Table of Contents:-
- Exim policy of India
- objectives of exim policy
- what is Exim policy?
Exim policy of India
The EXIM Policy of India contains several policy measures and decisions implemented by the central government to regulate imports and exports to and from the country. In addition, it also describes the various export promotion measures, policies and associated procedures. The Central Government, particularly the Ministry of Commerce, prepares and announces the Foreign Trade Policy in our country. India’s Export-Import Policy also known as Foreign Trade Policy, in general, aims at enhancing export potential, improving export performance, promoting foreign trade, and fostering a favourable balance of payment position.
The Directorate General of Foreign Trade is the chief governing body for matters about such a policy. In addition, the policy follows the regulations outlined in the Foreign Trade Development and Regulation Act. The current, Foreign Trade Act has replaced the earlier law in this regard, known as the Imports and Exports (Control) Act 1947.
History of EXIM Policy of India
In the 1950s and 1960s, trade policies prioritized the country’s self-reliance and self-sufficiency, while in and after the 1970s, the focus shifted to achieving export-led growth, enhanced efficiency, and greater competitiveness. In 1962, the Government of India established a special EXIM Committee to review the country’s previous export-import policies. Thereafter, Mr V. P. Singh, who served as the Commerce Minister at the time, announced the Exim Policy on April 12, 1985. Initially, the main purpose behind introducing the EXIM Policy was to strengthen India’s export business, and the government planned for it to continue for three years.
The trade policy during this period, however, exhibited a restrictive nature. In this context, many view the year 1991 as a pivotal moment for the country’s trade sector. It was/during this year that the country evidenced massive trade liberalization measures and departed from the prevalent protectionist trade policies. The post-reform era is a common way to describe the period after 1991.
India’s EXIM Policy
Exporting refers to the sale of goods and services to foreign nations, whereas importing involves buying goods and services from abroad. Globalization connects the economies of the world. The exchange of goods and services between countries plays an important role in enhancing the economic development of developed or developing countries. The emergence of global institutions like UNCTAD, and WTO. ASEAN, etc. has resulted in rapid growth of world trade. EXIM (Export Import) Policy or trade policy outlines the set of laws and regulations for exports and imports of a country. It also helps in export promotion and controlling imports of a country by following specific policies and guidelines formulated by the government. To a large extent, the EXIM Policy has removed various quantitative restrictions, licensing and other regulatory and discretionary controls. This has liberalised exports and imports since 1992.
India established the EXIM Policy to assess the level of protectionism and free trade within the country and to highlight measures for boosting exports. The Foreign Trade (Development and Regulation) Act of 1992 recommended its formation. The Union Commerce Ministry of the Indian Government formulates the policy every year on March 31 for five years. The policy introduces specific amendments and schemes on a priority basis every year. Currently, India’s Foreign Trade Policy for 2015 to 2020 represents an integrated five-year policy.
What is Exim Policy?
An EXIM (Export-Import) Policy, crafted by a nation’s government, functions as a guidebook for international trade. It sets the necessary guidelines for buying and selling goods and services to other countries. It explains how businesses and individuals should go about selling their products to foreign nations (export) and buying things from foreign countries (import).
The main goals of an EXIM Policy are to help promote and make it easier to export things, and at the same time, control and manage the process of importing goods to achieve specific economic and strategic targets. These policies are made and updated by the government to support the country’s trade goals. The way these rules are set up can have a big impact on a country’s trade balance (what it sells and buys), economic growth, and how well it competes on the international stage.
The details in an EXIM Policy can be different from one country to another, and they can change over time to match the shifting economic conditions and global trade trends.
Objectives of EXIM Policy
The major objectives of the export-import policy are as follows
1) To achieve larger percentage shares in the worldwide merchandise trade by aiding sustainable growth in exports.
2) To provide essential raw materials, components, intermediates, consumables and capital goods for accelerating production services to encourage sustainable economic growth.
3) To attain international quality standards by boosting the technological ability and level of Indian primary sectors (agriculture, services and industry), thus improving India’s competitiveness and job opportunities.
4) To offer high-quality products and services to domestic consumers at prices which are internationally competitive and also position the domestic goods and services simultaneously in the international market.
EXIM Policy of India (2015-2020)
The EXIM Policy or Foreign Trade Policy (2015-2020) is notified by the Central Government, in the exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (No. 22 of 1992) (FT (D&R) Act), as amended. The Foreign Trade Policy (FTP), 2015-2020, incorporating provisions relating to the export and import of goods and services shall come into force with effect from the date of notification and shall remain in force up to 31 March 2020, unless otherwise specified. The relevant FTP shall govern all exports and imports conducted until the date of the notification unless otherwise specified.
India’s foreign trade policy aims to play a significant role in global trade through a comprehensive approach. To attain economic growth, it is very important to increase the level of exports and to provide import assistance. Economic development is based on the stability and rationality of trade and economic policies with their mutual participation. Therefore, all the past economic policies must be combined to formulate a new foreign trade policy for India, this helps in widening the scope of India’s foreign trade.
Objectives of EXIM Policy of India (2015-2020)
A vision is best achieved through measurable targets. The government aims to increase India’s exports of merchandise and services from USD 465.9 billion in 2013-2014 to approximately USD 900 billion by 2019- 2020 and to increase India’s share in global exports from 2 per cent to 3.5 per cent.
The FTP for 2015-2020 aims to achieve the following given objectives:
1) To provide a stable and sustainable policy environment for foreign trade in merchandise and services.
2) To link procedures, rules and incentives for exports and imports with other initiatives such as Digital India, Make in India and Skills India to create an “Export Promotion Mission” for India.
3) To promote the diversification of India’s export basket by helping various sectors of the Indian economy gain global competitiveness to promote exports.
4) To create architecture for India’s global trade engagement to expand its markets and better integrate with major regions, thereby increasing the demand for India’s products and contributing to the government’s flagship “Make in India” initiative.
5) To provide a mechanism for regular appraisal to rationalise imports and reduce the trade imbalance.
Colonial Influence on India’s Exim Policy
India’s colonial history significantly shaped its early approach to trade policy in the decades following independence. The focus of India’s trade policy was driven by concerns about limited foreign exchange reserves and the determination to allocate them primarily for essential purposes to drive economic development.
Key objectives included industrialization and achieving self-sufficiency in essential goods. The reason for this emphasis was the fear that relying on more powerful nations for essential imports could result in political dependence.
The National Planning Committee (NPC), was established in 1946 under the leadership of Pt. Jawaharlal Nehru succinctly articulated this perspective. They believed that in the modern world, no country could be politically and economically independent without high levels of industrialization, advanced technology, and self-sufficiency in essential resources. Failure to do so could upset the global balance and empower more developed nations, even if a country retained nominal political independence.
The overarching goal was to attain national self-sufficiency, with international trade playing a role but cautiously to avoid falling into economic imperialism.
These principles laid the foundation for India’s subsequent EXIM (Export-Import) policy, which, for the most part, prioritized import substitution and protection of domestic industries through various tariff and non-tariff controls from 1950-51 to 1990-91. However, since 1990-91, India has implemented significant and far-reaching changes in its trade policy.