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Unit – V

EXIM TRADE

Export Trade, Procedure, Steps & Documentation, Direction of India‟s Trade – Export
Financing –Documents related to Export Trade – Export Marketing – Import Trade, Procedure,
Steps, Documentations and Problems - EXIM Policy - Balance of Payment – Disequilibrium and
Measures for Rectification - Institutions connected with EXIM Trade.

EXPORT TRADE

Introduction

India’s Foreign Trade i.e. Exports and Imports are regulated by Foreign Trade Policy notified by
Central government in exercise of powers conferred by section 5 of foreign trade (Development
and Regulation) Act 1992. Presently Foreign Trade Policy 2015-20 is effective from 1st April,
2015. As per FTD & R act, export is defined as an act of taking out of India any goods by land,
sea or air and with proper transaction of money.

STARTING EXPORTS

Export in itself is a very wide concept and lot of preparations is required by an exporter before
starting an export business. To start export business, the following steps may be followed:

1) Establishing an Organisation

To start the export business, first a sole Proprietary concern/ Partnership firm/Company
has to be set up as per procedure with an attractive name and logo.

2) Opening a Bank Account

A current account with a Bank authorized to deal in Foreign Exchange should be opened.

3) Obtaining Permanent Account Number (PAN)

It is necessary for every exporter and importer to obtain a PAN from the Income Tax
Department. (To apply PAN Card Click Here)

4) Obtaining Importer-Exporter Code (IEC) Number

An IEC is a 10 digit number which is mandatory for undertaking export/ import.

Application for obtaining IEC Number can be submitted to Regional authority of DGFT
in form ANF 2A along with the documents listed therein.

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Applicants can also apply for e-IEC on the DGFT website (http://dgft.gov.in/). Only one
IEC can be obtained against a single PAN.

5) Registration cum membership certificate (RCMC)

For availing authorization to import/ export or any other benefit or concession under FTP
2015-20, as also to avail the services/ guidance, exporters are required to obtain RCMC
granted by the concerned Export Promotion Councils/ FIEO/Commodity Boards/
Authorities.

6) Selection of product

All items are freely exportable except few items appearing in prohibited/ restricted list.

After studying the trends of export of different products from India proper selection of
the product(s) to be exported may be made.

7) Selection of Markets

An overseas market should be selected after research covering market size, competition,
quality requirements, payment terms etc. Exporters can also evaluate the markets based
on the export benefits available for few countries under the FTP. Export promotion
agencies, Indian Missions abroad, colleagues, friends, and relatives might be helpful in
gathering information.

8) Finding Buyers

Participation in trade fairs, buyer seller meets, exhibitions, B2B portals, web browsing
are an effective tool to find buyers. EPC’s, Indian Missions abroad, overseas chambers of
commerce can also be helpful. Creating multilingual Website with product catalogue,
price, payment terms and other related information would also help.

9) Sampling

Providing customized samples as per the demands of Foreign buyers help in getting
export orders. As per FTP 2015-2020, exports of bonafide trade and technical samples of
freely exportable items shall be allowed without any limit.

10) Pricing/Costing

Product pricing is crucial in getting buyers’ attention and promoting sales in view of
international competition. The price should be worked out taking into consideration all
expenses from sampling to realization of export proceeds on the basis of terms of sale i.e.
Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost & Freight(C&F), etc. Goal
of establishing export costing should be to sell maximum quantity at competitive price

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with maximum profit margin. Preparing an export costing sheet for every export product
is advisable.

11) Negotiation with Buyers

After determining the buyer’s interest in the product, future prospects and continuity in
business, demand for giving reasonable allowance/discount in price may be considered.

