What is a foreign trade?
- A foreign trade is also known as the External trade, International trade or an inter-regional trade and it is a trade between various countries of the market.
- When a country that gets an inflow of the goods and services is called an import trade and the one who sent the outflow of the Commerce, and services is called Export trade.
What is foreign trade policy?
- Foreign trade policy is a set of rules, regulations and procedure which have to be followed in the international trade.
Foreign trade policy 2015-2020
- The Ministry of Commerce and Industry has launched a new foreign policy for the period of 2015 to 2020 on April 1, 2015, before this period a foreign trade policy is called an EXIM (Export-Import) policy.
- This policy aims to strengthen the potential of export business and performance, to support and build a positive balance of payments.
Review of Mid-term foreign trade policy
- A mid-term foreign trade policy is reviewed on 5th December 2017 by Suresh Prabhu, the Minister of Commerce and Industry in New Delhi.
- At the time of review of foreign trade policy, there are many other ministers from the different ministries like Shri CR Chaudhary (Minister of State for Commerce and Industry), Shri Hasmukh Adhia (Finance Secretary), Smt. Rita Teaotia (Commerce Secretary), Shri Ramesh Abhishek (Secretary Department of Industrial Policy & Promotion) and Shri Alok Chaturvedi (Director General of Foreign Trade).
- To promote foreign trade policy, The Ministry of Commerce and Industry has increased annual incentives for labour-intensive or a medium and small enterprise MSME by 2% which amounts to more than 8000 crores of rupees.
Highlights of the review of foreign trade policy 2015 - 2020
1) Goods and Services Related Reforms
- Due to Goods and services tax, there is a big issue of blockage of working capital in the business and it affects foreign trade also. So, an export promotion of capital goods board has unveiled a plan which will benefit a trade whether a domestic or an international 100 per cent and to make this plan active, an E-WALLET is going to be launched on 1st April 2018. Exporters can pay 1% of exported goods and services.
2) Repositioning Export Strategy
- To increase India's share in the international market by exploring new market and by goods and services through sharpened policy
- To leverage the perks of goods and services tax and facilitate trade by the ease of doing business.
- To obverse export performance and quickly review it by analysing and taking corrective steps.
- To promote exports by small-scale industry or from an agricultural sector through the global value chain.
3) Encouraging Exports by MSMES and Labour Intensive Industries
- To promote MSMEs and labour intensive industry, The Ministry of Commerce and Industry has introduced some incentives which are as under.
- For MSMEs, incentives are at 2%, 3 %, 4% and 5% of the amount of foreign trade export.
- For Textile industry, incentives are raised from 2% to 4% which amounts to Rs 2743 crore.
- For Business, Legal, Accounting, Architectural, Engineering, Educational, Hospital, Hotels and Restaurants, incentives are increased by 2% above the existing rate which amounts to 1140 crore.
- Duty Credit Scrips validity period increased from 18 months to 24 months and rate of transfer or sale of scrips reduced from 12% to 0%.
4) New Trust Based Self Ratification Scheme for Duty-Free Import of Raw Material
- This scheme allows duty-free export with a self-declaration it means, there is no need to go to the norms committee for the approval but instead of it an exporter by himself certify for it.
- This scheme will initially for the Authorized Economic Operators only who deals in pharmaceuticals, chemicals, textiles, engineering and in high technology products.
5) Contact@Dgft Service for Trade Facilitation
- A DGFT website www.dgft.gov.in is launched to solve the issues related to the foreign trade and solve it promptly with an ease.
- This portal helps Importer as well Exporter to track the status and chance to give an opinion.
6) Trade Facilitation
- A trade facilitation committee is set under cabinet secretary who includes all outlines like clarity, technology, simplification of procedures, risk-based assessment and infrastructure development.
- A committee will mainly focus on the four sections
- 1) Infrastructure
- 2) Legal issues
- 3) Outreach
- 4) Time Release Study
- 7) New Logistics Division
- It will help to expand and organize the implementation of the integrated development of logistic sector by making improvement in policy, present rules and regulations and current technology.
8) State-Of-The-Art Trade Analytics
- This department is set to analyse database policy action and initiate trade information related to national and international import-export database.
9) Exploring New Export Markets
- Under this, a new market with a high level of potential to grow and expand will be covered in various sectors like healthcare, education, agro processing, manufacturing, mining, textiles, consumer goods, infrastructure development and construction.
10) Exploring New Export Products
- In this, a range of products included like medical devices or equipment, technical textile, electronic component, project goods, defence and hi-tech products.
- Medium and Small scale industry cover products like agricultural products, marine products, carpets products, leather products, Ayush and health products, textiles products and readymade garments, handloom products, handicrafts products, jute products, diamond, gold and jewellery.
11) Greater Participation in The Global and Regional Value Chains
- This will help to facilitate by focusing on automating port and customs operations, allows green channel clearances and benchmarking the shipping time.
12) Simplification of Procedures and Processes
- Now, PAN card is also used for IEC procedure and the process of export obligation period extension, a block-wise extension, movement of capital goods from one unit of the IEC owner to another is assigned to the regional offices.
13) Enhanced Value Limit on The Free of Cost (Foc) Exports
- A free of cost export promotion is sectioned under an annual export limit of 1 crore or 2% of an average annual export realized in the previous three years, whichever is minimum.
- For pharmaceutical sector, a limit is 2% of the annual export and for the government sector; a limit is up to 8% which is realized in the previous three years.
14) Capacity Building
- In this, an importance is given to new entrepreneurs for exports and for this, a programme named Niryat Bandhu is followed by DGFT.
- Under Department of Commerce, there are various institutions like Indian Institute of Foreign Trade, Indian Institute of Packaging, Indian Institute of Plantation, Export Promotion Councils, Centres of Excellence and Plantation Research Institutes.
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