INDIA’S FOREIGN TRADE AND LEGISLATION

E-LEARNING 2012UNIT – I

India’s foreign trade since 1951 – Salient features and special provisions of 1997-2002 Policy, 2002-2007 policy – New Foreign trade policy 2004-2009 -Impact of recent changes in Foreign Trade Policy.

UNIT – II

Legal framework of India’s Foreign Trade – The Foreign Trade Development and Regulation Act (1992) – Import and Export (Control) Act (1947) – Foreign Trade Regulation Rules (1993) – Foreign Trade (exemption from application of rules in certain cases) order 1993 – Notification under Foreign Trade (development & regulation) Act 1992 – Regulatory environment of International Business – Exchange control regulations in India.

UNIT – III

Technology import contract – Technology Policy and environment – Selection and transfer issues – Law for protection of Intellectual Property Rights, Patents, Trademarks, etc.,

UNIT – IV

Law of product liability – Laws relating to customs practices and procedures – settlement of International Trade disputes – Carriage of goods by sea, air and over road. UNIT – V

Case Studies (based on the above units).

Note: Question paper shall cover 100% Theory

Books for References:

1. Mercantile Law : N. D. Kapoor 2. International Marketing, Analysis and Strategy :Sakonkvisit and Shaw 3. International Trade and Export Management : Francis Cherunilum 4. International Trade : M. L. Varma 5. Export Management : T. A. S. Balagopal

UNIT I

India’s foreign trade since 1951 – Salient features and special provisions of 1997-2002 Policy, 2002-2007 policy – New Foreign trade policy 2004-2009 -Impact of recent changes in Foreign Trade Policy.

PART A(1 MARK)

1. Foreign trade policy is otherwise known as EXIM POLICY.

2. Foreign trade policy 2004-2009 is effective from 1 st april 2004

3. Current commerce minister of India ANAND SHARMA.

4. In 2000 export promotion scheme was introduced which is called as DFRC scheme.

PART B(5 MARK)

1. Explain in brief , the objectives of India’s foreign trade policy

For achieving these objectives, the following strategies need to be adopted:

Unshackling of controls and creating an atmosphere of trust and transparency to

unleash the innate entrepreneurship of our businessmen, industrialists and traders.

Simplifying procedures and bringing down transaction costs.

Neutralizing incidence of all levies and duties on inputs used in export products,

based on the fundamental principle that duties and levies should not be exported.

Facilitating development of India as a global hub for manufacturing, trading and

services.

Identifying and nurturing special focus areas which would generate additional

employment opportunities, particularly in semi-urban and rural areas, and developing a

series of 'Initiatives' for each of these.

Facilitating technological and infrastructure up gradation of all the sectors of the

Indian economy, especially through import of capital goods and equipment, thereby

increasing value addition and productivity, while attaining internationally accepted

standards of quality.

Activating our Embassies as key players in our export strategy and linking our

Commercial Wings abroad through an electronic platform for real time trade intelligence

and enquiry dissemination.

2. What is India’s Foreign Trade Policy

India Foreign Trade Policy: Kamal Nath, Union Minister for Commerce &

Industry, announced the India Foreign Trade Policy for the five years beginning 2004. It is

significant now to have a Foreign Trade Policy in place of the erstwhile Export-Import

Policy. In it, Mr. Kamal Nath has tried to articulate trade policy in terms of the nation's

development objectives particularly employment generation, which finds a prominent place

in the Common Minimum Programme. However, the Government has still a long way to

go towards fully integrating the trade policy with the development policy.

Following are the highlights of the new India Foreign Trade Policy for the five-year

period beginning 2004:

India's percentage share in global merchandise trade to be doubled by 2009.

Thrust on employment generation, especially in semi-urban and rural areas.

Trade procedures to be simplified and transaction costs to be reduced

Special focus areas to be identified and nurtured to facilitate development of India as

a global hub for manufacturing, trading and services.

A new scheme called Vishesh Krishi Upaj Yojna introduced to boost exports of

fruits, vegetables, flowers, minor forest produce and their value-added products.

Import of seeds, bulb, tubers and planting material liberalized.

3. Explain India’s Foreign Trade Policy 2004-09

The Strategy that will be followed in the India Foreign Trade Policy 2004-09 are:

(a) it is for the first time that a comprehensive India Foreign Trade Policy is being

notified. The India Foreign Trade Policy takes an integrated view of the overall

development of India’s foreign trade.

(b) The key strategies are:

Unshackling of controls

Creating an atmosphere of trust and transparency.

(c) Adopting the fundamental principle that duties and levies should not be exported.

Government is committed to resolving all outstanding problems and disputes

pertaining to the past policy periods through the Grievance Redressal Committee

set up recently, for condoning delays, regularizing breaches by exporters in bonafide

cases, resolving disputes over entitlements, granting extensions for utilization of

licenses etc. The atmosphere of partnership between Government and Business will

be enhanced and taken forward.

4. Explain Foreign Trade Policy ( Exim-Policy ) 2009 - 2014

Foreign Trade has gained immense importance in India in the recent years. The

export import (exim) policy of India has laid guidelines for India to become a major

player in world trade, an all encompassing; comprehensive view needs to be taken for

the overall development of the country’s foreign trade. The new exim policy states

that reasonableness and consistency among trade and other economic policies is

important for maximizing the contribution of such policies to development. The

foreign trade policy implies in its preamble that while incorporating the existing

practice of enunciating an annual exim policy, it is necessary to go much beyond and

take an integrated approach to the developmental requirements of India’s foreign

trade.

The exim policy of India can be viewed at our website which is updated on a regular

basis. The import laws of India are governed by the foreign trade policy. All

exporters/importers trading from India have to adhere to the foreign exim policies in

order to gain benefits on the trade front.

5. What are the Foreign Trade Policy of India?

The Govt. of India, Ministry of Commerce and Industry announce Export Import Policy

every five years. The current policy covers the period 2002-2007. The Export Import Policy

(Foreign Trade Policy) is updated every year on the 31st of March and the modifications,

improvements and new schemes are effective w.e.f. 1st April of every year.

Context of new Foreign Trade Policy

Trade is not an end in itself, but a means to economic growth and national development.

The primary purpose is not the mere earning of foreign exchange, but the stimulation of

greater economic activity.

For India to become a major player in world trade, an all encompassing, comprehensive

view needs to be taken for the overall development of the country's foreign trade.

While increase in exports is of vital importance, we have also to facilitate those imports

which are required to stimulate our economy. Coherence and consistency among trade and

other economic policies is important for maximizing the contribution of such policies to

development. Thus, while incorporating the existing practice of enunciating an annual

Foreign Trade Policy, it is necessary to go much beyond and take an integrated approach to

the developmental requirements of India's foreign trade.

The Foreign Trade Policy is built around two major objectives. These are:

To double our percentage share of global merchandise trade within the next five

years; and

To act as an effective instrument of economic growth by giving a thrust to

employment generation.

STRATEGY

For achieving these objectives, the following strategies need to be adopted:

Unshackling of controls and creating an atmosphere of trust and transparency to

unleash the innate entrepreneurship of our businessmen, industrialists and traders.

Simplifying procedures and bringing down transaction costs.

Neutralizing incidence of all levies and duties on inputs used in export products,

based on the fundamental principle that duties and levies should not be exported.

Facilitating development of India as a global hub for manufacturing, trading and

services.

Identifying and nurturing special focus areas which would generate additional

employment opportunities, particularly in semi-urban and rural areas, and developing a

series of 'Initiatives' for each of these.

Facilitating technological and infrastructure up gradation of all the sectors of the

Indian economy, especially through import of capital goods and equipment, thereby

increasing value addition and productivity, while attaining internationally accepted

standards of quality.

Activating our Embassies as key players in our export strategy and linking our

Commercial Wings abroad through an electronic platform for real time trade intelligence

and enquiry dissemination.

PART C(8MARK)

1.The new Policy envisages merchant exporters and manufacturer exporters, business

and industry as partners of Government in the achievement of its stated objectives and

goals – Discuss.

The new Exim-Policy is essentially a roadmap for the development of India's foreign

trade. It contains the basic principles and points the direction in which we propose to go. By

virtue of its very dynamics, a trade policy cannot be fully comprehensive in all its details. It

would naturally require modification from time to time. We propose to do this through

continuous updating, based on the inevitable changing dynamics of international trade. It is

in partnership with business and industry that we propose to erect milestones on this

roadmap. With a view to doubling our percentage share of global trade within 5 years and

expanding employment opportunities, especially in semi urban and rural areas, certain

special focus initiatives have been identified for the agriculture, handlooms, handicraft,

gems & jewellery and leather sectors.

AGRICULTURE

A new scheme called the Vishesh Krishi Upaj Yojana (Special Agricultural Produce

Scheme) for promoting the export of fruits, vegetables, flowers, minor forest produce, and

their value added products has been introduced (Para 3.8).

Funds shall be earmarked under ASIDE for development of Agri Export Zones (AEZ)

Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.

Import of capital goods shall be permitted duty free under the EPCG Scheme

Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.

HANDLOOMS

Specific funds would be earmarked under MAI/ MDA Scheme for promoting handloom

exports

Duty free import entitlement of specified trimmings and embellishments shall be 5% of FOB

value of exports during the previous financial year.

Duty free import entitlement of hand knotted carpet samples shall be 1% of FOB value of

exports during the previous financial year.

Duty free import of old pieces of hand knotted carpets on consignment basis for re-export

after repair shall be permitted.

New towns of export excellence with a threshold limit of Rs 250 crore shall be notified.

HANDICRAFTS

New Handicraft SEZs shall be established which would procure products from the cottage

sector and do the finishing for exports

Duty free import entitlement of trimmings and embellishments shall be 5% of the FOB value

of exports during the previous financial year. The entitlement is broad banded, and shall

extend also to merchant exporters tied up with supporting manufacturers

The Handicraft Export Promotion Council shall be authorized to import trimmings,

embellishments and consumables on behalf of those exporters for whom directly importing

may not be viable Specific funds would be earmarked under MAI & MDA Schemes for

promoting Handicraft exports

CVD is exempted on duty free import of trimmings, embellishments and consumables.

GEMS AND JEWELLERY

Import of gold of 18 carat and above shall be allowed under the replenishment scheme

Duty free import entitlement of consumables for metals other than Gold, Platinum shall be

2% of FOB value of exports during the previous financial year.

Duty free import entitlement of commercial samples shall be Rs 100,000.

Duty free re-import entitlement for rejected jewellery shall be 2% of the FOB value of

exports

Cutting and polishing of gems and jewellery, shall be treated as manufacturing for the

purposes of exemption under Section 10A of the Income Tax Act

LEATHER AND FOOTWEAR

Duty free import entitlement of specified items shall be 5% of FOB value of exports during

the preceding financial year.

The duty free entitlement for the import of trimmings, embellishments and footwear

components for footwear (leather as well as synthetic), gloves, travel bags and handbags

shall be 3% of FOB value of exports of the previous financial year. The entitlement shall also

cover packing material, such as printed and non printed shoeboxes, small cartons made of

wood, tin or plastic materials for packing footwear

Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs

duty.

Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is

permitted CVD is exempted on lining and interlining material notified at S.No 168 of

Customs Notification No 21/2002 dated 01.03.2002

CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC(HS).

2. What are the export promotion schemes?

A. Target plus scheme to accelerate growth of exports.

B. Vishesh krishi upaj yojna for agro-exports.

C. Served from India scheme

D. Additional flexibility under EPCG

E. Import of fuel under DFRC entitlement allowed to be transferred to marketing

agencies authorized by Min of Petroleum and Natural Gas.

F. The DEFB scheme will be continued.

G. EOUs shall be exempted from Service Tax in proportion to their exported goods and

services.

H. A scheme to establish Free Trade and Warehousing Zone is introduced to create

trade-related infrastructure to facilitate import and export with freedom to carry out

trade transactions in free currency.

In order to showcase India's industrial and trade prowess to its best advantage and leverage

existing facilities to enhance the quantity of space and service the govt plans to transform

Pragati Maidan into a world-class complex with visitor friendliness ingress and egress

system.

A Note on Special Economic Zones (SEZ)

SEZ is growth engines that can boost manufacturing, augment exports and generate

employment. The private sector has been actively associated with the development of SEZs.

The SEZs require special fiscal and regulatory regime in order to impart a hassle free

operational regime encompassing the state of the art infrastructure and support services. The

proposed legislation on SEZs to be enacted in the near future would cover the concepts of the

developer and co- developer , incorporate the provision of virtual SEZs, have fiscal

concessions under the Income Tax and Customs Act, provide for Offshore Banking Units

(OBUs) etc.

Out of the 24 new Special Economic Zones (SEZs) approved for establishment (as on

31/3/2004), 3 SEZs at Salt Lake (Manikanchan), Indore and Jaipur have become operational

and another two Zones are now ready for operation. The new SEZs are being set up largely

by the State Governments or their agencies or by the private sector in association with the

State Governments or by the private sector on their own. Periodic meetings are held by the

Department of Commerce with the State Governments/promoters of the SEZs to expedite the

projects. Eight SEZs at Kandla and Surat (Gujarat), Santa Cruz (Maharashtra), Cochin

(Kerala), Chennai (Tamil Nadu), Vishakapatnam (Andhra Pradesh), Falta (West Bengal) and

NOIDA (UP) converted from Export Processing Zones (EPZs) are operational.

EnquiNRI Investment

To attract foreign investment in India, Government is offering several facilities to Non

Resident Indians (NRIs), Persons of Indian Origin (PIO) and Overseas Corporate Bodies

(OCBs).

NRIs/PIOs/OCBs/ are permitted to open bank accounts in India out of funds remitted from

abroad, foreign exchange brought in from abroad or out of funds legitimately due to them in

India, with authorised dealer.

Reserve Bank has granted general permission to NRIs/PIOs, for undertaking direct

investments in Indian companies, under the Automatic Route purchase of shares under

Portfolio Investment Scheme, investment in companies and proprietorship/partnership

concerns on non-repatriation basis and for remittances of current income. NRIs/PIOs do not

have to seek specific permission for approved activities under these schemes.

3.Direct Investment Opportunities Available to NRIs/PIOs/OCBs ?

1. Automatic Route Of RBI With Repatriation Benefits: NRIs/OCBs can invest in

shares/convertible debentures of Indian companies under the Automatic Route without

obtaining Government or RBI permission except for a few sectors where FIPB/SIA

permission is necessary, or where the investment can be made only up to a certain percentage

of paid up capital.

2. Investment With Government Approval: Investments not eligible under the Automatic

Route, are considered by the Foreign Investment Promotion Board(FIPB) a high Powered

inter-ministerial body under the chairmanship of Secretary, Department of Industrial Policy

& Promotion, SIA, subject to sectoral limits/norms. These investments also enjoy full

repatriation benefits.

3. Other Investments with Repatriation Benefits:

1. Investment in Domestic Mutual Funds

2. Investment in Bonds Issued By Public Sector Undertakings

3. Purchase of Shares Of Public Sector Enterprises (By NRIs/PIOs/OCBs)

4. Deposits with Companies (For A Minimum Period Of Three Years)

5. Investment in Government Securities/Shares

4. Investment Up to 100% Equity without Repatriation Benefits:

1. Capital Contribution to

any Proprietary or

Partnership Concern

NRIs can invest by way of capital contribution in any proprietary or

partnership concern in India provided the firm or the proprietary concern is not

engaged in any agricultural/plantation activities or real estate business or Print

Media on non-repatriation basis subject to the certain conditions.

2. New Issues of

Shares/Debentures of

Indians Companies

NRIs/OCBs as been ranted general permission to subscribe to the

shares/convertible debentures of an Indian company on non-repatriation basis,

and to an Indian company to issue shares or convertible debentures by way of

new/rights/bonus issue to NRIs/OCBs on non-repatriation basis provided that

the investee company is not engaged in agricultural/plantation activities or real

estate business (excluding real estate development i.e. development of

property or construction of houses) or chit fund or is not a Nidhi company.

5. Other Investments by NRIs/OCBs without Repatriation Benefits

Investment in Non Convertible Debentures

Money Market Mutual Funds

Deposits With Companies

Commercial Papers (OCBs are presently not permitted)

UNIT II

Legal framework of India’s Foreign Trade – The Foreign Trade Development and

Regulation Act (1992) – Import and Export (Control) Act (1947) – Foreign Trade Regulation

Rules (1993) – Foreign Trade (exemption from application of rules in certain cases) order

1993 – Notification under Foreign Trade (development & regulation) Act 1992 – Regulatory

environment of International Business – Exchange control regulations in India.

PART A(1MARK)

1. EXPAND FTP

Foreign Trade Policy

2. EXPAND FTDR

Foreign Trade Development &Regulation Act

3. Define Monetary policy

Monetary policy is the process by which the monetary authority of a country

controls the supply of money, often targeting a rate of interest for the purpose

of promoting economic growth and stability The official goals usually include

relatively stable prices and low unemployment. Monetary theory provides

insight into how to craft optimal monetary policy.

PART B(5MARK)

1. What are the Legal framework of India’s Foreign Trade?

The Foreign Trade Policy 2 009-2014 (FTP), incorporating provisions relating to

export and import of goods and services, shall come into force with effect from 2 7th

August, 2 009 and shall remain in force upto 31 st March, 2014 unless otherwise

specified. All exports and imports upto 2 6th August 2 009 shall be accordingly

governed by the FTP 2004-2009. Central Government reserves right in public interest

to make any amendments by notification to this Policy in exercise of powers conferred

by Section 5 of FT(D&R) Act.

2. What is Foreign Trade Policy?

In India, the main legislation concerning foreign trade is the Foreign Trade

(Development and Regulation) Act, 1992. The Act provides for the development and

regulation of foreign trade by facilitating imports into, and augmenting exports from, India

and for matters connected therewith or incidental thereto. As per the provisions of the Act,

the Government :- (i) may make provisions for facilitating and controlling foreign trade; (ii)

may prohibit, restrict and regulate exports and imports, in all or specified cases as well as

subject them to exemptions; (iii) is authorised to formulate and announce an export and

import policy and also amend the same from time to time, by notification in the Official

Gazette; (iv) is also authorised to appoint a 'Director General of Foreign Trade' for the

purpose of the Act, including formulation and implementation of the export-import policy.

Accordingly, the Ministry of Commerce and Industry has been set up as the most

important organ concerned with the promotion and regulation of foreign trade in India. In

exercise of the powers conferred by the Act, the Ministry notifies a trade policy on a regular

basis with certain underlined objectives. The earlier trade policies were based on the

objectives of self-reliance and self-sufficiency. While, the later policies were driven by

factors like export led growth, improving efficiency and competitiveness of the Indian

industries, etc.

