principles with due regard to public interest”
(Export-Import Bank of India Act, 1981)
OPERATING GROUPS OF EXIM BANK
Corporate Banking Group Project Finance/Trade Finance Group Small and Medium Enterprise Export Services Group Export Marketing Services Bank Support Services Group
Financing Programmes
Export Credit Import
Credit
Loans for Exporting Units
credit opened by an importer with a bank in an exporter's country to finance an export operation
credit opened
by an importer
at a bank in his
own country
upon which an
exporter may
draw.
Provides loans for the exporting units setup in the country
RECENT TRENDS Q1(Quarter 1) of 2012-13, exports stood at US$ 75.2 bn and
showed a decline of 1.7 per cent as against an increase of 36.4
per cent during Q1 of 2011-12.
Q1 of 2012-13, imports declined by 6.1 percent over the
corresponding quarter of 2011-12 and stood at US$ 115.3
billion.
Lower growth in POL imports at 5.5 percent during Q1 of
2012-13 as compared with 52.5 percent during Q1 of 2011-12.
RECENT TRENDS Imports of gold and silver, US$ 9.4 bn during Q1 of 2012-13
were 48.4 per cent lower than that in Q1 of 2011-12.
Non-oil non-gold imports during Q1 of 2012-13 at US$ 65.3
bn recorded a decline of 2.9 per cent as compared to an
increase of 18.9 per cent in Q1 of preceding year.
Trade deficit during Q1 of 2012-13 stood lower at US$ 40.1
bn as compared with US$ 46.2 bn during Q1 of 2011-12.
India’s Foreign Trade
•Growth is uncertain in coming months, given the worsening global
macroeconomic outlook and high interest rate in the domestic market.
•During April-Sept 2011, India's imports expanded by 32.4% to $ 233.5
billion. The trade deficit during the April-Sept’ 2011 period stood at $
73.5 billion. Increasing Trade Deficit further depreciates Rupee.
•Depreciation of rupee will also push up cost of imports leading to
wider trade deficit in coming times.
Export/Import Share of India as (%) of GDP
Exports of Principal Commodities
Imports of Principal Commodities
India's Exports to Principal Regions
India's Imports from Principal Regions
India’s Foreign Trade
Last 10 Years India’s Export/Import Performance
CONCLUSION
Composition of India’s Foreign Trade has undergone a positive change. It is a remarkable achievement that India has transformed itself from a predominantly primary goods exporting country into non primary goods exporting country. Under Imports also India’s dependence on food grains and capital goods has declined.
References
http://www.eximkey.com http://www.eximinfo.com http://www.eximbankindia.in/ http://dgft.gov.in http://finmin.nic.in/