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Meaning of foreign trade policy

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Meaning of foreign trade policy

  1. 1. GROUP -5CONTENTS•Regulation of foreign trade,•Foreign Trade development and regulation act,•Foreign trade policies,•Export promotion,•Organizational Setup,•Production Assistance,•Marketing assistance,•EPZ, EOU, SEZ,•Export Housing•Trade housing
  2. 2. FOREIGN TRADE  Exchange of goods and services between the countries is known as foreign trade. The difference is the producer and consumers reside in separate countries.
  3. 3. DEVELOPMENT AND REGULATION ACT OF FOREIGN TRADE POLICYIn 1992, the govt. enacted foreign trade (Development &Regulation ) Act to facilitate import and enhancing exportsfrom India.As per the provisions of the act , the Govt. :- may make provisions for facilitating and controlling foreigntrade;May prohibit ,restrict and regulate exports & imports ,in all orspecified cases as well as subject them to exemptions;Is authorized to formulate and announce an export & importpolicy and also amend the same from time-to-time,bynotification in the Official Gazette.
  4. 4. Changes that took place :-With economic reforms,globalisation of the Indianeconomy has been the guiding factor in formulating thetrade policies.The reform measures introduced in the subsequentpolicies have focused on liberalization , openness andtransparency.They have provided an export friendly environment bysimplifying the procedures for trade facilitation.
  5. 5. KEY STRATEGIES FOR ACHIEVING ITS OBJECTIVES :-Simplifying procedures and bringing down transactioncosts;Facilitating development of India as a global hub formanufacturing , trading and services.Identifying and nurturing special focus areas togenerate additional employment opportunities ,particularly in semi-urban and rural areas.Facilitating technological and infrastructuralupgradation of the Indian economy ,especially throughimport of capital goods and equipments.Activating Indian embassies as key players in theexport strategy.
  6. 6. MEANING OF FOREIGN TRADE POLICYForeign trade policy is the combination of wordsFirst is foreign trade andSecond is policy Foreign trade:It is the exchange of goods and services between nations. Goods can be defined as finished products, as intermediate goods used in producing other goods, or as agricultural products and foodstuffs. Policy: policy is the set of rules and proceedure.
  7. 7. OBJECTIVES OF THE FOREIGN TRADEPOLICY OF INDIA The Foreign Trade Policy of India is based on two major objectives, they are –  To double the percentage share of global merchandise trade within the next five years. To act as an effective instrument of economic growth by giving a thrust to employment generation
  8. 8. STRATEGY OF FOREIGN TRADE POLICY OFINDIA Removing government controls Facilitating development of India as a global hub for manufacturing, trading, and services Generating additional employment opportunities technological and infrastructural up gradation Simplification of commercial and legal procedures and bringing down transaction costs. Simplification of levies and duties on inputs used in export products
  9. 9. FEATURES OF FTP(04-09) A new scheme called the vishesh krishi upaj yojana for promoting the exports of fruits, vegetables, flowers and their value added products has been introduced. Funds shall be earmarked for the development of agri export zones (AEZ). Units in AEZ shall be exempt from bank guarantee under the EPCG scheme. Import of capital goods shall be permitted duty free under the EPCG scheme. Import of gold of 18 carat and above shall be allowed under the replenishment scheme.
  10. 10. FEATURES OF FTP(09-2014) Duty exemption scheme Duty free import authorisation Export promotion of capital goods(EPCG) Deemed exports Star export houses Focus market scheme Focus product scheme Vishesh krishi gram upaj yojna(VKGUY) Service export 100%EOU/SEZ, etc
  11. 11. PRODUCT ASSISTANCE/ FACILITIESExperts depend , inter alia ., on exportable surplus and thequality and price of the goods. Govt. have therefore , taken anumber of measures to enlarge and strengthen theproduction base, to improve the productive efficiency anquality of products and to make the product more costeffective.