12) Covering Risks through ECGC

International trade involves payment risks due to buyer/ Country insolvency. These risks
can be covered by an appropriate Policy from Export Credit Guarantee Corporation Ltd
(ECGC). Where the buyer is placing order without making advance payment or opening
letter of Credit, it is advisable to procure credit limit on the foreign buyer from ECGC to
protect against risk of non-payment.(To know more about ECGC Click Here)

Processing an Export Order

i. Confirmation of order

On receiving an export order, it should be examined carefully in respect of items,

specification, payment conditions, packaging, delivery schedule, etc. and then the order
should be confirmed. Accordingly, the exporter may enter into a formal contract with the
overseas buyer.

ii. Procurement of Goods

After confirmation of the export order, immediate steps may be taken for
procurement/manufacture of the goods meant for export. It should be remembered that
the order has been obtained with much efforts and competition so the procurement should
also be strictly as per buyer’s requirement.

iii. Quality Control

In today’s competitive era, it is important to be strict quality conscious about the export
goods. Some products like food and agriculture, fishery, certain chemicals, etc. are
subject to compulsory pre-shipment inspection. Foreign buyers may also lay down their
own standards/specifications and insist upon inspection by their own nominated
agencies. Maintaining high quality is necessary to sustain in export business.

iv. Finance

Exporters are eligible to obtain pre-shipment and post-shipment finance from

Commercial Banks at concessional interest rates to complete the export transaction.
Packing Credit advance in pre-shipment stage is granted to new exporters against
lodgment of L/C or confirmed order for 180 days to meet working capital requirements

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for purchase of raw material/finished goods, labour expenses, packing, transporting, etc.
Normally Banks give 75% to 90% advances of the value of the order keeping the balance
as margin. Banks adjust the packing credit advance from the proceeds of export bills
negotiated, purchased or discounted.

Post Shipment finance is given to exporters normally upto 90% of the Invoice value for
normal transit period and in cases of usance export bills upto notional due date. The
maximum period for post-shipment advances is 180 days from the date of shipment.
Advances granted by Banks are adjusted by realization of the sale proceeds of the export
bills. In case export bill becomes overdue Banks will charge commercial lending rate of
interest.

v. Labeling, Packaging, Packing and Marking

The export goods should be labeled, packaged and packed strictly as per the buyer’s
specific instructions. Good packaging delivers and presents the goods in top condition
and in attractive way. Similarly, good packing helps easy handling, maximum loading,
reducing shipping costs and to ensuring safety and standard of the cargo. Marking such
as address, package number, port and place of destination, weight, handling instructions,
etc. provides identification and information of cargo packed.

vi. Insurance

Marine insurance policy covers risks of loss or damage to the goods during the while the
goods are in transit. Generally in CIF contract the exporters arrange the insurance
whereas for C&F and FOB contract the buyers obtain insurance policy.

vii. Delivery

It is important feature of export and the exporter must adhere the delivery schedule.
Planning should be there to let nothing stand in the way of fast and efficient delivery.

viii. Customs Procedures

It is necessary to obtain PAN based Business Identification Number (BIN) from the
Customs prior to filing of shipping bill for clearance of export good and open a current
account in the designated bank for crediting of any drawback amount and the same has to
be registered on the system.

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the
format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An
exporter need to apply different forms of shipping bill/ bill of export for export of duty
free goods, export of dutiable goods and export under drawback etc.

Under EDI System, declarations in prescribed format are to be filed through the Service
Centers of Customs. A checklist is generated for verification of data by the

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exporter/CHA. After verification, the data is submitted to the System by the Service
Center operator and the System generates a Shipping Bill Number, which is endorsed on
the printed checklist and returned to the exporter/CHA. In most of the cases, a Shipping
Bill is processed by the system on the basis of declarations made by the exporters without
any human intervention. Where the Appraiser Dock (export) orders for samples to be
drawn and tested, the Customs Officer may proceed to draw two samples from the
consignment and enter the particulars thereof along with details of the testing agency in
the ICES/E system.

Any correction/amendments in the check list generated after filing of declaration can be
made at the service center, if the documents have not yet been submitted in the system
and the shipping bill number has not been generated. In situations, where corrections are
required to be made after the generation of the shipping bill number or after the goods
have been brought into the Export Dock, amendments is carried out in the following
manners.

1. The goods have not yet been allowed "let export" amendments may be permitted
by the Assistant Commissioner (Exports).

2. Where the "Let Export" order has already been given, amendments may be
permitted only by the Additional/Joint Commissioner, Custom House, in charge of
export section.

