1.

Export and Import System in India:

India’s import and export system is governed by the Foreign

o
Trade (Development & Regulation) Act of 1992 and
India’s Export Import (EXIM) Policy.
o Free Trade: Generally, exports and imports are considered “free”
except when regulated by prohibitions, restrictions, or exclusive
trading requirements through State Trading Enterprises.
o The manner of regulation is specified in the Indian Trade
Classification (Harmonized System) [ITC (HS)] of Exports and
Imports1.
2. Key Procedures and Considerations:
o Importer-Exporter Code (IEC): Obtaining an IEC is mandatory
for both export from India and import to India. It serves as a key
business identification number2.
o Trade Balance: Balancing imports and exports ensures economic
stability.
o Foreign Exchange Reserves: Imports contribute to foreign
exchange reserves, supporting economic growth.
o Quality and Competition: Imports allow access to superior goods
and foster competition.
o Trade Policy Review Mechanism (TPRM): India participates in
peer reviews to evaluate trade policies and practices3.

Remember that India’s trade policies aim to strike a balance between promoting
economic growth and safeguarding national interests.

the foreign trade regulation act 1992-exim policy

The Foreign Trade (Development and Regulation) Act, 1992 (commonly known as
the EXIM Act) plays a crucial role in shaping India’s foreign trade policies. Let’s explore its
key provisions:
1. Objective:
o The EXIM Act aims to facilitate imports into and augment exports
from India.
o It provides guidelines for the development and regulation of foreign
trade.
2. Key Provisions:
 o Importer-Exporter Code (IEC): Obtaining an IEC is mandatory for both
export from India and import to India. It serves as a key business
identification number.
o Foreign Trade Policy: The Act empowers the government to announce
the Foreign Trade Policy, which outlines provisions related to imports
and exports.
o Quantitative Restrictions: The Act allows the imposition of
quantitative restrictions on specific goods.
o Search, Seizure, and Penalty: The Act provides powers related to
search, seizure, penalties, and confiscation.
o Controls on Export of Specified Goods, Services, and Technology:
The Act regulates the export of specific goods, services, and
technology.
o Appeal and Review Mechanism: Provisions for appeal and review are
included.
o Miscellaneous: The Act also covers matters related to protection,
application of other laws, rules, and more.

pre - liberalization and post - liberalization era in trade

1. Pre-Liberalization Era (1950-1990):
o Government Intervention: During this period, India followed
an import-substitution policy with a focus on heavy industry. The
government played a significant role in economic planning and
intervention.
o Mahalanobis Strategy: India adopted the Mahalanobis strategy,
emphasizing industrialization.
o Slow Growth: Despite efforts, the Indian economy grew at a
relatively slow pace during these decades.
o Inward-Looking Development: The state assumed a central role
in economic planning and development
2. Post-Liberalization Era (1990-Present):
o Structural Adjustment Program: In 1990-1991, India faced a
severe balance of payments crisis. As a response, India adopted
a structural adjustment program.
o Liberalization and Globalization: India shifted from a restrictive
and planned economy to a more open and liberalized one.
o Reforms: The early 1990s marked a major turning point. India
embraced economic reforms, including import
liberalization and export liberalization.
 o Improved Performance: Many economists attribute India’s
improved performance to the liberalization program.
o Creative Destruction: Liberalization led to increased competition,
technology upgrades, and creative destruction as efficient firms
replaced inefficient ones.
o Trade Growth: Post-liberalization, India witnessed a significant
increase in the rate of growth of both imports and exports

power of the Central Government to control foreign trade

in India as per the Foreign Trade (Development and Regulation) Act, 1992:
1. Import and Export Regulation:
o The Central Government has extensive powers to regulate and control
foreign trade.
o These powers include making provisions related
to imports and exports.
o The government can issue orders, notifications, and policies to facilitate
or restrict trade activities.
2. Foreign Trade Policy (FTP):
o The Central Government announces the Foreign Trade
Policy periodically.
o The FTP outlines guidelines, incentives, and regulations for imports and
exports.
o It aims to promote economic growth, enhance competitiveness, and
ensure balanced trade.
3. Importer-Exporter Code (IEC):
o The Central Government mandates obtaining an Importer-Exporter
Code (IEC) for all importers and exporters.
o The IEC serves as a unique identification number for businesses
engaged in foreign trade.
4. Quantitative Restrictions:
o The Central Government has the authority to impose quantitative
restrictions on specific goods.
o These restrictions may limit the quantity of certain items that can be
imported or exported.
5. Search, Seizure, and Penalty:
o The government can conduct searches, seize goods, and impose
penalties for violations of foreign trade laws.
o Contravention of provisions can lead to penalties or confiscation.
6. Controls on Export of Specified Goods, Services, and Technology:
 oThe Act empowers the government to regulate the export of specific
goods, services, and technology.
o It ensures compliance with international agreements and national
interests.
7. Appeal and Review Mechanism:
o Provisions for appeals and reviews are available to address disputes or
grievances related to foreign trade.
8. Miscellaneous:
o The Act also covers matters such as protection of actions taken in good
faith, application of other laws, and rule-making powers.

