Chapter 04

FOREIGN TRADE POLICIES

OF INDIA

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CHAPTER-04

FOREIGN TRADE POLICIES OF INDIA

Introduction

Foreign trade policy is also known as Export-Import policy or EXIM Policy.

The EXIM polices are adopted by any country regarding the exports and imports

goods and services with other countries in the world. Trade policies can be of two

types, the free trade policy and the protective trade policy. In free trade policy there is

complete absence of restrictions on the exchange of goods and services among the

nations. There is also a complete absence of tariffs, quotas, taxes and subsides on

productions, factors use and consumption. Theoretically, the free trade has several

advantages for mostly the developed countries but if we will talk about the developing

countries the free trade does not proved much productive or proved to be a

disadvantage. As earlier India has also a type of closed economy and free trade was

also absent in India till 1980’s. After 1990, by the emergence of new industrial policy

Indian trade comes with the contact of foreign countries and became the part of

liberalised economy or globalised economy after 1991.

Under protective trade policy a country manages to protect the domestic

economy from the competition of foreign goods which may threaten the domestic

goods and would definitely replace the domestic products from the markets leads

heavy losses to the domestic producers may also cause the situation of unemployment

in the domestic country and instead of the development of under developed economy.

The economy may also caught in the trap of unemployment, poverty and so on. Right

after the independence of India from 1950-1990 is also under the protective trade

policies but after 1991 Indian economy got free and LPG model was implemented on

Indian. By this model most of the protective sectors got free except some but many of

the under developed countries are still under the coverage of protectionism. There

may be outward and the inward trade policies. The outward looking trade policies not

only encourage the free trade but also the free movement of goods and services,

capital and the investment of foreign investor in your country through an open system

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communication. Correspondingly, the inward looking trade policy stresses to produce

all the goods and services for the purpose of growth and development within the

country. Under this policy there is a definite restriction of movement of goods and

services, capital and no kind of foreign investment can take place from foreigners. In

a good sense we can say that inward looking policy may prove the stimulator for the

domestic industries or weak industries and these kinds of policies provide a chance to

the weak industries of developing countries to get stable hand strong which may later

on face the foreign competition consistently.

Before 1991, India is also protected by inward looking policy only for the

purpose of protecting weak industries of India or Indian markets from foreign

competition. India is also not interested in exporting and importing of goods and

services to foreign countries. The main objective of this policy was to ensure the

countries independent development. As a result India proved itself one of the closed

economies at the end of 1980’s. India was a founding member of the General

agreements on tariffs and trade (GATT) in 1947 and also became the member of

(WTO) in 1995 and also regularly took part in the different negotiations. Despite

being one of the prominent founding member of Non-Alignment movement in 1961.

India’s relations with the Soviet Union got much closed as a result proved the bitter

relationships between India and U.S.A.

This chapter is particularly concerned with the analyses of the reason of an

export policy in the developing countries keeping in view of the deteriorating trade

balance resulting from their mounting expenditure. Regarding the analyses of the

Indian export policy the present chapter can be divided in to two parts:

1. The first part consists of the analysis of trade policies before the period of

Globalization (1991). From 1960 to 1990 the period is quite restrictive and the

protectionist policy was governing in India.

2. The second part consists of the opening of Indian economy in terms of trade

began in 1991 by the face of new economic policy or the model of (LPG). The

Indian economy got liberalized and then after the trade policies of Indian arise

with the membership of WTO and with the acceptance of Dunkel Psoposals.

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Principles of Indian foreign policies

1. Non-Alignment:- The policy of non-alignment is the most important

contribution of India to international community. Immediately after the

hostilities ended with the Second World War, a new and unprecedented

tension developed between the erstwhile friends and allies. The acute state of

tension came to be called cold war8. The division of the world into two blocs

led by United States and the former Soviet Union respectively caused the cold

war. India made up its mind not to join any of the power blocs.

2. Panchsheel and Peaceful Co-existence:- Peaceful co-existence of nations of

diverse ideologies and interests is an important principle of our foreign

policy. Indian Philosophy of vasudhaiva Kutumbkam promotes the feeling of

'one world.' In practice it means the nations inhabited by peoples belonging to

different religions and having different social systems can co-exist, live

together in peace, while each follows its own system. The five principles were

mentioned under the personable of the agreement are:

1. Mutual respect for each other’s territorial integrity and sovereignty;

2. Mutual non- aggression;

3. Mutual non interference in each other internal affair;

4. Equality and Mutual benefit; and

5. Peaceful co-existence.

3. Freedom of Dependent Peoples: Anti imperialism: -Anti-colonialism and

imperialism has been a matter of faith with India's Foreign policy makers.

Having been a victim of British imperialism for a long time, India divided to

oppose all forms of colonialism and Imperialism.

4. Opposition to Racial Dissemination: -India finally believes in equality of all

human beings. It policy is aimed to all forms of social discrimination.

5. Foreign economic aid and India's independent policy: - India firmly

believed that economics development of a country was an urgent necessity.

Soon after Independence India devoted its energies to a planned and rapid all

round development.

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6. Support to the United Nations: - India is one of the founder member of

United Nations organization and many of the international organization and

agencies

7. Peaceful settlement of international disputes: - Disputes among nations are

unavoidable; there can be only two methods of setting international disputes

war or peaceful settlements. War has been the most used method of deciding

disputes form the prehistoric days.

Reasons of trade policies in developing economies

As it has been analysed that the free trade policy is not a fertile exercise for the

developing countries but still has the worse need of dynamic trade policy to promote

the economic development of developing economies for the number of reasons. It is

impossible to avoid that such countries confronted with the continuous definite in

their trade balances arising out of their mounting expenditure for the sake of

development. To seek the development in the developing countries the countries call

for the increase in imports of capital goods, raw material and technology, but it is

impossible to meet out these imports by the increase in exports. The insistently

repetitive deficits in the balance of trade have the definite potential to produce an

adverse effect on the development of these types of economies.

On the other hand if the developmental expenditure is reduced from these

countries then it creates a long term development problems in the developing

countries.

There have been many studies regarding the persistent deficit in trade balance

which has been analysed empirically of the developing countries. Agogo Mawuli,

who analysed seventeen developing countries as a sample in his study and

experiences the deficit trade balance only because of the rapid accumulation of

capital. On the other hand, M.M Metwelly and Rick Tamaschke have also took the

reference of six developing countries and found the same problem of mounting

expenditure of developing countries for the sake of development. When after studying

or analysing both of them comes to the conclusion that these countries are unable to

meet out the imports to their exports as results the terms of trade is worsened day by

day and their position is deteriorating continuously. Due to less export of India or

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unmanageable export of India the country had mounting trade deficit and under

external debt. In 1996 the external debit on India was estimated as 28.90% of the

GDP in 1995-96. At the present time India still is facing a huge amount of shape of

external debt.

