EXIM Policy Final

8/8/2019 EXIM Policy Final

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Group 3


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` Natural Resources are unequally distributed across the world

` No Nation is self sufficient and has all the goods that it needs.

` Cost of productions are different in different countries.

` To meet foreign exchange needs.


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` These are policies that aims at :

Developing export potential

Improving export performance

Encouraging foreign trade Creating favorable balance of payments position.

` EXIM Policies are prepared and announced by the Central

Government (Ministry of Commerce) and is regulated by

the Foreign TradeDevelopment & Regulation Act, 1992.


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` The first EXIM Policy was introduced on the 12th of April,

1985.

`

The Government of India notifies the EXIM Policy for aperiod of five years.


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` To accelerate the economy and to derive maximum benefitsfrom expanding global market opportunities.

` To stimulate growth by providing access to essential raw

materials, intermediates, components, and capital goodsrequired for production.

` To Enhance the technological strength and efficiency

` To generate new employment.

` To provide quality consumer products at reasonable prices


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The government appointed the Import and Export Policy

Committee headed by Mr.Mudaliar in 1962 to review

Governments trade policy.

The recommendations of the committee were accepted by the

government. Mr.V.P Singh, the then Commerce Minister,

announced the Export Import policy on the 12th of April,

1985.

The basic aim of the policy was to facilitate production

through easier and quicker access to imported inputs, impartcontinuity and stability of EXIM Policy, strengthen the export

production base, facilitate technological up gradation and

affect all possible savings in imports.


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Import policy post independence :-

Limited Imports to conserve foreign exchange

Industrialization centered

Modified to help export promotion


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Indias foreign trade policy during the last five decades may be

broadly split into three phases :-

Import substitution policy

Export drive policy

Export acceleration policy


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` In order to liberalize imports and boost exports, the

Government of India introduced the Indian EXIM Policy on

April 1, 1992.

` Export Import Policy was made for the duration of 5 years tobring stability and continuity.

` But The Central Government reserves the right to make any

amendments to the trade policy in public interest.

` This policy was thought to be a major step towards the

economic reforms of India.


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Liberalization Licensing, quantitative restrictions and other regulatory controls was

substantially eliminated.

Import liberalization

Out of 542 items from the restricted lists 150 items was transferred toSpecial Import License(SIL) and remaining 392 items have been

transferred to Open General license(OGL) List .

EPCG Scheme

Duty on imported capital goods reduced from 15% to 10%.

Advanced license scheme

Period for export obligation was extended from 12 months to 18 months.


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Globalization ofIndian economyAgriculture

Additional SIL of 1% for export of agro product, allowing EOUs and other

units in EPZ in agriculture sectors to 50%of their outputs in the domestic

tariff area (DTA) on payment of duty.

`

100% Foreign Equity participation In the case of 100% EOU, and units setup in EPZ.

Quality upgradation

` ISO 9000 certification has been increased from 2% to 5% of the FOB value

of exports. This has encouraged industries for R&D program.

Impact on self reliance` This policy encouraged domestic sourcing of raw materials in order to

build of a strong domestic production based.


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` Aims at achieving at least 1% share of world exports by 2006-2007 from thepresent level of 0.67%.

` Increasing commodity-country matrix from15 countries and 15 commoditiesto 25 countries and 220 export products under the Medium Term ExportStrategy.

` Providing better transport assistance for export of fresh and processedfruits, vegetables, floriculture, dairy products.

` Special emphasis has to be laid on promoting exports of cottage andhandicraft sectors.

` Export restrictions like registration and packaging requirements wereremoved on butter, wheat & wheat products, coarse grains.


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` Aims at doubling percentage share of global trade within 5years

` Expanding employment opportunities, especially in semi

urban and rural areas.

` Certain special focus initiative have also been identified foragriculture, handlooms, handicraft, gems & jewellery, leather

and Marine sectors.

` Several new institutions were established during this period

whose main functions were to help exporters.

Some of this institutions are-India Trade Promotion

Organization (ITPO),National Centre for Trade Information

(NCTI),


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` Agriculture :

Scheme called the Vishesh Krishi Upaj Yojana for promoting

the export of fruits, vegetables, flowers, minor forest produce,

and their value added products has been introduced.

Import of inputs such as pesticides shall be permitted underthe Advance License for agro exports.

` Handlooms :

Specific funds would be earmarked under MAI/ MDAScheme for promoting handloom exports.


