INDIAS TRADE POLICY

Magnitude and direction of Indian International trade, bilateral and multilateral trade agreements, EXIM Policy on Balance of Payments, Recent trends.

INDIAS TRADE POLICY GOI introduced major reforms in trade and industry. ----- Continuous emphasis on increasing industrial production. ----- Financial services being liberalized gradually. ----- Liberalized telecommunication sector. ----- Infrastructural sectors such as Ports, Aviation opened up. ----- Most of the items are placed under OGL. ----- Simplified foreign investment procedures. ----- Opened up no of sectors for FDI. ----- In manufacturing sector, foreign participation can take place automatically up to 51% (in some sectors) or up to 74% in other sectors. ----- FDI is allowed up to 100% in food processing sector. ----- FDI is allowed up to 51% in the automobile sector. If the GOI gives special permission, FDI can be up to 100%.

Response of other countries to Indias Trade Policy

----- Many countries using Non-Tariff Barriers to restrict imports from India. ----- Many countries have reservations on Indias agricultural products & marine products which are often not supported by adequate scientific justification. ----- Restrictive visa regime in developed countries has proved to be disincentive for exports in the service sector (Software Sector). ----- Presently India has accepted 67% of all its tariff lines. Bound rates are rates of customs duty fixed at certain level beyond which the duty cannot be raised. Thus there is ceiling on tariff rates. ----- Bound rates range from 0 to 300% for agricultural products and from 0 to 40% for other products. ----- Bound rates are 25% for intermediate goods and 40% on finished goods.

----- GOI would like to renegotiate some of its tariff bindings. ----- GOI is trying to raise local standards to international standards. ----- (BIS) has harmonized 3500 Indian standards with ISO. ----- India does not have the access to technologies developed abroad for achieving standards acceptable to importing countries. ----- India has implemented product patent regime recently to comply with WTO requirement.

SECTORWISE TRADE POLICIES

Agricultural Sector 1) Removal of control on the interstate movement of certain grains. Control on administered prices. Control on export and import of certain products. GOI has identified potential commodities in various states and AEZ have been set up. Food Processing Sector 1) Reduction of import duty/customs duty to half. Import licensing restrictions have been removed.

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Mining & Petroleum Sector 1) More emphasis on increased oil exploration domestically to reduce import dependence of oil. GOI has given permission to FDI in the mining activity Of 13 minerals. FIPB will approve FDI participation (more than 50%). Reduction in tariff rates to 10% for non-ferrous and iron ores and 13% for coal. 1)

Manufacturing Sector Reforms of GOI Reduction in average tariff rates.

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Removal of import licensing restrictions. Relocations in compulsory industrial Licensing. Liberalization of foreign investment Policies.

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SERVICE SECTOR

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Reforms in services like finance, IT, commerce and tourism. Insurance sector opening up. Removal of restrictions on foreign firms in the banking sector.

FOREIGN TRADE POLICY OF INDIA (EXIM POLICY) Based on liberalization, openness and globalization with a basic thrust on export promotion activity, removal of trade restrictions and making Indian Industry more competitive to meet global requirements. New foreign trade policy of India was announced by GOI and it was named as Exim Policy. Objective: : : leather To double percentage share of global trade within 5 years. To expand employment opportunities in semiurban and rural areas. More export thrust on agriculture, handlooms, handicraft, gems and jewellery and sectors.

FEATURES OF FOREIGN TRADE POLICY 2004-2009. 1) A new scheme called (Special Agricultural Produce Scheme) for promoting the export--- fruits, vegetables, flowers, minor forest produce and their value added products. Funds shall be earmarked for the development of AEZ. Units in AEZ will be exempt from bank guarantee. Capital goods imported under EPCG shall be permitted to be installed anywhere in the AEZ. Import of capital goods shall be permitted duty free under the EPCG scheme. Specific funds earmarked for promoting handloom and handicraft exports. To establish new handicraft SEZ for handicrafts. HEPC has been authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom direct importing may not be viable. Import of gold of 18 carat and above shall be allowed.

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ROLE OF EXIM BANK

Philosophy : Believes that there is a strong linkage between export development and poverty reduction. With 70% rural population, creating of export capability in rural grassroots enterprise is a MUST. Globalization will be successful and acceptable only if the benefits reach the rural population. Rural enterprises suffer from various handicaps such as image, quality, capacity, packaging and delivery. NGOs and SHGs are the front for rural enterprises. Through proper guidance and support, rural grassroot enterprises can access the global market and realize better prices for their products thereby contributing to poverty reduction.

Exim Bank works in co-ordination with NGOs/SHGs and rural enterprises. Exim Bank has presence in India as well as overseas. Exim Bank facilitates the linkage between rural grassroot enterprises and corporate and also with overseas buyers and agencies with the objective of bringing the benefits of globalization to the rural population.

Exim Bank of India ------ fully owned by GOI Exim Bank is in existence for last 25 years.

ROLE
1) 2) 3) Purpose of financing, promoting and facilitating Indias international trade. The bank finances export of projects, products and services from India through no. of promotional programmes. The bank also creates export capability in small and medium enterprises (SMES), grassroot rural business enterprises and agro industries. To facilitate number of SMES to become active players in the global market in sectors like IT, Auto Components, Pharmaceuticals, Textiles, Clothings, Agrochemicals etc. To support Indian corporate to set up ventures overseas, acquire business and brands abroad to strengthen their global presence. Poverty reduction in rural areas through export linkages. To get benefit of globalization to grassroot rural enterprises. To provide knowledge and information to the artisans and NGOs on upgradation of design and packaging of handicraft products.

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CASE STUDY Discuss and debate the issues and impediments to growth of Indias foreign trade.