In 2012-13 the external debit on India stood at US $ 390.00 million. As a

result the large share of our export earnings are eaten up by this external burden and

the economy did not get rid of deficit of trade in balance.

India’s foreign trade policy

Upto 1991 the Indian economy is under the coverage of heavy tariffs more

than 200 percent and there was extensive imposition of quantitative restrictions and

full protection on the foreign investment in India. In 1991 the India economy got

liberalized and almost in all the sectors the restrictive policies abolishes only under

the conditions of extreme necessity. Since that time the trade has produced

remarkable achievement in the GDP of India which is increased from 15 percent from

1991 and in 2005 the percentage share of trade in the total GDP in 35 percent and

now in 2012-13 it is 43 percent.

In the recent years India stand on the path of beneficial trade policies for the

producers as well as the consumers and for the whole economy as well. With the

passage of time India is quite sensitive inits trade policies which are reflecting in the

recent trade policies. The trade policies of 2004-09 and 2009-14,in these policies it is

determined that India had to facilitate those imports which are required to stimulate

our economy.

Historical Background of Trade Policies of India

Before to discuss the history of trade policies of India towards the different

countries of the world in general and U.S.A in particular. Any countries trade policies

can be determined with their personal relations to one another. Thus each country has

its relations with the other nations of the world can be known as the strategic

relations. In this chapter with regard to the present study here we will discuss the

indo- US strategic dialogue. The basic improvement in the relations between INDIA

and U.S.A took place after the conclusion of the cold war as there was a

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misconception between the two countries. During the cold war both the countries

were motivated by different ideological orientations. As India and the other

developing countries has adopted the path of non- aligned which means India kept

itself away from the U.S.A as well as the soviet union but U.S.A with her global

influence followed the logic of cold war and doubted on India that India is bowing

towards soviet union which U.S.A don’t want to see at any cost as a result in 1971

U.S.A threatened India that she will mobilise her naval forces in support of Pakistan

set the mutually contradictory pattern of relationship between India and U.S.A which

continued the rest of cold war period. After that U.S.A and India has remained under

the mode of contradictions on several international issues like disarmament, apartheid

in South Africa, soviet intervention in Afghanistan and so on. After the collapse of

soviet union in 1991 the relations between the two countries streamlined upto some

extent and the congenial atmosphere has been created officiallyby both the

countriesunder which the dialogues can took place between the two nations and then

the concept of globalization has been released by the economic leaders of the world

like U.S.A which is than taken by India hand to hand and implemented on the Indian

economy in 1991 by the than government under the prime minister ship of P.V

Narsimharao. The interest of Indian government towards liberalising the its economy

was welcomed and appreciated by the U.S.A and its western allies as if they viewed

India’s opening economy as a new opportunity for their trade and investment. India

also needs the western technology to reap the benefits of globalized economy. After

the disintegration of the soviet union U.S.A remained only the superpower in the

world and India has no hesitation to come in a close contact with the U.S.A thus after

the end of cold war both the countries move closer to each other. Than new innings of

peace and prosperity started between India and U.S.A evidently after the end of cold

war both the countries begin with the high level consultation and after this in regular

intervals the president of U.S.A visited India to hold on various issues of mutual

interests.

Since it has been justified that India has always in disadvantage in the terms of

international trade. India’s trade is in deficit right from the time of its independence

upto now. Although to mend the balance of payment of India in 1991 India totally

lifted all the restrictions from trade for the sake of improvement in the balance of

payment position but still seen to be ineffective. Being a developing economy it is not

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possible for India to develop its industries without protection policies. Therefore, it

was necessary for India to impose restriction on its economy just as to develop its

industries on its own. On the other side the developed countries of the world were

searching for the largest markets like India where there is the highest consumption

class may available for the consumption of foreign foods. Although India has

launched the various trade policies from time to time from the period of 1950-1991

but the policies unable to respond accordingly. As a result in 1991 India has no option

rather to open its markets for the world’s competition. Under the Prime Minister Ship

of P.V. Narsimha Rao and Finance Minster of that time Dr. Manmohan Singh gave

green signal to the Indian markets to work globally and Indian economy was set free

to play among the international players.

Making departure from all are policies which have been implemented before

1991. On July 24, 1991 the new industrial policy or the new economic policy came

into existence with the lot of hopes and a mere relaxation for the Indian government

because at that time the government was at the stage of bankruptcy and there was no

foreign exchange at that time. The new model of (LPG), Liberalization, Globalization

and Privatization also born just after the announcement of this policy. The Indian

economy got globalized with the terms and conditions of WTO, World Bank, IMF

and the economic leaders of the world. The policy of 1991 proved the double edged

knife. On the one hand if the knife can cut vegetables for your cooking than on the

other hand it may also cut your hands. The policy of 1991 on the one hand improved

Indian depressed position but on the other hand it may also prove to be harmful for

the Indian weak industries or Indian producers.

The Main Objectives of New Industrial Policy of 1991

1. To consolidate the strengths build up during the last four decades of economic

planning.

2. To correct the distortions or weaknesses that may have crept in the industrial

structure.

3. To maintain a sustained growth in the productively and employment.

4. To attain international competitiveness.

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Since independence, the Government of India has judiciously restricted the

foreign competition by using the import licensing, import quotas, import duties and in

extreme cases even banning import of specific goods. The policies of export import

are regulated by Director General of foreign track (DGFT) under the act of 1992. All

the guidelines are regarding trade of India are issued by (DGFT). Thus (DGFT) is the

main governing body in matters related to EXIM Policy of India. The main objectives

of the Foreign Trade Development and Regulation Act are to provide the facilitating

of imports and augmenting of exports from India.

Indian EXIM Policy contains various policy related decisions taken by the

government in the sphere of foreign trade. The foreign trade policies are prepared to

keeping in view the import and especially the exports and exports promotion of a

country. In general the EXIM Policy is drafted to improve the export potential of

developing countries, encouraging foreign trade and creating favourable balance of

payment position.