With economic reforms, globalization of the Indian economy has been the guiding factor in

formulating the trade policies. The reform measures introduced in the subsequent policies

have focused on liberalization, openness and transparency. They have provided an export

friendly environment by simplifying the procedures for trade facilitation. The announcement

of a new Foreign Trade Policy for a five year period of 2004-09, replacing the hitherto

nomenclature of EXIM Policy by Foreign Trade Policy (FTP) is another step in this

direction. It takes an integrated view of the overall development of India’s foreign trade and

provides a roadmap for the development of this sector. A vigorous export-led growth strategy

of doubling India’s share in global merchandise trade (in the next five years), with a focus on

the sectors having prospects for export expansion and potential for employment generation,

constitute the main plank of the policy. All such measures are expected to enhance India's

international competitiveness and aid in further increasing the acceptability of Indian exports.

The policy sets out the core objectives, identifies key strategies, spells out focus initiatives,

outlines export incentives, and also addresses issues concerning institutional support

including simplification of procedures relating to export activities.

3. What are the objectives ?

Unshackling of controls and creating an atmosphere of trust and transparency;

Simplifying procedures and bringing down transaction costs;

Neutralizing incidence of all levies on inputs used in export products;

Facilitating development of India as a global hub for manufacturing, trading and

services;

Identifying and nurturing special focus areas to generate additional employment

opportunities, particularly in semi-urban and rural areas;

Facilitating technological and infrastructural upgradation of the Indian economy,

especially through import of capital goods and equipment;

Avoiding inverted duty structure and ensuring that domestic sectors are not

disadvantaged in trade agreements;

Upgrading the infrastructure network related to the entire foreign trade chain to

international standards;

Revitalizing the Board of Trade by redefining its role and inducting into it experts on

trade policy; and

Activating Indian Embassies as key players in the export strategy.

The FTP has identified certain thrust sectors having prospects for export expansion and

potential for employment generation. These thrust sectors include: (i) Agriculture; (ii)

Handlooms & Handicrafts; (iii) Gems & Jewellery; and (iv) Leather & Footwear.

Accordingly, specific policy initiative for these sectors has been announced.

For the agriculture sector :-

A new scheme called "Vishesh Krishi Upaj Yojana (Special Agricultural

Produce Scheme)" to boost exports of fruits, vegetables, flowers, minor forest

produce and their value added products has been introduced. Under the scheme,

exports of these products qualify for duty free credit entitlement (5 per cent of Free

On Board (f.o.b) value of exports) for importing inputs and other goods;

Duty free import of capital goods under Export Promotion Capital Goods

(EPCG) scheme, permitting the installation of capital goods imported under EPCG

for agriculture anywhere in the Agri- Export Zone (AEZ);

Utilizing funds from the 'Assistance to States for Infrastructure Development

of Exports (ASIDE) scheme' for development of AEZs;

Liberalization of import of seeds, bulbs, tubers and planting material, and

liberalization of the export of plant portions, derivatives and extracts to promote

export of medicinal plants and herbal products.

For the handlooms and handicraft sector :-

Enhancing to 5 per cent of Free On Board (f.o.b) value of exports duty free

import of trimmings and embellishments for handlooms and handicrafts;

Exemption of samples from countervailing duty (CVD);

Authorizing Handicraft Export Promotion Council to import trimmings,

embellishments and samples for small manufacturers; and

Establishment of a new Handicraft Special Economic Zone.

For the gems and jewellery sector :-

Permission for duty free import of consumables for metals other than gold and

platinum up to 2 per cent of Free On Board (f.o.b) value of exports;

Duty free re-import entitlement for rejected jewellery allowed up to 2 per cent

of f.o.b value of exports;

Increase in duty free import of commercial samples of jewellery to Rs.1 lakh;

and

Permission to import of gold of 18 carat and above under the replenishment

scheme.

For the leather and footwear sector, the specific policy initiatives are mainly in

the form of reduction in the incidence of customs duties on the inputs and plants

and machinery. These include:-

Increase in the limit for duty free entitlements of import trimmings,

embellishments and footwear components for leather industry to 3 per cent of Free

On Board (f.o.b) value of exports and that for duty free import of specified items for

leather sector to 5 per cent of f.o.b value of exports;

Import of machinery and equipment for Effluent Treatment Plants for leather

industry exempted from customs duty; and

4. WHAT ARE THE EXCHANGE CONTROL IN INDIA ?

Regulation at government level of money-flows in and out of a country.

Exchange controls are usually maintained in the belief that they help to protect a

country'scurrency and its foreign-exchangeres erves. The controls may restrict

investments by residents overseas and non-residents' investments andparticip ation in

the local market. Big international currency movements tend not to obey such

controls. Sometimes individuals are limited in the amount of currency they may take

abroad for holidays. The UK abandoned exchange controls in 1979. In Australia,

exchange controls which had persisted in one form or another since 1939 were

virtually abolished in December 1983 when the $A was floated.

Types of controls that governments put in place to ban or restrict the amount

of foreign currency or local currency that is allowed to be traded or purchased.

Common exchange controls include banning the use of foreign currency and

restricting the amount of domestic currency that can be exchanged within the country.

Typically, countries that employ exchange controls are those with weaker economies.

These controls allow countries a greater degree of economic stability by limiting the

amount of exchange rate volatility due to currency inflows/outflows.

5. What are the Objectives of exchange control in India?

(i) Protection of Balance of Payments. One of the important objectives of exchange

control is protection of balance of payments. When the balance of payments deficit of a

nation becomes large an chronic an its automatic correction is not possible, certain active

measures have to be adopted. In normal times the adverse balance of payments caused

value of country's currency to fall and helps in restoring equilibrium. But there are

conditions under which a fall in the exchange value and currency has no effect on imports

and exports. Under such situations, measures are adopted to stabilize the exchange value

of currency at level higher than would b possible under free conditions.

(ii) Reducing Burden of Foreign Debt. The exchange value of a currency is sometimes

fixed and maintained at higher level to lighten the burden of foreign debts contracted in terms

of foreign currencies. By overvaluing currency, the foreign exchange earnings of the country

from exports are increased in cases where the demand is inelastic and the prices in therms of

the home currency to be paid for essential imports get reduced.

(iii) Raising the Level of Prices. Sometimes the currency is undervalued to help in

raising certain conditions in thought desirable to stabilize the exchange rate at what can

be called the equilibrium level, i.e., the level determined by market forces. Short-term

fluctuations are eliminated by deliberate action of authorities.

(iv) Elimination of Short-term Fluctuations in Exchange Rate. Exchange regulation in

certain conditions is thought desirable to stabilize the exchange rat at what can be called the

equilibrium level, i.e., the level determined by market forces. Short-term fluctuations are

eliminated by deliberate action of authorities.

(v) Prevention of Export of Capital. When the country suffers from exceptionally

heavy outflow of capital caused by loss of confidence on the part of nationals of the country

or foreigners in the economy of the country or its currency, certain exchange controls over

remittances from and the country are necessary.

(vi) Economic Planning. Exchange control is an important part of economic policy in

any planned economy. Planning involves a very careful use of foreign exchange

resources of the country so that only those goods are imported which are essential for the

implementation of the plans. Exchange controls are resorted to regular the exports and

imports in the light of plans.

(vii) Encouragement of Certain Economic Activities. One of the objectives of

exchange regulations is to encourage certain economic activities in the country. Certain

industries can be developed by reducing the imports of commodities produced by them and

restricting the availability of foreign exchange to pay for them. For example tourist traffic in

the country is encouraged by making available to the tourists home currency at favourable

rates.

Different methods are adopted by Governments to ensure that suitable foreign exchange

controls imposed and operated for the achievement of the desired objectives. Foreign

exchange control was introduced in India in 1939 at the outbreak of World War II-as a

measure under the Defence of India Rules. The primary objective of this control was to

conserve foreign exchange resources of the country for obtaining necessary raw

materials.

It was taken as a temporary device to meet the situation created by war. But since then

the country has almost throughout faced the problem of foreign exchange deficit. The

authorities, therefore, had to continue with the foreign exchange control. In the year 1947

the Foreign Exchange Regulation Act was passed which has been replaced by Foreign

Exchange Regulation Act 1973. (FERA).

PART C(8MARK)

1. Explain The Foreign Trade (Development and Regulation) Act, 1992

1.Short title and commencement:

(1) This Act may be called The Foreign Trade (Development and Regulation)

Act, 1992.

(2) Sections 11 to 14 shall come into force at once and the remaining provisions

of this Act shall be deemed to have come into force on the 19th day of June,

1992.

2. Definitions: In this Act, unless the context otherwise requires:

(a) "Adjudicating Authority" means the authority specified in, or under, section

13;

(b) "Appellate Authority" means the authority specified in, or under, sub-section

(1) of section 15.

(c) "Conveyance" means any vehicle, vessel, aircraft or any other means of

transport including any animal;

(d) "Director General" means the Director General of Foreign Trade appointed

under section 6;

(e) "import" and "export" means respectively bringing into, or taking out of,

India any goods by land, sea or air;

(f) "Importer-Exporter Code Number" means the Code Number granted under

section 7

(g) "Licence" means a licence to import or export and includes a customs

clearance permit and any other permission issued or granted under this Act;

(h) "Order" means any order made by the Central Government under section 3;

and

(i) "Prescribed" means prescribed by rules made under this Act.

Chapter II: Power of Central Government to make Orders and Announce

Export and Import Policy

3. Powers to make provisions relating to imports and exports:

(1) The Central Government may by Order published in the Official Gazette,

make provision for the development and regulation of foreign trade by

facilitating imports and increasing exports.

(2) The Central Government may also, by Order published in the Official

Gazette, make provision for prohibiting, restricting or otherwise regulating, in all

cases or in specified classes of cases and subject to such exceptions, if any, as

may be made by or under the Order the import or export of goods.

(3) All goods to which any Order under sub-section (2) applies shall be deemed

to be goods the import or export of which has been prohibited under section 11

of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall

have effect accordingly.

4. Continuance of existing Orders:

All Orders made under the Imports and Exports (Control) Act, 1947 ( 18 of 1947

), and in force immediately before the commencement of this Act shall, so far as

they are not inconsistent with the provisions of this Act, continue to be in force

and shall be deemed to have been made under this Act.

5. Export and Import Policy:

The Central Government may, from time to time, formulate and announce by

notification in the Official Gazette, the Export and Import Policy and may also,

in like manner, amend that policy.

6. Appointment of Director General and his functions:

(1) The Central Government may appoint any person to be the Director General

of Foreign Trade for the purposes of this Act.

(2) The Director General shall advise the Central Government in the formulation

of the Export and Import Policy and shall be responsible for carrying out that

policy.

(3) The Central Government may, by Order published in the Official Gazette

direct that any power exercisable by it under this Act (other than the powers

under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and

subject to such conditions, by the Director General or such other officer

subordinate to the Director General, as may be specified in the Order.

Chapter III: Importer-Exporter Code Number and Licence

7. Importer-Exporter Code Number: No person shall make any import or

export except under an Importer-Exporter Code Number granted by the Director

General or the officer authorised by the Director General in this behalf, in

accordance with the procedure specified in this behalf by the Director General.

8. Suspension and Cancellation of Importer-Exporter Code Number :

(1) Where:

(a) any person has contravened any law relating to Central Excise or Customs or

Foreign Exchange or has committed any other economic offence under any other

law for the time being in force as may be specified by the Central Government

by notification in the Official Gazette, or

(b) the Director General has reason to believe that any person has made an export

or import in a manner gravely prejudicial to the trade relations of India with any

foreign country or to the interests of other persons engaged in imports or exports

or has brought disrepute to the credit or the goods of the country.

The Director General may call for the record or any other information from that

person and may, after giving to that person a notice in writing informing him of

the grounds on which it is proposed to suspend or cancel the Importer-Exporter

Code Number and giving him a reasonable opportunity of making a

representation in writing within such reasonable time as may be specified in the

notice and, if that person so desires, of being heard, suspend for a period, as may

be specified in the order, or cancel the Importer-Exporter Code Number granted

to that person.

(2) Where any Importer-Exporter Code Number granted to a person has been

suspended or cancelled under sub-section (1), that person shall not be entitled to

import or export any goods except under a special licence granted, in such

manner and subject to such conditions as may be prescribed, by the Director

General to that person.

9. Issue ,suspension and cancellation of Licence :

(1) The Central Government may levy fees, subject to such exceptions, in respect

of such person or class of persons making an application for a licence or in

respect of any licence granted or renewed in such manner as may be prescribed.

(2) The Director General or an officer authorised by him may, on an application

and after making such inquiry as he may think fit, grant or renew or refuse to

grant or renew a licence to import or export such class or classes of goods as may

be prescribed, after recording in writing his reasons for such refusal.

(3) A licence granted or renewed under this section shall-

(a) be in such form as may be prescribed;

(b) be valid for such period as may be specified therein; and

(c) be subject to such terms, conditions and restrictions as may be prescribed or

as specified in the licence with reference to the terms, conditions and restrictions

so prescribed.

(4) The Director General or the officer authorised under sub-section (2) may,

subject to such conditions as may be prescribed, for good and sufficient reasons,

to be recorded in writing suspend or cancel any licence granted under this Act:

Provided that no such suspension or cancellation shall be made except after

giving the holder of the licence a reasonable opportunity of being heard.

(5) An appeal against an order refusing to grant, or renew or suspending or

canceling, a licence shall lie in like manner as an appeal against an order would

lie under section 15.

Chapter IV: Search, Seizure, Penalty and Confiscation

10. Power relating to search and seizure:

(1) The Central Government may, by notification in the Official Gazette,

authorize any person for the purposes of exercising such powers with respect to

entering such premises and searching, inspecting and seizing of such goods,

documents, things and conveyances, subject to such requirements and conditions,

as may be prescribed.

(2) The provisions of the Code of Criminal Procedure, 1973(2 of 1974), relating

to searches and seizures shall, so far as may be, apply to every search and seizure

made under this section.

11. Contravention of provisions of this Act, Rules, Orders and Export and

Import Policy:

(1) No export or import shall be made by any person except in accordance with

the provisions of this Act, the rules and orders made thereunder and the Export

and Import Policy for the time being in force.

(2) Where any person makes or abets or attempts to make any export or import in

contravention of any provision of this Act or any rules or orders made thereunder

or the Export and Import Policy, he shall be liable to a penalty not exceeding one

thousand rupees or five times the value of the goods in respect of which any

contravention is made or attempted to be made, whichever is more.

(3) Where any person, on a notice to him by the Adjudicating Authority, admits

any contravention, the Adjudicating Authority may, in such class or classes of

cases and in such manner as may be prescribed, determine, by way of settlement,

an amount to be paid by that person.

(4) A penalty imposed under this Act may, if it is not paid, be recovered as an

arrear of land revenue and the Importer-Exporter Code Number of the person

concerned, may, on failure to pay the penalty by him, be suspended by the

Adjudicating Authority till the penalty is paid.

(5) Where any contravention of an provision of this Act or any rules or orders

made thereunder or the Export and Import Policy has been, is being, or is

attempted to be made, the goods together with any package, covering or

receptacle and any conveyances shall, subject to such requirements and

conditions as may be prescribed, be liable to confiscation by the Adjudicating

Authority.

(6) The goods or the conveyance confiscated under sub-section (5) may be

released by the Adjudicating Authority, in such manner and subject to such

conditions as may be prescribed, on payment by the person concerned of the

redemption charges equivalent to the market value of the goods or conveyance,

as the case may be.

12. Penalty or confiscation not to interfere with other punishments :

No penalty imposed or confiscation made under this Act shall prevent the

imposition of any other punishment to which the person affected thereby is liable

under any other law for the time being in force.

13. Adjudicating Authority

Any penalty may be imposed or any confiscation may be adjudged under this

Act by the Director General or, subject such limits as may be specified, by such

other officer as the Central Government may, by notification in the Official

Gazette, authorize in this behalf.

14. Giving of opportunity to the owner of the goods, etc:

No order imposing a penalty or of adjudication or of confiscation shall be made

unless the owner of the goods or conveyance or other person concerned, has been

given a notice in writing:-

(a) informing him of the grounds on which it is proposed to impose a penalty or

to confiscate such goods or conveyance; and

(b) to make a representation in writing within such reasonable time as may be

specified in the notice against the imposition of penalty or confiscation

mentioned therein, and if he so desires, of being heard in the matter.

Chapter V: Appeal and Revision

15. Appeal:

(1) Any person aggrieved by any decision or order made by the Adjudicating

Authority under this Act may prefer an appeal:-

(a) where the decision or order has been made by the Director General, to the

Central Government,

(b) where the decision or order has been made by an officer subordinate to the

Director General, or the Director General or to any officer superior to the

Adjudicating Authority authorised by the Director General to hear the appeal,

within a period of forty-five days from the date on which the decision or order is

served on such person:

Provided that the Appellate Authority may, if it is satisfied that the appellant was

prevented by sufficient cause from preferring the appeal within the aforesaid

period, allow such appeal to be preferred within a further period of thirty days;

Provided further that in the case of an appeal against a decision or order

imposing a penalty or redemption charges, no such appeal shall be entertained

unless the amount of the penalty or redemption charges has been deposited by

the appellant;

Provided also that, where the Appellate Authority is of opinion that the deposit to

be made will cause undue hardship to the appellant, it may, at its discretion,

dispense with such deposit either unconditionally or subject to such conditions as

it may impose.

(2) The Appellate Authority may, after giving to the appellant a reasonable

opportunity of being heard, if he so desires, and after making such further

inquiries, if any, as it may consider necessary, make such orders as it thinks fit,

confirming, modifying or reversing the decision or order appealed against, or

may send back the case with such directions as it may think fit, for a fresh

adjudication or decision, as the case may be, after taking additional evidence, if

necessary:

Provided that an order enhancing or imposing a penalty or redemption charges or

confiscating goods of a greater value shall not be made under this section unless

the appellant has been given an opportunity of making a representation, and if he

so desires, of being heard in his defence.

(3) The order made in appeal by the Appellate Authority shall be final.

16. Revision:

The Central Government, in the case of any decision or order, not being a

decision or order made in an appeal, made by the Director General, or the

Director General in the case of any decision or order made by any officer

subordinate to him, may on its or his own motion or otherwise, call for and

examine the records of any proceeding in which a decision or an order imposing

a penalty or redemption charges or adjudicating confiscation has been made and

against which no appeal has been preferred, for the purpose of satisfying itself or

himself, as the case may be, as to the correctness, legality or propriety of such

decision or order and make such orders thereon as may be deemed fit

Provided that no decision or order shall be varied under this section so as to

prejudicially affect any person unless such person-

(a) has, within a period of two years from the date of such decision or order,

received a notice to show cause why such decision or order shall not be varied,

and

(b) has been given a reasonable opportunity of making representation and, if he

so desires, of being heard in his defence.

17. Powers of Adjudicating and other Authorities :

(1) Every authority making any adjudication or hearing any appeal or exercising

any powers of revision under this Act shall have all the powers of a civil court

under the Code of Civil Procedure, 1908,( V of 1908 ), while trying a suit, in

respect of the following matters, namely:-

(a) summoning and enforcing the attendance of witnesses;

(b) requiring the discovery and production of any document;

(c) requisitioning any public record or copy thereof from any court or office.