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` Handicrafts: -New Handicraft SEZs shall be established which

would procure products from the cottage sector and do the

finishing for exports.

` Gems & Jeweler: -Import of gold of 18 carat and above shall be

allowed under the replenishment scheme.

` Leather and Footwear:-

Machinery and equipment for Effluent Treatment Plants shall be

exempt from basic customs duty.

Re-export of unsuitable imported materials such as raw hides &skins and wet blue leathers is permitted.


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` The Board of Trade was revamped and given a clear and

dynamic role in advising government on relevant issues

connected with Foreign Trade Policy.

` Development and promotion on SEZs. Special Economic Zones

(SEZ) are growth engines that can boost manufacturing, augment

exports and generate employment. The private sector has been

actively associated with the development of SEZs.


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` Special Economic Zone (SEZ) is a specifically delineated duty

free area. It require special fiscal and regulatory regime in

order to impart a hassle free operational regime encompassing

the state of the art infrastructure and support service.

` SEZ units may export goods and services including agro-

products, partly processed goods, sub-assemblies and

components except prohibited items .


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Balance ofPayment:

A systematic record of a nation's total payments to foreign

countries, including the price of imports and the outflow of

capital and gold, along with the total receipts from abroad,

including the price of exports and the inflow of capital and

gold.

They are further divided into the following:i) Capital Account

ii) Current Account


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It is the sum of the balance of trade (exports minus imports of

goods and services), net factor income (such as interest and

dividends) and net transfer payments (such as foreign aid).


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` The capital account records all transactions between adomestic and foreign resident that involves a change ofownership of an asset.

` It is the net result of public and private internationalinvestment flowing in and out of a country.

` It includes foreign direct investment, portfolio investment

(such as changes in holdings of stocks and bonds) and otherinvestments (such as changes in holdings in loans, bankaccounts, and currencies).


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` The freedom to convert the local financial assets into foreign

financial assets and vice-versa at market determined rates of

exchange.

` It is associated with the changes of ownership in

foreign/domestic financial assets and liabilities and embodies

the creation and liquidation of claims on, or by the rest of the

world.


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FDI and FII

FDI Foreign Direct Investment

Asserts controlling stake with inclination to control.a

firm.

FII

Stock Market / Securities market based investment with no

inclination to control


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` A committee on capital account convertibility was setup by the

Reserve Bank of India (RBI) under the chairmanship of former RBI

deputy governor S.S. Tarapore to "lay the road map" to capital

account convertibility.

` In 1997, the Tarapore Committee had indicated the preconditions for

Capital Account Convertibility.

The three crucial preconditions were :

1)fiscal consolidation,

2)a mandated inflation target

3)strengthening of the financial system.

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Raise the annual limit for the amount you are allowed to carry on

a private visit abroad from $25000 presently to $100000.

Permission to invest into foreign stock markets up to the extentof $25,000 in a year.

Banning the Participatory Notes to avoid/reduce money

laundering.


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` India has still followed a path of partial CAC and is moving

gradually towards full convertibility.

` Adoption of CAC in India was to make the movement of

capital and the capital market independent and open. This

would exert less pressure on the Indian financial market.

` Allocation of foreign funds in the country helps in equalizing

the capital return rates not only across different borders, butalso escalates the production levels.


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` It allows domestic residents to invest abroad and have a globallydiversified investment portfolio, this reduces risk and stabilizes theeconomy.

` NRI community will benefit tremendously if and when Capital

Account Convertibility becomes a reality du to various restrictionimposed on the movement of their wealth.

` Opens the gate for international savings to be invested in India. It isgood for India if foreigners invest in Indian assets this makesmore capital available for Indias development.

` Most importantly convertibility will induce competition againstIndian finance.


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` During the good years of the economy, it might experience

huge inflows of foreign capital, but during the bad times there

will be an enormous outflow of capital.

` There arises the possibility of misallocation of capital inflows.

Such capital inflows may fund low-quality domestic

investments, like investments in the stock markets or real

estates, and desist from investing in building up industries and

factories, which leads to more capacity creation andutilization, and increased level of employment.


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` An open capital account can lead to the export of domestic

savings which for capital scarce developing countries would

curb domestic investment.


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` According to us it is not the right time for our economy to go

for full Capital account convertibility as it will not benefit

Indian Economy owing to the fact that we are still a

developing economy and we still need priority sector

investments, free entry and exit of fund will merely lead toincrease in inequality.


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` THANK YOU

EXIM Policy Final

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