PRESENTATAION ON FOREIGN TRADE POLICY

MEANING OF FOREIGN TRADE POLICY Foreign trade policy is the combination of words

First is foreign trade and Second is policy Foreign trade :It is the exchange of goods and services between nations. Goods can be defined as finished products, as intermediate goods used in producing other goods, or as agricultural products and foodstuffs

Need and Importance of Foreign Trade

Division of labour and specialisation. Optimum allocation and utilisation of

resources. Equality of prices Availability of multiple choices Raises standard of living of the people

Advantages of Free Trade

Increased Production and Efficiency. Consumer Satisfaction. Employment and Economic Growth. Minimizes War

  The Disadvantages of Free Trade

What are Free Trade Zones? Free trade zones are areas and regions without

trade limitations and boundaries. All the countries that constitute the free trade region allow free flow of trade between them and apply little or no trade barriers and tariffs against goods and services delivered from any country within the free trade region.There are, however, some disadvantages that come with open borders.

Increased Competition Increased Unemployment Corporate Restructuring Economic Underdevelopment

10 Advantages of Free Trade

History of foreign trade Policy of India

In the year 1962, the Government of India appointed a special foreign trade policy Policy Committee to review the government previous export import policies. The committee was later on approved by the Government of India. Mr. V. P. Singh, the then Commerce Minister and announced the foreign trade Policy on the 12th of April, 1985. Initially the foreign trade Policy was introduced for the period of three years with Main objective to boost the export business in India

The effect of new Foreign Trade Policy on different sectors Gems and Jewelry

• The manpower centered Gems and Jewelry sector will probably get a bigger boost from the Foreign Trade Policy announced by Commerce and Industry Minister Anand Sharma.• The government has declared duty draw backs on gold Jewelry exports, in case the yellow metal has been imported independently by Jewelry makers.• This stimulating move will inspire Jewelry exporters to import more raw materials like gold and then export it after value-addition.• To establish India on the global map as a ‘diamond trading hub’ a plan to set up a ‘Diamond Bourses’ is on the cards. The first one has already been set up in Mumbai.

Leather SectorRe-exporting of unsold imported hides and skins and semi-finished leather have been from public bonded warehouses, on payment of 50% export duty. Increase of FPS rate to 2% will reportedly benefit this sector.

Tea• Exports of tea have been brought under Videsh Krishi and Gram Udyog Yojana (VKGUY), which provides 5% incentive. This exporter-friendly policy is expected to offset some of the soaring costs, like transportation.• However, exporters getting benefits of Duty Entitlement Passbook (DEPB), in excess of 1%,this benefit will get limited to 3%. The incentive will lead to Rs.50 to Rs. 120 crore worth of tea exports.

HIGHLIGHTS OF FOREIGN TRADE POLICY(2009-2014)1. Incentive available under FMS raised from 2.5% to

3%.

2. Incentive available under Focus Product Scheme (FPS) raised from 1.25% to 2%.

3. Widens scope for products to be included for benefits under FPS. Additional engineering products, plastic and some electronics get a look in.

4. Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI)

5. To aid technological upgradation of export sector, EPCG Scheme at Zero Duty has been introduced.

6 Jaipur, Srinagar and Anantnag have been recognised as‘Towns of Export Excellence’ for handicrafts; Kanpur,Dewas and Ambur for leather products; and Malihabad for horticultural products.

7. Export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced by 50%.

8. Focus Product Scheme benefit extended for export of ‘green products’and some products from the North East.Status Holders

9. To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme is extended beyond 31-12-2009 till 31.12.2010.

10. Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been extended till 31.3.2010 in the Budget 2009-10.

Export Promotion Capital Goods Scheme(2009-2014) : The scheme allows import of capital goods for pre

production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of licence. Capital goods would be allowed at 0% duty for exports of agricultural products and their value added variants.

However, in respect of EPCG licences with a duty saved of Rs.100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.

The capital goods shall include spares (including refurbished/ reconditioned spares) , tools, jigs, fixtures, dies and moulds. EPCG licence may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the licence holder.

Second hand capital goods without any restriction on age may also be imported under the EPCG scheme.

Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst and consumable for the existing and new plant and machinery may also be imported under the EPCG scheme .

Benefits to Domestic Supplier In the event of a firm contract

between the EPCG licence holder and domestic manufacturer for such sourcing, the domestic manufacturer may apply for the issuance of Advance Licence for deemed exports for the import of inputs including components required for the manufacturer of said capital goods