In both the cases, after the permission for amendments has been granted, the Assistant
Commissioner / Deputy Commissioner (Export) may approve the amendments on the
system on behalf of the Additional /Joint Commissioner. Where the print out of the
Shipping Bill has already been generated, the exporter may first surrender all copies of
the shipping bill to the Dock Appraiser for cancellation before amendment is approved on
the system.

ix. Customs House Agents

Exporters may avail services of Customs House Agents licensed by the Commissioner of
Customs. They are professionals and facilitate work connected with clearance of cargo
from Customs.

x. Documentation

FTP 2015-2020 describe the following mandatory documents for import and export.

· Bill of Lading/ Airway bill

· Commercial invoice cum packing list

· shipping bill/ bill of export/ bill of entry (for imports)

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(Other documents like certificate of origin, inspection certificate etc may be required as
per the case.)

xi. Submission of documents to Bank

After shipment, it is obligatory to present the documents to the Bank within 21 days for
onward dispatch to the foreign Bank for arranging payment. Documents should be drawn
under Collection/Purchase/Negotiation under L/C as the case may be, along with the
following documents

- Bill of Exchange

- Letter of Credit (if shipment is under L/C)

- Invoice

- Packing List

- Airway Bill/Bill of Lading

- Declaration under Foreign Exchange

- Certificate of Origin/GSP

- Inspection Certificate, wherever necessary

- Any other document as required in the L/C or by the buyer or statutorily.

xii. Realization of Export Proceeds

As per FTP 2015-2020, all export contracts and invoices shall be denominated either in
freely convertible currency of Indian rupees, but export proceeds should be realized in
freely convertible currency except for export to Iran.Export proceeds should be realized
in 9 months.

India - Import Requirements and Documentation

Includes import documentation and other requirements for both the U.S. exporter and foreign
importer.

Import licensing requirements:

In the last decade, India has steadily replaced licensing and discretionary controls over
imports with deregulation and simpler import procedures. The majority of import items
fall within the scope of India’s EXIM Policy regulation of Open General License (OGL). This
means that they are deemed to be freely importable without restrictions and without a license,

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except to the extent that they are regulated by the provisions of the Policy or any other law.

Imports of items not covered by OGL are regulated, and fall into three categories: banned or
prohibited items, restricted items requiring an import license, and "canalized" items importable
only by government trading monopolies and subject to Cabinet approval regarding timing and
quantity.

The following are designated import certificate issuing authorities (ICIA):

The Department of Electronics for import of computer and computer related systems
The Department of Industrial Policy and Promotion for organized sector firms except for import
of computers and computer based systems

The Ministry of Defense for defense related items

The Director General of Foreign Trade for small-scale industries not covered in the foregoing.

Capital goods can be imported with a license under the Export Promotion Capital Goods plan
(EPCG) at reduced rates of duty, subject to the fulfillment of a time-bound export obligation.
The EPGC plan now applies to all industry sectors. It is also applicable to all capital
goods without any threshold limits, on payment of a 5% customs duty.

A duty exemption plan is also offered under which imports of raw materials,
intermediates, components, consumables, parts, accessories and packing materials required for
direct use in products to be exported may be permitted free of duty under various categories
of licenses. For the actual user, a non-transferable advance license is one such license. For
those who do not wish to go through the advance-licensing route, a post-export duty-free
replenishment certificate is available.

Advance License: An advance license is issued to allow duty free import of inputs, which are
physically incorporated in the export product (making normal allowance for wastage).
In addition, fuel, oil, energy, catalysts etc. that are consumed in the course of their use to
obtain the export product, may also be allowed under the plan.

Duty free import of mandatory spares up to 10% of the CIF value of the license, which
are required to be exported/ supplied with the resultant product, may also be
allowed under Advance License.

Advance license can be issued for:

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Physical exports: An advance license may be issued for physical exports to a manufacturer
exporter or merchant exporter tied to supporting manufacturer(s) for import of
inputs required for the export product.

Intermediate supplies: An advance license may be issued for intermediate supply to a

manufacturer- exporter for the import of inputs required in the manufacture of goods to be
supplied to the ultimate exporter/deemed exporter holding another Advance License.

Deemed exports:

An advance license can be issued for deemed exports to the main contractor for import of inputs
required in the manufacture of goods to be supplied to the categories mentioned in paragraph 8.2
(b), (c), (d), (e), (f), (g), (i), and (j) of the Policy. An advance license
for deemed exports can also be availed by the sub-contractor of
the main contractor to such project provided the name of the sub-contractor(s) appears in
the main contract. Such license for deemed export can also be issued for supplies made to
United Nations Organizations or under the Aid Program of the United
Nations or other multilateral agencies and paid for in foreign exchange.
Import Declaration: Importers are required to furnish an import declaration in
the prescribed bill of entry format, disclosing full details of the value of imported goods.