(d) Receiving evidence on affidavits; and

(e) issuing commissions for the examination of witnesses or documents.

(2) Every authority making any adjudication or hearing any appeal or exercising

any powers of revision under this Act shall be deemed to be a civil court for the

purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 0f

1974),

(3) Every authority making any adjudication or hearing any appeal or exercising

any powers of revision under this Act, shall have the power to make such orders

of an interim nature as it may think fit and may also, for sufficient cause, order

the stay of operation of any decision or order.

(4) Clerical or arithmetical mistakes in any decision or order or errors arising

therein from any accidental slip or omission may at any time be corrected by the

authority by which the decision or order was made, either on its own motion or

on the application of any of the parties:

Provided that where any correction proposed to be made under this sub-section

will have the effect of prejudicially affecting any person, no such correction shall

be made except after giving to that person a reasonable opportunity of making a

representation in the matter and no such correction shall be made after the expiry

of two years from the date on which such decision or order was made.

Chapter VI: Miscellaneous

18. Protection of action taken in good faith: No order made or deemed to have

been made under this Act shall be called in question in any court, and no Suit,

prosecution or other legal proceeding shall lie against any person for anything in

good faith done or intended to be done under this Act or any order made or

deemed to have been made thereunder

19. Power to make rules:

(1) The Central Government may, by notification in the Official Gazette, make

rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power,

such rules may provide for all or any of the following matters, namely:-

(a) the manner in which and the conditions subject to which a special licence

may be issued under sub-section (2) of section 8.

(b) the exceptions subject to which and the person or class of persons in respect

of whom fees may be levied and the manner in which a licence may be granted

or renewed under sub-section (1) of section 9.

(c) the class or classes of goods for which a licence may be granted under sub-

section (2) of section 9.

(d) the form in which and the terms, conditions and restrictions subject to which

licence may be granted under sub-section (3) of section 9.

(e) The conditions subject to which a licence may be suspended or cancelled

under sub-section (4) of section 9.

(f) the premises, goods, documents, things and conveyances in respect of which

and the requirements and conditions subject to which power of entry, search,

inspection and seizure may be exercised under sub-section (1) of section 10.

(g) The class or classes of cases for which and the manner in which an amount,

by way of settlement, may be determined under sub-section (3) of section 11.

(h) The requirements and conditions subject to which goods and conveyances

shall be liable to confiscation under sub-section (5) of section 11.

(i) the manner in which and the conditions subject to which goods and

conveyances may be released on payment of redemption charges under sub-

section (6) of section 11; and

(j) any other matter which is to be, or may be, prescribed, or in respect of which

provision is to be, or may be, made by rules.

(3) Every rule and every Order made by the Central Government under this Act

shall be laid, as soon as may be after it is made, before each House of

Parliament, while it is in session, for a total period of thirty days which may be

comprised in one session or in two or more successive sessions, and if, before the

expiry of the session immediately following the session or the successive

sessions aforesaid, both Houses agree in making any modification in the rule or

the Order or both Houses agree that the rule or the Order should not be made, the

rule or the Order as the case may be, shall thereafter have effect only in such

modified form or be of no effect, as the case may be; so, however, that any such

modification or annulment shall be without prejudice to the validity of anything

previously done under that rule or the Order.

20. Repeal and savings:

(1) The Imports and Exports (Control) Act, 1947 ( 18 of 1947 ) and the Foreign

Trade (Development and Regulation) Ordinance 1992 are hereby repealed.

(2) The repeal of the Imports and Exports (Control) Act, 1947 shall, however,

not affect, -

(a) the previous operation of the Act so repealed or anything duly done or

suffered thereunder; or

(b) any right, privilege, obligation or liability acquired, accrued or incurred under

the Act so repealed; or

(c) any penalty, confiscation or punishment incurred in respect of any

contravention under the Act so repealed; or

(d) any proceeding or remedy in respect of any such right, privilege, obligation,

liability, penalty, confiscation or punishment as aforesaid,

And any such proceeding or remedy may be instituted, continued or enforced,

and any such penalty, confiscation or punishment may be imposed or made as if

that Act had not been repealed.

(3) Notwithstanding the repeal of the Foreign Trade (Development and

Regulation) Ordinance, 1992 (11 of 1992) anything done or any action taken

under the said Ordinance shall be deemed to have been done or taken under the

corresponding provisions of this Act.

2. What are the foreign trade (regulation) rules, 1993

Ministry of Commerce

Notification No. GSR 791 (E), dated 30-12-1993

In exercise of the powers conferred by Section 19 of the Foreign Trade (Development and

Regulation) Act, 1992 (22 of 1992), the Central Government hereby makes the following

rules, namely:—

1. Short title and commencement. — (1) These rules may be called the Foreign Trade

(Regulation) Rules, 1993.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions. — In these rules unless the context otherwise requires, —

(a) "Act" means the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

(b) "charitable purpose" includes relief of the poor, education, medical relief and the

advancement of any other object of general public utility;

(c) "importer" or "exporter" means a person who imports or exports goods and holds a valid

Importer-exporter Code Number granted under section 7;

(d) "licensing authority" means an authority authorised by the Director General under sub-

section (2) of section 9 to grant or renew a licence under these rules;

(e) "Policy" means the export and import Policy formulated and announced by the Central

Government under section 5;

(f) "schedule" means a Schedule appended to these rules;

(g) "section" means a section of the Act;

(h) "special licence" means a licence granted under sub-section (2) of section 8;

(i) "value" has the meaning assigned to it in clause (41) of section 2 of the Customs Act,

1962 (52 of 1962);

(j) words and expression used in these rules and not defined but defined in the Act shall have

the meanings respectively assigned to them in the Act.

3. Grant of special licence. — (1) Where the Importer-exporter Code Number granted to

any person has been suspended or cancelled under sub-section (1) of section 8, the Director

General may, having regard to the following factors, grant to him a special licence, namely:

—

(1) that the denial of a special licence is likely to affect the foreign trade of India

adversely; or

(2) that the suspension or cancellation of the Importer-exporter Code Number is likely

to lead to non-fulfilment of any obligation by India under any international

agreement.

(2) The special licence granted to any person under sub-rule (1) shall be non-

transferable.

4. Application for grant of licence. — A person may make an application for the grant of a

licence to import or export goods in accordance with the provisions of the Policy or an Order

made under section 3.

5. Fee. — (1) Every application for a licence to import shall be accompanied by the fee

specified in the Schedule.

(2) The mode of deposit of fee shall be as specified in the Schedule.

(3) No fee shall be payable in respect of any application made by:

(a) the Central Government, a State Government or any department or any office of

the Government;

(b) any local authority for the bona fide import of goods required by it for official use;

(c) any institution set up for educational, charitable or missionary purposes, for the

import of goods required for its use;

(d) an applicant for the import of any goods (other than a vehicle) if  the import of the

goods is for his personal use which is not connected with trade or manufacture.

(4) The fee once received will not be refunded except in the following circumstances, namely

:-

(i) where the fee has been deposited in excess of the specified scale of fee;

or

(ii) where the fee has been deposited but no application has been made; or

(iii) where the fee has been deposited in error but the applicant is exempt from

payment of fee.

6. Conditions of licence. — (1) It shall be deemed to be a condition of every licence for

export that:-

(i) no person shall transfer or acquire by transfer any licence issued by the licensing authority

except in accordance with the provisions of the Policy;

(ii) the goods for the export of which the licence is granted shall be the property of the

licensee at the time of the export.

(2) The licensing authority may issue a licence for import subject to one or more of the

following conditions, namely: -

(a) that the goods covered by the licence shall not be disposed of except in

accordance with the provisions of the Policy or in the manner specified by the

licensing authority in the licence;

(b) that the applicant for a licence shall execute a bond for complying with the terms

and conditions of the licence.

(3) It shall be deemed to be a condition of every licence for import that:

(a) no person shall transfer or acquire by transfer any licence issued by the licensing

authority except in accordance with the provisions of the Policy;

(b) the goods for the import of which a licence is granted shall be the property of the

licensee at the time of import and upto the time of clearance through customs;

(c) the goods for the import of which a licence is granted shall be new goods, unless

otherwise stated in the licence;

(d) the goods covered by the licence for import shall not be exported without the

written permission of the Director General.

(4) Any person importing goods from the United States of America in accordance with the

terms of the Indo-US Memorandum of Understanding on Technology Transfer shall also

comply with all the conditions and assurances specified in the Import Certificate issued in

terms of such Memorandum, and such other assurances given by the person importing those

goods to the Government of the United States of America through the Government of India.

7. Refusal of licence.—(1) The Director General or the licensing authority may for reasons

to be recorded in writing, refuse to grant or renew a licence if —

(a) the applicant has contravened any law relating to customs or foreign exchange;

(b) the application for the licence does not substantially conform to any provision of

these rules;

(c) the application or any document used in support thereof contains any false or

fraudulent or misleading statement;

(d) it has been decided by the Central Government to canalise the export or import of

goods and distribution thereof, as the case may be, through special or specialised

agencies;

(e) any action against the applicant is for the time being pending under the Act or

rules and Orders made thereunder;

(f) the applicant is or was a managing partner in a partnership firm, or is or was a

Director of a private limited company, having controlling interest against which any

action is for the time being pending under the Act or rules and Orders made

thereunder;

(g) the applicant fails to pay any penalty imposed on him under the Act;

(h) the applicant has tampered with a licence;

(i) the applicant or any agent or employee of the applicant with his consent has been a

party to any corrupt or fraudulent practice for the purposes of obtaining any other

licence;

(j) the applicant is not eligible for a licence in accordance with any provision of the

Policy;

(k) the applicant fails to produce any document called for by the Director General or

the licensing authority;

(l) in the case of a licence for import, no foreign exchange is available for the

purpose;

(m) the application has been signed by a person other than a person duly authorised

by the applicant under the provisions of the Policy;

(n) the applicant has attempted to obtain or has obtained cash compensatory support,

duty drawback, cash assistance benefits allowed to Registered Exporters or any other

similar benefits from the Central Government or any agency authorised by the Central

Government in relation to exports made by him on the basis of any false, fraudulent

or misleading statement or any document which is false or fabricated or tampered

with.

(2) The refusal of a licence under sub-rule (1) shall be without prejudice to any other action

that may be taken against an applicant by the licensing authority under the Act.

8. Amendment of licence. - The licensing authority may of its own motion or on an

application by the licensee, amend any licence in such manner as may be necessary or to

rectify any error or omission in the licence.

9. Suspension of a licence. — (1) The Director General or the licensing authority may, by

order in writing, suspend the operation of a licence granted to —

(a) any person, if any order of detention has been made against such person under the

provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities

Act, 1974 (52 of 1974); or

(b) a partnership firm or a private limited company, if the person referred to in clause (a) is a

partner or a whole time director or managing director, as the case may be, of such firm or

company:

Provided that the order of suspension shall cease to have effect in respect of the aforesaid

person or, as the case may be, the partnership firm or company, when the order of detention

made against such person, —

(i) being an order of detention to which the provisions of section 9 of the Conservation of

Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) do not

apply, has been revoked on the  report of Advisory Board under section 8 of that Act or

before receipt of the report of the Advisory Board or before making a reference to the

Advisory Board; or

(ii) being an order of detention to which the provisions of section 9 of the Conservation of

Foreign Exchange and Prevention of Smuggling Ac-tivities Act, 1974 (52 of 1974) apply,

has been revoked on the report of the Advisory Board under section 8 read with sub-section

(2) of section 9 of the Act or before receipt of such report;

(iii) has been set aside by a court of competent jurisdiction.

(2) The Director General or the licensing authority may by an order in writing suspend the

operation of any licence granted under these rules, where proceedings for cancellation of

such licence has been initiated under rule 10.

10. Cancellation of a licence. — The Director General or the licensing authority may by an

order in writing cancel any licence granted under these rules if —

(a) the licence has been obtained by fraud, suppression of facts or misrepresentation;

or

(b) the licensee has committed a breach of any of the conditions of the licence; or

(c) the licensee has tampered with the licence in any manner; or

(d) the licensee has contravened any law relating to customs or foreign exchange or

the rules and regulations relating thereto.

11. Declaration as to value and quality of imported goods. — On the importation into, or

exportation out of, any customs ports of any goods, whether liable to duty or not, the owner

of such goods shall in the Bill of Entry or the Shipping Bill or any other documents

prescribed under the Customs Act, 1962 (52 of 1962), state the value, quality and description

of such goods to the best of his knowledge and belief and in case of exportation of goods,

certify that the quality and specification of the goods as stated in those documents, are in

accordance with the terms of the export contract entered into with the buyer or consignee in

pursuance of which the goods are being exported and shall subscribe a declaration of the

truth of such statement at the foot of such Bill of Entry or Shipping Bill or any other

documents.

12. Declaration as to Importer-exporter Code Number. — On the importation into or

exportation out of any Customs port of any goods the importer or exporter shall in the Bill of

Entry or Shipping Bill or, as the case may be, in any other documents prescribed by rules

made under the Act or the Customs Act, 1962 (52 of 1962), state the Importer-exporter Code

Number allotted to him by the competent authority.

13. Utilisation of imported goods. — (1) No person shall use any imported goods allotted to

him by the State Trading Corporation of India or any other agency recognised by the Central

Government in a manner and for the purpose, otherwise than as declared by him in his

application for such allotment or in any document submitted by him in support of such

application.

(2) No person shall dispose of any goods imported by him against a licence except in

accordance with the terms and conditions of such licence.

14. Prohibition regarding making, signing of any declaration, statement or documents.

— (1) No person shall make, sign or use or cause to be made, signed or used any declaration,

statement or document for the purposes of obtaining a licence or importing any goods

knowing or having reason to believe that such declaration, statement or document is false in

any material particular.

(2) No person shall employ any corrupt or fraudulent practice for the purposes of

obtaining any licence or importing or exporting any goods.

15. Power to enter premises and inspect, search and seize goods, documents, things and

conveyances. — (1) Any person authorised by the Central Government under sub-section (1)

of section 10 (hereinafter called the authorised person) may, at any reasonable time enter any

premises in which —

(i) any imported goods or materials which are liable to confiscation under the

provisions of the Act; or

(ii) any books of accounts or documents or things which, in his opinion, will be useful

for, or relevant to any proceedings under the Act,

are suspected to have been kept or concealed and may inspect such goods, materials, books

of accounts, documents or things and may take such notes or extracts there from as he may

think fit.

(2) If the authorised person has reasons to believe that —

(i) any imported goods or materials liable to confiscation under the Act; or

(ii) any books of accounts or documents or things which, in his opinion, will be useful

for, or relevant to, any proceedings under the Act,

are secreted in any premises he may enter into and search such premises for such goods,

materials, books of accounts, documents or things.

(3) (a) If the authorised person has reason to believe that any imported goods or materials are

liable to confiscation under the Act, he may seize such goods or materials together with the

package, covering or receptacle, if any, in which such goods or materials are found to have

been mixed with any other goods or materials :

Provided that where it is not practicable to seize any such goods or materials, the authorised

person may serve on the owner of the goods or materials an order that he shall not remove,

part with or otherwise deal with the goods or materials except with the previous permission

of the authorised person.

(b) Where any goods or materials are seized under clause (a) and no notice in respect thereof

is given within six months of the seizure of the goods or materials, the goods or materials

shall be returned to the person from whose possession they were seized:

Provided that the aforesaid period of six months may, on sufficient cause being shown, be

extended by the Director General for a further period not exceeding six months.

(c) The authorised person may seize any books of accounts or documents or things which in

his opinion, will be useful for, or relevant to, any proceedings under the Act.

(d) The person from whose custody any documents are seized under this sub-rule, shall be

entitled to make copies thereof or take extracts therefrom in the presence of the authorised

person.

(e) If any person legally entitled to the books of account or other documents or things seized

under this sub-rule objects, for any reason, to the retention by the authorised person of the

books of account or the documents or things, he may move an application to the Central

Government stating therein the reasons for such objection, request for the return of the books

of account or documents or things.

(f) On receipt of the application under clause (e), the Central Government may, after giving

the applicant an opportunity of being heard, pass such order as it may think fit.

(g) Where any document is produced or furnished by any person or has been seized from the

custody or control of any person under the Act or has been received from any place outside

India in the course of the investigation for any contravention referred to in section 11 by any

person and such document is tendered in evidence against the person by whom it is produced

or from whom it was seized or against such person or any other person who is jointly

proceeded against, the Adjudicating Authority shall, notwithstanding anything to the contrary

contained in any other law for the time being in force, -

(i) presume, unless the contrary is proved, that the signature and every other part of such

document which purports to be in the handwriting of any particular person of which the

Adjudicating Authority may reasonably assume to have been signed by or to be in the

handwriting of any particular person, is under the person's handwriting, and in the case of a

document executed or attested, it was executed or attested by the person by whom it purports

to have been so executed or attested;

(ii) admit the document in evidence notwithstanding that it is not duly stamped, if such

document is otherwise admissible in evidence.

(4) The authorised person, may, if he has reason to suspect that any conveyance or animal is

being or is about to be used for the transportation of any imported goods or material which

are liable to confiscation under the Act, and that by such transportation any provision of the

Act has been, is being or is about to be contravened at any time, stop such conveyance or

animal or in the case of aircraft compel it to land, and —

(a) rummage and search the conveyance or any part thereof;

(b) examine and search any goods or material in the conveyance or on the animal;

(c) if it becomes necessary to stop any conveyance or animal, he may use all lawful

means for stopping it and where such means fail, the conveyance or animal may be

fired upon,

and where he is satisfied that it is necessary so to do to prevent the contravention of any

provision of the Act or of the rules and orders made thereunder or the Policy or condition of

any licence, he may seize such conveyance or animal.

Explanation. - Any reference in this rule to a conveyance shall, unless the context otherwise

requires, be construed as including a reference to an aircraft, vehicle or vessel.

16. Settlement. — (1) The Adjudicating Authority may determine the amount of settlement

to be paid by the person to whom a notice has been issued and who has opted for settlement

and has admitted the contravention specified in the notice, in the following cases, namely:—

(i) where it is of the opinion that the contravention of any provision of the Act or

these rules or the Policy has been made without mens rea or without willful mistake

or without suppression of facts, or without any collusion, or without fraud and

forgery, or without an intent to cause loss of foreign exchange; or

(ii) where the person importing the goods has not met the requirements of the actual

user conditions as specified in the Policy and has not misutilised the said imported

goods; or

(iii) where the person importing the goods has not fulfilled the export obligation and

has not misutilised the said imported goods.

(2) Where a person has opted for settlement under sub-rule (1), the settlement made by the

Adjudicating Authority shall be final.

