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Study of EXIM
policy
PRE 1991
SCENARIO
OF FOREIGN
TRADE
Exim is the
principal fin
ancial instit
ution in the
country for c
o-
coordinating
working of
institutions
engaged in
financing
exports
andimports.
The import
policy in the
post
independenc
e period was
guidedby
consideratio
n of a growth
oriented
policy which
should
ultimately
leadus to the
objective of
self reliance:
a) Imports
should be
limited as
far as
possible so
as to
conservefor
eign
exchange.b)
Imports of
those items
were to be
encouraged
which would
help
theindustriali
zation of the
economy
and imports
of such
items
whichcould
be produced
at home
were
discouraged
or
completely
banned.This
distinction
between
essential
and non-
essential
items of
importswere
necessary
in view of
the fact that
even
the demand
for importsof
capital
goods and
other
equipment in
a developing
economy
couldbe of
such a
magnitude
that it might
become
difficult to
find
foreignexcha
nge for
development
al imports.c)
The nature
of imports
should be
so modified
that it
helped
exportpromo
tion, and
thus mitigate
the deficit in
the balance
of
paymentspo
sition
ultimately.Th
e governme
nt appointe
d the Impor
t and Expor
t PolicyCom
mittee
headed by
Mr. Mudaliar
in 1962 to
review
Government
strade
policy. The
recommend
ations of the
committee
were
accepted
bythe
government.
Mr.V.P.Sing
h, the then
Commerce
Minister,
announcedth
e Export
Import policy
on the 12
th
of April,
1985.It was
here that for
thefirst time
the
Government
announced
the policy on
a three year
basis.The
basic aim of
the policy
was to
facilitate
production
through
easier


Study of EXIM
policy
and quicker
access to
imported
inputs,
impart
continuity
and stability
of Exim Poli
cy, strength
en the expo
rt productio
n base, faci
litatetechnol
ogical up
gradation
and affect all
possible
savings
in imports.

Brief
Review of
Indias
Trade
Policy
Indias
foreign trade
policy during
the last five
decades
may
bebroadly
split into
import
substitution
policy,
export drive
policy and
exportaccele
ration policy.
The import
substitution
was followed
in the first
twodecades.
With fears of
external
dominance,
the Indian
planners
adopteda
somewhat
introvert
external
trade
strategy
which relied
on
encouraging
domestic
production
for the
domestic
market with
the help of
high
tariffsand
high degree
of
protection.
Far from
viewing
foreign trade
as anengine
of growth,
Indian
planners
sought to
minimise
import
demand
byadopting
an import su
bstitution po
licy and gav
e secondary
place toexp
orts primarily
as a source
to generate
the foreign
exchange
earningsto
meet that
part of the
import bill
not covered
by external
assistance.T
here were
controls over
both imports
and exports.
However,
this policyof
import
substituting
industrialisat
ion and
system of
controls
failed
toproduce
rapid growth
and self-
reliance.With
the
realisation of
the
drawbacks
of the
excessively
inward-
looking strat
egy on one
hand and th
e need for
modernisati
on andtechn
ology upgra
dation on th
e other, cert
ain policy m
easures wer
einitiated in
the late
seventies.
Export
incentives in
the form of
cashcompe
nsatory sup
port (CCS),
import reple
nishment (R
EP), dutydr
awback
(DDS),
market
development
assistance
(MDA) etc
and
exportservic
es in the
form of
export
promotion
councils,
commodity
boards and
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