Import Licenses : All import documents must be accompanied by any import licenses.
This will enable the customs to clear the documents and allow the import without delay.

Ex-factory invoice, freight and insurance certificates: These must be attached so that
the customs can verify the price and decide on the classification under which the import
tariff can be calculated.

Letter of Credit (L/C): All importers must accompany a copy of the L/C to ensure that
payment for the import is made. Normally this document is counter-checked with the issuing
bank so that outflow of foreign exchange is checked.

Not all consignments are inspected prior to clearance, and inspection may be dispensed with for
reputable importers. In the current customs set-up, an appointment with the clearing agents for
clearance purposes will avoid delays. In general, documentation requirements, including ex-
factory bills of sale, are extensive and delays are frequent.

Clearance delays cost time and money, including additional detention and demurrage charges,
making it more expensive to operate and invest in India. For delayed clearances, importers
seek release of shipments against a performance bond; furnishing a bank guarantee for this
purpose is a more expensive proposition. Customs have recently extended operations to 24 hours

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a day to ensure timely clearance of export cargo.

Major problem faced by export sector in India:

1. Poor Quality Image-

“Made in India” does not enjoy good reputation in the markets abroad. Rather it is considered to
be a sign of poor quality. The products manufactured in Japan, Korea and now even China are
frequently quoted as examples of dependable quality. Carelessness, lack of commitment on part
of exporters and non presence of a proper exporter’s culture in India are to blame.

2. High Costs-

While technological factors and low productivity contribute to high costs of production, It is
estimated that interest rate alone constitutes nearly 5% of the cost of production in India.
Moreover bank charges in India work out to nearly 3% as compared to 1% in countries like
Japan and Korea. Similarly, port charges in India are 3-4 times higher than those in Hong Kong,
Singapore. The traditional export sectors of textiles and jute have already suffered a lot due to
lack of modernisation, whereas many other competing countries have made rapid strides in this
regard.

3. Unreliability-

Besides quality, Indian exporters are regarded as unreliable on certain other factors such as going
back on a contract and refusing to fulfil it on its original terms, inability to provide prompt
aftersales services. While exporters from competing countries like South Korea, Japan and
Taiwan normally replace a defective consignment free of cost and without taking much time.

4. Infrastructural Bottlenecks-

In India, power shortages and breakdowns disrupt production schedules, inadequate and
unreliable transport increase costs and adversely affect timely shipments and lack of
communication facilities hinder growth of exports.

5. Inadequacy of Trade Information System-

With the phenomenal expansion of the internet it has become very easy in the world today to
obtain information. However in India, because of poor facilities of communication, when
compared to developed countries, it is not possible to depend on internet for obtaining latest
trade information. Developed countries mention that they won’t prefer trading with exporters
who are not in a position to complete necessary formalities through the mode of Electronic Data
Interchange.

6. Supply Problems-

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The problem is that much of the exporting is the result of residual approach rather than conscious
effort of producing to export. It is a serious drawback of the Indian export sector in its inability
to provide continuous and smooth supply of adequate quantities in respect of several products.
The tendency to export what we produce instead of producing to export still characterise the
export behaviour.

7. Faceless Presence-

Indian exports are sold in foreign markets in the same condition as they are exported but under
foreign brand names. Major items like leather manufactures, seafood and spices, etc, Although,
may go further repacking or processing have a faceless presence in the foreign markets. It holds
true that when a product carries a foreign brand name it fetches a higher price. than the same
product with an Indian name.

8. Uncertainties-

One of the defects of our trade policy regime has been the uncertainty about future policies,
incentive schemes, etc. The import export policy have been given a five year span to bring about
some stability, however, still a very large number of amendments are affected each year. There
have been reports of loss of Crores worth exports due to inter departmental coordination.

9. Procedural Complexities-

With regard to export documentation and formalities, it have been observed that most existing
procedural and documentation formalities prescribed by different authorities have been
developed to suit their own individual requirements without much regard to its repercussions on
total export activity.