17. Confiscation and redemption. — (1) Any imported goods or materials in respect of

which —

(a) any condition of the licence, or letter of authority under which they were imported

relating to their utilisation or distribution; or

(b) any condition relating to their utilisation or distribution, subject to which they

were received from or through, an agency recognised by the Central Government; or

(c) any condition imposed under the Policy with regard to the sale or disposal of such

goods or materials, has been, is being, or is attempted to be, contravened, shall

together with any package, covering or receptacle in which such goods are found, be

liable to be confiscated by the Adjudicating Authority, and where such goods or

materials are so mixed with any other goods or materials that they cannot be readily

separated, such other goods or materials shall also be liable to be so confiscated :

Provided that where it is established to the satisfaction of the Adjudicating Authority that any

goods or materials which are liable to confiscation under this rule, had been imported for

personal use, and not for any trade or industry, such goods or materials shall not be ordered

to be confiscated.

(2) The Adjudicating Authority may permit the redemption of the confiscated goods or

materials upon payment of redemption charges equivalent to the market value of such goods

or materials.

18. Confiscation of conveyance. — (1) Any conveyance or animal which has been, is being,

or is attempted to be used, for the transport of any goods or materials that are imported and

which are liable to confiscation under rule 17, shall be liable to be confiscated by the

Adjudicating Authority unless the owner of the conveyance or animal proves that it was, is

being, or is about to be so used without the knowledge or connivance of the owner himself,

his agent, if any, and the person in-charge of the conveyance or animal and that each of them

had taken all reasonable precautions against such use.

 

(2) The Adjudicating Authority shall permit redemption of the confiscated conveyance or

animal used for the transport of goods or passengers for hire upon payment of redemption

charges equivalent to the market value of such conveyance or animal.

3. WHAT IS THE FOREIGN TRADE (EXEMPTION FROM APPLICATION OF RULES IN CERTAIN

CASES) ORDER, 1993 ?

Minitry of Commerce Notification S.O. No. 1056 (E), dated 31-12-1993

In exercise of the powers conferred by section 3, read with section 4, of the Foreign Trade

(Development and Regulation) Act, 1992 (22 of 1992) and in supersession of the Imports (Control)

Order, 1955 and the Exports (Control) Order, 1988, except as respects things done or omitted to be

done before such supersession, the Central Government hereby makes the following Order,

namely :-

1. Short title and commencement. — (1) This Order may be called the Foreign Trade (Exemption

from application of Rules in certain cases) Order, 1993.

(2) It shall come into force on the date of its publication in the Official Gazette.

2. Definitions. — In this Order, unless the context otherwise requires, —

(a) "Act" means the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

(b) "Import Trade Regulations" means the Act and the rules and order made thereunder and the

export and import policy;

(c) "Rules" means the Foreign Trade (Regulation) Rules, 1993;

(d) Words and expressions used in this Order and not defined but defined in the Act shall have the

meanings respectively assigned to them in the Act.

3. Exemption from the application of rules. — (1) Nothing contained in the Rules shall apply to the

import of any goods. —

(a) by the Central Government or agencies, undertakings owned and controlled by the Central

Government for Defence purposes;

(b) by the Central Government or any State Government, statutory corporation, public body or

Government undertaking run as a Joint Stock Company through the agency of the Purchase

Organisations of the Ministry of Supply, that is India Supply Mission, London and India Supply

Mission, Washington;

(c) by the Central Government, any State Government or any statutory corporation or public body or

Government undertaking run as a Joint Stock Company, orders in respect of which are placed

through the Directorate General, Supplies and Disposals, New Delhi;

(d) by transhipment or imported and bonded on arrival for re-export as ships stores to any country

outside India except Nepal and Bhutan or imported and bonded on arrival for re-export as aforesaid

but subsequently released for use of Diplomatic personnel, Consular Officers in India and the officials

of the United Nations Organisation and its specialised agencies who are exempt from payment of

duty under the notification of the Government of India in the Ministry of Finance (Department of

Revenue) No. 3, dated 8th January, 1957 and the United Nations (Privileges and Immunities) Act,

1947 (46 of 1947) respectively;

(e) imported and bonded on arrival for sale at approved duty-free shops, whether to outgoing or

incoming passengers, against payments in free foreign exchange;

(f) which are in transit through India by post or otherwise, or are redirected by post or otherwise to a

destination outside India, except Nepal and Bhutan provided that such goods while in India are

always in the custody of the postal or customs authorities;

(g) for transmission across India by air to Afghanistan or by land, to any other country outside India,

except Nepal and Bhutan under claim for exemption from duty or for refund of duty either in whole or

in part :

Provided that such goods are imported by or on behalf of the Govern-ment or a country bordering on

India or that the importer undertakes to produce within a specified period evidence that such goods

have crossed the borders of India or in default to pay such penalty as the proper officer of customs

may deem fit to impose on such goods :

Provided further that nothing contained in this item will exempt any goods from the Import Trade

Regulations;

(h) by the person as passenger baggage to the extent admissible under the Baggage Rules for the

time being in force except quinine exceeding five hundred tablets or 1/3 Ib powder or one hundred

ampoules :

Provided that in the case of imports by a tourist, articles of high value whose re-export is obligatory

under rule 7 of the Tourist Baggage Rules,1978 shall be re-exported on his leaving India, failing

which such goods shall be deemed to be goods of which the import has been prohibited under the

Customs Act, 1962 (52 of 1962):

Provided further that the import of gold in any form including ornaments (but excluding ornaments

studded with stones or pearls) will be allowed as part of baggage by passengers of Indian origin or a

passenger holding a valid passport issued under the Passports Act, 1967 (15 of 1967) subject to the

following conditions, namely :-

(a) that the passenger importing the gold is coming to India after a period of not less than six months

of stay abroad;

(b) the quantity of gold imported shall not exceed 5 Kilograms per passenger;

(c) import duty on gold shall be paid in convertible foreign currency; and

(d) there will be no restriction on sale of such imported gold; (i) by any person through the post or otherwise for his personal use, or by any institution or hospital

for its use except —

(a) vegetable seeds exceeding one Ib. in weight;

(b) beer;

(c) tea; (d) books, magazines, journals and literature which are not allowed to be imported under the

Policy for the time being in

force;

(e) goods, the import of which is canalised under the Policy;

(f) alcoholic beverages;

(g) fire arms and ammunition;

(h) consumer electronic items (except hearing aids and life-saving equipments, apparatus

and appliances and parts thereof): Provided that the c.i.f. value of goods imported as aforesaid at any one time shall not

exceed rupees two thousand.

(j) by or on behalf of Diplomatic personnel, consular officers and Trade Commissioners in

India who are exempted from payment of Customs duty under Notification No. 3 dated the 8th

January, 1957 of the Government of India in the Ministry of Finance (Department of

Revenue);

(k) from any country, which are exempted from Customs duty on re-importation under section 20 of

the Customs Act, 1962 (52 of 1962) or under Customs Notification Nos. 113 dated 16th May 1957,

103 dated 25th March, 1958, 260 and 261 dated llth October, 1958, 269, 271, 273, 274, 275 and 276

dated 25th October, 1958 and 204 dated 2nd August, 1976, of the Government of India, Ministry of

Finance (Department of Revenue) or Notification No. 174, dated the 24th September, 1966 or

Notification No. 103, dated the 16th May, 1978, of the Government of India, Ministry of Finance

(Department of Revenue and Insurance) or Notification No. 80, dated 29th August, 1970;

(1) of Indian manufacture and foreign-made parts of such goods, exported and received back by the

manufacturer from the consignee for repair and re-export:

Provided that —

(i) the customs authorities are satisfied that the goods received back by the said manufacturers are

the same which were so exported; and

(ii) in the case of goods other than those exempted from customs duty on reimportation under

Customs Notification No. 132, dated 9th December, 1961, a bond is executed by the importer with the

customs authority at the port concerned to the effect that the goods thus imported will be re-exported

after repair within six months;

(m) by officials of the United Nations Organisation and its specialised agencies who are exempted

from payment of Customs duty under the United Nations (Privileges and Immunities) Act, 1947 (46 of

1947);

(n) by the Ford Foundation who are exempt from payment of Customs duty under an Agreement

entered into between the Government of India and the Ford Foundation;

(o) being vehicles as defined in Article I of the Customs Convention on the Temporary Importation of

Private Road Vehicles or the component parts thereof referred to in Article 4 of the said Convention

and which are exempted from payment of customs duty under the notification of the Government of

India in the Ministry of Finance (Department of Revenue) No. 296, dated the 2nd August, 1976 :

Provided that —

(i) such vehicles or component parts are re-exported within the period specified in the said notification

or within such further period as the customs authorities may allow;

(ii) the provisions of the said notification or of the "triptyque or Camel-De-Passage" permit are not

contravened in relation to such vehicle or component parts :

Provided further that nothing contained in this item shall prejudice the application to the said vehicles

or component parts of any other prohibition or regulation affecting the import of goods that may be in

force at the time of import of such goods;

(p) being goods imported temporarily for display or use in fairs, exhibitions or similar events specified

in Schedule I to the notification of the Government of India in the Ministry of Finance (Department of

Revenue) No. 157/90-CUSTOMS, dated the 28th March, 1990 against ATA Carnets under the

Customs Convention on the ATA Carnets for temporary admission of goods (ATA Convention) done

at Brussels on the 30th July, 1963:

Provided that —

(i) such goods are exported within a period of six months from the date of clearance or such extended

period as the Central Government may allow in each case; and

(ii) the provisions of the said notification or of the ATA convention are not contravened:

Provided further that nothing contained in this item shall prejudice the application to the said goods of

any other prohibition or regulation affecting the import of goods that may be in force at the time of

import of such goods;

(q) covered by an import licence issued by His Majesty's Government of  Nepal and the importer

furnishes a bond to the proper officer of customs in the form prescribed by such officer with a

Scheduled Bank as surety to the effect that he shall pay the duty and pay penalty imposed for

contravening Import Trade Regulations in respect of the whole or any portion of the goods which is

not proved to have entered the territory of Nepal;

(r) of Indian manufacture or by the Central Government or any State Government for repair and re-

export to Indian Embassies abroad or to any other office of the Central Government or State

Government in a foreign country;

(s) being foodgrains, by Food Corporation of India:

Provided that at the time of clearance, a declaration to the effect that the import in question has been

approved by the Central Government, is furnished by the importer to the Customs authorities;

(t) being articles of food and edible material, which are supplied as free gift by the agencies approved

by the United Nations Organisation and which are exempted from payment of customs duty under the

Notification of Government of India in the Ministry of Finance (Department of Revenue) No. GSR 766,

dated 21st June, 1975.

(2) Nothing contained in the Rules shall apply to —

(a) any goods exported by or under the authority of the Central Government;

(b) any goods other than foodstuffs constituting the stores or equipment of any outgoing vessel or

conveyance;

(c) any goods constituting the bona fide personal baggage of any person, including a passenger or

member of a crew in any vessel or conveyance, going out of India:

Provided that the Wild Life (dead, alive or part thereof or produce therefrom) shall not be treated as

part of such personal baggage;

(d) any goods exported by post or by air under the conditions specified in postal notice issued by the

Postal Authorities;

(e) any goods transhipped at a port in India after having been manifested for such transhipment at the

time of despatch from a port outside India;

(f) any goods imported and bonded on arrival in India for re-export to any country outside India,

except Nepal and Bhutan;

(g) any goods in transit through India by post or any goods re-directed by post to a destination outside

India except Nepal and Bhutan:

Provided that such goods while in India are always in the custody of the postal authorities;

(h) any goods imported without a valid import licence and exported in accordance with an order for

the export of such goods made by the proper officer of Customs;

(i) products approved for manufacture in and export from the respective Free trade Zones/Export

Processing Zones and 100 per cent Export Oriented Units except textile item covered by bilateral

agreements, exports to Rupee Payment Countries under the Annual Trade Protocol and Exports

against payment in Indian Rupees to former Rupee Payment Countries:

Provided that conditions imposed by the Board of Approval on an Export Oriented Unit of Export

Processing Zone unit will be binding on such a unit;

(j) export of Blood group Oh (Bombay Phono type) meant for scientific research or emergency

medical treatment, as life saving measure on humanitarian grounds by the Director, National Blood

Group Reference Laboratory, Bombay on the basis of a certificate issued by him to this effect in each

case;

UNIT III

Technology import contract – Technology Policy and environment – Selection and transfer issues – Law for protection of Intellectual Property Rights, Patents, Trademarks, etc.,

PART A

1.Expand IPR

Intellectual Property Rights

2.TRIPS

Trade-Related Aspects of Intellectual Property Rights

3.TRIMS

Trade Related Investment Measures

4.DEFINE TRADE MARK

A distinctive name, symbol, motto, or design that legally identifies a company or its products and services, and sometimes prevents others from using identical or similar marks.

PART B

1. what is technology import contract?

According to the Administrative Measures for the Registration of Technology Import and

Export Contracts recently published by the Ministry of Commerce (MOFCOM), companies

in China will be able to make online registration of contracts of import and export of

technology which can be freely imported and exported.

Technology import and export contracts include contracts of assignment of patent rights or

rights to apply for patents, contracts of licensing of rights to implement patents, contracts of

licensing the use of technical know-how, contracts of technical service and other contracts

concerning technology import and export.

Technology importers and exporters should first make registration by logging on to the

technology import and export contract information management system of the MOFCOM

website and complete the registration with the competent departments of commerce by

presenting the application for registration, copies of the contracts (including Chinese

translation) and documents certifying the legal status of the contracting parties.

The competent departments of commerce shall verify the details of the contracts within three

days upon receipt of the above documents and issue to the technology importers and

exporters the Certificate of Registration for Technology Import Contract or Certificate of

Registration for Technology Export Contract.

2.Explain technology policy

The study of technology policy or engineering and policy is taught at multiple universities.

Classic political science teaches technology as a black box. Similarly economics treats

technology as a residual to explain otherwise inexplicable growth. The creation of the U.S.

Office of Science and Technology Policy addressed the fact that policy can not treat all

technologies as identical based on their social or economic variables. Technology policy is

distinct from science studies but both claim Thomas Samuel Kuhn as a founder, while

technology policy recognizes the importance of Vannevar Bush. Technology policy

approaches science as the pursuit of verifiable or falsifiable hypotheses, while science studies

has a post-modern view whereby science is belief-based and all truths are relative.

Technology policy is rarely post-modern. Its goal is the improvement of policy and

organizations based on an understanding of the underlying scientific and technological

constraints and potential. For example, some clean coal technologies via carbon sequestration

and the allocation of electromagnetic spectrum by auction are ideas that emerged from

technology policy schools.

3. Explain IPR

Intellectual property (IP) is a term referring to a number of distinct types of

creations of the mind for which a set of exclusive rights are recognized—and the

corresponding fields of law.[1] Under intellectual property law, owners are granted

certain exclusive rights to a variety of intangible assets, such as musical, literary, and

artistic works; discoveries and inventions; and words, phrases, symbols, and designs.

Common types of intellectual property include copyrights, trademarks, patents,

industrial design rights and trade secrets in some jurisdictions.

Although many of the legal principles governing intellectual property have evolved

over centuries, it was not until the 19th century that the term intellectual property

began to be used, and not until the late 20th century that it became commonplace in

the United States

4.what is trade mark

A trademark, trade mark, or trade-mark[1] is a distinctive sign or indicator used by an

individual, business organization, or other legal entity to identify that the products or services

to consumers with which the trademark appears originate from a unique source, and to

distinguish its products or services from those of other entities.

A trademark may be designated by the following symbols:

™ (for an unregistered trade mark, that is, a mark used to promote or brand goods)

℠ (for an unregistered service mark, that is, a mark used to promote or brand

services)

® (for a registered trademark)

A trademark is typically a name, word, phrase, logo, symbol, design, image, or a

combination of these elements.[2] There is also a range of non-conventional trademarks

comprising marks which do not fall into these standard categories, such as those based on

color, smell, or sound.

The owner of a registered trademark may commence legal proceedings for trademark

infringement to prevent unauthorized use of that trademark. However, registration is not

required. The owner of a common law trademark may also file suit, but an unregistered mark

may be protectable only within the geographical area within which it has been used or in

geographical areas into which it may be reasonably expected to expand.

The term trademark is also used informally to refer to any distinguishing attribute by which

an individual is readily identified, such as the well-known characteristics of celebrities. When

a trademark is used in relation to services rather than products, it may sometimes be called a

service mark, particularly in the United States.

PART C

1. Explain Administration of Registration of Technology Import and Export Contracts Procedures

2004-04-10 From: Ministry of Commerce

Article 1 These Procedures are formulated in accordance with the PRC, Administration of

Technology Import and Export Regulations in order to standardize the administration of

technology contracts for free import and export, to establish a system for the administration

of information on the import and export of technology, and to promote the development of

China’s import and export of technology.

Technology import contracts entered into as capital investment to, and acting as an

attachment to the articles of association of, a Sino-foreign equity joint venture, Sino-foreign

cooperative joint venture or wholly foreign-owned enterprise at the time of establishment

shall be subject to the procedures set out in laws relating to foreign investment enterprises.

Article 2 Technology import and export contracts shall include patent right assignment

contracts, patent application right assignment contracts, patent licensing contracts, know-how

licensing contracts, technical services contracts, and other contracts containing provisions

regarding the import or export of technology.

Article 3 Free import and export technology contracts shall be registered on the internet.

The department in charge of foreign trade and economic cooperation shall be the

administrative department for registration of technology import and export contracts.

Free import and export technology contracts shall be effective as of the date on which they

are legally established.

Article 4 The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) shall be

responsible for administering registration of technology import contracts for major projects.

Article 1 These Procedures are formulated in accordance with the PRC, Administration of Technology

Import and Export Regulations in order to standardize the administration of technology contracts for free

import and export, to establish a system for the administration of information on the import and export

of technology, and to promote the development of China’s import and export of technology.

Technology import contracts entered into as capital investment to, and acting as an attachment to the

articles of association of, a Sino-foreign equity joint venture, Sino-foreign cooperative joint venture or

wholly foreign-owned enterprise at the time of establishment shall be subject to the procedures set out in

laws relating to foreign investment enterprises.

Article 2 Technology import and export contracts shall include patent right assignment contracts,

patent application right assignment contracts, patent licensing contracts, know-how licensing contracts,

technical services contracts, and other contracts containing provisions regarding the import or export of

technology.

Article 3 Free import and export technology contracts shall be registered on the internet. The

department in charge of foreign trade and economic cooperation shall be the administrative department

for registration of technology import and export contracts.

Free import and export technology contracts shall be effective as of the date on which they are legally

established.

Article 4 The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) shall be responsible

for administering registration of technology import contracts for major projects.

Major projects shall refer to:

1. projects financed with State funds within the budget, loans from foreign governments, and/or loans

from international financial organizations;

2. projects approved by the State Council.

Upon effectiveness of the contract, a technology importer shall register on the China International

Electronic Commerce Network and submit the application for the registration of technology import

contract, a copy of the technology import contract and documents evidencing the legal status of

contracting parties to MOFTEC for registration. MOFTEC shall verify the details of the contract

registration within three working days of the date of receipt of the above documents and shall issue to

the importer a Technology Import Contract Registration Licence.