Appointment and powers of the Director General of Foreign

Trade (DGFT) in India:
1. Appointment:
o The Central Government has the authority to appoint any person as
the Director General of Foreign Trade for the purposes of
the Foreign Trade (Development and Regulation) Act, 1992.
o The DGFT plays a crucial role in formulating and implementing foreign
trade policies.
2. Functions and Powers of the Director General:
o Advisory Role: The DGFT advises the Central Government in the
formulation of the foreign trade policy.
o Policy Implementation: The DGFT is responsible for carrying out the
foreign trade policy effectively.
o Policy Continuity: The DGFT ensures policy continuity and
responsiveness to promote India’s exports of goods and services.
o IEC Issuance: The DGFT grants Importer-Exporter Code
(IEC) numbers, which are mandatory for all importers and exporters.
o Quantitative Restrictions: The DGFT can impose quantitative
restrictions on specific goods.
o Search, Seizure, and Penalty: The DGFT has powers related to search,
seizure, and penalties for violations.
o Controls on Export: The DGFT regulates the export of specified goods,
services, and technology.
o Appeal and Review: The DGFT handles appeals and reviews related to
foreign trade matters.
Reserve Bank of India (RBI) wields significant influence over
foreign trade in India. Let’s explore its powers and role:

1. Regulation of Foreign Exchange:

o The RBI oversees and manages the foreign exchange market in India.
o It ensures smooth international trade operations by regulating currency
exchange rates, capital flows, and foreign exchange reserves
2. Authorization and Control:
o The RBI has the authority to authorize individuals or companies to
deal in foreign exchange.
o It can also authorize dealers to transact in foreign currencies, subject to
review.
o The RBI can revoke authorization in case of non-compliance
3. Management of Securities:
o The RBI oversees the trading of securities by both federal and state
governments.
o Its jurisdiction extends to controlling these activities, as specified in the
RBI Act of 1934
4. Promotion of Export:
o The RBI encourages facilities for providing finance for foreign trade,
especially exports from India

Export Promotion Councils (EPCs):

o Purpose: EPCs are industry-specific organizations that promote exports

from India.
o Functions:
▪ Advisory Role: EPCs advise the government on export-related
policies.
▪ Implementation: They facilitate the implementation of export
promotion measures.
▪ Registration: EPCs register exporters under the Foreign Trade
Policy.
o Examples of EPCs:
▪ EEPC India: Promotes engineering exports.
▪ PEPC: Focuses on project exports.
▪ Chemexcil: Deals with chemicals and allied products.
 ▪ CAPEXIL: Promotes export of basic chemicals, pharmaceuticals,
and cosmetics.
▪ Council for Leather Exports: Supports the leather industry.
▪ Sports Goods Export Promotion Council: Promotes sports
goods exports.
▪ Gem and Jewellery Export Promotion Council: Facilitates gem
and jewelry exports.
▪ Shellac Export Promotion Council: Deals with shellac exports.
▪ Cashew Export Promotion Council of India: Promotes cashew
exports.
▪ Plastics Export Promotion Council: Supports the plastics
industry.

Export Oriented Units (EOUs):

o Definition: EOUs are industrial units established for producing goods
for export.
o Incentives:
▪ Duty-Free Import: EOUs can import raw materials and capital
goods duty-free.
▪ Tax Benefits: They enjoy tax exemptions and concessions.
▪ Simplified Procedures: EOUs benefit from simplified
procedures for export-oriented production.
o Examples: EOUs operate in various sectors such as textiles, electronics,
and pharmaceuticals.

Export Processing Zones (EPZs):

o Definition: EPZs are designated areas where industries focus
exclusively on exports.
o Infrastructure: EPZs provide infrastructure, utilities, and facilities for
export-oriented production.
o Customs Benefits: EPZs offer customs duty exemptions and
streamlined procedures.
o Examples: SEZs (Special Economic Zones) are an evolved form of
EPZs in India.