10. Institutional Rigidities-

When the export of a country is being intensified, it is necessary that the formalities related to
export activity are also streamlined and simplified so that they do not constitute impediments to
growth of the country’s export trade.

EXIM Policy:

A new export and import policy were framed in 1992 which was effective till 1997. Since then
new changes have been made in the policy to achieving the following objectives:
1. To enhance the level of exports;
2. To improve the balance of payment;
3. To improve the balance of trade;
4. To enhance the reverse of foreign exchange;
5. To allow import of technology and equipment’s which may help in establishing new
industrial enterprises, produce new products and adopt a new process for higher production
levels.

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6. To ensure the availability of goods for the domestic consumption and to allow exports so that
the producers get a fair price;
7. To allow import of certain goods as listed in the Open General Licence;
8. To allow for hassle free exports and imports;
9. Reducing the interface between the exporters and Director General of Foreign Trade by
reducing the number export documents;
10. Establishing Advance Licencing System for imports of goods needed for manufacturing
various goods for export;
11. Removal of the provisions to proceed realization;
12. Establishing of Export oriented units and Export Processing Zones specifically for goods
meant to be produced for exports only;
13. To accelerate the country’s transition to a globally oriented vibrant economy to deriving
maximum benefits from expanding global market opportunities;
14. To enhance the technological strength and efficiency of Indian agriculture, industry, and
services there by improving their competitive strength while generating new employment
opportunities. It encourages the attainment of internationally accepted standards of quality of
Indian exports; and
15. To provide consumers with good quality products at reasonable prices through regulated
imports of such products.

BALANCE OF PAYMENT

The balance of payments (BOP) is the method countries use to monitor all international
monetary transactions at a specific period. Usually, the BOP is calculated every quarter and
every calendar year. All trades conducted by both the private and public sectors are
accounted for in the BOP to determine how much money is going in and out of a country. If
a country has received money, this is known as a credit, and if a country has paid or given
money, the transaction is counted as a debit. Theoretically, the BOP should be zero, meaning
that assets (credits) and liabilities (debits) should balance, but in practice, this is rarely the
case. Thus, the BOP can tell the observer if a country has a deficit or a surplus and from
which part of the economy the discrepancies are stemming.

The balance of payments is the record of all international financial transactions made by a
country's residents. A country's balance of payments tells you whether it saves enough to pay for
its imports. It also reveals whether the country produces enough economic output to pay for its
growth. The BOP is reported for a quarter or a year.

A balance of payments deficit means the country imports more goods, services and capital than
it exports. It must borrow from other countries to pay for its imports. In the short-term, that fuels
the country's economic growth. It's like taking out a school loan to pay for education. Your
expected higher future salary is worth the investment.

In the long-term, the country becomes a net consumer, not a producer, of the world's economic
output. It will have to go into debt to pay for consumption instead of investing in future growth.
If the deficit continues long enough, the country may have to sell off its assets to pay its
creditors. These assets include natural resources, land and commodities,

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A balance of payments surplus means the country exports more than it imports. Its government
and residents are savers. They provide enough capital to pay for all domestic production. They
might even lend outside the country.

A surplus boosts economic growth in the short term. That's because it's lending money to
countries that buy its products. That boosts its factories, allowing them to hire more people.

In the long run, the country becomes too dependent on export-driven growth. It must encourage
its residents to spend more. A larger domestic market will protect the country from exchange
rate fluctuations. It also allows its companies to develop goods and services by using its own
people as a test market.

What are the Methods of Correcting Disequilibrium in the Balance of Payments?