In the early fifties (1950-1956) there was no clear trade policies of India and it

was quite difficult to analyse the balance of payment position of India at that time. As

the government of India stabilized in early sixties (1961) due to industrialization in

the world, India also started to move towards industrialization as a result of which

there was a imports of commodities which put heavy pressure on the balance of

payments of India. Being the world’s largest democracy and the second most popular

country of the world by has a very little share of foreign trade accounted about only 5

percent of GDP up to 1980. After the country achieved independence in 1948 its slow

moving economy did a very little participation in world trade. The economic leaders

of the country the adopted the policy of import substitution industrialization for the

sake of development of Indian economy at its own, but India was not in position to

export even a single commodity because of the member of reasons, high

manufacturing cost, low quantity etc. Thus it can be said that India was much closed

economy up to 1980. After 1980 everything changed with a high momentum. GDP

per casita which rose at an annual rate of only 1.3 percent from 1960 to 1980 is now

growing at 4 percent annually since 1980. After that India’s share in world trade goes

up rapidly as India later on in 1991 open its markets for international competition and

tariffs were brought down and the quotas were removed. By 2005 the exports and

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imports of India were 20.30 and 23.30 percent of GDP respectively and now the trade

of India reached US $ 7.30 trillion with the value growth of 24 percent.

In short, India has become a high performance economy. It’s still a very poor

country, but it is rapidly growing richer and has become the attractive destination for

may developed countries like China, U.S.A etc. The big question, of course in why

India’s growth rate has increased so dramatically. That question is the subject of

heated debate among the economists. Some economists have argued that trade

liberalization, which allowed India to participate in the global economy, was crucial.

Other economist pointed out that India’s growth began accelerating around

1980, while the big changes in trade policy didn’t occur until the beginning of the

1990’s. Any now in late eighties India became one of most attractive business resort

for the developed nations and every developed country and even the leading Financial

agencies of the world wants to come in control with India by any means. Although

India is also achieving good in every field but still was not sufficient to meet out the

demand of the large masses of the country. To meet out the consumption of large

population of India, India has to maintain the cordial relations with the other countries

of the world most preferably the developed countries because India almost has the

need of technology, Foreign exchange and many other things which may help our

country to come out of the depression and slow down which we have seen earlier.

With a view to strengthen the Trade Relations of India with the developed

world like U.S.A. The flexible and most acceptable Trade policies were announced by

the Indian government time to time and for thedevelopment of organisational

development a number of bodies were set up. Some of the import organisations

among them are the export promotion councils which will see the steps have been

taken to improve the promotions of exports time to time. These councils mostly works

on the plans and targets for exports. The export promotion councils also take care of

the quality, control, finance, marketing, packaging, shipping and diversification of

exports. The councils also work with the help of Federation of Indian Export

organisation.

To give force to exports, the export processing zones (EPZ) were setup which

provided the free trade environment for export production so as to make the Indian

products ready for foreign competition in the world markets. By 1990 there were

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seven EPZ’s in India, such as Noida, Cochin, Kandla, Santa Cruz, Falta, Madras and

Visakhapatnam. These export processing zones attracted the foreign private

investment which contributed a lot in the improvement of infrastructure and trade

facilitation, although the economic survey for 1989-90 was observed that “the

performance of EPZ’s has been far from satisfactory”. The Trading Housing or

Export Houses and star trading houses were set up for the convenient exports and

imports which shows exemplary performance in the EXIM Policy of 1990-93.

The Institute of foreign trade has also conducting the survey of markets for the

purpose to know about the nature of markets and then guide the different export

promoting organisation to explore their export potential in this regard. The hearted

efforts have also been made by the Indian diplomatic mission to push the Indian

exports. Exhibition of Indian products were also organised in India and abroad the

country.

India is know at the stage of its dynamism and was to be known for its

dynamic trade policies but still the frame work was week on the number of aspects.

As Dr. C. Rangarajan pointed out in his Frank Morass Memorial lecture, 15 June

1992 that for a significantly higher growth of export. The macroeconomic policy must

favour export; there should be adequate sect oral co-ordination so that infrastructure

and other facilities were appropriate besides detailed planning product wide and

country wise.

However, most of the economist or strategists believed that the infrastructural

weaknesses are mainly responsible for the slow growth of exports of India

sincen1996-97. Therefore to sort out the weakness in trade pattern of India and to

renovate these trade policies have been formulated for some definite periods are as

given below:

The Recent Trade Policy

After the announcement of new Industrial Policy in 1991 and opening of

Indian markets for free competition in the whole world and creates hope for the Indian

economy to came in the level of subsistence but only the New Industrial Policy is not

sufficient to recover the world’s largest economy as a result on 31 March, 1992, a

new trade policy was announced by the Government of India has marked the

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departure for all the previous trade policies because the previous trade policies does

not show such an value changes for the improvement of foreign trade position of

India. This policy is therefore important and unique because it has been announced

after the implementation of the New Industrial Policy of 1991 and rather than this

policy almost lifts all kinds of state control and regulations. It also abolishes the

previous licensing environment form the Indian economy.

In this policy except (Negative List) all the commodities can be imported with

out any kind of tariff imposition on them. The private sector is allowed to import the

commodities like raw material and capital goods without the intervention of

government, but besides this the exports obligations must be fulfilled

correspondingly. This policy is based on the assumptions of liberalisation.

The steps were also taken to boost the domestic industrial productions. The

some more aspects of the EXIM policy of (1992-1997) include:

Introduction of the duty free exports promotion of capital goods (EPCG)

scheme.

Strengthening of the advanced licensing system.

The creation of suitable frame work for integrating Indian foreign trade in to

the internal economy.

The Indian industrial products to achieve the best quality of products so that

they could stand in front of the high international standard of quality.

The research and development should be promoted to attain the technological

modernisation and up gradation of Indian industries.

Any how the Indian government in order to liberalization the imports and

boosts the exports and to bring the stability and continuity the export promotion

policy of 1992-97 was made for the duration of five years. However, the government

also keep the public rights reserve for the welfare of the peoples in the exercise of the

powers conferred by the section-05 of the Act of 1992. Such amendment shall be

made by means of a notification published in the Gazette of India. This policy is

believed be a significant step towards the economic reforms of India and a great hope

for the positive BOP.

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EXIM Policy of 1997-2002

The policy of 1997-2002 has brought a new concept in the trade policies of

Indian and provide Indian economy a gateway to liberalization and modernisation by

which the Indian economy is able to integrate with the different and developed

economies of the world. The policy contains a number of significant features. The

most controversial (VABAL) value based license scheme has been abolished and 542

items have been transferred from the restricted list to special import license (SIL) and

freely importable list. The new Entitlement passbook scheme has also been

introduced.

