Introduction
Foreign Trade can be understood as exchange of goods and services across International Territories and Borders. This exchange of goods and services between India and various other countries is usually regulated by the Government of India, in the form of a written plan of action rationalizing the course of action of the Government. In simpler terms, Foreign Trade Policy is a set of guidelines or instructions issued by Central Government in matters related to Import or Export of goods and services in India viz., foreign trade.
Legislation governing Foreign Trade
In India the promotion and regulation of foreign trade is governed by Union Ministry of Commerce and the main legislation relating to foreign trade is Foreign Trade (Development and Regulation) Act, 1992. The FT (D&R) Act provides for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto.
In exercise of the powers conferred by the FT(D&R) Act , the Union Ministry of Commerce and Industry, Government of India generally announces the integrated Foreign Trade Policy (FTP) in every five years with certain underlined objectives. The Foreign Trade Policy was earlier called as Export Import policy i.e., EXIM Policy. This policy is updated every year, in addition to changes that are made throughout the year.
The current Foreign Trade Policy, which was effective from 01st April, 2015, is an integrated policy for the period 2015-2020.
Administration of the FTP
The FTP is formulated, controlled and supervised by the office of the Director General of Foreign Trade (DGFT), an attached office of the Ministry of Commerce & Industry, Government of India. DGFT has several offices in various parts of the country which work on the basis of the policy formed by the headquarters at Delhi.
Though FTP is formulated by DGFT, it is administered in close coordination with other agencies. Other important authorities dealing with FTP include Central Board of Excise and Customs, Reserve Bank of India, State VAT Departments.
Features of Foreign Trade Policy 2015-2020
The new five year Foreign Trade Policy 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country keeping with the “Make in India” vision of our Hon’ble Prime Minister Narendra Modi. FTP 2015-20 introduces two new schemes, namely “Merchandise Exports from India Scheme (MEIS) for export of specified goods to specified markets and “Services Exports from India Scheme (SEIS)” for increase of exports of notified services.
Some of the key features of the new Foreign Trade Policy 2015-2020 are:
- FTP would reduce export obligations by 25% and give boost to domestic manufacturing
- India to be made a significant participant in world trade by 2020
- FTP benefits from both MEIS & SEIS will be extended to units located in SEZs
- India to be made a significant participant in world trade by 2020
- FTP 2015-20 introduces two new schemes, namely “Merchandise Exports from India Scheme (MEIS)” and “Services Exports from India Scheme (SEIS)”. The ‘Services Exports from India Scheme’ (SEIS) is for increasing exports of notified services. These schemes (MEIS and SEIS) replace multiple schemes earlier in place, each with different conditions for eligibility and usage. Incentives (MEIS & SEIS) to be available for SEZs also. e-Commerce of handicrafts, handlooms, books etc., eligible for benefits of MEIS.
- Served From India Scheme (SFIS) will be replaced with Service Export from India Scheme (SEIS).
- Industrial products to be supported in major markets at rates ranging from 2% to 3%.
- Debits against scrips would be eligible for CENVAT credit or drawback also.
- Reduced Export Obligation (EO) (75%) for domestic procurement under EPCG scheme.
- Vishakhapatnam and Bhimavaram added as Towns of Export Excellence.
- Online procedure to upload digitally signed document by Chartered Accountant/Company Secretary/Cost Accountant to be developed.
The newly constituted government is confident that the five year Foreign Trade Policy 2015-20 will enable India to respond to the challenges of the external trade environment and take India to the next level in International Trade.
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