Persistent disequilibrium in the balance of payments, particularly the deficit balance, is
undesirable because it (a) weakens the country's economic position at the international level, and
(b) affects the progress of the economy adversely.
It must be cured by taking appropriate measures. There are many methods to correct
disequilibrium in the balance of payments. Important among them are discussed below:
1. Deflation:
Deflation is the classical medicine for correcting the deficit in the balance of payments. Deflation
refers to the policy of reducing the quantity of money in order to reduce the prices and the money
income of the people.
The central bank, by raising the bank rate, by selling the securities in the open market and by
other methods can reduce the volume of credit in the economy which will lead to a fall in prices
and money income of the people.
Fall in prices will stimulate exports and reduction in income checks imports. Thus, deflationary
policy restores equilibrium to the balance (a) by encouraging exports through reduction in their
prices and (b) by discouraging imports through the reduction in incomes at home.
Moreover, a higher interest rate in the domestic market will attract foreign funds which can be
used for correcting disequilibrium.
However, deflation is not considered a suitable method to correct adverse balance of payments
because of the following reasons: (a) Deflation means reduction in income or wages which is
strongly opposed by the trade unions, (b) Deflation causes unemployment and suffering to the
working class, (c) In a developing economy, expansionary monetary policy rather than
contractionary (deflationary) monetary policy is required to meet the developmental needs.
2. Depreciation:
Another method of correcting disequilibrium in the balance of payments is depreciation.
Deprecation means a fall in the rate of exchange of one currency (home currency) in terms of
another (foreign currency).

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A currency will depreciate when its supply in the foreign exchange market is large in relation to
its demand. In other words, a currency is said to depreciate if its value falls in terms of foreign
currencies, i.e., if more domestic currency is required to buy a unit of foreign currency.
The effect of depreciation of a currency is to make imports dearer and exports cheaper. Thus,
depreciation helps a country to achieve a favourable balance of payments by checking imports
and stimulating exports.
Exchange depreciation is automatic:
It works in a flexible exchange rate system and can correct a mild adverse balance of payments if
the country's demand for imports and the foreign demand for its exports are fairly elastic. But the
method of exchange depreciation has the following defects:
(i) It is not suitable for a country which follows a fixed exchange rate system.
(ii) It makes international trade risky and thus reduces the volume of trade.
(iii) The terms of trade go against the country whose currency depreciates because the foreign
goods have become costlier than the local goods and the country has to export more to pay for
the same volume of imports.
(iv) Experience of certain countries has indicated that exchange depreciation may generate
inflationary pressure by increasing the domestic price level and money income.
(v) The success of the method of exchange depreciation depends upon the cooperation of other
countries. If other countries also start depreciating their exchange rates, then these methods will
not benefit any country.
3. Devaluation:
Devaluation refers to the official reduction of the external values of a currency. The difference
between devaluation and depreciation is that while devaluation means the lowering of external
value of a currency by the government, depreciation means an automatic fall in the external
value of the currency by the market forces; the former is arbitrary and the latter is the result of
market mechanism.
Thus, devaluation serves only as an alternative method to depreciation. Both the methods imply
the same thing, i.e., decrease in the value of a currency in terms of foreign currencies.
Both the methods can be used to produce the same effects; they discourage imports, encourage
exports and thus lead to a reduction in the balance of payments deficit.
The success of the method of devaluation depends upon the following conditions :
(i) The elasticity of demand for the country's exports should be greater than unity.
(ii) The elasticity of demand for the country's imports should be greater than unity.
(iii) The exports of the country should be non-traditional and the increasingly demanded from
other countries.
(iv) The domestic price should not rise and should remain stable after devaluation.

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(v) Other countries should not retaliate by resorting to corresponding devaluation. Such a
retaliatory measure will offset each other's gain.
Devaluation also suffers from certain defects:
(i) Devaluation is a clear revelation on the country's economic weakness.
(ii) It reduces the confidence of the people in country's currency and this may lead to speculative
outflow of capital.
(ii) It encourages inflationary tendencies in the home country.
(iv) It increases the burden of foreign debt.
(v) It involves large time lag to produce effects.
(vi) It is a temporary device and does not provide a permanent remedy to correct adverse balance
of payments.
4. Exchange Control:
Exchange control is the most widely used method for correcting disequilibrium in the balance of
payments. Exchange control refers to the control over the use of foreign exchange by the central
bank.
Under this method, all the exporters are directed by the central bank to surrender their foreign
exchange earnings. Foreign exchange is rationed among the licensed importers. Only essential
imports are permitted.
Exchange control is the most direct method of restricting a country's imports. The major
drawback of this method is that it deals with the deficit only, and not its causes. Rather it may
aggravate these causes and thus may create a more basic disequilibrium. In short, exchange
control does not provide a permanent solution for a chronic disequilibrium.

Different bodies involved in Exports and Imports in India

The primary aim to set up machinery for consultation is to create the required forum and environment for

consulting various quarters interested and engaged in foreign trade.

