5. Composition Of Foreign Trade
Composition of foreign trade means major commodity or
sectors in which India is doing export and import. India is a very old
participant in world trade. Its participation have been promoted by the
opening of Suez Canal and speedy development of the ship building
industry supplemented by the spread of industrial revolution in Europe
and fast expansion of Indian railways.
Fuels, capital goods,
chemicals, food grains,
Petroleum products, Capital
goods ,Pearls and precious
gems, Iron and steel
Fertilizers ,edible oil
textiles , Gems and
Light machinery etc.
It refers to goods that we buy from other countries.
At times of independence India was an agrarian economy.
Partition of our country has brought food shortage because wheat
growing regions vested with Pakistan.
Hence India need to import in large quantities, food , cotton jute. Etc
With development of economy over these days, there occurred
changes in composition of imports.The development required setting
up of industries , modernization of agriculture etc.
Now,Capital goods like machinery, chemicals, fertilizers ,metals
als petroleum products etc. are imported .
Exports means that we are selling commodities to other countries.
At the time of independence our exports comprise of agricultural
products like tobacco, spices, raw materials of cotton and jute etc.
Due to industrialization the proportion of raw materials in our exports
9. Composition of Trade
• Source : Economic Survey 2011-12
S. No Commodity Group Year 2010-11 ( in %age)
1 Agriculture and allied products 9.9
2 Ores and minerals ( excluding coal) 4.0
3 Manufactured Goods 68.0
4 Crude and petroleum products( Including coal) 16.8
5 Other and unclassified items 1.2
Composition of exports
11. Composition of Imports
1 Food and allied
2 Fuel 31.3
3 Fertilisers 1.9
4 Paper Board,
5 Capital Goods 13.1
6 Others 47.7
Composition of Imports
Food and allied
12. DIRECTION OF INDIA’S FOREIGN
Direction means countries to which India exports its goods and
countries from which it imports.
Direction of trade also helps to understand the diplomatic
relationship maintained by India with other countries of trade.
West Europe (28.1 per cent),America (25.4 per cent),Africa (6.3
per cent) and East Europe (3.1 per cent).
13. Direction of foreign trade consists of destination of exports
and sources of our imports.
Prior to our Independence when India was under British rule,
much of our trade was done with Britain. Therefore, UK used
to hold the first position in India’s foreign trade.
However, after Independence, new trade relationships were
established. Now USA has emerged as the most important
trading partner followed by Germany, Japan and UK. India is
also making efforts to increase the exports to other countries
also the direction of India’s exports and imports.
15. Organization for
17. Trade policy refers to thecomplete framework
of laws ,regulations ,international
agreements, and, negotiating stances adopted
by a government to achieve legally binding
market access fordomestic firms.
18. The Government has seta long-termvision of making India
a majorplayer in world trade.
Foreign Trade Policy (FTP) provides the basic policy framework
of translating thisvision intospecific strategies, goalsand target
19. STRTEGIC OPTIONS FOR TRADE
⚫ A Free trade policy is one which does not impose any
restriction on the exchange of goods and services between
different countries. A free trade policy involves complete
absence of tariffs, quotas, exchange restrictions, taxes and
subsidies on production, factor use and consumption.
⚫ AProtective trade policy pursued by a country seeks
to maintain a system of trade restrictions with the
objective of protecting the domestic economy from the
competition of foreign products
20. An Inward looking trade policy(import substitution)
stresses the need for a country to evolve its own style of
development and to be the master of its own fate, with
restrictions on the movement of goods, services and people
in and out of the country.An inward looking trade policy
encourages the development of indigenous technologies
appropriate to a country’s resource endowment.
An Outward looking trade policy (export-led
growth)encourages not only free trade but also the free
movement of capital, workers, enterprises and students, a
welcome to the multinational enterprise, and an open system
21. INDIA’S FOREIGN TRADE POLICY
The foreign Trade of India is guided by the Export-Import (EXIM )
policy of the Government of India and is regulated by the Foreign
Trade (Development and Regulation ) Act,1992.
The Foreign Trade Policy contains various decisions taken by the
government in the sphere of Foreign Trade, i.e., with respect to
imports and exports from the country and more especially export
promotion measures, policies and procedures related thereto.
It is the set of guidelines and instructions established by DGFT
(Directorate General of Foreign Trade ) in matters related to the import
and export of goods in India.
The present foreign trade policy is for the period of 5 years i.e. from
2015 to 2020.
22. FTP is the new
name for the
policy. 31st august 2004
- To double our %
share of global
within the next 5
To act as an effective
instrument of economic
growth by giving a thrust
23. ⚫The Union Commerce Ministry, Governmentof India
announces the integrated Foreign Trade Policy FTP in
every fiveyear. This policy is updated every year on
the 31st of March with some modifications and new
schemes. New schemes come into effect on the first
day of financial year i.e. April 1, everyyear.
⚫The Foreign trade Policywhich was announced on
April 1,2015 is an integrated policy for the period 2015-
24. Prior to 1985 , the Government of India used to
announce the EXIM policy annually.However,with a
view to have uniformity and stability in EXIM
policy,it was decided to give the policy a validity of
three years and the first three-year EXIM policy was
announced in 1985.
Since 1985, there was a moderate trend towards
trade liberalisation,which finally took shape in 1991.
25. *DGFT (Directorate General of Foreign Trade) is the
main governing body in matters related to Exim Policy.
*This Policy is prepared and announced by the Central
Government (Ministry of Commerce) which aims at:
developing export potential, improving export
performance, encouraging foreign trade and creating
favorable balance of payments position, in general.
