Indian Foreign Trade Policy Since 1947

In India, the main legislation concerning foreign trade is the Foreign Trade (Development and Regulation) Act, 1992. The Act provides for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto. As per the provisions of the Act, the Government :(i) may make provisions for facilitating and controlling foreign trade; (ii) may prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions; (iii) is authorised to formulate and announce an export and import policy and also amend the same from time to time, by notification in the Official Gazette; (iv) is also authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act, including formulation and implementation of the export-import policy. Accordingly, the Ministry of Commerce and Industry has been set up as the most important organ concerned with the

promotion and regulation of foreign trade in India. In exercise of the powers conferred by the Act, the Ministry notifies a trade policy on a regular basis with certain underlined objectives. The earlier trade policies were based on the objectives of selfreliance and self-sufficiency. While, the later policies were driven by factors like export led growth, improving efficiency and competitiveness of the Indian industries, etc. Since independence a number of changes have taken place in all most all sectors of the Indian economy, As far as foreign trade is concerned, India adopted an inward-oriented restrictive trade policy till 1960"s. Since 1960"s, India adopted the import substitution policy, however the liberalisation era was started in 1970"s, but it is a mild in nature, in the late 1980"s and early 1990"s the drastic changes took place under the leadership of our late Prime Minister Mr. P.V.Narshimha Rao, and the finance minister Dr. Manmohan Singh. Indian economy has shifted towards globalisation and our economy is linked with world economy.

Throughout 1950-1951 to 2003- 2004 the Govt, of India have implemented a number of foreign trade policies, these policies have brought a tremendous change in India's foreign trade. Indian Foreign Trade Policy took a while in shaping up to a definitive framework.

In the post-Independence pre liberalization era, exports were ignored and the domestic market was fiercely protected. While world exports grew by over 8%, Indian exports grew only by 34% during the 1950s and 1960s. To curb rising imports in 1960s, the foreign trade policy included import substitution and export promotion to revive exports. The 1970s saw a rise in foreign trade with exports growing at 16% and imports at 20%. However the oil crisis in 1970s hit the export industry with the result of the foreign policy being tweaked to encourage exports through export subsidies. The Balance of Payments crisis in 1991 and subsequent rescue by IMF and other international banks resulted in the liberalization of the foreign trade policy. This was the much

needed revolution Indian foreign trade needed. Licensing was abolished and exports and imports were free subject to the negative list. Export Promotion of Capital Goods (EPCG) was implemented with zero customs duty on import of capital goods with an export obligation of 6 times the duty saved on the goods to be fulfilled in 6 years. Specific schemes were implemented to promote exports in specific foreign markets and on specific products. Specialized units and zones for foreign trade were set up. There were drastic reductions on import duty as well. India joined the WTO in 1995 and export-import targets were set to 25% and 20% respectively during 1997-2002. Emphasis was laid on Indian investment overseas and economic groupings. Duty free import of energy and oil related products which are required for production of export products was introduced in 2004-09. Under the current foreign trade policy of the UPA government, efforts are focused on specific sectors like Agriculture, Handlooms, Gems & Jewellery, Leather, Marine, and Green products. Market diversification has been identified as key with

focus on 26 new countries. Incentives of 2-3% on FOB value have been proposed. The target of the current foreign trade policy is to bring Indias share in global exports to 2% by 2020. While this is largely achievable, issues such as low quality of Indian exports and poor access to foreign markets as well as the rise of Chinese exports in the global market could play game changing roles in the future of Indian foreign trade. Indias Foreign Trade Partners In the last decade, exports to Asia and Africa have increased substantially while exports to North America and Europe have shrunk significantly. Asia accounts for over 50% of exports while North America and Europe totally account for a little over 35%. Latin American and African countries account for over 10% of exports and this is likely to grow in the years to come. Indian exports are majorly accounted for by USA, the Middle East Asian countries, Korea and Australia. India majorly imports more than it exports from China, Germany, Hong Kong, UK, Switzerland and Japan.

Chief Items of Exchange Indias trade basket is like that of any other developing country. Indian exports primarily comprise of petroleum products, gems & jewellery, machines, pharmaceuticals and fine chemicals, RMG cotton, transport equipment, iron ore, cotton yarn & fabrics. Petroleum products account for almost US$ 30 bn of Indias exports with Gems & Jewellery coming a close second with US$ 20 bn. Indias imports are majorly constituted of petroleum crude & products (almost US$80 bn of Indian imports). Other majorly imported goods are electronic goods, transport equipment, gold, iron & steel, precious stones, coal & coke among others. Export & Import of services is growing phenomenally at 31% and 24% respectively and this forms a major part of Indias BoP. Software Exports alone account for US$ 40.3 bn. However, oil imports have reduced in 2009-10 with the effect of reducing the trade deficit. Scope for Improvement: There is definite scope for improvement and growth in foreign trade. India needs to start targeting the developing

economies of the world due to the scale of growth in these markets as well as large, untapped demand. India needs to focus on its manufacturing industry so as to improve range of export products, quality of products as well as reduce cost of productions through technological upgradation and economies of scale. India needs a second green revolution to further exploit its competitive products. Export needs to be further promoted and this can be done through more export subsidies and lower export duties on lesser exported products. advantage in agricultural produce and