It facilitates to develop a dialogue between Government, industry and the entrepreneurs, at various levels,

to discuss varied problems faced by the enterprises and suggest necessary measures to solve the problems.

Export is a dynamic industry and faces stiff international competition. It requires innovation, flexible

approach and expeditious action to catch the swift changes that emerge as new opportunities. Further,

orientation in attitude has to be developed to visualize and anticipate the changes that may overtake the

scene. Equally, appropriate Government policies are important to support for rapid growth in international

trade. To gear up with the changes, exporter needs guidance and assistance at different stages of export

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effort. For this purpose, Government has set up several institutions whose function is to support exporter

in his endeavors. Institutions that are engaged in expo falls in six distinct tiers. The set-up is:

Six Tiers Consultative Set-up

Department of Commerce

Primary Government agency responsible for formulating and directing Foreign Trade Policy and

programs including establishing relations with other countries where needed

Board of Trade

Mechanism to maintain continuous dialogue with trade and industry for appropriate policy measures and

corrective action by Government

Commodity specific organisations

Tackling problems connected with individual commodities and groups of commodities Service

Institutions Assist exporters to expand their operations to reach world markets more effectively

Government Trading organsiations

Handling export/import of specified commodities & supplementing efforts of private enterprises in export

promotion and import management

6. Agencies at State Level : Export Promotion

GOVERNMENT POLICY MAKING AND CONSULTATIONS

The following bodies are involved in policy making and consultation process:

1. Department of Commerce

Ministry of Commerce is the apex ministry at the central level to formulate and execute India's
foreign trade policy and to initiate various exports promotional measures. e main functions of the
Ministry are formulation of international commercial policy, egotiation of trade agreements,
formulation of export-import policy and their implementation. has created a network of
commercial sections in Indian embassies and high commissions various countries for export-
import trade flows. It has set up an "Exporters' Grievances dressal Cell" to assist exports in quick
redressal of grievances. The department of Commerce, in the Ministry of Commerce, has been

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made responsible for India's external trade and all matters connected with the same. This is the
main organisation to formulate and guide India's foreign trade, formed with the responsibility of
promoting India's interest in international market. The Department of Commerce has six
divisions and their functions are as under:

Trade Policy Division

To keep abreast of the developments in the International organisations like UNCTAD, WTO, the
Economic Commissions for Europe, Africa, Latin America and Asia and Far East

Foreign Trade Territorial

Development of trade with different countries and regions of the world

Export Products Division

Problems connected with production, generation of surplus and development of markets for the
various products under its jurisdiction

Export Industries Division

Development and Regulation of tobacco, Rubber and cardamom.

Export Services Division

Export promotion activities relating to handlooms, textiles, woolens, readymade garments, silks,
jute and jute products, handicrafts, coir and coir products Problems of Export Assistance

Economic Division
Formulation of exports strategies, Export planning, Periodic appraisal and Review of policies

2. Board of Trade
It has been set up on May 5, 1989 with a view to provide an effective mechanism to maintain
continuous dialogue with trade and industry in respect of major developments in the field of
international trade. It provides regular consultation, monitoring and review of India's foreign
trade policies and operations. The board has the representatives from commerce and other
important Ministries, Trade and Industry Associations and Export Services Organisations. It is an
important national platform for a regular dialogue between the Government and trade and

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industry. The deliberations in the Board of Trade provide guidelines to the Government for
appropriate policy measures for corrective action.

The Minister of Commerce is the chairman of the Board of Trade. The official membership
includes Secretaries of the Ministries of Commerce and Industry, Finance (Revenue), External
Affairs (ER), Textiles, Chairman of ITPO, Chairman/MD of ECGC, MD of Exim Bank and
Deputy Governor of Reserve Bank of India.The non-official members are President of FICCI,
ASSOCHAM, CH, FIEO, All India Handloom Weavers Marketing Co-operative Society,

Representatives various Trade and industry sectors, media and other eminent personalities

in the field of Export and Import Trade.

Cabinet Committee on Exports

Cabinet Committee regular and effective monitoring of India’s foreign trade performance and
related policies

4. Empowered Committee of Secretaries

For speedier and quicker decision making, an Empowered Committee of Secretaries has been set
up to assist the Cabinet Committee on Exports.