Objective of the EXIM Policy 1997-2002

The principal objectives of the Export Import Policy 1997-2002 are as follows:

(I) To accelerate the economy from low level of economic activities the high

level of economic activities by marketing it a globally oriented vibrant

economy and drive maximum benefits from expanding global market

opportunities.

(II) To create new employment opportunities and encourage the attainment of

internationally accepted standards of quality.

(III) To give quality consumer product at practical prices.

Highlights of the EXIM Policy 1997-2002

1. Period of the EXIM Policy: This policy is valid for five years instead of three

years as in the case of earlier policies. It is effective from 1st April 1937 to 31st

March.

2. Liberalization: A very important feature of the policy is liberalization. It has

substantially eliminated licensing, quantitative restrictions and other

regulatory and discretionary controls. All goods, except those coming under

negative list, may be freely imported or exported.

3. Imports liberalization: of 543 items from restricted list 150 items have been

transferred to special import license (SIL) list and remaining 392 items have

been transferred to open General License (OGL) list.

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4. Export promotion Capital Goods (EPCG) Scheme: The duty on imported

capital goods EPCG scheme has been reduced from 15 per cent to 10 per cent.

Under the zero duty EPCG scheme, the threshold limit has been reduced from

Rs. 20 crore to Rs. 5 crore for agricultural and allied sectors.

5. Advance License Scheme: Under advance License scheme, the period for

export obligation has been extended from 12 months to 18 months. A further

extension fro six months can be given on payment of 1 per cent of the value of

unfulfilled exports.

6. Duty Entitlement Pass (DEFB) Scheme: Under the DEFB, An exporter may

apply for credit, as a specified percentage of FOB value of export, made in

freely convertible currency. Such credit can be utilized for import of raw

materials, intermediates, components, parts, packaging material etc. For export

purpose.

Impact of EXIM Policy 1997-2002

(A) The EXIM Policy 1997-2002 proposed with an aim to prepare a framework

for globalization of Indian economy. This is evident from the very fast

objective of the policy, which states. To accelerate the economy from the level

of economic activities to high level of economic activities by marketing it a

globally market oriented vibrant economy and to derive maximum benefits

from expanding global market opportunities.

(B) Impact on Agriculture: Many encouraging steps have been taken in the

EXIM Policy 1997-2002 in order to give a boost to Indian agricultural sector.

These steps includes provision of additional SIL of 1 % for export of agro

products, allowing EOU’s and other units in EPZs in agriculture sectors to

50% of their output in the domestic tariff area (DTA) on payment of duty.

(C) Impact on foreign Investment: In order to encourage foreign investment in

India, the EXIM Policy 1997-2002 has permitted 100% foreign equity

participation in case of 100% EOU’s and units set up in EPZs.

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Export- Import Policy (2002-07)

Union commerce and industry Minister Mr. Murasoli Maran announced the

EXIM policy for the year period (2002-07) on March 31, 2002. The main thrust of the

policy was to push India’s exports aggressively by undertaking several measures

aimed at augmenting exports of farm goods, the small scale sector, textile, gems and

jewellery, electronic hardware etc.

Special Economic Zones: Indian banks were allowed to set up offshore banking units

(OBUs) in special economic zones. These units would act as magnets to attract

foreign direct investment. These offshore banking units would be virtually foreign

branches of Indian banks, but located in India. OBUs would be exempt from cash

reserve ratio (CRR), statutory liquidity ratio (SLR) and would be give access to SEZ

developers to international finance at international rates. This measure was aimed to

make special economic zones internationally competitive.

1. Employment Oriented Measures: EXIM (2002-07) policy initiated a number

of Measures which would help employment orientation. Among them were the

Following:

(A) Agriculture- EXIM policy removed all quantitative restriction on all

Agricultural products except a few sensitive items like jute and onions.

(B) Cottage Sector and Handicrafts:

(i) An amount of Rs. 5 crores under market access initiative (MAI)

were earmarked for promoting cottage sector export coming under

KVIC. The units under handicrafts could also access funds under MAI.

(ii) Under export promotion capital goods (EPCG) scheme, these

Units would not be required to maintain an average level of exports,

while calculating export obligation.

(iii) The units in handicraft sector would be entitled to duty free

Imports of an enlarged of items up to 30% of o.b. value of their

exports.

(C) Small Scale Industry: with a view to encouraging further development of

contress of economic and export excellences such as TIRPUR OF HOSIERY,

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WOOLEN BLANKETS IN Panipat, woollen knitwear in Ludhiana, following

benefits would be available to small sector

1. Common service provides in these areas would be entitled to

the facility of export promotion capital Goods (EPCG) scheme.

2. Entitlement for the export houses status at Rs.5 crores instead

of Rs. 15 crores for others.

A big initiative to permit offshore banking units (OBUs) would help to

develop foreign branches of Indian Banks. The move was intended to provide

international finance at international rates. This would lower the cost of credit to our

exporters and thus made them more competitive. This initiative, specially directed at

special economic zones was another healthy feature of the Exim policy.

Due to the change the central government, foreign trade policy (2002-07) was

to be scrapped and introduced new policy (2004-09) was announced.

Foreign Trade Policy (2004-09)

Union commerce and industry Minister Mr. Kamal Nath announced the

foreing trade policy for the five year period (2002-09) on 31st August 2004 which

aimed doubling Indias’s percentage share in global merchandise trade from 0.7 % in

2003. To 1.5 % 2009. During 2003-04, India’s merchandise exports were valued at $

61.8 billion accounting for about 0.7% of world’s exports. If share was to doubled, it

would imply that the country’s exports would have to reach $ 195 billion by 2009,

assuming a 10% compound annual growth rate in world trade. For this purpose,

India’s exports should grow at the annual average growth rate of 26%. Besides this,

the service sector is also expected to increase its share in export of invisible to over $

100 billion. Together, the two sectors are expected to reach the target of $ 300billion

by 2009.

Main Elements of Exim Policy 2004-09

The new Exim Policy 2004-09 has the following main elements:

Legal Framework

Board of Trade

General Provision Regarding Imports and Exports

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Export Promotion Capital goods Scheme

Export Oriented Units (EOUs), Electronics Hardware technology Parks

(BTPs) (EHTPS), software, Technology Parks ((STPs) and Bio- Technology

(BTPs)

Special Economic Zones

Free trade and Warehousing Zones

Deemed Exports

FREE EXPORTS: Incase an export of import that is permitted freely under

export import policy is subsequently subjected to any restriction of regulation,

such imports or exports will ordinarily be permitted not withstanding such or

regulation. To keep under consideration to double the India’s trade share

globally which in turn will expand the employment opportunities and so many

other things which will enhance the Indian economy all over, and the special

focus has been identified for agriculture, gems and jewellery, leather and

marine sectors. Government of India shall make efforts to promote exports to

these sectors by sectoral strategies shall be notified from time to time.

