Foreign Trade Policy in India- Brief Analysis
Updated: Jan 18
A foreign trade Policy is a framework that provides for the policies and strategies for the Export and trade policies of a country. It is the area that comes under International Trade law. In India, The foreign trade is promoted and Implemented by the Directorate General of Foreign Trade(DGFT), under the Ministry of Commerce and Industry(MoCI).
In India, The foreign Trade Policy lays down the procedures for the transportation, which facilitates foreign trade Management at ease. Economic growth and employment generation are the key objectives of the Indian Foreign Trade Policy. The aim of boosting up economic growth is attained by encouraging the individuals or the business entities to set up the EXIM (Export-Import) Units throughout the country.
Procedures to set up the EXIM Units
To avail of all the incentives and concessions under the FTP, a Business Entity/ an individual should get registered as the EXIM unit.
Incorporation Of a company: Set up a proprietary/partnership firm/Company, in compliance with the Companies Act procedure.
Open Current Account and obtain Import export code/ PAN: the current account should be opened with a bank authorizing the foreign exchange. A Permanent Account Number(PAN) should be obtained, followed by the import-export code which is availed from the DGFT.
Registration Cum Membership Certificate: This certificate can be obtained from the Export Promotion Councils(EPC) / Federation of Indian Export Organisation/ Commodity Boards. The Certificate is mandatory to avail concessions under FTP.
Risk Coverage Policy: one must obtain the risk coverage policy from Export Credit Guarantee Corporation, through aa authentic Insurance policy.
Major Highlights of Foreign Trade Policy 2015-20
The current Foreign Trade policy had been implemented, clearly keeping its aim and objectives in its mind. Key highlights of the Foreign Trade Policy are :
Merging of goods Schemes - Earlier there were 5 different schemes (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) for rewarding merchandise exports with different kinds of duty scrips with varying conditions attached to their use. Under the new Foreign Trade Policy, all these schemes have been merged into a single scheme, namely the Merchandise Export from India Scheme ("MEIS") and there is no conditionality attached to scrips issued under the MEIS.
Replacement of 'Service providers located in India' to 'Indian Service Providers' - The Served From India Scheme has been replaced with the Service Exports from India Scheme ("SEIS"). Therefore, SEIS rewards to all service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider.
Extended Incentives for Special Economic Zones In India.
Status Holder Recognition and related Privileges - the business entities who have contributed immensely towards India's Foreign Trade are conferred with the position of 'Status Holder' and given special privileges to facilitate their trade transactions, to reduce their transaction costs and time.
Simplification of Export House certificate - The nomenclature of Export House, Star Export House, Trading House, Star Trading House, Premier Trading House certificate has been simplified and changed to One, Two, Three, Four, and Five Star Export House.
Incorporation of a new chapter on quality complaints and trade disputes: The new chapter on quality complaints and trade disputes have been incorporated into the foreign Trade policy, to resolve the trade disputes between importers and exporters.
Listing of Mandatory documents needed for an EXIM unit to export or import from India - the Current trade policy had mandated some of the documents for the EXIM. For Export, Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/ Postal Receipt, Commercial Invoice cum Packing List, Shipping Bill/ Bill of Export/ Postal Bill of Export are required. In the case of Import, Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/ Postal Receipt in form CN-22 or CN-23, Commercial Invoice cum Packing List, Bill of Entry is required.
The Foreign Trade policy creates a great impact on the import and export trade in India. The periodical review and the subsequent Implementation is as per the strategies to boost up the economy of the Country. In the wake of the 'Make in India' Initiative, India had modified the current foreign Trade policy, to encourage the business entities to start up the investment export-import Bussiness. Thus, Government Aims to Increase the economic growth, which accelerates Employment generation and thus tries to solve India's two fore-most concerns at a single stretch.
ABOUT THE AUTHOR
Swathi. Ashok. Nair is currently pursuing law at School of Legal Studies, Cochin University of Science and Technology
They can be Contacted at email@example.com or www.linkedin.com/in/swathi-ashok-nair-096253148.
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