India has pursued different trade policies over different phases since independence in 1947. Initially, it focused on boosting exports and restricting imports to protect domestic industries and improve the balance of payments. It implemented import licensing, quotas, and duties while promoting exports. Since the 1960s, India has gradually liberalized imports and focused more on export promotion through various incentives like export subsidies, duty exemptions, and capital goods schemes. The current policy aims to further increase exports to $200 billion through extensions of existing incentive schemes and adding more sectors and products.

1. Foreign Trade Policy

2. FOREIGN TRADE POLICY AND BALANCE OF
PAYMENTS
Advanced Countries:
• restrict their imports and provide a sheltered market for their own
industries
• promote their exports so that their expanding industries could
secure foreign markets.
Discriminating Protection – Import restriction since 1923 to protect
domestic industries against foreign competition

3.  Restricted imports using import licensing,
import quotas, import duties etc.
 Banning or keeping to the minimum the
import of non-essential consumer goods
 Comprehensive control of various items of
imports
 Liberal import of machinery, equipment, and
other developmental goods to support heavy
industry-based economic growth
 A favourable climate for the policy of import
substitution.
 Setting up of trading institutions and through
other fiscal measures, subsidies etc. the
promotion of exports
Features

4. PHASES OF INDIA’S TRADE POLICY
Five distinct phases in India’s trade policy can be noted as
follows:
• The first phase: 1947–48 to 1951–52
•BOP with dollar adverse  boost exports in above dollar area
•The second phase: 1952–53 to 1956–57
•Import licenses liberalized
•Reducing export duties
•Abolishing export quotas
•The third phase: 1957–58 to June 1966
•Export promotion drive launched
•Import – substitution industries encouraged
•The fourth phase started after devaluation of the rupee in
June 1966
•Liberalized imports and expand exports
•Last phase after 1975–76
•Import liberalization to encourage export promotion

5. MAJOR TRADE REFORMS
1. REP (Exim Scrip) the principal instrument for export-related imports
2. All exports to have a uniform REP rate of 30 per cent of the FOB value.
3. Maximum incentive to exporters whose import intensity is low.
4. All supplementary licences shall stand abolished except in the case of the
small-scale sector and for producers of life-saving drugs/equipment.
5. All additional licences granted to export houses shall stand abolished.
6. OGL items to be imported through REP route
7. Unlisted OGL  category abolished and all items to be imported through REP
scheme
8. Cash Compensatory Scheme (CCS) abolished
9. Financial institutions allowed to trade in exim scrips

6. •The Export Promotion Capital Goods (EPCG) scheme
- It was one of the several export-promotion initiatives
launched by the government in the early '90s. The basic
purpose of the scheme was to allow exporters to import
machinery and equipment at affordable prices so that they
can produce quality products for the export market.
•Cash Compensatory Scheme – Cash subsidy scheme
designed to compensate the exporters for unrebated
indirect taxes and to provide resources for product
development.
•Import Replenishment Licenses (REP) – It enabled
exporters to import inputs where the domestic substitutes
were not adequate in terms of price, quality etc.
•International Price Reimbursement Scheme (IPRS) –
Designed to make available specific inputs at international
prices

7. •Duty Entitlement Passbook Scheme DEPB – It’s aim is to
neutralize the incidence of basic and special customs duty on
import content of export product. Under the post-export
DEPB, which is issued after exports, the exporter is given a
duty entitlement Pass Book at a pre-determined credit on the
FOB value. The DEPB allows import of any items except the
items which are otherwise restricted for imports.
•Status Holder Incentive Scheme (SHIS) – It entitles the
status holders such as trading houses, star trading houses
etc for additional duty scrip @ 1% of the FOB value of
exports.
•Freight On Board (FOB) - specifies which party (buyer or
seller) pays for which shipment and loading costs, and/or
where responsibility for the goods is transferred.

8.  Government confident of $200 billion exports this fiscal.
 Zero duty Export Promotion Capital Goods (EPCG) scheme
extended by one year to March 31, 2012; more products
added.
 Duty Entitlement Passbook (DEPB) scheme extended by six
months till June 30, 2011.
 Number of additional products from sectors like leather,
engineering, textiles, jute added to 2 per cent interest
subvention scheme.
 Additional benefit of 2 per cent bonus for 135 products
under Focus Product Scheme.
 One per cent Status Holder Incentive Scheme (SHIS) for
technology up-gradation extended till 2011-12; more
products added in the scheme.
 Benefits under Market Linked Focus Product Scheme to
garment exports to EU extended till March, 2011.

9.  Barmer (handicrafts), Bhiwandi (textiles) and Agra (leather
goods) declared Towns of Export Excellence.
 Steps announced to reduce transaction cost of exports.
 Leather sector allowed to re-export of unsold imported
raw hides and skins and semi-finished leather from public
bonded warehouses, without export duty.
 List of items allowed for duty-free import of gems and
jewellery sector expanded.
 Scrips issued under Served From India Scheme (for services
sector) can be used for payment of duty on import of
vehicles.
 Instant tea and CSNL Cardinol included for five per cent
duty benefit.