Article 5 The commission (office, bureau) in charge of foreign trade and economic cooperation of

each province, autonomous region, municipality directly under the central government and municipality

with independent development plans (Local Department in charge of Foreign Trade and Economic

Cooperation) shall be responsible for the administration of registration of free import and export

technology contracts except for that of major projects. Free import and export technology contracts of

centrally-managed enterprises shall be registered according to their locations with the Local Department

in charge of Foreign Trade and Economic Cooperation.

The commission (office, bureau) in charge of foreign trade and economic cooperation of each province,

autonomous region, municipality directly under the central government and municipality with

independent development plans may delegate administration of registration of free import and export

technology contracts to the department in charge of foreign trade and economic cooperation at the next

lower level.

Upon effectiveness of the contract, the technology importer or exporter shall register on the China

International Electronic Commerce Network and submit the application for the registration of

technology import or export contract, a copy of the contract and documents evidencing the legal status

of contracting parties to the Local Department in charge of Foreign Trade and Economic Cooperation or

to an authorized body for registration. The Local Department in charge of Foreign Trade and Economic

Cooperation or the authorized body shall within three working days of the date of receipt of the above

documents verify the details of the contract registration and shall issue to the importer or exporter a

Technology Import Contract Registration Certificate or a Technology Export Contract Registration

Certificate.

Article 6 If the application documents are not in accord with Articles 18 and 40 of the PRC,

Administration of Technology Import and Export Regulations or the records are not in accord with the

contract, the department in charge of foreign trade and economic cooperation shall, within three working

days of the date of receipt of the application, notify the importer or exporter to supplement and correct

the documents or amend the records. It shall, within three working days of the date of receipt of the

supplemented and corrected application or amended registration record, verify the details of the contract

registration and issue a Technology Import Contract Registration Certificate or a Technology Export

Contract Registration Certificate.

Article 7 The main contents of free technology import or export contract registration shall include:

1. the contract number;

2. the contract title;

3. the technology supplier;

4. the technology receiver;

5. the technology user;

6. the summary of the contract;

7. the value of the contract;

8. the method of payment;

9. the method of settlement;

10. the type of credit.

Article 8 The State shall implement standardized codification of free import and export technology

contract numbers. The numbering of technology import and export contracts shall comply with the

following rules:

1. the contract number shall be 17 characters in total;

2. the first nine characters shall be fixed: the first two being the (last two) digits of the year of

formulation of the contract, the third and fourth being the (two letter) code for the importing or

exporting country, the fifth and sixth being the (two letter) code for the region in which the importing or

exporting enterprise is located, the seventh being the status of the contract (import = Y, export = E), and

the eighth and ninth being the (two digit) code for the importing or exporting industry. The last eight

characters shall be decided by the enterprise itself. For example: 01USBJE01CNTIC001.

Article 9 The technology importer or exporter shall re-register when amending the contents of an

already registered free technology import or export contract as specified in Article 7 of these Procedures.

Article 10 If implementation of a registered free technology import or export contract is for some

reasons suspended or terminated, the technology importer or exporter shall in a timely manner submit

the technology import or export contract registration certificate and other documentation to the

department in charge of foreign trade and economic cooperation for record filing.

2. Explain in detail Intellectual property

Intellectual property (IP) is a term referring to a number of distinct types of legal

monopolies over creations of the mind, both artistic and commercial, and the corresponding

fields of law.[1] Under intellectual property law, owners are granted certain exclusive rights to

a variety of intangible assets, such as musical, literary, and artistic works; discoveries and

inventions; and words, phrases, symbols, and designs. Common types of intellectual property

include copyrights, trademarks, patents, industrial design rights and trade secrets in some

jurisdictions.

Although many of the legal principles governing intellectual property have evolved over

centuries, it was not until the 19th century that the term intellectual property began to be

used, and not until the late 20th century that it became commonplace in the United States.[2]

The British Statute of Anne 1710 and the Statute of Monopolies 1623 are now seen as the

origin of copyright and patent law respectively.[3]

Financial incentive

These exclusive rights allow owners of intellectual property to reap monopoly profits. These

monopoly profits provide a financial incentive for the creation of intellectual property, and,

in case of patents, pay associated research and development costs.[4] Some commentators,

such as David Levine and Michele Boldrin, dispute this justification.[5]

[edit] Economic growth

The legal monopoly granted by IP laws are credited with significant contributions toward

economic growth.[citation needed] Economists estimate that two-thirds of the value of large

businesses in the U.S. can be traced to intangible assets.[citation needed] "IP-intensive industries"

are estimated to generate 72 percent more value added (price minus material cost) per

employee than "non-IP-intensive industries".[6][dubious – discuss]

A joint research project of the WIPO and the United Nations University measuring the

impact of IP systems on six Asian countries found "a positive correlation between the

strengthening of the IP system and subsequent economic growth." [7] However, correlation

does not necessarily mean causation: given that the patent holders can freely relocate, the

Nash equilibrium predicts they will obviously prefer operating in countries with strong IP

laws.[neutrality is disputed] In some of the cases, the economic growth that comes with a stronger IP

system[neutrality is disputed] is due to increase in stock capital from direct foreign investment, as was

shown for Taiwan[8] after the 1986 reform.

Rights and justice

Ayn Rand supported copyrights and patents, noting in Capitalism: The Unknown Ideal that

they are the legal implementation of the base of all property rights: a man's right to the

product of his mind. An idea as such cannot be protected until it has been given a material

form. An invention has to be embodied in a physical model before it can be patented; a story

has to be written or printed. But what the patent or copyright protects is not the physical

object as such, but the idea which it embodies. Although it is important to note, that a

discovery cannot be patented, only an invention. She argued that the term should be limited.

If it were held in perpetuity, it would lead to the opposite of the very principle on which it is

based: it would lead, not to the earned reward of achievement, but to the unearned support of

parasitism.

Economics

Intellectual property rights are temporary state-enforced monopolies regarding use and

expression of ideas and information.

Intellectual property rights are usually limited to non-rival goods, that is, goods which can be

used or enjoyed by many people simultaneously—the use by one person does not exclude use

by another. This is compared to rival goods, such as clothing, which may only be used by one

person at a time. For example, any number of people may make use of a mathematical

formula simultaneously. Some objections to the term intellectual property are based on the

argument that property can only properly be applied to rival goods (or that one cannot own

"property" of this sort).

Since a non-rival good may be simultaneously used (copied, for example) by many people

(produced with minimal marginal cost), monopolies over distribution and use of works are

meant to give producers incentive to create further works. The establishment of intellectual

property rights, therefore, represents a trade-off, to balance the interest of society in the

creation of non-rival goods (by encouraging their production) with the problems of monopoly

power. Since the trade-off and the relevant benefits and costs to society will depend on many

factors that may be specific to each product and society, the optimum period of time during

which the temporary monopoly rights should exist is unclear.[9]

History

This article or section may contain previously unpublished synthesis of published

material that conveys ideas not attributable to the original sources. See the talk page

for details. (April 2010)

See also: History of patent law and History of copyright law

Modern usage of the term intellectual property goes back at least as far as 1888 with the

founding in Berne of the Swiss Federal Office for Intellectual Property (the Bureau fédéral

de la propriété intellectuelle). When the administrative secretariats established by the Paris

Convention (1883) and the Berne Convention (1886) merged in 1893, they also located in

Berne, and also adopted the term intellectual property in their new combined title, the United

International Bureaux for the Protection of Intellectual Property. The organisation

subsequently relocated to Geneva in 1960, and was succeeded in 1967 with the establishment

of the World Intellectual Property Organization (WIPO) by treaty as an agency of the United

Nations. According to Lemley, it was only at this point that the term really began to be used

in the United States (which had not been a party to the Berne Convention),[2] and it did not

enter popular usage until passage of the Bayh-Dole Act in 1980.[10]

The concept appears to have made its first appearance after the French revolution. In an 1818

collection of his writings, the French liberal theorist, Benjamin Constant, argued against the

recently-introduced idea of "property which has been called intellectual."[11] The term

intellectual property can be found used in an October 1845 Massachusetts Circuit Court

ruling in the patent case Davoll et al. v. Brown., in which Justice Charles L. Woodbury wrote

that "only in this way can we protect intellectual property, the labors of the mind, productions

and interests are as much a man's own...as the wheat he cultivates, or the flocks he rears." (1

Woodb. & M. 53, 3 West.L.J. 151, 7 F.Cas. 197, No. 3662, 2 Robb.Pat.Cas. 303,

Merw.Pat.Inv. 414). The statement that "discoveries are...property" goes back earlier. Section

1 of the French law of 1791 stated, "All new discoveries are the property of the author; to

assure the inventor the property and temporary enjoyment of his discovery, there shall be

delivered to him a patent for five, ten or fifteen years."[12] In Europe, French author A. Nion

mentioned propriété intellectuelle in his Droits civils des auteurs, artistes et inventeurs,

published in 1846.

The concept's origins can potentially be traced back further. Jewish law includes several

considerations whose effects are similar to those of modern intellectual property laws, though

the notion of intellectual creations as property does not seem to exist – notably the principle

of Hasagat Ge'vul (unfair encroachment) was used to justify limited-term publisher (but not

author) copyright in the 16th century.[13] The Talmud contains the prohibitions against certain

mental crimes (further elaborated in the Shulchan Aruch), notably Geneivat da'at (גניבת דעת,

literally "mind theft"), which some have interpreted[14] as prohibiting theft of ideas, though

the doctrine is principally concerned with fraud and deception, not property.

Thomas Jefferson and James Madison, drafters of the Copyright Clause, were both quite

skeptical to the monopolies of copyright, and monopolies of patents, and wrote extensively

on the subject.[15][16]

Stable ownership is the gift of social law, and is given late in the progress of society. It would

be curious then, if an idea, the fugitive fermentation of an individual brain, could, of natural

right, be claimed in exclusive and stable property. If nature has made any one thing less

susceptible than all others of exclusive property, it is the action of the thinking power called

an idea, which an individual may exclusively possess as long as he keeps it to himself; but

the moment it is divulged, it forces itself into the possession of every one, and the receiver

cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less,

because every other possesses the whole of it. He who receives an idea from me, receives

instruction himself without lessening mine; as he who lights his taper at mine, receives light

without darkening me. That ideas should freely spread from one to another over the globe,

for the moral and mutual instruction of man, and improvement of his condition, seems to

have been peculiarly and benevolently designed by nature, when she made them, like fire,

expansible over all space, without lessening their density in any point, and like the air in

which we breathe, move, and have our physical being, incapable of confinement or exclusive

appropriation. Inventions then cannot, in nature, be a subject of property.

—Thomas Jefferson, to Isaac McPherson 13 Aug. 1813 Writings 13:333--35[17]

Criticism

Main article: Criticism of intellectual property

The term itself

Richard Stallman argues that, although the term intellectual property is in wide use, it should

be rejected altogether, because it "systematically distorts and confuses these issues, and its

use was and is promoted by those who gain from this confusion." He claims that the term

"operates as a catch-all to lump together disparate laws [which] originated separately,

evolved differently, cover different activities, have different rules, and raise different public

policy issues."[18] Stallman advocates referring to copyrights, patents and trademarks in the

singular and warns against abstracting disparate laws into a collective term.

The laws

Some critics of intellectual property, such as those in the free culture movement, point at

intellectual monopolies as harming health, preventing progress, and benefiting concentrated

interests to the detriment of the masses,[19][20] and argue that the public interest is harmed by

ever expansive monopolies in the form of copyright extensions, software patents and

business method patents.

Some libertarian critics of intellectual property have argued that allowing property rights in

ideas and information creates artificial scarcity and infringes on the right to own tangible

property. Stephan Kinsella uses the following thought experiment to demonstrate this

objection:

[I]magine the time when men lived in caves. One bright guy—let’s call him Galt-Magnon—

decides to build a log cabin on an open field, near his crops. To be sure, this is a good idea,

and others notice it. They naturally imitate Galt-Magnon, and they start building their own

cabins. But the first man to invent a house, according to IP advocates, would have a right to

prevent others from building houses on their own land, with their own logs, or to charge them

a fee if they do build houses. It is plain that the innovator in these examples becomes a partial

owner of the tangible property (e.g., land and logs) of others, due not to first occupation and

use of that property (for it is already owned), but due to his coming up with an idea. Clearly,

this rule flies in the face of the first-user homesteading rule, arbitrarily and groundlessly

overriding the very homesteading rule that is at the foundation of all property rights.[21]

Other criticism of intellectual property law concerns the tendency of the protections of

intellectual property to expand, both in duration and in scope. The trend has been toward

longer copyright protection[22] (raising fears that it may some day be eternal[23][24][25][26]). In

addition, the developers and controllers of items of intellectual property have sought to bring

more items under the protection. Patents have been granted for living organisms,[27] and

colors have been trademarked[28]. Because they are systems of government-granted

monopolies copyrights, patents, and trademarks are called intellectual monopoly privileges,

(IMP) a topic on which several academics, including Birgitte Andersen[29] and Thomas

Alured Faunce [30] have written.

Protection pays!

European companies are facing unprecedented global competition, and the only way for

Europe

to withstand this is through innovation. Without suitable protection for intellectual property,

however, there is not sufficient motivation to invest in innovative products. And if

intellectual

property rights cannot be enforced, they are worthless. Small and medium-sized enterprises

(SMEs) often do not have the staying power, financial or personnel resources necessary to

enforce their rights. They do not have the means for their own “Intellectual Property”

department,

yet they are threatened by imitations and product piracy in Europe as well as around the

globe.

In order to help SMEs make use of the wide range of instruments which are available for the

protection of intellectual property, the European Commission, as part of the Lisbon strategy

for

growth and employment, has initiated a number of practical measures and devoted significant

effort to combating product imitations and piracy.

The project “IPeuropAware – IP Awareness and Enforcement: Modular Based Actions for

SMEs”,

launched by the European Commission’s Directorate General for Enterprise and Industry, is

financed through the Commission's CIP (Competitiveness and Innovation Framework

Programme). The primary objective is to increase SMEs’ knowledge of intellectual property

rights

and their enforcement while helping to integrate this into their innovation and business

strategies.

From 2007-2010, twenty national patent offices are working in separate fields with three

research

institutes for this purpose, to help provide SMEs at the European level with strategies for

combating intellectual property right infringement resulting from brand and product piracy.

Manuals have been developed for industries which are particularly hard hit by counterfeiting

(textiles, furniture, leather goods and shoes) and provided to SMEs in these sectors free of

charge.

The German Patent and Trade Mark Office is particularly pleased to present these practical

manuals to you at the world’s largest consumer goods fair as part of its “Messe Frankfurt

against

Copying” initiative – a service of Messe Frankfurt GmbH.

In addition, the seminar being conducted for this purpose, which boasts experts from various

fields

of intellectual property rights, offers you a unique opportunity to obtain a comprehensive

overview

of the possibilities which are available to you for protecting your brands and products in

Europe

and China, including the enforcement of your intellectual property rights. This seminar is

being

organised by Messe Frankfurt GmbH, the Enterprise Europe Network in Hesse and the

German

Patent and Trade Mark Office as part of “IPeuropAware”. Please refer to the

accompanyingprogramme for more details

3. Explain Intellectual Property Protection Act of 2006

The Intellectual Property Protection Act of 2006 is a proposed bill, backed by Rep. Lamar

S. Smith (R) of Texas, that would greatly increase the scope of the Digital Millennium

Copyright Act as well as adding an assorted number of laws and penalties relating to

intellectual property.

Overview

The Intellectual Property Protection Act of 2006 is supported by the Justice Department and

aims to increase the government's ability to combat IP violations and help reduce terror-

related and criminal enterprises supposedly funded by piracy. The government has not been

able to show a verifiable link between IP violations and terror groups.

This bill should not be confused with HR 2391, The Intellectual Property Protection Act of

2004 which was an earlier collection of intellectual property related legislation.

Major Provisions

Allow criminal penalties even for work not registered in the US Copyright Office.

Increase jail time for attempted copyright infringement from 5 years to 10 or 10 to 20

years for further offenses even if the attempt is unsuccessful.

Permit the use of wiretaps in copyright investigations and create a new FBI unit

dedicated to copyright infringement

Allow organizations holding copyrights to seize any documentation related to

copyright infringement.

Force infringers to forfeit property used in the offense.

Expand DMCA language prohibiting the distribution of technology capable of

circumventing copy protection to more restrictive language which prevents

possession or creation of such technology if there is a possibility of redistribution.

Intellectual Property Protection Act of 2007

On May 14, 2007, Attorney General Alberto Gonzales proposed the Intellectual Property

Protection Act of 2007 to Congress. The legislation was preemptive in nature, and called "a

sweeping intellectual-property bill that would increase criminal penalties for copyright

infringement, including 'attempts' to commit piracy." [1]

Details

The Intellectual Property Act of 2007 proposed a package of new tactics to combat

copyright infringement, especially focused on internet piracy. According to a CNet News

Article, the bill would:

Criminalize "attempting" to infringe copyright. At the time, federal law punished

not-for-profit copyright infringement with between one to ten years in prison, but

only if actual infringement took place. The IPPA would eliminate that requirement.

(The Justice Department's summary of the legislation says: "It is a general tenet of the

criminal law that those who attempt to commit a crime but do not complete it are as

morally culpable as those who succeed in doing so.")[2]

Create a new crime of life imprisonment for using pirated software. Anyone

using counterfeit products who "recklessly causes or attempts to cause death" can be

imprisoned for life. During a conference call, Justice Department officials gave the

example of a hospital using pirated software instead of paying for it.[3]

Permit more wiretaps for piracy investigations. Wiretaps would be authorized for

investigations of Americans who are "attempting" to infringe copyrights.[4]

Allow computers to be seized more readily. Specifically, property such as a PC

"intended to be used in any manner" to commit a copyright crime would be subject to

forfeiture, including civil asset forfeiture. Civil asset forfeiture had become popular

among police agencies in drug cases as a way to gain additional revenue, though it

was problematic and controversial.[5]

Increase penalties for violating the Digital Millennium Copyright Act's

anticircumvention regulations. At the time, criminal violations were punished by

jail sentences of up to ten years and fines of up to $1 million. The IPPA would add

forfeiture penalties.[6]

Add penalties for "intended" copyright crimes. At the time, certain copyright

crimes required someone to commit the "distribution, including by electronic means,

during any 180-day period of at least 10 copies" valued at more than $2,500. The

IPPA would insert a new prohibition: actions that were "intended to consist of"

distribution.[7]

Require Homeland Security to alert the Recording Industry Association of

America. This would happen when CDs with "unauthorized fixations of the sounds,

or sounds and images, of a live musical performance" are attempted to be imported.