Board of Trade EXIM Policy 2004-09

BOT has a clear and dynamic role in the advising government on relevant

issues connected with foreign trade.

1. In the light of emerging national and international economic scenarios to

advise government on policy measures for the preparation and

implementation of short term and long term plans for increasing exports.

2. To review the export performance of various sectors and to identify the

constraints and suggest industry specific measures to optimize export

earnings.

3. To review policy instruments and procedure for imports and exports and

suggest steps to rationalize such schemes for optimum use.

4. To examine issues which are considered relevant for the promotion of

Indias foreign trade and to strengthen international competitiveness of

Indian goods and services.

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Permeable of Exim Policy 2004-09: It is a speech given by the Ministry of

Commerce Government of India has set up several institution whose main function

are to help an exporter in his work. It would be advisable for an exporter to acquaint

hi these institutions and the nature of the help that they can provide so that he can

initially contact them and have a clear picture of what help he can expect of the

organized sources in his export effort. Some of these institutions are as follows:

Export Promotion Council

Commodity Boards

Marine Products Export Development Authority

Agriculture and Processed Food Products Export Development Authority

Indian Institute of Foreign trade

India Trade Promotion Organisation (ITPC)

National Centre for trade Information (NCTI)

Export Credit Guarantee Corporation (ECGC)

Export-Import Bank

Export Inspection Council

Indian Council of Arbitration

Federation of Indian Export Organisation

Department of commercial Intelligence and statistics

Directorate General of Shipping

Freight Investigation Bureau

India’s Foreign Trade Policy (2009-14)

Theforeign trade policy which was announced on August 28,2009 is an

integrated policy for the period (2009-14).

Objectives of foreign Trade Policy 2009-14

I) To arrest and reverse declining trend of export is the main aim of the policy.

This aim will be reviewed after two years.

II) To double India’s exports of goods and services by 2014.

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III) To double India share in global merchandise trade 2020 as a long term aim of

this policy. India’s share in global merchandise export was 1.45 percent in

2008. Simplification of the application procedure for availing various benefits.

IV) To set in motion the strategies and policy measures which catalyse the growth

exports.

V) To encourage exports through a mix of measures including fiscal incentives,

institutional changes, procedural rationalisation and efforts for enhance market

access across the world and diversification of export.

Aim in General: The policy aims at developing export, improving export

performance, boosting foreign trade and earning valuable foreign exchange. FTP

assumes great significance this year as India’s exports have been battered by the

global recession. A fall in exports has led to the closure of several small and medium

scale export oriented units, resulting in large scale unemployment.

Targets

Export Target $200 billion for 2010-11.

Export Growth Target: 15 % for next two year and 25% thereafter.

EPCG

1. Obligation under EPCG scheme relaxed.

2. To aid technological up gradation of export sector. EPCG scheme at Zero duty

has been introduced.

3. Export obligation ob import of spares, moulds etc. Under EPCG scheme has

been reduced by 50%.

Re-fixation of Annual Export Obligation:

Taking into account the decline in exports, the facility of re-fixation of annual

average export obligation for a particular financial year in which there is decline in

exports from the country, has been extended for the 5 year policy period 2009-14.

Support for the Green products and products from North East extended.

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Announcements for FPS, FMS, MLFPS

1. 26 new market added in this scheme

2. Incentives under FMS rose from 2.5 % to 3 %.

3. 3. Incentive available under focus Product scheme (FPS) raised from 1.25% to

2%.

4. Extra products included in the scope of benefits under FPS.

5. Market linked focus product scheme (MLFPS) expanded by inclusion of

product like pharmaceutical, textile fabrics, rubber products, glass products,

auto components motor cars, bicycle and its parts etc. However, benefits to

these products will be provided, if exports are made to 13 indentified markets

(Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico,

Ukraine, Vietnam, Cambodia, Australia and New Zealand).

6. Focus Product Scheme benefit extended for export of green products and some

products from the North East.

7. A Common simplified application form has been introduced to apply for

benefits under FPS, FMS, MLFS, and VGUY.

Announcements for MDA and MAI

Higher Allocation for market development assistance (MDA) and market

access initiative (MAI) has been announced.

Towns of Export Excellence (TEE)

The following cities have been recognized as town of export excellence (TEE)

1. Handicraft : Jaipur and Srinagar and Anantnag

2. Leather Product: Kanpur, Dewas and Amur.

3. 3. Horticulture Products : Malihabad

Scheme for Status Holders: (Status Holders means Star status holders)

1. Additional Duty Credit Scrip shall be given to status holders@ 1% the fob

value of past export accelerate export and encourage technological up

gradation.

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2. This facility shall be available for sectors of leather (excluding finished

leather), textile and jute, handicraft, engineering (excluding Iron and steel and

non- ferrous metals in primary and intermediate form, automobiles and two

wheelers, nuclear reactors and parts and ship , boats and floating structure),

plastic and basic chemical (excluding pharma products).

3. This facility shall be available up to 31st March 2011.

4. Transferability for duty credit scraps being issued of status holders under

VKGUY scheme permitted only for the procurement of cold chain

equipments.

5. Extension of Income to Exemption to EOU and STPI:

Income tax Exemption to 100% EOU and to STPI units under section 10B and 10A of

income tax act, has been already extended for the financial year 2010-11 in the

Budget 2009-10

Extension of ECGC:

The adjustment assistance scheme initiated in December ,2008 to provide

enhanced ECGC cover at 95% to the adversely sectors, is continued till March 2010.

Announcements for Marine sector:

Fisheries exempted from maintenance of average EO under EPCG scheme

(along with 7 Sectors) however fishing Travellers , boats (TPS/Duty Free Certificate

of entitlement (DFCE) Scheme for the main sector.

Announcement for gem and jewellery sector:

1. Duty drawback is allowed on jewellery exports to neutralize duty incidence.

2. Plan to establish diamond Bourse(s) with an aim to make India an

International Trading hub announced.

3. Introduction of a new facility to allow import on consignment basis of cut and

polished diamonds for the purpose of grading/certification.