26. LEGAL FRAMEWORK FOR FOREIGN TRADE OF
Foreign Trade (Development and Regulation) Act, 1992,
Foreign Trade (Regulation) Rules 1993
Foreign Trade (Exemption) Order 1993
Garments Export Entitlement Policy: 2000-2004,
Export (Quality Control and Inspection) Act, 1963,
Customs and Central Excise Duties Drawback Rules,
Foreign Exchange Management Act, 1999
27. Customs and Central Excise Regulations
Export and Import Policy - now called Foreign Trade Policy
Handbook of Procedures – Vol. I
Handbook of Procedures – Vol. II incorporating the Standard
Input Output Norms (SION)
ITC (HS) Classification of Import and Export Policy
30. Objectives of India’s
Foreign Trade Policy 2015-20
• FTP 2015-20 provides a framework for increasing exports of goods
and services as well as generation of employment and increasing
value addition in the country, in line with the ‘Make in India’
• The Policy aims to enable India to respond to the challenges of the
external environment, keeping in step with a rapidly evolving
international trading architecture and make trade a major
contributor to the country’s economic growth and development.
•To arrest and reverse declining trend of exports is the
main aim of the policy. This aim will be reviewed after two and half
•Simplification of the application procedure for availing various
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•To set in motion the strategies and policy measures which
catalyze the growth of exports.
•To encourage exports through a mix of measures including
fiscal incentives, institutional changes, procedural
rationalization and efforts for enhance market access across the
world and diversification of export markets.
32. Increase exports to $900 billion by 2019-20, from $466
billion in 2013-14.
Raise India's share in world exports from 2% to 3.5%.
Merchandise Export from India Scheme (MEIS) and
Service Exports from India Scheme (SEIS) launched.
Served From India Scheme (SFIS) will be replaced with
Service Export from India Scheme (SEIS).
For grant of rewards under MEIS, the countries have
been categorized into 3 Groups, whereas the rates of
rewards under MEIS range from 2 per cent to 5 per cent.
Under SEIS the selected Services would be rewarded at the
rates of 3 per cent and 5 per cent.
Highlights of Foreign Trade policy
2015 - 2020
33. FTP to be aligned to Make in India, Digital India and Skills
Duty credit scrips made freely transferable and usable For
payment of custom duty, excise duty and service tax.
Export promotion mission to take on board state Governments
Unlike annual reviews, FTP will be reviewed after two-and-
Higher level of support for export of defence, farm Produce
and eco-friendly products.
Nomenclature of Export House, Star Export House, Trading
House, Premier Trading House certificate changed to 1,2,3,4,5
Star Export House. The criteria for export performance for
recognition of status holder have been changed from Rupees to
US dollar earnings.
Online procedure to upload digitally signed document by
CharteredAccountant/Company Secretary/CostAccountant to
Validity period of SCOMET export authorisation extended
from present 12 months to 24 months.
Chapter-3 incentives extended to units located in SEZs.
Export obligation under EPCG scheme reduced to 75%
to Promote domestic capital goods manufacturing.
E-Commerce exports of handloom products,
books/periodicals, leather footwear, toys and customised
fashion garments through courier or foreign post office would
also be able to get benefit of MEIS (for values up to INR
Inter-ministerial consultations to be held online for issue of
No need to repeatedly submit physical copies of documents
available on Exporter Importer Profile.
108 MSME clusters have been identified for focused
interventions to boost exports. Accordingly, ‘Niryat Bandhu
Scheme’has been galvanised and repositioned to achieve the
objectives of ‘Skill India’.
Trade facilitation and enhancing the ease of doing business are
the other major focus areas in this new FTP. One of the major
objective of new FTP is to move towards paperless working in
Manufacturers, whoarealso status holders, will now be
able toself-certify their manufactured goods in phases, as
originating from India with a view to qualifying for
preferential treatment undervarious formsof bilateral and
regional trade agreements. This ‘Approved Exporter System’
will help manufacturerexporters considerably in getting fast
ess to international markets.
To facilitate external trade and payments
To promote the orderly development and
maintenance of foreign exchange market
38. Foreign exchange transactions were regulated by
Foreign exchange regulation act (FERA), 1973
Following the liberalization ushered in 1991 some
amendmentswere made to FERA in 1993 therewas
a lot demand to bring certain major changes in
FERA in the light of economicchanges took place
Consequently a new act was formed to replace
FERA, known as Foreign exchange management
act (FEMA), 1999
Administration of the Act
- The rules regulations and norms pertaining to many sections are laid down by
RBI in consultation with central Government.
- The Act requires central Government to appoint,
⚫ Adjudicating Authorities for holding enquires related to the contravention of the
⚫ one or more Special Directors (appeals) to hear appeals against the order of the
- Central Government shall have to establish
1. An Appellate Tribunal for foreign Exchange to hear appeals against the
order of the Adjudicating Authorities and the Special Directors
2. A Director of Enforcement with a Director and such officers or class of officers
as it thinks fit for taking up for investigation the contravention under this Act
40. FERA V/s FEMA:-
1. In FEMA only the specified acts related to
foreign exchange are regulated while in FERA
anything and everything that has to do with
foreign exchange was controlled
2. The objective of FEMA is to facilitate trade while
that of FERA is to prevent misuse
3. FEMA is a much smaller enactment only 49
sections against 81 sections of FERA
41. A thorough understanding of the country’s
trade policy and incentives are crucial for
the development of a successful
international business strategy.
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Composition & Direction of Foreign Trade
Foreign Trade Policy
India’s Foreign Trade Policy
Foreign Trade Policy 2015 – 2020
AT A GLANCE