Neither the Motion Picture Association of America nor the Business Software

Alliance (nor any other copyright holder, such as photographers, playwrights or news

organizations, for that matter) would qualify for this kind of treatment.[8]

Congressional action

As of June 14, 2007, the Intellectual Property Protection Act of 2007 had yet to find a

sponsor in the House or Senate. Members from both parties, however, had spoken in support

of increased intellectual property protection in the past. Rep. Lamar Smith (R-Texas)

commented on the bill, "We are reviewing (the attorney general's) proposal. Any plan to stop

IP theft will benefit the economy and the American worker... I applaud the attorney general

for recognizing the need to protect intellectual property."[9]

Controversy

On May 21, 2007, John Aravosis of AMERICAblog wrote, "First off, what this legislation is

really about...is the U.S. Department of Homeland Security getting carte blanche

authorization to fish through your computer and tap your phones with impunity, whenever

they want, so long as they argue that they think you might have ever tried to download even a

single song via Limewire or some of other music-sharing software, or have ever copied a

photo off the Internet, or even watched a single clip from any TV show on YouTube. They're

going to use this legislation to hunt for terrorists, and won't need search warrants, etc. That's

what this is about."[10]

4. explain International Patent System

Concept of Patent

The patent rights can be enforced only after securing the patent. Patent

restricts others to make, use, offer for sale, sale or import the patented

product. Patent is granted for both a product and a process. Patent right locks

the functionality aspect and restricts the rights to the patent owner. Patent is a

time limited monopoly which is granted from the date of the first filing for

twenty years.

The patent application could be either provisional or complete. To exploit the right to

propriety, the inventors prefer to file the provisional application at the concept stage of the

invention when they feel confident to file the complete application within twelve months

time from the date of the provisional application. The difference between the provisional and

the complete application is that in the provisional application only the outline of the

invention is given and thus a tentative domain of the invention is described. The claim part,

the patent rights subsists on this part, is written only in the complete application.

Concept of Priority

Priority is a very important part of patent system. It means that who has right to secure patent

to the exclusion to the other applicants in any country. There are two concepts of priority.

The first is the first to file concept and the other is first to invent concept. According to the

first to file concept, the first applicant has the right exclusion to the others to file and secure

patents in the most of the countries which follow the international patent system. This

concept is followed by most of the countries including India. The first to invent concept says

that the inventor who invented first has the right to file and secure the patent. This concept is

followed by the US.

Patentable Inventions

There are three conditions, novelty, non-obviousness and industrial use, for an invention to

qualify as a patentable invention irrespective of any domestic patent law. Novelty means that

the invention should be not be known in the industry anywhere before. An invention first

practiced as a trade secret and later applied for patent does not qualify under this condition.

Non-obviousness means that the invention should be such that it add-value to the existing

knowledge domain. The teaching of the invention must not be obvious to anyone having

knowledge in that particular domain of technology. The third condition makes it clear that

patent is granted only for the applied science which has some industrial use. The invention

should be either in the form of a product or a process which can be commercially exploited.

The Patent System

Patent rights are territorial in nature and governed by the domestic patent laws. It means that

a patent right holder in the US has rights only in the US territories. For securing the same

rights, one needs to redo the patent rights securing process in each country of the business

interest from the prospective of commercialization of the invention.

To synchronize the domestic patent system at the international level gradually an

international understanding developed for protecting industrial property in the nineteenth

century when the industrialization was at its peak. The transition of the industrialization into

knowledge economy melted the conventional understanding into an agreement which is

acting as an international patent law. The international understanding on industrial property,

which is another term used for the intellectual property minus copyright, is known as Paris

Convention for the protection of Industrial Property. Since it was a convention, it lacked

binding force. But it helped in designing the international patent law which came under the

banner of the TRIPS Agreement, which has binding force. The binding force means that how

what is agreed upon at an international level is translated into the domestic laws of the

signatory countries. Treaties and conventions are merely an understanding lacking binding

the signatory countries to follow them. But TRIPS is an agreement having deterrence to force

the signatory sovereigns to act up on the terms and conditions of the agreement.

Each inventor, either a part of the Paris Convention Union for protection of industrial

property or the WTO Contracting country, has twelve months time from the date of the

first/basic application to decide and file an application for securing the patent rights in the

other member countries. This additional right is known as priority right.

There is time buying system which helps in deferring the patent application filing in the other

countries to the maximum of thirty months from the date of the filing the basic application.

This system is known as Patent Cooperation Treaty (PCT) and administer by the World

Intellectual Property Rights Organization (WIPO). The TRIPS Agreement has borrowed the

National Treatment concept from the Paris Convention. The national treatment means that

the foreigners would be given the same treatment as the nationals of a country. TRIPS further

added Most Favored Nation (MFN) concept in it; which means that any especial favor given

by a country to a country will be applicable to rest of the member countries. The concepts of

the national treatment and the MFN status provide equality before the laws of a member

country to the foreigners.

Hence, there are two options for an applicant to file a patent application in a foreign country.

The first one is Paris Convention and the second is exploiting the PCT route. The first route

is advisable when an applicant wants to file the application without loosing time. The other

route is advisable when the applicants wish to buy some time for any reason to exploit the

patent rights later without loosing the priority. Both the options are open for both the Indian

and the US nationals in each-other’s country.

Though the TRIPS Agreement directs its signatory countries to grant patent in all the

technologies, there are a few exceptions to this direction in India. Similarly there is a

fundamental difference in definition of invention. The US patent law includes both

inventions and discoveries as a subject matter of patent but India, like most of the countries,

accepts only inventions as a patentable subject matter. Another difference is in the treatment

of the prior art. The US patent law accepts knowledge existing in some tangible format

outside its territories for the consideration of knowledge forming prior art. The US accepts

hear-say knowledge existing in its territories. To the contrary, Indian law accepts all kind of

information, whether hear-say or in some tangible form, existing anywhere as prior art.

5. How to Secure Patent Rights in India

The Constitution of India starts with ‘We the People of India..’ wordings and declares herself

a Socialist Republic in the preamble itself. The Supreme Court of India in a case declared

that Constitution is not to be construed as a mere law, but as the machinery by which laws

are made. Though the patent law was framed and repeatedly amended in compliance with

India’s commitment to various international treaties, conventions and agreement, none of IP

laws is above the Constitution of India. An attempt to make a fine balance between the social

welfare commitment to the nation and the rights of the patent owner can be seen in various

provisions of the Indian patent law. India is a natural ally to the developing and least

developed countries, who see and respect her as their leader. As a leader of the third world

countries India has extended social responsibility towards their welfare. This responsibility is

also reflected in the Patent Act.

India is a signatory country to the Paris Convention and the WTO. The foreigners draw right

to file patent applications in the foreign countries under the provisions of the Paris

Convention and the TRIPS Agreement. The foreign applicants have equal rights before the

patent law of India and there is no discrimination based on nationality as agreed by India to

the above-stated international instruments.

The first patent application is known as the basic application. A foreign national can file the

basic application in India drawing rights under the Paris Convention or can file the national

phase application in India within twelve months after filing the basic application either in his

home country or elsewhere. The twelve month time to file the subsequent application is an

international right and is known as Priority Right. By claiming the priority right, the

applicant secures preference to other applicants who filed their applications any time later to

the basic application filed by the first applicant. English is the official language for filing the

application in India by the foreigners.

In case an application has been filed under the provisions of the PCT, it remains suspended

for eighteen months from the date of the basic application filing and is not processed. The

national phase applications rooting from the PCT application can be filed latest by thirty one

months from the date of the basic application filing. In case the national phase application is

filed before thirty one months which is the time deadline to enter into the national phase, the

patent Office shall not start processing of the national phase application before the expiration

of thirty one months from the basic application filing date, else otherwise formally requested

to process under other provisions. Here it is important to mention that PCT application is just

a time buying process to extend the priority to file the national phase applications. A PCT

application in itself does not materialize into any patent; it is the national phase application

which may ultimately yields patent.

When an application is made by virtue of an assignment of rights to apply for patent for the

invention, the applicant needs to file the right to assignment in the prescribed form within six

months from the date of the filing of the application in India. A declaration of inventorship is

required to be filed with the complete application or within one month from the date of the

filing of the complete application. Besides, the applicant needs to keep the Indian Patent

Office update on other national phase applications for the same invention in the prescribed

format in the prescribed time.

After expiration of the thirty one months period from the basic application filing date, the

application is processed and published in the Patent Journal. Under the normal process there

is no need to apply for the publication of the application. There is a provision under the

patent law for filing an early publication request. On and from the date of publication of the

application the applicant shall have the like privileges and rights as if the application for

patent has been granted, provided the applicant shall not be entitled to institute any

proceedings for infringement until the grant of the patent.

After publication of the application, the applicant gets forty eight months time from the

priority date of the basic application to file a request for an examination of the application.

There is no restriction to file a request for examination of the application, but it would be

considered only after publication of the application. Ordinarily the first examination report

(FER) is send within six months from the date of the examination request or six months from

the date of publication, whichever is later.

India has adopted post-grant opposition procedure without loosing her old pre-grant

opposition procedure. When a patent application is published but the patent has not been

granted, any person in writing may oppose the application on any of the prescribed grounds.

Similarly, any person, at any time after the grant of the patent but before the expiry of one

year from the date of publication of grant of the patent may give a notice of opposition to the

Controller in the prescribed manner.

When the application is found to be in order for the grant of patent complying with the Patent

Act, a patent is granted.

The life span of a patent is twenty years starting from the date of the filing of the patent

application. For the international applications filed under the Patent Cooperation Treaty

(PCT) the twenty years shall be counted from the international (PCT) application filing date.

The patent requires to be renewed each year by paying the renewal fee. In absence of non-

renewal of patent, the rights are lapsed. The applicant can file for renewal of the lapsed

patent within eighteen months from the date on which the patent has ceased to have effect.

There is no right during the suspension of patent due to non-renewal.

The district court has the jurisdiction to try an infringement suit. Provided that where a

counter-claim for revocation of the patent is made by the defendant, the suit is transferred to

the respective High Court for decision. In an infringement suit the court may grant an

injunction and at the opinion of the plaintiff either damages or account of profit. The court

may also order for the forfeiture and destruction of the infringing goods without any

compensation. The appeals to the orders and decisions of the Controller and all cases of

revocation of patent other than on a counter-claim in a suit for infringement and rectification

of register pending before any High Court shall go to the Intellectual Property Appellate

Board (IPAB).

To balance the monopoly patent rights granted to a parson, there is a complete chapter titled

‘working of patents, compulsory licenses and revocation’ to safeguard the socialist

commitment of India. Another chapter titled ‘use of inventions for purpose of Government

and acquisition of inventions by central Government’ is an attempt by India not to find her

into tight spot to honor a patent against her national or social interests.

6. Explain in detail Trademark

A trademark or trade mark[1] is a distinctive sign or indicator used by an individual,

business organization, or other legal entity to identify that the products or services to

consumers with which the trademark appears originate from a unique source, and to

distinguish its products or services from those of other entities.

A trademark is designated by the following symbols:

™ (for an unregistered trade mark, that is, a mark used to promote or brand goods)

℠ (for an unregistered service mark, that is, a mark used to promote or brand

services)

® (for a registered trademark)

A trademark is a type of intellectual property, and typically a name, word, phrase, logo,

symbol, design, image, or a combination of these elements.[2] There is also a range of non-

conventional trademarks comprising marks which do not fall into these standard categories.

The owner of a registered trademark may commence legal proceedings for trademark

infringement to prevent unauthorized use of that trademark. However, registration is not

required. The owner of a common law trademark may also file suit, but an unregistered mark

may be protectable only within the geographical area within which it has been used or in

geographical areas into which it may be reasonably expected to expand.

The term trademark is also used informally to refer to any distinguishing attribute by which

an individual is readily identified, such as the well known characteristics of celebrities. When

a trademark is used in relation to services rather than products, it may sometimes be called a

service mark, particularly in the United States.[2]

Fundamental concepts

The essential function of a trademark is to exclusively identify the commercial source or

origin of products or services, such that a trademark, properly called, indicates source or

serves as a badge of origin. In other words, trademarks serve to identify a particular business

as the source of goods or services. The use of a trademark in this way is known as trademark

use. Certain exclusive rights attach to a registered mark, which can be enforced by way of an

action for trademark infringement, while unregistered trademark rights may be enforced

pursuant to the common law tort of passing off.

It should be noted that trademark rights generally arise out of the use or to maintain exclusive

rights over that sign in relation to certain products or services, assuming there are no other

trademark objections.

Different goods and services have been classified by the International (Nice) Classification of

Goods and Services into 45 Trademark Classes (1 to 34 cover goods, and 35 to 45 services).

The idea of this system is to specify and limit the extension of the intellectual property right

by determining which goods or services are covered by the mark, and to unify classification

systems around the world.

History

In trademark treatises it is usually reported that blacksmiths who made swords in the Roman

Empire are thought of as being the first users of trademarks.[3] Other notable trademarks that

have been used for a long time include Löwenbräu, which claims use since 1383, and Stella

Artois, which claims use since 1366.[citation needed]

Registered trademarks involve registering the trademark with the government. The oldest

registered trademarks in various countries include:

United Kingdom : 1876 – The Bass Red Triangle was the first trademark to be

registered under the Trade Mark Registration Act 1875.[4]

United States: Picture of Samson wrestling a lion, to Samson Rope.

Symbols

The two symbols associated with U.S. trademarks ™ (the trademark symbol) and ® (the

registered trademark symbol) represent the status of a mark and accordingly its level of

protection. While ™ can be used with any common law usage of a mark, ® may only be used

by the owner of a mark following registration with the U.S. Patent and Trademark Office

(USPTO or PTO) and designates such. The proper manner to display either symbol is

immediately following the mark in superscript style.

Terminology

Terms such as "mark", "brand" and "logo" are sometimes used interchangeably with

"trademark". "Trademark", however, also includes any device, brand, label, name, signature,

word, letter, numerical, shape of goods, packaging, colour or combination of colours, smell,

sound, movement or any combination thereof which is capable of distinguishing goods and

services of one business from those of others. It must be capable of graphical representation

and must be applied to goods or services for which it is registered.

Specialized types of trademark include certification marks, collective trademarks and

defensive trademarks. A trademark which is popularly used to describe a product or service

(rather than to distinguish the product or services from those of third parties) is sometimes

known as a genericized trademark. If such a mark becomes synonymous with that product or

service to the extent that the trademark owner can no longer enforce its proprietary rights, the

mark becomes generic.

Registration

The law considers a trademark to be a form of property. Proprietary rights in relation to a

trademark may be established through actual use in the marketplace, or through registration

of the mark with the trademarks office (or "trademarks registry") of a particular jurisdiction.

In some jurisdictions, trademark rights can be established through either or both means.

Certain jurisdictions generally do not recognize trademarks rights arising through use. In the

United States the only way to qualify for a federally registered trademark is to first use the

trademark in commerce.[5] If trademark owners do not hold registrations for their marks in

such jurisdictions, the extent to which they will be able to enforce their rights through

trademark infringement proceedings will therefore be limited. In cases of dispute, this

disparity of rights is often referred to as "first to file" as opposed to "first to use." Other

countries such as Germany offer a limited amount of common law rights for unregistered

marks where to gain protection, the goods or services must occupy a highly significant

position in the marketplace - where this could be 40% or more market share for sales in the

particular class of goods or services.

A registered trademark confers a bundle of exclusive rights upon the registered owner,

including the right to exclusive use of the mark in relation to the products or services for

which it is registered. The law in most jurisdictions also allows the owner of a registered

trademark to prevent unauthorized use of the mark in relation to products or services which

are identical or "colourfully" similar to the "registered" products or services, and in certain

cases, prevent use in relation to entirely dissimilar products or services. The test is always

whether a consumer of the goods or services will be confused as to the identity of the source

or origin. An example may be a very large multinational brand such as "Sony" where a non-

electronic product such as a pair of sunglasses might be assumed to have come from Sony

Corporation of Japan despite not being a class of goods that Sony has rights in.

Once trademark rights are established in a particular jurisdiction, these rights are generally

only enforceable in that jurisdiction, a quality which is sometimes known as territoriality.

However, there is a range of international trademark laws and systems which facilitate the

protection of trademarks in more than one jurisdiction (see International trademark laws

below).

Search

The USPTO maintains a database of registered trademarks. The database is open to the

public; however a licensed attorney may be required to interpret the search results.

Furthermore as trademarks are governed by federal law, state law and common law, a

thorough search as to the availability of a mark is very important. In the United States,

obtaining a trademark search and relying upon the results of an opinion issued by an attorney

may insulate a trademark user from being required to pay treble damages and attorney's fees

in a trademark infringement case as it demonstrates that the trademark user performed due

diligence and was using the mark in good faith. The USPTO internally captures more

information about trademarks than what they publicly disclose on their official search

website. For example, the USPTO collects information about what exactly is shown inside

every logo trademark filing.

Trademarks may also be searched on third-party databases, such as LexisNexis, Dialog and

Compu-Mark.

In Europe and if a community trademark has to be filed, searches have to be conducted with

the OHIM (Community Trademark Office) and with the various national offices. An

alternative solution is to conduct a trademark search within private databases.

Ability to register

In most systems, a trademark can be registered if it is able to distinguish the goods or

services of a party, will not confuse consumers about the relationship between one party and

another, and will not otherwise deceive consumers with respect to the qualities of the

product.

Distinctive character

Main article: Trademark distinctiveness

Maintaining rights

Trademarks rights must be maintained through actual lawful use of the trademark. These

rights will cease if a mark is not actively used for a period of time, normally 5 years in most

jurisdictions. In the case of a trademark registration, failure to actively use the mark in the

lawful course of trade, or to enforce the registration in the event of infringement, may also

expose the registration itself to become liable for an application for the removal from the

register after a certain period of time on the grounds of "non-use". It is not necessary for a

trademark owner to take enforcement action against all infringement if it can be shown that

the owner perceived the infringement to be minor and inconsequential. This is designed to

prevent owners from continually being tied up in litigation for fear of cancellation. An owner

can at any time commence action for infringement against a third party as long as it had not

previously notified the third party of its discontent following third party use and then failed

to take action within a reasonable period of time (called acquiescence). The owner can

always reserve the right to take legal action until a court decides that the third party had

gained notoriety which the owner 'must' have been aware of. It will be for the third party to

prove their use of the mark is substantial as it is the onus of a company using a mark to check

they are not infringing previously registered rights. In the US, owing to the overwhelming

number of unregistered rights, trademark applicants are advised to perform searches not just

of the trademark register but of local business directories and relevant trade press.

Specialized search companies perform such tasks prior to application.

All jurisdictions with a mature trademark registration system provide a mechanism for

removal in the event of such non use, which is usually a period of either three or five years.

The intention to use a trademark can be proven by a wide range of acts as shown in the

"Wooly Bull" and "Ashton v Harlee" cases.

In the U.S., failure to use a trademark for this period of time, aside from the corresponding

impact on product quality, will result in abandonment of the mark, whereby any party may

use the mark. An abandoned mark is not irrevocably in the public domain, but may instead be

re-registered by any party which has re-established exclusive and active use, and must be

associated or linked with the original mark owner. If a court rules that a trademark has

become "generic" through common use (such that the mark no longer performs the essential

trademark function and the average consumer no longer considers that exclusive rights attach

to it), the corresponding registration may also be ruled invalid.