4. 13 value limits of personal carriage have been increased from $2 million to US

$5 million in case of participation in overseas exhibition.

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5. The limit in case of personal carriage, as sample, for export promotion tours,

has also been increased from US$ 0.1 million to US$ 1 million.

6. Time limit of 60 days for re-import of exported gem and jewellery items for

participation in exhibition has been extended to 90 days in case of USA.

Announcement for Agro Exports:

1) Introduction of a single window system to facilitate export perishable

agricultural produce with an aim to reduce translation and handling cost.

2) This system will involve creation of multi-functional nodal agencies.These

agencies will be accredited by APEDA.

Announcement for Leather Export:

On the payment of 50% applicable export duty. Leather sector shall be

allowed re-export of unsold imported raw hides and skins and semi finished leather

from public bounded ware houses.

Announcement for Tea Exports:

1. The existing minimum addition under advance authorization scheme for

export of tea is 100%.It has been reduced from the existing 100% to50%.

2. DTA(Domestic Tariff Area) sale limit of instant tea by EOU units increased

from 30% to 50%.

3. Export of tea has been included under VKGUY Scheme benifits.

Announcement for Pharma Exports:

1. Export Obligation for advance authorization issued increased from existing 6

months to 36 months.

2. Pharma sector included under MLFPS for countries in Africa and Latin

America & some countries in Oceania and Far East.

Announcement for Handloom Exports:

The claims under focus Product Scheme, the requirement of Handloom mark

was required earlier. This has been removed.

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Scheme for Export Oriented Units

1. EOUs have been allowed to sell products manufactured by them in

DTA(Domestic Tariff Area) upto a limit of 90% instead of existing

75%,without changing the criteria of similar goods, within the overall

entitlement of 50% for DTA sell.(This means that instead of 75% these units

can sell up to 90% of these products in the domestic markets).

2. EOU allowed to procure finished goods for consolidation along with their

manufactured goods , subject to certain safeguards.

3. Extension off block period by one year for calculation of Net Foreign

Exchange earnings of EOUs kept under consideration.

4. EOU allowed CENVAT Credit Facility.

Announcement for Value Added Manufacturing (VAM)

To encourage Value Added Manufactured export, a minimum 15% value

addition on imported inputs Advance Authorization Scheme.

Announcement for Project Export:

Project Exports and a large number of manufactured goods covered under FPS

and MLFPS.

Announcement in DEPB Scheme:

Custom duty component on fuel where fuel is allowed as a consumable in

Standard Input-Output Norm included in factoring.

Easy Import of Sample:

Number of sample pieces has been increased form the existing 15 to 50. This

will facilitate the duty free import of samples by exporters.

Convertibility of Shipping Bills:

Greater flexibility has been permitted to allow conversion of Shipping Bills

form one Export Promotion scheme to other scheme. Customs shall now permit this

conversion within three months instead of the present limited period of only one

month.

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Reduction in Transaction Costs

1. Dispatch of imported goods directly from the Port to the site has allowed

under Advance Authorisation scheme for deemed supplies. Customs shall now

permit this conversion within three months, instead of the present period of

only one month.

2. Maximum applicable fee for 18 Authorisation licence application has been

reduced to Rs.100000 from the existing Rs. 150000 (for manual application)

and Rs. 50000 from the existing Rs. 75000(for EDI applications).

3. No fee shall now be charge for grant of incentives under the schemes in FTP.

Disposal of Manufacturing Wastes

Disposal of manufacturing wastes/scrap will not e allowed after payment of

applicable excise duty also before fulfilment of export obligation under Advance

Authorization and EPCG Scheme. Earlier it was allowed after fulfilment of export

obligation.

Announcement for Sports Weapon:

License for the imports of sports weapon will be issued now by Regional

Authorities provided a NOC (No Objection Certificate) is issued by Ministry of

Sports and Youth Affairs. Earlier DGFT Headquarter had to be approached for this.

Announcement for Medical Devices:

To solve the problem of medical device industry, the procedure for issue of

Free Scale Certificate has been simplified and the validity of each certificate has been

increased from 1 year to 2 years.

Trade Position of India with U.S.A during the Trade Policy Periods

Trade and Commerce form a crucial component of the rapidly expanding and

multifaceted relations between India and U.S.A. From a modest $ 5.6 billion in 1990,

the bilateral trade in merchandise goods has increased to $ 63.7 billion in 2013

representing an impressive 1037.5% growth in a span of 23 years.

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India’s merchandise exports to U.S.A grew by 9.7% from $ 9.66 during the

period January – March 2013 to $ 10.60 billion during the period January – March

2014. US exports of merchandise to India fell by 9.7% from $ 5.17 billion during the

period January – March 2013 & $ 4.66 billion during the period January – March

2014. India – U.S bilateral merchandise trade stands at $ 15.26 billion during the

period January – March 2014.

1. India US bilateral Relations have developed into a global strategic partnership,

based on increasing convergence of interests on bilateral, regional and global

issues. Regular exchanges of high level political in its composed with wide

ranging dialogue architecture has enabled sustained momentum to bilateral

cooperation and helped to establish a long term framework for India-U.S

global strategic partnership. Now the bilateral cooperation between India-

U.S.A has become broad based and multispectral coming almost all the

aspects such as Trade and Investment, Defence and security, education,

Science and Technology, cyber security, high technology, civil nuclear

energy, space technology and applications, clean energy, environment,

agriculture and health.

2. Ministerial level strategic dialogue has been launched between India and

U.S.A , co-chaired by External affairs minister and the U.S secretary of state

in July 2009 which focuses on bilateral Relations along five pillars of mutual

interests, namely, Strategic Cooperation, Energy and Climate Change,

Education and Development, Economy, Health and Innovation, Science and

Technology.

The first round of Strategic Dialogue was held in Washington D.C in June

2010. The fourth meeting of strategic Dialogue was held in New Delhi in June

2013.

3. Foreign Office Consultations

Regular contacts at Political and Official level.

4. Civil Nuclear Cooperation

Begin the Implementation of Civil Nuclear Agreements.

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5. Defence Cooperation

In 2005 a new chapter regarding the Relations of India and U.S.A has come

into existence about Defence Cooperation in which both the sides are in

consultation to upgrade the defence Relationship by simplifying technology

transfer policies and exploring possibilities of co-development and

coproduction of defence system.

