Indian Streams Research Journal

Vol.1,Issue.V/June; 12pp.1-4

Dr. Roshankumar M. Bhigania

ISSN:-2230-7850

Research Papers

FOREIGN TRADE POLICY (FTP)

Dr. Roshankumar M. Bhigania

Research Guide and Associate Professor in Commerce,
Yeshwant Mahavidyalaya,
Nanded-431 602

ABSTRACT
Foreign Trade Policy (FTP) (also called EXIM Policy) means the policy relating to country's exports
and imports. It is the policy relating to foreign trade/international marketing. Even policies relating to
export promotion are covered within the scope of Exim policy. Since 2004, the term Exim Policy is substituted
by the term Foreign Trade Policy (FTP) which is announced for a period of five years at a time (since March,
1992).

In India, Foreign Trade Policy is announced by the Central Government (Ministry of Commerce)
periodically (at present on five years basis with yearly revision). It contains various policy and
procedural decisions taken as per the prevailing internal as well as global marketing environment. FTP
suggests the measures adopted to achieve well-defined export objectives. Certain concessions,
incentives and facilities are also provided to exporters through foreign trade policy. Exporters are
supposed to study the details of the Exim Policy and adjust their export marketing activities accordingly.
They have to follow certain rules and procedures as noted in the Foreign Trade Policy for securing the
benefits of concessions and incentives offered.
MAIN OBJECTIVES OF FOREIGN TRADE POLICY :
Main objectives of Foreign Trade Policy are as noted below:
(1)To strengthen the base for export production for promoting exports.
(2)To create sound and favourable situation for export promotion through diversification.
(3)To facilitate technological upgradation of domestic production so as to make Indian goods globally
competitive.
(4)To reduce imports through import substitution and encouragement to indigenous production.
(5)To simplify and streamline import-export procedures.
(6)To enable exporters to draw long term export plans and strategies.
(7)To provide necessary institutional support to export initiatives by exporters/export organizations.
(8)To provide liberal import facilities to promote exports.
(9)To offer different types of export incentives, concessions and facilities so as to encourage
Please cite this Article as : Dr. Roshankumar M. Bhigania , FOREIGN TRADE POLICY (FTP) : Indian Streams Research
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FOREIGN TRADE POLICY (FTP)

Indian Streams Research Journal

Vol.1,Issue.V/June; 2012

manufacturers and exporters to take more initiative in export promotion.

(10)To facilitate availability of necessary imported inputs for sustaining industrial growth.
(11)To establish the framework for globalization of India's foreign trade.
(12)To promote productivity, modernization and competitiveness of India industry and thereby to
enhance its export capabilities.
FOREIGN TRADE POLICY 2009-2014:
On 27th August, 2009 the Foreign Trade Policy for the period of five years from 2009-14 was
announced. The earlier policy for 2004-09 was replaced by the new policy for 2009-14. There is
continuity in the long term foreign trade policy of the country. The policy for 200-14 is based on the
achievements of previous policy. The new policy is for large scale exports, employment generation,
growth of services sector and raising competitiveness of Indian Industries. The stable policy
environment is favourable to large scale export growth.
The UPA Government came to power at a time when the entire world was passing through
unprecedented economic slowdown. Practically every country is affected due to economic recession but
of course in varying degrees. All major economic indicators of industrial production, trade, capital
flows, unemployment, per capita investment and consumption have been adversely affected. The WTO
estimates decline of global trade by 9% in volume terms and IMF estimates a decline of over 11%. World
Bank has forecasted painful and disturbing forecasts which suggest that 53 million more people would be
placed below poverty line and over a billion people would go hungry. Fortunately, India has not suffered
as badly as the countries of the West, yet our exports have declined due to contraction in demand.
Announcing Foreign Trade Policy in this economic climate is indeed a daunting task.
OBJECTIVE OF FTP 2009-14:
(1)
To double India's exports of goods and services by 2014.
(2)
To double India's percentage share of global trade by 2020.
(3)
To focus on the generation of additional employment through large scale exports.
HIGHLIGHTS AND IMPLICATIONS OF FTP 2009-14 :
Following are the major highlights of the Foreign Trade Policy 2009-14.
(1)Stability and Continuity of the Foreign Trade Policy: In order to impart stability to the policy regime,
Duty Entitlement Passbook Scheme (DEPB) is extended till 31.12.2010. Income Tax exemption to
100% EOUs and STPI has been extended till the financial year 2010-11 i.e. till 31st March, 2011. The
new policy provides stable policy environment for export growth.
(2)Higher support for market: 26 new markets have been added under Focus Market Scheme which
includes 16 new markets in Latin America and 10 in Asia-Oceania. Incentive under Focus Market
Scheme has been raised from 1.25% to 2%. Market Linked Focus Product Scheme (MLFPS) has been
expanded by inclusion of 153 new products.
(3)Product diversification : A large number of products from various sectors have been included which
cover engineering products (agricultural machinery, parts of trailers, sewing machines, hand tools,
garden tools, musical instruments, railway locomotives, clocks and watches etc.); plastic; jute products;
technical textiles; green technology products and certain electronic items. Market Lined Focus Product
Scheme (MLFPS) HAS BEEN EXPANDED. certain new products have been added to meet demand in
new markets which are motor cars, apparels, auto components, bicycle and its parts. Higher allocation
for Market Development Assistance (MDA) and Market Access Initiative (MAI) scheme will be
provided.
(4)Technological upgradation: In order to help technological upgradation in the export sector EPCG
scheme at zero duty has been implemented. This scheme will be available for engineering and electronic
products, basic chemicals and pharmaceuticals, apparels, textiles, handicrafts, plastics, chemical and
allied products, leather and leather products. This scheme will remain operative till 31st March 2011.
(5)New Towns of Excellence : New towns of excellence have been recognized. Such towns include
Jaipur, Srinagar and Anantanag are recognized as Towns of Export Excellence for handicrafts.
Kanpur, Dewas and Ambur have been recognized for leather products and Malihabad for horticulture
products.
Please cite this Article as : Dr. Roshankumar M. Bhigania , FOREIGN TRADE POLICY (FTP) : Indian Streams Research
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FOREIGN TRADE POLICY (FTP)

