2. MEANING OF FOREIGN TRADE POLICY
Foreign trade policy is the combination of words
First is foreign trade and Second is policy Foreign
trade :It is the exchange of goods and services
between nations. Goods can be defined as
finished products, as intermediate goods used in
producing other goods, or as agricultural products
and foodstuffs
3. Need and Importance of Foreign
Trade
Division of labour and specialisation.
Optimum allocation and utilisation of
resources.
Equality of prices
Availability of multiple choices
Raises standard of living of the people
4. Advantages of Free Trade
Increased Production and Efficiency.
Consumer Satisfaction.
Employment and Economic Growth.
Minimizes War
5. What are Free Trade Zones?
The Free trade zones are areas and regions without trade
Disadvantages of Free Trade
limitations and boundaries. All the countries that
constitute the free trade region allow free flow of trade
between them and apply little or no trade barriers and
tariffs against goods and services delivered from any
country within the free trade region.There
are, however, some disadvantages that come with open
borders.
Increased Competition
Increased Unemployment
Corporate Restructuring
Economic Underdevelopment
6. History of foreign trade Policy
of India 1962, the Government of India
In the year
appointed a special foreign trade policy Policy
Committee to review the government previous
export import policies. The committee was later
on approved by the Government of India. Mr. V.
P. Singh, the then Commerce Minister and
announced the foreign trade Policy on the 12th of
April, 1985. Initially the foreign trade Policy was
introduced for the period of three years with Main
objective to boost the export business in India
7. The effect of new Foreign Trade
Gems and Jewelry
Policy on different sectors will
• The manpower centered Gems and Jewelry sector
probably get a bigger boost from the Foreign Trade Policy
announced by Commerce and Industry Minister Anand
Sharma.
• The government has declared duty draw backs on gold
Jewelry exports, in case the yellow metal has been imported
independently by Jewelry makers.
• This stimulating move will inspire Jewelry exporters to
import more raw materials like gold and then export it after
value-addition.
• To establish India on the global map as a ‘diamond trading
hub’ a plan to set up a ‘Diamond Bourses’ is on the cards. The
first one has already been set up in Mumbai.
8. Leather Sector
Re-exporting of unsold imported hides and skins
and semi-finished leather have been from public
bonded warehouses, on payment of 50% export
duty. Increase of FPS rate to 2% will reportedly
benefit this sector.
Tea
• Exports of tea have been brought under Videsh
Krishi and Gram Udyog Yojana
(VKGUY), which provides 5% incentive. This
exporter-friendly policy is expected to offset
some of the soaring costs, like transportation.
• However, exporters getting benefits of Duty
Entitlement Passbook (DEPB), in excess of
9. HIGHLIGHTS OF FOREIGN TRADE
POLICY(2009-2014) FMS raised from 2.5% to
1. Incentive available under
3%.
2. Incentive available under Focus Product Scheme
(FPS) raised from 1.25% to 2%.
3. Widens scope for products to be included for benefits
under FPS. Additional engineering products, plastic
and some electronics get a look in.
4. Higher allocation for Market Development
Assistance (MDA) and Market Access Initiative
(MAI)
5. To aid technological upgradation of export
sector, EPCG Scheme at Zero Duty has been
10. 6 Jaipur, Srinagar and Anantnag have been recognised as‘Towns
of Export Excellence’ for handicrafts; Kanpur,Dewas and
Ambur for leather products; and Malihabad for horticultural
products.
7. Export obligation on import of spares, moulds etc. under
EPCG Scheme has been reduced by 50%.
8. Focus Product Scheme benefit extended for export of ‘green
products’and some products from the North East.Status
Holders
9. To impart stability to the Policy regime, Duty Entitlement
Passbook (DEPB) Scheme is extended beyond 31-12-2009 till
31.12.2010.
10. Interest subvention of 2% for pre-shipment credit for 7
specified sectors has been extended till 31.3.2010 in the
Budget 2009-10.
11. Export Promotion Capital Goods Scheme(2009-
2014) :
The scheme allows import of capital goods for
pre production, production and post production
(including CKD/SKD thereof as well as computer
software systems) at 5% Customs duty subject to
an export obligation equivalent to 8 times of duty
saved on capital goods imported under EPCG
scheme to be fulfilled over a period of 8 years
reckoned from the date of issuance of licence.
Capital goods would be allowed at 0% duty for
exports of agricultural products and their value
added variants.
However, in respect of EPCG licences with a
12. The capital goods shall include spares (including
refurbished/ reconditioned spares)
, tools, jigs, fixtures, dies and moulds. EPCG
licence may also be issued for import of
components of such capital goods required for
assembly or manufacturer of capital goods by
the licence holder.
Second hand capital goods without any
restriction on age may also be imported under
the EPCG scheme.
Spares (including refurbished/ reconditioned
spares), tools, refractories, catalyst and
consumable for the existing and new plant and
13. Benefits to Domestic Supplier
In the event of a firm contract between the
EPCG licence holder and domestic manufacturer
for such sourcing, the domestic manufacturer
may apply for the issuance of Advance Licence
for deemed exports for the import of inputs
including components required for the
manufacturer of said capital goods