5 Grievances Cell
Grievances Cell has been established to entertain and monitor disposal of grievances and
suggestions received. The purpose is to redress the genuine grievances, at the earliest. The
grievance committee is headed by the Director General of Foreign. Trade. At the State level, the
head of the concerned Regional Licensing authority heads the grievances committee. The
committee also includes representatives of FIEO, concerned Export Promotion Council/
Commodity Board and other departments and organisations. The grievances may be addressed to
the Grievances Cell, in the prescribed proforma.

6. Director General of Foreign Trade (DGFT)

DGFT is an important office of the Ministry of Commerce to help formulation of India's
Export4mport formulation policy and implementation thereof. It has set up regional offices in

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almost all the states and Union territories. These offices are known as Regional Licensing
Authorities. The Regional Licensing offices also act as Export facilitation centres.

7. Ministry of Textiles
This is another ministry of Government of India which is responsible for policy formulation,
development, regulation and export promotion of textile sector including sericulture, jute and
handicrafts etc. It has a separate Export Promotion Division, advisory boards, development
corporations, Export Promotion Councils and Commodity Boards. The advisory hoards have
been set up to advise the government in the formulation of the overall development programmes
in the concerned sector. It also devises strategy for expanding markets in India and abroad. The
four advisory boards are as under:

(a) All India Hand loom Board

(b) All India Handicrafts Board

(c) All. India Power loom Board

(d) Wool. Development Board.

There are Development Commissioners, Handicrafts and Handlooms who advise on matters
relating to development and exports of these sectors. There are Textile Commissioner and Jute
commissioner who advise on the matters relating to growth of exports of these sectors. Textile
committee has also been set up for ensuring textile machinery indigenously, especially for
exports.

8. Institutional Framework
Export Promotion Councils and Commodity Boards have been established with the objective of
promoting and strengthening commodity specialization. They are the key institutions in the
institutional framework, established in India for export promotion.

(A) Export Promotion Councils: There are 19 Councils covering different products. These
Councils advise the Government the measures necessary to facilitate future exports growth,
assist manufacturers and exporters to overcome various constraints and extend them full range of

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services for the development of overseas market. The councils also have certain regulatory
functions such as the power to de-register errant and defaulting exporters. An idea of the
functions of the Export Promotion Council can be had from understanding some of the functions
of the Engineering Export Promotion Council. Some of their functions are:
(a) to apprise the Government of exporters' problems;

(b) to keep its members posted with regard to trade inquiries and opportunities;

(c) to help in exploration of overseas markets and identification of items with export potential;

(d) to render assistance on specific problems confronting individual exporters;

(e) to help resolve amicably disputes between exporters and importers of Indian engineering
goods and (f) to offer various facilities to engineering exporters in line with other exporting
countries.

Over the years, the role of Export Promotion Councils has reduced to traditional liaison work and
has lost their importance. Now, the procedures connected with the foreign trade are more
simplified. So, they have to redefine their role to offer concrete market promotional and
consolidation programmes and services to their members.

Commodity Boards: There are 9 statutory Boards. These Boards deal with the entire range of
problems of production, development, marketing etc. In respect of these commodities concerned,
they act themselves as if they are the Export Promotion Councils. These Boards take promotional
measures by opening foreign offices abroad, participating in trade fairs and exhibitions,
conducting market surveys, sponsoring trade delegations etc.
9. States' Cell This has been created under Ministry of Commerce. Its functions are to act as a
nodel agency for interacting with state government or Union territories on matters concerning
export or import from the state or Union territories. It provides guidance to state level export
organsiations. It assists them in the formulation of export plans for each state.
10. Development Commissioner, Small Scale industries Organisation The Directorate has the
headquarter in New Delhi and Extension Centres are located in almost all the States and Union
Territories. They provide export promotion services almost at the door steps of small-scale

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industries and cottage units. The important functions are: (i) To help the small scale industries to
develop their export capacities (ii) To organize export training programmes (iii) To collect and
disseminate information (iv) To help such units in developing their export markets (v) To take up
the problems and other issues related to small-scale indus Corporation tries Besides, there are
Directorates of Industries, National Small Scale Industries exports from small-scale industries.

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