For examples, see trademark distinctiveness.

Enforcing rights

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challenged and removed. (February 2008)

The extent to which a trademark owner may prevent unauthorized use of trademarks which

are the same as or similar to its trademark depends on various factors such as whether its

trademark is registered, the similarity of the trademarks involved, the similarity of the

products or services involved, and whether the owner’s trademark is well known.

If a trademark has not been registered, some jurisdictions (especially Common Law

countries) offer protection for the business reputation or goodwill which attaches to

unregistered trademarks through the tort of passing off. Passing off may provide a remedy in

a scenario where a business has been trading under an unregistered trademark for many

years, and a rival business starts using the same or a similar mark.

If a trademark has been registered, then it is much easier for the trademark owner to

demonstrate its trademark rights and to enforce these rights through an infringement action.

Unauthorized use of a registered trademark need not be intentional in order for infringement

to occur, although damages in an infringement lawsuit will generally be greater if there was

an intention to deceive.

For trademarks which are considered to be well known, infringing use may occur where the

use occurs in relation to products or services which are not the same as or similar to the

products or services in relation to which the owner's mark is registered.

7.Compare with patents, designs and copyright

See also: Functionality doctrine

While trademark law seeks to protect indications of the commercial source of products or

services, patent law generally seeks to protect new and useful inventions, and registered

designs law generally seeks to protect the look or appearance of a manufactured article.

Trademarks, patents and designs collectively form a subset of intellectual property known as

industrial property because they are often created and used in an industrial or commercial

context.

By comparison, copyright law generally seeks to protect original literary, artistic and other

creative works. Continued active use and re-registration can make a trademark perpetual,

whereas copyright usually lasts for the duration of the author's lifespan plus 70 years for

works by individuals, and some limited time after creation for works by bodies corporate.[10]

This can lead to confusion in cases where a work passes into the public domain but the

character in question remains a registered trademark.[11]

Although intellectual property laws such as these are theoretically distinct, more than one

type may afford protection to the same article. For example, the particular design of a bottle

may qualify for copyright protection as a non-utilitarian [sculpture], or for trademark

protection based on its shape, or the 'trade dress' appearance of the bottle as a whole may be

protectable. Titles and character names from books or movies may also be protectable as

trademarks while the works from which they are drawn may qualify for copyright protection

as a whole.

Drawing these distinctions is necessary, but often challenging for the courts and lawyers,

especially in jurisdictions where patents and copyrights pass into the public domain,

depending on the jurisdiction. Unlike patents and copyrights, which in theory, are granted for

one-off fixed terms, trademarks remain valid as long as the owner actively uses and defends

them and maintains their registrations with the competent authorities. This often involves

payment of a periodic renewal fee.

As a trademark must be used in order to maintain rights in relation to that mark, a trademark

can be 'abandoned' or its registration can be cancelled or revoked if the mark is not

continuously used. By comparison, patents and copyrights cannot be 'abandoned' and a patent

holder or copyright owner can generally enforce their rights without taking any particular

action to maintain the patent or copyright. Additionally, patent holders and copyright owners

may not necessarily need to actively police their rights. However, a failure to bring a timely

infringement suit or action against a known infringer may give the defendant a defense of

implied consent or estoppel when suit is finally brought.

Dilution

Main article: Trademark dilution

A trademark is diluted when the use of similar or identical trademarks in other non-

competing markets means that the trademark in and of itself will lose its capacity to signify a

single source. In other words, unlike ordinary trademark law, dilution protection extends to

trademark uses that do not confuse consumers regarding who has made a product. Instead,

dilution protection law aims to protect sufficiently strong trademarks from losing their

singular association in the public mind with a particular product, perhaps imagined if the

trademark were to be encountered independently of any product (e.g., just the word Pepsi

spoken, or on a billboard). Under trademark law, dilution occurs either when unauthorized

use of a mark "blurs" the "distinctive nature of the mark" or "tarnishes it." Likelihood of

confusion is not required. 15 U.S.C §§ 1127, 1125(c).

Sale, transfer and licensing

In various jurisdictions a trademark may be sold with or without the underlying goodwill

which subsists in the business associated with the mark. However, this is not the case in the

United States, where the courts have held that this would "be a fraud upon the public". In the

U.S., trademark registration can therefore only be sold and assigned if accompanied by the

sale of an underlying asset. Examples of assets whose sale would ordinarily support the

assignment of a mark include the sale of the machinery used to produce the goods that bear

the mark, or the sale of the corporation (or subsidiary) that produces the trademarked goods.

Most jurisdictions provide for the use of trademarks to be licensed to third parties. The

licensor (usually the trademark owner) must monitor the quality of the goods being produced

by the licensee to avoid the risk of trademark being deemed abandoned by the courts. A

trademark license should therefore include appropriate provisions dealing with quality

control, whereby the licensee provides warranties as to quality and the licensor has rights to

inspection and monitoring.

Domain names

The advent of the domain name system has led to attempts by trademark holders to enforce

their rights over domain names that are similar or identical to their existing trademarks,

particularly by seeking control over the domain names at issue. As with dilution protection,

enforcing trademark rights over domain name owners involves protecting a trademark

outside the obvious context of its consumer market, because domain names are global and

not limited by goods or service.

This conflict was more easily resolved when the domain name user actually used his website

to compete with the trademark owner. Cybersquatting, however, involves no such

competition, but instead an unlicensed user registering the trademark as a domain name in

order to pressure a payoff (or other benefit) from the lawful mark owner. Typosquatters—

those registering common misspellings of trademarks as domain names—have also been

targeted successfully in trademark infringement suits. Other types of domain name disputes

include the so-called "gripe site," which use a registered trademark in a domain such as

"[trademark]sucks.com." There are also disputes arising from the subdomain, when a third

party uses a protected mark in a web address such as "[trademark].

[legitimatedomain].com."[12]

This clash of the new technology with preexisting trademark rights resulted in several high

profile decisions as the courts of many countries tried to coherently address the issue (and not

always successfully) within the framework of existing trademark law. As the website itself

was not the product being purchased, there was no actual consumer confusion, and so initial

interest confusion was a concept applied instead. Initial interest confusion refers to customer

confusion that creates an initial interest in a competitor's "product" (in the online context,

another party's website). Even though initial interest confusion is dispelled by the time any

actual sales occur, it allows a trademark infringer to capitalize on the goodwill associated

with the original mark.

Several cases have wrestled with the concept of initial interest confusion. In Brookfield

Commc'ns v. West Coast Ent'mt the court found initial interest confusion could occur when a

competitor's trademarked terms were used in the HTML metatags of a website, resulting in

that site appearing in the search results when a user searches on the trademarked term. In

Playboy v. Netscape, the court found initial interest confusion when users typed in Playboy's

trademarks into a search engine, resulting in the display of search results alongside unlabeled

banner ads, triggered by keywords that included Playboy's marks, that would take users to

Playboy's competitors. Though users might ultimately realize upon clicking on the banner

ads that they were not Playboy-affiliated, the court found that the competitor advertisers

could have gained customers by appropriating Playboy's goodwill since users may be

perfectly happy to browse the competitor's site instead of returning the search results to find

the Playboy sites.

In Lamparello v. Falwell, however, the court clarified that a finding of initial interest

confusion is contingent on financial profit from said confusion, such that, if a domain name

confusing similar to a registered trademark is used for a non-trademark related website, the

site owner will not be found to have infringed where he does not seek to capitalize on the

mark's goodwill for his own commercial enterprises.

In addition, courts have upheld the rights of trademark owners with regard to commercial use

of domain names, even in cases where goods sold there legitimately bear the mark. In the

landmark decision Creative Gifts, Inc. v. UFO, 235 F.3d 540 (10th Cir. 2000)(New Mexico),

defendants had registered the domain name "Levitron.com" to sell goods bearing the

trademark "Levitron" under an at-will license from the trademark owner. The 10th Circuit

affirmed the rights of the trademark owner with regard to said domain name, despite

arguments of promissory estoppel.

Most courts particularly frowned on cybersquatting, and found that it was itself a sufficiently

commercial use (i.e., "trafficking" in trademarks) to reach into the area of trademark

infringement. Most jurisdictions have since amended their trademark laws to address domain

names specifically, and to provide explicit remedies against cybersquatters.

In the US, the legal situation was clarified by the Anticybersquatting Consumer Protection

Act, an amendment to the Lanham Act, which explicitly prohibited cybersquatting. It defines

cybersquatting as "(occurring) when a person other than the trademark holder registers the

domain name of a well known trademark and then attempts to profit from this by either

ransoming the domain name back to the trademark holder or using the domain name to divert

business from the trademark holder to the domain name holder" [13]. The provision states that

"[a] person shall be liable in a civil action by the owner of the mark ... if, without regard to

the goods or services of the person, that person (i) had a bad faith intent to profit from the

mark ...; and registers, traffics in, or uses domain name [that is confusingly similar to

another's mark or dilutes another's mark]"[14].

This international legal change has also led to the creation of ICANN Uniform Domain-

Name Dispute-Resolution Policy (UDRP) and other dispute policies for specific countries

(such as Nominet UK's DRS) which attempt to streamline the process of resolving who

should own a domain name (without dealing with other infringement issues such as

damages). This is particularly desirable to trademark owners when the domain name

registrant may be in another country or even anonymous.

Registrants of domain names also sometimes wish to register the domain names themselves

(e.g., "XYZ.COM") as trademarks for perceived advantages, such as an extra bulwark against

their domain being hijacked, and to avail themselves of such remedies as confusion or

passing off against other domain holders with confusingly similar or intentionally misspelled

domain names.

As with other trademarks, the domain name will not be subject to registration unless the

proposed mark is actually used to identify the registrant's goods or services to the public,

rather than simply being the location on the Internet where the applicant's web site appears.

Amazon.com is a prime example of a protected trademark for a domain name central to the

public's identification of the company and its products.

Terms which are not protectable by themselves, such as a generic term or a merely

descriptive term that has not acquired secondary meaning, may become registrable when a

Top-Level Domain Name (e.g. dot-COM) is appended to it. An example of such a domain

name ineligible for trademark or service mark protection as a generic term, but which

currently has a registered U.S. service mark, is "HEARSAY.COM".

Among trademark practitioners there remains a great deal of debate around trademark

protection under ICANN's proposed generic top-level domain name space expansion. World

Trademark Review has been reporting on the at times fiery discussion between trademark

owners and domainers[15].

[edit] International law

It is important to note that although there are systems which facilitate the filing, registration

or enforcement of trademark rights in more than one jurisdiction on a regional or global basis

(e.g. the Madrid and CTM systems, see further below), it is currently not possible to file and

obtain a single trademark registration which will automatically apply around the world. Like

any national law, trademark laws apply only in their applicable country or jurisdiction, a

quality which is sometimes known as "territoriality".

Territorial application

The inherent limitations of the territorial application of trademark laws have been mitigated

by various intellectual property treaties, foremost amongst which is the WTO Agreement on

Trade-Related Aspects of Intellectual Property Rights. TRIPS establishes legal compatibility

between member jurisdictions by requiring the harmonization of applicable laws. For

example, Article 15(1) of TRIPS provides a definition for "sign" which is used as or forms

part of the definition of "trademark" in the trademark legislation of many jurisdictions around

the world.

Madrid system

Main article: Madrid system

The major international system for facilitating the registration of trademarks in multiple

jurisdictions is commonly known as the "Madrid system". Madrid provides a centrally

administered system for securing trademark registrations in member jurisdictions by

extending the protection of an "international registration" obtained through the World

Intellectual Property Organization. This international registration is in turn based upon an

application or registration obtained by a trade mark applicant in its home jurisdiction.

The primary advantage of the Madrid system is that it allows a trademark owner to obtain

trademark protection in many jurisdictions by filing one application in one jurisdiction with

one set of fees, and make any changes (e.g. changes of name or address) and renew

registration across all applicable jurisdictions through a single administrative process.

Furthermore, the "coverage" of the international registration may be extended to additional

member jurisdictions at any time.

8.Explain Trademark Law Treaty

The Trademark Law Treaty establishes a system pursuant to which member jurisdictions

agree to standardize procedural aspects of the trademark registration process. It is not

necessarily respective of rules within individual countries.[16]

Community Trade Mark system

Main article: Community Trade Mark

The Community Trade Mark system is the trademark system which applies in the European

Union, whereby registration of a trademark with the Office for Harmonization in the Internal

Market (Trade Marks and Designs) (i.e. OHIM, the trademarks office of the European

Union), leads to a registration which is effective throughout the EU as a whole. The CTM

system is therefore said to be unitary in character, in that a CTM registration applies

indivisibly across all European Union member states. However, the CTM system did not

replace the national trademark registration systems; the CTM system and the national

systems continue to operate in parallel to each other (see also European Union trade mark

law).

If you reside outside the EU, you must have professional representative to the procedures

before the OHIM. If you are a European resident, you don’t have to have professional

representation to file an opposition, however, it is strongly recommended by the OHIM.

One of the tasks of a CTM owner is the monitoring of the later applications whether any of

those is similar to his/her earlier trademark. Monitoring is not easy and usually requires

professional expertise. To conduct a monitoring there is the so-called Trademark Watching

service where it can be checked if someone tries to get registered marks that are similar to the

existing marks.

Oppositions should be filed on the standard opposition form in any official language of the

European Union, however, the substantive part of the opposition (e.g. the argumentations)

can be submitted only in the language of the opposed application, that is one of the working

languages of the OHIM, e.g. English, Spanish, German. Worth noting that in most of the

cases the opponents file their oppositions in English.

UNIT IV

Law of product liability – Laws relating to customs practices and procedures – settlement of International Trade disputes – Carriage of goods by sea, air and over road.

PART A

1.Expand EPCG Export promotion capital goods

2.DEPB Duty Entitlement Pass book Scheme.

3.IEC Number Import –Export Code Number

PART B

1. What is Product liability?

Product liability is the area of law in which manufacturers, distributors, suppliers,

retailers, and others who make products available to the public are held responsible for the

injuries those products cause.

Product liability in the United States

2. What are the Theories of liability

In the United States, the claims most commonly associated with product liability are

negligence, strict liability, breach of warranty, and various consumer protection claims. The

majority of product liability laws are determined at the state level and vary widely from state

to state. Each type of product liability claim requires different elements to be proven to

present a successful claim.

3. Explain the Types of liability

Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes between three

major types of product liability claims:

manufacturing defect,

design defect,

a failure to warn (also known as marketing defects).

However, in most states, these are not legal claims in and of themselves, but are pleaded in

terms of the theories mentioned above. For example, a plaintiff might plead negligent failure

to warn or strict liability for defective design.[1]

Manufacturing defects are those that occur in the manufacturing process and usually involve

poor-quality materials or shoddy workmanship. Design defects occur where the product

design is inherently dangerous or useless (and hence defective) no matter how carefully

manufactured. Failure-to-warn defects arise in products that carry inherent nonobvious

dangers which could be mitigated through adequate warnings to the user, and these dangers

are present regardless of how well the product is manufactured and designed for its intended

purpose.

4. What is Breach of warranty

Warranties are statements by a manufacturer or seller concerning a product during a

commercial transaction. Warranty claims commonly require privity between the injured party

and the manufacturer or seller; in plain English, this means they must be dealing with each

other directly. Breach of warranty-based product liability claims usually focus on one of

three types: (1) breach of an express warranty, (2) breach of an implied warranty of

merchantability, and (3) breach of an implied warranty of fitness for a particular purpose.

Additionally, claims involving real estate may also take the form of an implied warranty of

habitability. Express warranty claims focus on express statements by the manufacturer or the

seller concerning the product (e.g., "This chainsaw is useful to cut turkeys"). The various

implied warranties cover those expectations common to all products (e.g., that a tool is not

unreasonably dangerous when used for its proper purpose), unless specifically disclaimed by

the manufacturer or the seller.

Negligence

A basic negligence claim consists of proof of

1. a duty owed,

2. a breach of that duty,

3. breach was the cause in fact of the plaintiffs injury(actual cause)

4. that the breach proximately caused the plaintiff's injury.

5. the plaintiff suffered actual injury.

As demonstrated in cases such as Winterbottom v. Wright, the scope of the duty of care was

limited to those with whom one was in privity. Later cases like MacPherson v. Buick Motor

Co. broadened the duty of care to all who could be foreseeably injured by one's conduct.

Over time, negligence concepts have arisen to deal with certain specific situations, including

negligence per se (using a manufacturer's violation of a law or regulation, in place of proof of

a duty and a breach) and res ipsa loquitur (an inference of negligence under certain

conditions).

Strict liability

Rather than focus on the behavior of the manufacturer (as in negligence), strict liability

claims focus on the product itself. Under strict liability, the manufacturer is liable if the

product is defective, even if the manufacturer was not negligent in making that product

defective.

The difficulty with negligence is that it still requires the plaintiff to prove that the defendant's

conduct fell below the relevant standard of care. However, if an entire industry tacitly settles

on a somewhat careless standard of conduct, then the plaintiff may not be able to recover

even though he or she is severely injured, because although the defendant's conduct caused

his or her injuries, such conduct was not negligent in the legal sense. As a practical matter,

with the increasing complexity of products, injuries, and medical care (which made many

formerly fatal injuries survivable), it is quite a difficult and expensive task to find and retain

good expert witnesses who can establish the standard of care, breach, and causation.

Therefore, in the 1940s and 1950s, many American courts departed from the MacPherson

standard and decided that it was too harsh to require seriously injured consumer plaintiffs to

prove negligence claims against manufacturers or retailers. To avoid having to deny such

plaintiffs any relief, these courts began to look for facts in their cases which they could

characterize as an express or implied warranty from the manufacturer to the consumer. The

res ipsa loquitur doctrine was also stretched to reduce the plaintiff's burden of proof. Over

time, the resulting legal fictions became increasingly strained.

Of the various U.S. states, California was the first to throw away the fiction of a warranty and

to boldly assert the doctrine of strict liability in tort for defective products, in 1963 (under the

guidance of then-Associate Justice Roger J. Traynor). See Greenman v. Yuba Power

Products, 59 Cal. 2d 57 (1963). The importance of Greenman cannot be overstated: in 1996,

the Association of Trial Lawyers of America (now known as the American Association of

Justice) celebrated its 50th anniversary by polling lawyers and law professors on the top ten

developments in tort law during the past half-century, and Greenman topped the list.[2]

Consumer protection

In addition to the above common law claims, many states have enacted consumer protection

statutes providing for specific remedies for a variety of product defects. Statutory remedies

are often provided for defects which merely render the product unusable (and hence cause

economic injury) but do not cause physical injury or damage to other property; the

"economic loss rule" means that strict liability is generally unavailable for products that

damage only themselves. The best known examples of consumer protection laws for product

defects are lemon laws, which became widespread because automobiles are often an

American citizen's second-largest investment after buying a home.

