Information related to Foreign trade act, EXIM Policy and FEMA

1. BUSINESS
ENVIRONMENT
TOPICS : FOREIGN TRADE ACT
EXIM
FEMA
~ DR. RAJNI MATHUR

2. WHAT IS BUSINESS ENVIRONMENT ?
Business Environment is a sum or collection of all internal & External
factors such as :
• Employees, Customers, Supply & Demand
• Management, Suppliers, Activities by government
• Innovation in Technology, Social Trends, Economic Changes
these are the factors which affects the company.
• It helps in identifying business opportunities, tapping useful
resources, improves the overall performance and growth of the
company.
2

3. FOREIGN TRADE ACT
What is foreign trade?
Foreign trade refers to the exchange of goods & services between
two or more countries.
Imports & Exports are considered to be two important components
of foreign trade.
Why it is important?
• Promote specialization in each country.
• Help to sell surplus output.
• Facilitate to import necessary & required goods.
• Earn foreign currency.
• Increase Investment opportunities.
3

4. FOREIGN TRADE [DEV. & REG.] ACT 1992
• Foreign policy of India is governed & regulated by Foreign Trade Act.
• It is a replacement of Import & Export Act of 1997.
• These act is considered to be a supreme legislations in
accomplishment of the foreign trade taking place in the country.
• It provides the proper framework for the development as well as
standardization of the foreign trade.
Under this act various powers have been bestowed upon the
Central Government that are :
1. They had all powers to make provisions that are related to foreign
trade.
4

5. CONTN…
2. It also empowers government to formulate imports as well as export
policies.
3. It also provides the appointment of the Director general by central
government by notifying this appointment in the foreign trade policies
as per the provision provided.
4. The act commands every importer as well as exporter to obtain a
code number called the “Importer Exporter Code” i.e. [IEC].
5. These Act also provides balancing of budgeting targets in terms of
imports & exports so that the nation reaches the peak of the economic
development.
5

6. EXIM POLICY
• The India's trade policy, announced under the foreign trade
development and regulation act 1992.
• EXIM POLICY- Export and Import policy, would reflect the extent of
regulations or liberalization of foreign trade and indicate the
measures for export promotion.
• In 1962, this policy was selected by government of India.
Feature of India's trade policy since 1992 is
• Freedom
• Licensing
• Quantitative restrictions
6

7. IMPACT OF EXIM POLICY
It influences the following areas of economy
• Globalization of Indian economy.
• Impact on the Indian industry.
• Impact on Agriculture.
• Impact on Foreign Investment.
• Impact on quality up gradation.
7

8. HIGHLIGHTS OF EXIM POLICY:
• Period of the EXIM policy.
• Liberalization
• Imports Liberalisation.
• Export promotion capital goods scheme.
• Advanced Licence scheme.
• Duty entitlement pass book scheme.
8

9. OBJECTIVES OF EXIM POLICY:
• To accelerate the economy from low to high.
• To motivate sustained economy growth.
• To improve technological strength and efficiency.
• To provide quality products and services.
9

10. FOREIGN EXCHANGE MANAGEMENT ACT, 1999
• The Foreign Exchange Management Act (1999) or in short FEMA has
been introduced as a replacement for earlier Foreign Exchange
Regulation Act (FERA). FEMA came into act on the 1st day of June,
2000.
• An Act to consolidate and amend the law relating to foreign exchange
with the objective of facilitating external trade and payments.
APPLICABILITY :
• It is applicable to whole of India.
• The act is also applicable to all branches, offices and agencies outside
India owned or controlled by a person who is resident of India.
10

11. Reasons contributing to enactment of FEMA
• Liberal EXIM Policy
• Increased inflow of foreign investment
• Foreign exchange reserves had increased
• Commitment of government to WTO
• Penalty provisions of FERA were very strict
11

12. FEATURES
• Dealing in foreign exchange.
• Full freedom to person resident in India to hold or transfer any foreign
securities or immovable property situated outside India.
• A person resident outside India is also permitted to hold shares,
securities and property acquired by him while he was resident in
India.
• Directorate of Enforcement.
12

13. OBJECTIVES
• To facilitate the external trade and payment.
• To promote an orderly development and maintenance of the foreign
exchange market in India.
• Regulation of foreign capital in India.
• To regulate employment business and investment of non-residents.
Regulators involved in FEMA
1. Reserve Bank of India (RBI).
2. Ministry of Industry, Government of India.
3. Ministry of Finance, Government of India
4. Directorate of Enforcement
13

14. DIFFERENCE BETWEEN FEMA & FERA
14

15. CONTN…
15

16. THANK
YOU