In 2013 a joint declaration on Defence Cooperation highlighted the deeping of

Indo-US relations. Then both the countries engaged in several bilateral

institutional mechanism includes Defence Policy Group (DPG). Defence Joint

Working Group (DJWG), Senior Technology Security Group (STSG), Joint

Technical Group (JTG) etc.

6. Counter Terrorism

7. Strategic Consultations

India and U.S have intensified and expanded their strategic consultations

recent years with dialogues covering East Asia, Central Asia and West Asia.

8. Trade and Economics

Total bilateral trade in goods touched USD 63.7 billion in 2013, registering

growth of about 1.7% our the last year. Indian exports accounted for USD 41.8

billion, whereas US exports stood at USD 21.9 billion. The merchandise trade

in first three months January to March 2014 was USD 15.26 billion growing at

2.94% over the same period last year. Total Trade in services in 2011 (the last

year for which the completed data is available) was USD 54.42 billion,

registering a growth Rate of 16.12%. In 2011, Indias exports to the United

States reached USD 26.80 billion and US exports to India accounted for USD

27.62 billion.

There are several Dialogue mechanism to strengthen bilateral

engagement an economic and trade issues including a ministerial Trade Policy

Forum (TPF) and a ministerial level Economic and Financial Partnership. The

last meeting of India-U.S Financial and Economic Partnership may held in

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Washington in October 2013. India and U.S are negotiating a Bilateral

Investment Treaty (BIT).

As a part of Economic Dialogue:

Commercial Dialogue has been set up to cover.

a) Trade Defence measures.

b) Small and Medium enterprises.

c) Capacity building on Intellectual Property Rights (IPR).

In April 2014 both the countries have same extended the India-US

Commercial Dialogue for another two years until March 2016.

10. Mutual Investments

U.S is the fifth largest sources of FDI in India. As per the official statistics – of

March 2014. The commutation FDI inflows from the US from April 2000 to

March 2014 amounted to about $ 11.92 billion constituting nearly 5.48% of

the total FDI into India.

During the FY 2013-14 (From April 2013 to March 2014) the FDI inflows

from U.S.A into India were $ 806 million contributing 6% of the total FDI inflow

during this period.

A recent study of 68 Indian companies which have invested in U.S conducted

by the Confederation of the Indian Industry (CII) has found that these companies

invested nearly US $ 17 billion in US and about one third of the companies are

actively engaged in (R&D) having spent over US $ 340 million in (R and D) .

Trade Organisations

Trade organisations are the associations that are establish to liberalize. The

trade among the member countries through voluntary participation. The various

treaties like SAFTA, NAFTA, SAARC, BRICS all have the aim to liberalize the trade

between the member countries smoothly. These tradeorganisations are established for

the specific purposes.

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List of some of the Trade organisations

World Trade Organisation (WTO).

International Organisation for Standardization (ISO)

United Nations Conference on Trade and Development (UNCTAD).

International Trade Centre.

World Customs Organisation (WCO).

World Fair Trade Organisation.

US looking at Reinvigoration India-US Relationship: Rhodes

The U.S.A is excited about the prospect of “reinvigorating” Indo-US ties

under the new Indian Government and is looking forward to a meeting between

President Barack Obama and Prime Minister Narinder Modi, a top white house

official has said.

Economy and Trade, energy and climate change, counter terrorism, regional

security and Asia Pacific region are expanded to be the focus area when Obama meets

Modi. This fall, which would also be an opportunity for the two leaders to establish

personal equations for the years to come, Deputy National Security advisor Ben

Rhodes said.

“We are very excited about the prospect of giving new shot of energy in the

US-India relationship. Having a strong Prime Minister who is now to office has

ambitions, I think would be helpful” Rhooks said.

Excited about a strong Modi Government in New Delhi the White House is

eagled looking at “Reinvigorating” the India-U.S.A Relationship.

Modi was clear in his conversation with the (US) President and his

conversation Publicity that the primary focus of his is going to be reinitialising the

Indian economy, which is good for the U.S.A.

As per the Prime Minister of India he is quite clear in his vision to accelerate

the economy of India as the basic contents like Trade, Investment and

Commerciality’s is going to be focus.

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It is has also been stated by the US officials that we are very much support the

efforts that can be taken domestically within India to promote growth, because that

would definitely benefit the United States.

Bi-lateral Trade of India and U.S.A

In the present time India and U.S.A have come to play an increasingly

dominant role in the world economic affairs. Both the nations have posted

aggressivegrowthRatesandamongstotherthings. Today India-US relations have

becomes increasingly broad based covering cooperation in areas such as the trade and

economic, defence and security, education, science and technology, high technology,

civil nuclear energy, space technology and applications, clean energy, environment

and health. Among all these Trade Relationis one of most preferable and fertile tie by

which all the other issues remain quite intact. Therefore in the present study it has

been tried that on the priority bases we must study the trade Relations of India with

U.S.A. Further more people to people interaction provides further utility and strength

to the bilateral relationships. There have been regular contacts at political and official

levels and wide ranging dialogue architecture on bilateral regional and global issues

has been put in place.

It is well known truth that economics is basically originated from Polity that is

why we always feel the fragrance of politics in economy and we cannot also avoid it.

If we have a brief look over the historic trade Relations of India with U.S.A. Let us

have a brief look over the history of Indo-US trade.

India and the United States of America have had trade Relations for over two

hundred years. Indo-American trade had started in the eighteenth century when the

Yankee Clipper. Ships brought ice from Boston and reached Calcutta, and returned to

America carrying spices and textiles from India. Limited diplomatic Relations were

established in 1790 when US President George Washington appointed a consul at

Calcutta. India Freedom fighters received friendly help and encouragement from US

people from time to time. Inter-governmental exchanges, tourism and religions

experiences promoted friendly relations between the two countries. But as the time

changes the Indo-US Relations also seems to look somewhat under the influence of

irritation and an ear of cold war started between the two nations. Later on in (1992 –

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2000) the Clinton administration of the US took the initiative by advocating

confidence building measures. An important improvement in the Indo-US Relations

took place in the area of economic policies. The United States welcomed

liberalisation of Indian economy and India’s Policy of inviting more and more foreign

investment in industry and development projects.

In the recent years in the years 2009 the visit of the than Prime Minister Dr.

Manmohan Singh to Washington from 22 – 26 November 2009 as the first state Guest

of President Barack Obama reaffirmed the global strategic partnership between India

and the United States. President Obamas visit to India from 6 – 9 November 2010

imparted further.