Indian Streams Research Journal

Vol.1,Issue.V/June; 2012

(6)EPCG Scheme relaxation : Export obligation under EPCG scheme has been reduced to 50% in order
to increase the life of existing plant and machinery. In the light of economic recession hitting export
performance, the facility of re-fixation of Annual Average Export Obligation for the year in which there
is decline in exports from the country has been extended upto 31st March 2014.
(7)Gems and Jewellery Sector : It is planned to establish Diamond Bourse/s to make India a diamond
international trading hub. Import on consignment basis of cut and polished diamonds has been
introduced. In case of participation in overseas exhibitions values limits of personal carriage of gems
and jewellery has been increased from $2 million to $5 million. Duty drawback will be allowed on
export of gold jewellery exports in order to neutralize duty incidence on the exports. In order to promote
export of Gems and Jewellery products, the value limits of personal carriage have been increased from
US $2 million to US $5 million for participation in overseased from US $ 0.1 million to US $ 1 million.
(8)Status holders : In order to increase exports and encourage technological upgradation, additional Duty
Credit Scrips shall be given to status holders @ 1% of the FOB value of past exports. Duty credit scrips
can be used to obtain capital goods with Actual User Condition upto 31st March 2011.
(9)Marine Sector : In order to boost marine sector import of fishing trawlers, boats ships and other similar
items shall not be allowed. Marine sector now enjoys the position of status holders.
(10)Agriculture Sector : In order to help export of perishable agricultural produce a single window
system has been introduced. This sector will have multi-functional model agencies to be accredited by
APEDA.
(11)Leather Sector : Unsold imported raw hides and skins can be re-exported along with semi-finished
leather from bonded warehouse. The exporter will have to pay 50% of the applicable export duty. FPS
rate will be increased by 2% in this sector.
(12)Tea : Export of tea is covered under VKGUY scheme benefits. The sale limit of instant tea by EOUs
has been enhanced from 30% to 50%. Minimum value addition under advance authorization scheme has
been reduced from the existing 100% to 50%.
(13)Handloom sector : Handloom Mark has been removed to get benefits under FPS.
EXPORT SOPS IN FOREIGN TRADE POLICY 2009-2014 :
(1)Rs. 5,000 crore refinances facility to Exim bank for pre-shipment and post-shipment credit.
(2)Rs. 1,100 crore allocated for settling refund claims.
(3)Rs. 1,400 crore for textile upgradation fund
(4)Rs. 350 crore for handicraft units.
(5)2% interest subvention on loans to several export sectors.
(6)Issues related to service tax refunds to exports sorted out.
(7)Section 10A and 10B benefits for software technology parks and export-oriented units extended till
2010-11.
(8)Special refinance facility to banks for extending credit to export sector.
CONCLUSION :
In conclusion, it may be noted that FTP 2009-14 is favourable to export promotion and Indian
exporters. They are offered attractive incentives for the promotion of exports. The global trading
situation is also becoming favourable due to the end of recent recession. Exports are, now, possible on a
large scale. Our position in the world export trade will improve in the near future. Our share in goods
and services was 0.92% in 2003. It increased to 1.64% in 2008. It is also estimated that nearly 14 million
jobs were created directly or indirectly as a result of augmented exports in the last five years. These are
positive signs on the export front. Exporters have to move forward in this direction using incentives and
supports provided by the Government through FTP 2009-14. India desires to raise exports to $450 billion
in the next three years through greater market diversification, research and development and a thrust
towards brand promotion. To achieve this goal. exports have to grow at a compound average growth of
26 per cent per annum. New inputs would be inducted in the FTP 2009-14. The potential for India's
export trade is wide; but the challenges are also plenty. India has to face such challenges in order to
become a major player in the global trade.

Please cite this Article as : Dr. Roshankumar M. Bhigania , FOREIGN TRADE POLICY (FTP) : Indian Streams Research
Journal (JUNE ; 2012)

FOREIGN TRADE POLICY (FTP)

Indian Streams Research Journal

Vol.1,Issue.V/June; 2012

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Please cite this Article as : Dr. Roshankumar M. Bhigania , FOREIGN TRADE POLICY (FTP) : Indian Streams Research
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