Insurance and Indemnification

Manufacturers often protect themselves from product liabilities by purchasing liability

insurance. Such insurance may be included in the manufacturer's General Commercial

Liability Insurance policy (a "CGL Policy") or may be purchased separately, depending on

the size and nature of the risk. Distributors and retailers of a product may have their own

liability insurance, and are sometimes an additional insured on the manufacturer's liability

insurance policies. In such cases, the distributor or retailer is insured by the manufacturer's

insurance, to the extent that the distributor or retailer is found liable simply for passing along

the manufacturer's product - a "pass through defendant". Such coverage does not extend to

independent modifications, advice, instructions or warnings that the distributor or retailer

may add to the product after it left the manufacturer. This form of additional insured

insurance roughly parallels the indemnification rights that a distributor or retailer often has

against the manufacturer when the distributor or retailer is a good faith seller of product.

Indemnification rights are found in the Uniform Commercial Code, statute statutes, and

common law indemnification principles. Thus, a large retail "big box" store that suffers

product liability to a consumer for selling a toaster that burns down a home would likely have

both indemnification and additional insured insurance rights to recoup any payments made.

Those indemnification and insurance rights would be against the original toaster

manufacturer, and its liability insurer. In this way, ultimate product liability is passed back

upstream to the original party most responsible for the loss, and its liability insurer.[citation needed]

6. Explain products liability law:

Products liability refers to the liability of any or all parties along the chain of manufacture of

any product for damage caused by that product. This includes the manufacturer of component

parts (at the top of the chain), an assembling manufacturer, the wholesaler, and the retail

store owner (at the bottom of the chain). Products containing inherent defects that cause harm

to a consumer of the product, or someone to whom the product was loaned, given, etc., are

the subjects of products liability suits. While products are generally thought of as tangible

personal property, products liability has stretched that definition to include intangibles (gas),

naturals (pets), real estate (house), and writings (navigational charts).

Products liability claims can be based on negligence, strict liability, or breach of warranty of

fitness depending on the jurisdiction within which the claim is based. Many states have

enacted comprehensive products liability statutes. These statutory provisions can be very

diverse such that the the United States Department of Commerce has promulgated a Model

Uniform Products Liability Act (MUPLA) for voluntary use by the states. There is no federal

products liability law.

In any jurisdiction one must prove that the product is defective. There are three types of

product defects that incur liability in manufacturers and suppliers: design defects,

manufacturing defects, and defects in marketing. Design defects are inherent; they exist

before the product is manufactured. While the item might serve its purpose well, it can be

unreasonably dangerous to use due to a design flaw. On the other hand, manufacturing

defects occur during the construction or production of the item. Only a few out of many

products of the same type are flawed in this case. Defects in marketing deal with improper

instructions and failures to warn consumers of latent dangers in the product.

Products Liability is generally considered a strict liability offense. Strict liability wrongs do

not depend on the degree of carefulness by the defendant. Translated to products liability

terms, a defendant is liable when it is shown that the product is defective. It is irrelevant

whether the manufacturer or supplier exercised great care; if there is a defect in the product

that causes harm, he or she will be liable for it.

The law of products liability is found mainly in common law (state judge-made law) and in

the Uniform Commercial Code. Article 2 of the UCC deals with the sales of goods and it has

been adopted by most states. In it, the most important products liability sections are the

implied and express warranties of merchantibility in the sales of goods §§ 2-314 and 2-315.

Products liability is derived mainly from Torts law (See Torts and Personal Injury).

PART C

1.EXPLAIN GUIDE TO THE PRODUCT LIABILITY LAW

(Law No.85, 1994)

1. Introduction of the Product Liability System

Through the rapid development of science and technology and aggressive innovation in

economic activities, Japan has attained a society of mass production and mass consumption.

On the other hand, because consumers use and consume high-tech and complicated products

daily, their safety primarily depends on product manufacturers.

Therefore, in order to change the principle of liability for damages in product-related

accidents from "negligence" to "defect", and relieve the injured persons in a swift and

appropriate manner, the Product Liability Law shall come into force from July 1, 1995. With

the introduction of the Product Liability system, it is expected that the way of thinking and

the approach concerning product safety of both the industry business segment and the

consumer segment will change and improve.

2. What is Product Liability?

(1) Definition of Product Liability

Product Liability shall be defined as liability for damages in such case as follows:

In the case where due to a defect in the delivered product, a life, a body or property of

another person (including a third party not using or consuming the product directly, and a

legal person as well as a natural person) is injured, the person who manufactured, processed,

imported or put his name, etc. on the product as business is liable for damages of the injured

person.

(2) Significance of Introduction of the Product Liability Law

Previously in Japan, claims for damages have usually been made based on the Civil Code

Article No.709 in case the injury is caused by a defect in the product. The Civil Code Article

No.709 employs the "fault-based liability (negligence) principle", and requires the "intention

or fault" of the manufacturer, etc. as a condition for liability.

The Product Liability Law takes the "defect in the product" as a condition for liability instead

of the "intention or fault" of the manufacturer, etc. Therefore, after introduction of the

Product Liability Law, the injured has only to verify the "defect in the product" for claiming

damages.

 

Civil Code Article No.709 Product Liability Law

The damage

The intention or fault of the accused

The causal relationship between the

damage and the intention or fault

The damage

The defect in the product (at the

time distribution commences)

The causal relationship between the

damage and the defect

The Product Liability Law can be said to employ the "liability without fault principle", that

is, the manufacturer, etc. is liable for damages if the injury is caused by a defect in the

product regardless of whether it was his intention or fault. However, the manufacturer, etc. is

not liable when there is no defect in the product. As the Product Liability Law is a means for

claiming damages, the plaintiff side bears the burden of proof for the above-mentioned 1) -

3). The enactment of the Product Liability Law means a change in the liability rule from

fault-based liability principle -To- defect-based liability principle

 

3. Points of the Product Liability Law

(1) Scope of the product

By definition, "product" means movable property manufactured or processed. Therefore,

incorporeal property such as services, information, software, electricity, etc., and immovables

are not the object of the Law. Moreover, agricultural, forestal, marine and mineral products

which are not processed artificially are not the object of the Law.

(2) Parties subject to liability

Parties subject to liability are as follows:

Manufacturer

Importer

Any person who puts his name, etc. on the product with such titles as "manufacturer" or

"importer", or any person who puts his name, etc. on the product in a manner mistakable for

its manufacturer or importer (For instance, any person selling OEM products using his

company brand name) Any person who, by putting his name, etc. on the product, may be

recognized as its manufacturer-in-fact, in the light of a manner concerning manufacturing,

processing, importation or sales, and other circumstances (For instance, any person, even

though he puts his name, etc. on the product with such titles as "seller" or "sales agency",

who is socially recognaized as its manufacturer-in-fact or is a sole distributor of the product)

(3) Concept of the term "defect"

A "defect" does not mean mere lack of quality of the product, but means lack of safety in the

product which may cause the injury to life, body, or property. In the law, the term "defect" is

defined as "lack of safety that the product ordinarily should provide," taking into account

"the nature of the product", "the ordinarily foreseeable manner of use of the product", "the

time when the manufacturer, etc. delivered the product", and other circumstances concerning

the product. These three above-mentioned circumstances include such respective factors, as

are presented below. In the actual trial, while the weight of each factor is different depending

on individual cases, these factors are comprehensively taken into account in judging whether

the product is defective or not. Meaning of "the nature of the product" This means the

circumstances of the product itself, including factors such as the following: representation of

the product (instructions, warnings, etc. to prevent accidents) effectiveness and usefulness of

the product (compared to its danger) cost vs. effect (the safety standard of products in the

same price range) probability of occurrence of accident and its extent ordinary use period and

durable period of the product Meaning of "the ordinarily foreseeable manner of use of the

product" This means the circumstances concerning use of the product, including factors such

as the following reasonably foreseeable use of the product possibility of preventing damage

from occurring by the product user Meaning of "the time when the manufacturer, etc.

delivered the product" This means the circumstances when the manufacturer, etc. delivered

the product, including factors such as the following: situation at the time the product was

delivered (the safety level required in society at the time the product was delivered)

technological capabilities(the prior state of safety regulations and possibility of alternative

design)

(4) Exemptions

Development Risk Defense, The Product Liability Law admits "Development Risk Defense"

as an exemption. This means the manufacturer, etc. shall not be liable for damages, if the

manufacturer, etc. proves that the state of "scientific or technical knowledge" at the time

when the manufacturer, etc. delivered the product was not such as to enable the existence of

the defect in the product to be discovered. "Scientific or technical knowledge" means all the

established knowledge that could influence the decision on the existence of the defect, and

not the knowledge held by a peculiar person but the total knowledge that objectively exists in

society. Component or Raw Material Manufacturer's Defense Insofar as components or raw

materials are "products" movable property manufactured or processed, their manufacturers

are also subject to liability in the Law. However, if the manufacturer, etc. of a component or

raw material proves that the defect is substantially attributable to compliance with the

instructions concerning the specifications given by the assembling manufacturer who

incorporates the component or raw material into another product, and that the manufacturer,

etc. is not negligent on occurrence of the defect, the manufacturer of the component or raw

material shall not be liable for damages.

(5) Time Limitations

The right for damages provided in the Law shall be extinguished by prescription if the

injured person or his legal representative does not exercise their rights within the following

period: A period of three years from the time when the injured person or his legal

representative becomes aware of the damage and the liable party for the damage (short-term

nagative prescription) A period of ten years from the time when the manufacturer, etc.

delivered the product (long-term liable period)

 Concerning introduction of the Product Liability Law, the cooperation of all divisions of

a company are indispensable. Namely, not only development, design, manufacturing and

quality control divisions, but also general affairs, law and consumer divisions, etc. are

recommended to cooperate with each other on product safety measures.

 In case injury to life, body, or property is caused by a defect in the product, all product-

related manufacturers as well as the assembling manufacturer of the finished product

shall be liable jointly and severally for the damages described in the Law.

The Product Liability Law (Law No.85, 1994)

Article 1:Purpose

The purpose of this Law is to relieve the injured person by setting forth liability of the

manufacturer, etc. for damages when the injury on a life, a body, or property is caused by a

defect in the product, and thereby to contribute to the stabilization and improvement of the

people's life and to the sound development of the national economy.

Article 2: Definitions

(1) As used in this Law, the term "product" means movable property manufactured or

processed.

(2) As used in this Law, the term "defect" means lack of safety that the product ordinarily

should provide, taking into account the nature of the product, the ordinarily foreseeable

manner of use of the product, the time when the manufacturer, etc. delivered the product, and

other circumstances concerning the product.

(3) As used in this Law, the term "manufacturer, etc." means any one of the following:

any person who manufactured, processed, or imported the product as business (hereinafter

called just "manufacturer"); any person who, by putting his name, trade name, trade mark or

other feature (hereinafter called "representation of name, etc.") on the product presents

himself as its manufacturer, or any person who puts the representation of name, etc. on the

product in a manner mistakable for the manufacturer; apart from any person mentioned in the

preceeding subsections, any person who, by putting the representation of name, etc. on the

product, may be recognized as its manufacturer-in-fact, in the light of a manner concerning

manufacturing, processing, importation or sales, and other circumstances.

Article 3:Product Liability

The manufacturer, etc. shall be liable for damages caused by the injury, when he injured

someone's life, body or property by the defect in his delivered product which he

manufactured, processed, imported or put the representation of name, etc. as described in

subsection 2 or 3 of section 3 of Article 2 on. However, the manufacturer, etc. is not liable

when only the defective product itself is damaged.

Article 4:Exemptions

In cases where Article 3 applies, the manufacturer, etc. shall not be liable as a result of

Article 3 if he proves; that the state of scientific or technical knowledge at the time when the

manufacturer, etc. delivered the product was not such as to enable the existance of the defect

in the product to be discovered; or in the case where the product is used as a component or

raw material of another product, that the defect is substantially attributable to compliance

with the instruction concerning the specifications given by the manufacturer of the said

another product, and that the manufacturer, etc. is not negligent on occurrence of the defect.

Article 5:Time Limitations

(1) The right for damages provided in Article 3 shall be extinguished by prescription if the

injured person or his legal representative does not exercise such right within 3 years from the

time when he becomes aware of the damage and the liable party for the damage. The same

shall also apply upon the expiry of a period of 10 years from the time when the manufacturer,

etc. delivered the product.

(2)The period in the latter sentence of section 1 of this Article shall be calculated from the

time when the damage arises, where such damage is caused by the substances which are

harmful to human health when they remain or accumulate in the body, or where the

symptoms for such damage appear after a certain latent period.

Article 6:Application of Civil Code

In so far as this law does not provide otherwise, the liability of the manufacturer, etc. for

damages caused by a defect in the product shall be subject to the provisions of the Civil Code

(Law No.89, 1896).

2.Product Liability Law - Protecting Consumers from Defective Products

Product liability law, also called "products liability", governs the liability of

manufacturers, wholesalers, distributors, and vendors for damages caused by dangerous or

defective products. The goal of product liability laws is to help protect consumers from

dangerous products, while holding manufacturers, distributors, and retailers responsible for

putting into the marketplace products that they knew or should have known were dangerous

or defective. Depending upon the jurisdiction, the liability of the various parties involved as

the product passes from the manufacturer to the consumer will vary.

Product liability frequently involves retail items, but can extend to pretty much anything that

can be sold. It is possible, for example, for a product liability action to arise from a defect in

real estate such as a leaky wall or poorly installed vapor barrierthat causes mold to grow

inside a wall, or from a product used in real estate, such as defective siding.

Product liability claims can be brought under a number of theories, depending upon local

law.

Design Defects: Liability arises from a mistake or oversight in the design of a product,

which makes it dangerous when used as intended, or when used for another reasonably

foreseeable purpose.

Manufacturing Defects: Liability arises from a defect that results from the manufacturing

process.

Marketing Defects: A marketing defect involves such issues as inadequate warning labels or

instructions, which, for example, prevent a user from recognizing a defect in the product, or

from being aware of how to safely use or apply the product.

The elements of what a plaintiff must prove to prevail in a product liability action will also

vary with the jurisdiction. It may be possible for a plaintiff to pursue more than one theory of

liability.

Negligence: In a negligence action, the plaintiff must typically demonstrate that the parties

responsible for placing the product into commerce had a duty to provide goods fit for their

foreseeable uses, would have detected the defect with the exercise of reasonable care in the

design, manufacture, or inspection process, failed to meet its obligations, and that the

plaintiff was injured by the product as a result of the defect while engaged in a foreseeable

use of the product.

Strict Liability: Under a strict liability standard, once the plaintiff establishes that a product

is defective, liability results from that fact alone no matter how much care was applied during

design, manufacture, marketing, distribution and sale.

Breach of Warranty: A warranty is essentially a contract of fitness between a manufacturer

or vendor and its customer. Under a breach of express warranty theory, the plaintiff alleges

the violation of the actual written warranty associated with a product. Under a breach of

implied warranty theory, the plaintiff alleges that although there is no express warranty or the

defect alleged is not covered by the express warranty, a defect in the goods renders them

unfit for the purpose intended.

Many jurisdictions have created comprehensive product liability statutes, to govern litigation

over injuries caused by defective products. Some states adhere more closely to a strict

liability model, while some have very narrow product liability standards and place a

significant burden of proof on a plaintiff. Some may defer to the safety determination made

by a federal agency, such as the FDA's review of pharmaceutical products, and shield

manufacturers from defects unless the plaintiff can demonstrate that they misled the

reviewing agency. They may also immunize parties beyond the point of manufacture, unless

the plaintiff can demonstrate that they had actual knowledge of a product defect.

4. What are the Dispute settlement

This page is a gateway to material on:

Disputes in general, and how they are handled in the WTO and its Dispute Settlement

Body

New negotiations on the Dispute Settlement Understanding

Individual dispute cases: The disputes

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement

Understanding is vital for enforcing the rules and therefore for ensuring that trade flows

smoothly.

A dispute arises when a member government believes another member government is

violating an agreement or a commitment that it has made in the WTO. The authors of these

agreements are the member governments themselves — the agreements are the outcome of

negotiations among members. Ultimate responsibility for settling disputes also lies with

member governments, through the Dispute Settlement Body.

Trade Agreements

From independence in 1947 and until the dawn of 1990s, the trade policy of India was

heavily influenced by the "Swadeshi" i.e. self sufficiency mentality and the "licence raj"

system of restrictions on production and imports.

First generation of reforms took place between 1991 to 1996. It aimed at liberalising trade -

led to a reduction of import tariffs, the elimination of quantitative restrictions, exchange rate

reforms and deregulation of industries. It resulted in a yearly growth rates of around 7%

compared with 3% before the reforms.

Now, India is a member of all the major multilateral economic fora, be it International

Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB). India is

even a founding member of GATT and the World Trade Organisation (WTO).

Regionally India is a member of SAARC (the South Asia Association of Regional Co-

operation) and BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Co-

operation). India enjoys different types of trade agreements with many countries. The

complete list is given below:

Free Trade Agreement (FTA)

Free Trade Agreement between two countries or group of countries agree to eliminate tariffs,

quotas and preferences on most of the goods (if not all) between them. Countries choose FTA

if their economical structures are complementary, not competitive. India enjoys FTA, till

date, with the following two countries:

Srilanka (28 December, 1998)

Thailand (9th October, 2003)

Trade Agreements

It is a bilateral or multilateral treaty or any other enforceable compact which commits two or

more nations to a specified terms of commerce, most of time involving mutually beneficial

concessions.

Bangladesh

Bhutan

Ceylon

Maldives

China

Japan

Korea

Mongolia

Trade Treaty

Nepal

Comprehensive Economic Cooperation Agreement (CECA)

Singapore

Framework Agreement

A framework agreement is one which sets the stage for future substantive liberalization by

defining the scope and terms of reference for some new area of discussions. List of countries

with which India enjoys Framework Agreement are as mentioned below:

With GCC states i.e. The Member States of the Cooperation Council for the Arab

States of the Gulf.

With ASEAN i.e. The Association of South East Asian Nations.

With Chile.

* NOTE : India will eliminate tariffs in 2011 for Brunei Darussalam, Cambodia, Lao PDR,

Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam; Brunei Darussalam,

Indonesia, Malaysia, Singapore and Thailand will eliminate in 2011 and new ASEAN

Member States i.e. CLMV will eliminate in 2016 for India. India and Philippines will

eliminate tariffs for each other on a reciprocal basis by 2016.

Regional Agreement

South Asia Free Trade Agreement (SAFTA) with Pakistan, Nepal, Sri Lanka, Bangladesh,

Bhutan and the Maldives.

Preferential Trade Agreement (PTA)

This trade gives preferential access to only certain products. It is done by reducing tariffs, but

it does not abolish them completely. PTA is established through trade pact and it is the

weakest form of economic integration. India enjoys PTA with the following countries:

Afghanistan

Chile

MERCOSUR - It is a trading bloc in Latin America comprising Brazil, Argentina,

Uruguay and Paraguay. It has Chile and Bolivia as its associate members.

MERCOSUR was formed in 1991 with the objective of facilitating the free

movement of goods, services, capital and people among the four member countries.