Trade and Economic Relations Trade and Economic Partnership between the US and India has been as way

component of the bilateral relationship. A new US Financial and Economic

Partnership to strengthen bilateral engagement or macroeconomic, financial and

investment related issues was launched in New Delhi in April 2010 by the than

Finance Minister Mr. Pranab Mukherjee and US Treasury secretary Timothy

Geithner. The second meeting of India-US Financial and Economic Partnership was

held in Washington D.C. in June 2011.

The Indo-US Trade Policy Forum The Indo-US Trade Policy Forum was established in July 2005 to discuss

issues related to trade. The last and seventh meeting of the TPF took place in

Washington D.C from September 21 – 22 (2010). An agreement on framework for

cooperation on Trade and investment was signed during the visit of the than Minister

of Commerce and Industry Mr. Anand Sharma to U.S.A in March 2010. As part of the

economic Dialogue, a separate Commercial Dialogue has been set up to cover:

a) Trade – Defence measures.

b) Small and Medium Enterprises and

c) Capacity building on intellectual Property Rights (IPRs)

For the greater investment of the private sector in discussion on issues

involving and investments the bilateral India-US CEO’s Forum was reconstituted in

2009. The fourth round of the reconstituted CEO’s Forum to facilitate a structured

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dialogue between the industry and the government was held on 22 September 2011 at

Washington D.C. Separately a Private Sector Advisory Group (PSAG) has also been

created consisting of Prominent Indian and international trade exports to provide

strategic recommendations and insights to the US-India Trade Policy Forum.

The India-US aviation Cooperation Programme (ACP) The India – US aviation Cooperation Programme was establish in 2007 to

further cooperation as a Public Private Partnership between the Indian Ministry of

Civil Aviation and US Federal Aviation Administration, the US Trade and

Development Agency (USTDA) other US government agencies and US aviation

companies. Bilateral trade has diversified and encompasses a wide range of products,

services and technology. An expanding and vibrant architecture of dialogue on

Commercial, economic and technology related issues has given a fillip to this

cooperation. India U.S total merchandise trade was US $ 57.80 billion in 2011. The

two way services trade was US $ 42.50 billion in 2009. The two governments have

resumed technical level negotiations on a bilateral investment trends. A totalization

agreement has also been under discussion for sometimes.

Negotiations of WTO and India Right from the data of membership of India with WTO India have the great

negotiation history with WTO in turn comes to an end with the definite modifications

regarding the trading environment of India with the world. The main also of these

negotiations are to entrance the trading relationship between different countries of the

world as so the India has also made her stance on various trade issues in front of

WTO from time to time. The Recent negotiation of India with WTO was held in Bali

in the ninth ministerial conference of WTO in Indonesia from 3 to 7 December 2013,

strengthened the credibility of the WTO as an institution. The outcome ensured that

the development dimension remains the central focus in the Doha Round. It

reaffirmed India’s leadership role amongst the developing countries and demonstrated

its constructive approach in the negotiations.

India played a Key Role in arriving at a breakthrough and sharing the

agreement. India ensured an outcome which secures its supreme national interests. It

was made amply clear that while being fully preformed to engage, India will never

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compromise on fundamental issues pertaining to food security, livelihood security and

the welfare of its poor.

Recent Trade Policy Measures: From time to time the different Trade Policies of India has been announced to

boost the exports in the Foreign Trade. On 18th of April 2013 besides the union

budget 2013-14 as has the RBI in its monetary and credit policies.

There are some of the Recent Policy Measures Related to budget area as under:-

- Specified machinery for manufacture of leather and leather goods including

foot wear the duty reduced to 5 percent from 7.5 percent.

- Duty on Pre-forms, Precious and Semi-Precious stones reduced to 2 percent

from 10 percent.

- For Readymade garment industry, zero excise duty at fibre stage for cotton

and a duty of 12 percent at the fibre stage for spun yarn made of manmade

fibre. The excise is totally lifted over from the handmade carpets and textile

floor coverings of coir and jute.

- Ships and Vessels exempted from the excise duty.

Credit Related - For availing of trade credit, the period of trade credit should be linked to the

operating cycle and trade transaction.

- The enhanced period of realization and repatriation to India of full export of

goods or software exports was brought down from 12 months to nine months

from the date of export.

- The units located in Special Economic Zones (SEZ) should realize and

repatriate full value of goods / software / services to India within a period of

12 months from the date of export.

Foreign Trade Policy Measures in 2013-14 - The Rupee Export credit interest Rate Subvention Scheme expanded to 101

tariff lines of the engineering sector and six tariff lines of the textile sector.

The validity of this scheme was extended upto 31 March 2014. The Rate of

interest subvention also increased from 2 percent to 3 percent w.e.f. 01-08-

2013.

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- Around 130 new products added for duty credit @ 2 percent to 5 percent of

7.0.b value of exports which included engineering, electronics, chemicals,

pharma and textiles.

- Around 57 new products and two new countries have been added under the

Market Linked Focus Product Scheme (MLFPS). The (MLFPS) extended till

31 March 2014 for export to U.S.A in respect of number of items like textiles

and clothing. It is further extended from 1-4-2014.

- Incremental Exports Incentivization scheme has been extended for the year

2013-14 with 53 Latin American and African Countries added to list w.e.f. 1-

4-2013.

- For the payment of Service Tax the scripts of Focus Product Scheme (FPS),

Focus Market Scheme (FMS) and Vishahs Krishi and Gram Udyog Yojana

(VKGUY) can be used now.

- Three new towns have been declared as towns of export excellence (TEE).

These are Gurgaon (textiles), morbi (ceramic tiles and sanitryware) and

Toothkudi (Marine).

- Around the new products including 153 hi-tech products added for duty credit

@ 2 eprcent of f.o.b value of exports on 10-07-2013 (effective from 15-08-

2013).

- Thirteen Products have been added under the MLFPS, allowing 2 percent

additional benefit.

Special Economic Zones (SEZ’S) In a span of eight years the SEZ Act and Rubs were notified in February 2006.

The formal approval has been granted to set up 566 SEZ’s out of which 388 have

been notified. At present the total of 184 special economic zones are exporting on 31

March 2014 the total number of persons employed in the Special Economic Zones are

12, 83309. The physical exports from the SEZ’s increased from Rs. 4, 76159 crores in

2013-13 to Rs. 4, 94, 77 crores in 2013-14 which registered a growth of 4.0 percent in

rupee terms. The approximate investment including the newly notified SEZ’s after the

SEZ Act 2005 is Rs. (570042) crores. Through the automatic route the SEZ are

facilitated with the 100 percent FDI in them.

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