Foreign Trade and its implications

Imports and exports are considered to be two important components of foreign

trade. Foreign trade refers to nothing but the exchange of the goods and
services between two or more countries, across their respective international
borders. The former implies the physical movement of the goods into a country
from another country following a legal manner. The latter is concerned with the
physical movement of the goods and services out of the country in a legal
manner. Thus, both the import and export have made the world a local market.

Foreign trade or international trade is considered to be extremely important for

the brand survival as well as the growth of any country. This is because foreign
trade acts as one of the primary economic boosters for that specific entity. Not
only this, foreign trade is also supposed to cover up the need for a country for
particular resources and to further get rid of the extra resources that are
abundantly available in the country.

Whether it is the optimum utilization of the resources, specialization and labor

division or price equality, quality of goods, multiple choices or the overall
economic development of the country, foreign trade has always helped in the
growth of a country where a country could stand on its own to address itself on
an international platform. Exporting, importing as well as entreporting involved
in the foreign trade of any country helps to raise the standard of living of the
people. These kinds of foreign trade also help to maintain the payment solution
balance of the country and make sure that there always exists a free flow of
economy.

Globalization has reached on its very summit and therefore a number of

countries have introduced their own respective foreign trade policies so as to
avoid all the hassle that might occur while trading with the foreign countries.
Thus, India, like other countries of the world has its own respective foreign
policy that covers all the know-hows as well as aspects involved while dealing
with the foreign countries.
The Foreign Trade (Development and Regulation)
Act, 1992

The foreign policy of India is governed and regulated by the Foreign Trade
(Development and Regulation) Act, 1992. This Act was established on the 7th of
August in the year 1992. The Act hasn’t been originated as a separate act to
regulate the foreign policy, but the same came into existence as a replacement
to the Import and Exports (Control) Act, 1947. Today, the entire scenario of
exports and imports in India is regulated and managed by the Foreign Trade
(Development and Regulation) Act, 1992. This act has eliminated all the existing
nuances of the previously introduced act and has given the Government of India
some of the most enormous powers to control it. This act is considered to be a
supreme legislation in accomplishment of the foreign trade taking place in the
country. The Act has been incorporated with a major intention to provide a
proper framework as to the development as well as standardization of the
foreign trade by the way of facilitating imports and enhancing the exports in the
country and all the other matters related to the same.

Under this Act, various powers have been bestowed upon the Central
Government. According to the provisions of this act, the Central Government
has all the power to make any provisions that are related to foreign trade in
order to fulfill the objectives of the act. This Act also empowers the government
to make any provisions in tandem to the formulations of import as well as
export policies governing throughout the country. The Act further provides for
the appointment of the Director General by the Central Government by notifying
this appointment in the Official Gazette for carrying out all the foreign trade
policies as per the provisions provided.

Salient Features of the Act

Foreign Trade (Development and Regulation) Act, 1992 is believed to be a

breakthrough in the economic development of the country, especially in today’s
world of globalization and industrialization. The entire act has been designed in
such a manner so as to run in consonance with the current trade policies
associated with the foreign countries. Thus, overall, this Act features everything
that makes the economy of the country stronger whenever the regard of foreign
trade is taken into consideration.

The following are considered to be the salient features of the act:

● The act has empowered the Central Government to make provisions for
the development as well as regulation of foreign trade by the way of
facilitating imports into as well as augmenting exports from the country
and in all the other matters related to foreign trade.
● This act authorizes the government to formulate as well as announce
the export and import policy and to also keep amending the same on a
timely basis. The government has also been given a wide power to
prohibit, restrict and regulate the exports and imports in general as
well as specified cases of foreign trade.
● The act provides for certain appointments especially that of the
Director-General to advise the Central Government in formulating
import and export policy and to implement the same.
● The act commands every importer as well as exporter to obtain a code
number called the ‘Importer Exporter Code Number (IEC)’ from the
Director-General or the authorized officer.
● The act provides the balancing of all the budgetary targets in terms of
imports and exports so that the nation reaches the very peak of
economic development. The principal objectives here include the
facilitation of sustain growth as to the exports of the country, the
distribution of quality goods and services to the domestic consumer at
internationally competitive prices, stimulation of sustained economic
growth by providing access to essential raw materials as well as
enhancement of technological strength and efficiency of Indian
agriculture, industry as well as services and improvement of their
competitiveness to meet all kinds of requirement of the global markets.

Present scenario of the Foreign Trade Policy

Presently, the Foreign Trade Policy of our country is in its sixth instalment of the
five-year policy that was earlier introduced in the year 1992 by the Government
of India. The new foreign trade policy of the country was announced on the 1st
of April, 2015 by the Government of India, Ministry of Commerce and Industry.
This current foreign trade policy extends for the period 2015-2020. The major
aim of the current foreign trade policy introduced in the country is nothing but
the development of export potential, improvement of export performance,
encouragement of foreign trade as well as the creation of favorable balance of
the position of the payment. This policy, also known as the Export Import Policy
(EXIM Policy) is updated every year on the last day of March and all the new
improvements, modifications as well as schemes so updated become effective
from the first day of April each year.

The current foreign trade policy so introduced in the country has laid down
certain aims and objectives before it. The major objectives that the current
foreign trade policy of our country has laid down are stated as under:

● The simplification as well as merger of all kinds of rewards schemes

including the Merchandise Exports from India Scheme (MEIS), Service
Exports from India Scheme (SEIS), incentives to be made available in
these schemes for all the Special Economic Zones, duty credit slips to
be freely transferable and useable for the payment of various duty and
many others.
● Special boost has been given to ‘Make in India’ policy that has been
launched by the government to encourage national as well as
multinational companies to manufacture their products in India.
● The trade facilitation and ease in terms of the performance of legal
business of all the kinds.
● The introduction of various other initiatives involving new schemes that
could run in tandem with the growing needs and wants of the people at
large and the increasing use of technology as well as digitalization into
these initiatives so as to reach the summit of technical advancement.

Importance of Foreign Trade Policy

Foreign Trade policy of any country is equally important for the free flow of
economy and the overall economic development of the country. Without a
proper foreign trade policy, any country would fail to execute its import as well
as export business smoothly. If there exists no proper foreign policy in a
country, the entire import-export and international business of the country will
fall down miserably and the same will surely meet a dead end. A foreign trade
policy of any country ensures a free flow of business as well as economy while
transacting or trading on an international scale. The same policy helps to
maintain the free flow of economy of the country, thereby accelerating the
financial growth, facilitating a free trade and liberalization as well as improving
the overall standard of living of its people.

Conclusion

After the implementation of foreign trade policy in India, the import, as well as
export among the foreign countries, have increased and the same has become
very safe and secure to perform. Setting up of different plans/policies such as
SEZ and EPZ by the Foreign Trade Policy of India has increased the number of
foreign investors in the country. Trading Housing has given a platform to both,
the consumers as well as the manufacturers and thus the same has entertained
an easy practice of trade in between different countries. Furthermore, the
simplification of procedures, as well as the idea of incentives provided to the
exporters and importers involved in the foreign trade, has acted in a fair way for
the traders and there is still a wide scope of improvement in the same.

Thus, the introduction of Foreign Trade (Development and Regulation) Act, 1992
in India has made the industrialization more liberal and the same has been
proven to be highly beneficial for all the traders as well as consumers in the
coming ages.