  12. 12. MEANING OF EXPORT PROCESSING ZONES Export Processing Zones (EPZs) are industrial estates which form enclaves from the national customs territory of a country, it can be summarized as a unit bearing clusters of specially designed zones of aggressive economic activity for the promotion of export.The main concept of Export Processing Zones was conceived in the early 1970s to promote the growth of the sickening export business of India. Further, the meaning of Export Processing Zones (EPZs) can be broadly defined as an area enjoying special government of India support with respect to fiscal incentives, tax rebates and other exclusive benefits for the growth of export.
  13. 13. OBJECTIVES OF SETTING UP OF EPZS• Encourage and generate the economic development• Encourage Foreign Direct Investments (FDI)• To earn foreign exchange• To generate employment opportunities• Foster the establishment and development of industrial enterprises within the said zones• Encourage and generate wider economic activities by encouraging foreign investments for the development of the zones• Upgrade labor and management skills• Ensure world class quality of products .
  14. 14. WHERE EPZ LOCATED? • Kandla Free Trade Zone (KAFTZ), Kandla, Gujarat • Santa Cruz Electronic Export Processing Zone (SEEPZ), S. Cruz, Maharashtra • Cochin Export Processing Zone (CEPZ), Cochin, Kerala • Falta Export Processing Zone (FEPZ), Falta,West Bengal • Madras Export Processing Zone (MEPZ), Madras, Tamil Nadu • Noida Export Processing Zone (NEPZ), Noida, Uttar Pradesh • Visakhapatnam Export Processing Zone (VEPZ), Visakhapatnam, Andhra Pradesh
  15. 15. SETTING UP 100% EOUS. The Government amended in November 1983 a concession scheme to facilitate the setting up of export-oriented units (EOUs) in order to enable them to meet requirements of foreign demand in terms of pricing, quality, precision etc. EOU refers to an industrial unit which refers to an industrial unit which offers for exports its entire production ,excluding permitted levels of reject. EOUs can be set up anywhere in the country and may be engaged in the manufacture and production of software, floriculture, horticulture, agriculture, aquaculture, animal husbandry, pisciculture, poultry and sericulture or other similar activities.
  16. 16. SEZ• Special economic zone is a particular area inside a state which acts as foreign territory for tariff and trade operations. Govt. provides tax exemption (IT, Excise, customs, sales etc.), subsidised water and electricity etc. SEZ can be sector specific or multi product sez. It helps in the development of infrastructure of the area around the SEZ, provides employment to people, makes the exports more viable. All this will helps the countrys products to become mor competitive vis-a-vis providing all round development of region. It should be noted that if 100 acres are alloted for SEZ, then only 30-35% of area is used for setting up plants , rest of the area is used to provide housing facilities, malls, multiplexes etc. Also Tax exemption is for specific period say for 10 yrs or so. India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asias first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.
  17. 17. TRADING HOUSES Trading Houses (TH) are independent companies staffed by international trade experts. They are business intermediaries between foreign manufacturers and foreign buyers or consumers of goods and services. Trading Houses export, import, and engage in third country trading of goods and services produced by other companies.
  18. 18. TRADING HOUSES OFFER THE FOLLOWINGSERVICES Identifying and selecting a market Identifying, selecting and evaluating clients Defining a product and related packaging requirements Marketing and adapting the product Negotiating the terms of sales (financing, shipping, payment terms, insurance) Preparing export documents Protecting clients from all export-related risks (including commercial and political factors as well as fluctuations in transportations and exchange rates) Shipping and receiving of goods Following up on claims and providing after-sales service Providing promotional support abroad
  19. 19. TRADING HOUSES ALSO PROVIDES VALUEADDED SERVICES LIKE: Save time since the Trading House already has well-established networking overseas Save money by spreading costs over several product lines Benefit from the established credibility of the Trading House on foreign markets Benefit from greater efficiency from the Trading Houses experience in specific markets Diversify their market and improve their export strategy
  20. 20. CONCLUSION After the implementation foreign trade policy , the import and export among foreign countries have increased and have become more secured. Setting up of EPZ and SEZ have also increased foreign investors . Trading Housing have given a platform to both manufacturers and consumers to freely and easily trade between different countries.