FTDA, 1992

Introduction
• Trade policy is one of the many economic instruments for achieving economic growth.
The basic twin objectives of the trade policy have been to promote exports and restrict
imports to the level of foreign exchange available in the country. The inherent problems
of the country have been non-availability/acute shortage of crucial inputs like industrial
raw materials, supporting relevant technology and required capital goods. The problems
can be removed by imports. But, continuous imports are neither possible nor desirable.
The gap between exports and imports is financed through borrowing and foreign aid.
However, imports must be financed by exports, in the long run. The basic objective of the
trade policy revolves round the instruments and techniques of export promotion and
import management.
• This Act replaced the earlier Act which used to be called as Import and Export (Control)
Act 1947.
(ii) The basic objective of FTDR 1992 is to provide a frame work for development and
regulation of foreign trade by facilitating imports into the country, as well as, taking
measures to increase exports from India and any other related matters.
(iii) The Act empowers the Central Government to make any provision in order to fulfill
these objectives.
(iv) In terms of these powers contained in FTDR Act 1992, the government makes
provisions to fulfill the objectives by way of formulation of the Export and Import Policy.
(v) Earlier this policy used to be called as Export and Import Policy i.e. Exim Policy,
however, of late the Policy is being termed as Foreign Trade Policy (FTP) of the country
as it covers areas beyond export and import in the country. This Policy, in terms of the Act
is formulated by the office of the Directorate General of Foreign Trade (DGFT), an
attached office of the Ministry of Commerce & Industry, Government of India.
• The Act lays down that no person can enter into import or export business in India unless
he is issued an Importer Exporter Code No. (IEC No.) by the office of the DGFT.
• (vii) In case any exporter or importer in the country violates any provision of the the
Foreign Trade Policy or for that matter any other law in force, like Central Excise or
Customs or Foreign Exchange, his IEC number can be cancelled by the office of DGFT
and thereupon that exporter or importer would not be able to transact any business in
export or import.
• (viii) The Act also provides for issuance of a permission called licence or authorization
for import or export, wherever it is required in terms of the policy. Similarly, powers to
suspend and cancel the licence for import or export are also provided for in the Act.
• (ix) The powers related to search and seizure etc. of the premises, where any violation of
Export Import Policy has taken place or is expected to take place are also provided for in
the Act.
• (x) What constitutes a violation of the provision of this Act is also contained in the Act
itself. Violations would cover situations when import or export has been made by
unauthorized persons who are not legally allowed to carry out import or export or when
any person carries out or admits to carry out any import or export in contravention of the
basic Export Import Policy.
• (xi) The penalties which can be imposed by the authorities, competent to do so, in case of
any contravention or violation of the Foreign Trade Policy are also described in the Act.
• (xii) As is the norm in any Act of the Government, in order to fulfill the basic dictum of
natural justice, detailed provisions for appeal and revision of orders are also provided for
in the Act. In terms of these provisions, any person who is aggrieved by any decision
taken by an authority under the Act can make an appeal to the superior Authority for
appeal and revision of the orders issued by the subordinate Authority. (xiii) In terms of the
Act an order has also been issued which lists down the categories which are exempted
from the application of provisions of the Foreign Trade Policy. This order is called
Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993. This
order separately lists the institutions and entities for export, as well as, imports on which
the rules framed under FTDR Act, 1992 are not applicable. (xiv) To operationalize the
provisions of any Act, Rules are required. For the FTDR Act, the rules framed and issued
by the Government are called Foreign Trade (Regulation) Rules, 1993 which lay down
the various operational provisions such as fee requirements for issuance of licenses,
conditions of licenses, refusal, suspension and cancellation of licenses etc.
• The policy is based on the principles of trust and partnership with exporters and aims at
process re-engineering and automation to facilitate ease of doing business for exporters.

Pillars of the Policy

• Incentive to Remission,
• Export promotion through collaboration - Exporters, States, Districts, Indian Missions,
• Ease of doing business, reduction in transaction cost and e-initiatives, and
• Emerging Areas – E-Commerce Developing Districts as Export Hubs and
streamlining Special Chemicals, Organisms, Materials, Equipment, and Technologies
(SCOMET) policy.
• Trade facilitation is a major objective of the FTP with specific goals. The latter include
granting online approvals within a day to a variety of permissions required by exporters;
reducing application fees for medium, small and micro-enterprise (MSME) exporters for
the advance authorisation (AA) and export promotion of capital goods (EPCG) schemes;
revamping e-Certificate of Origin (COO); and paperless filing of export obligation
discharge applications.[6]
• Grassroots Exports
• India’s recent efforts to increase overall goods exports include identifying the prospect of
exports from districts of the country. The efforts appear to be yielding results with the
sharp increase noted in goods exports during FY21/22 and FY22/23.
• The new FTP aims to further strengthen the emphasis by developing districts as export
hubs and preparing district-specific action plans. This will require building capacities to
identify potential exports and enhance their prospects for global markets. The FTP
underlines the intention of the central trade and export regulating agency – the Directorate
General of Foreign Trade (DGFT) – to work with states and districts to achieve this
objective.
• Merchanting is a novel element of the FTP. The FTP mentions “Merchanting trade
involving shipment of goods from one foreign country to another without touching Indian
ports; involving an Indian intermediary is allowed subject to compliance with RBI
[Reserve Bank of India] guidelines, except for goods/items in the CITES and SCOMET
list.”
• The ostensible objective behind encouraging merchanting is to promote India as an
intermediate trading hub. Large traders, alluded to as merchant exporters, and distinct
from manufacturing exporters who produce locally and export, will benefit from the
policy. They would particularly benefit from trading in goods that are prohibited as
exports from India.Locations like the Gujarat International Finance Tec-City stand to
benefit from the announcement if large global traders set up trading facilities for engaging
in merchanting.
• The FTP’s emphasis on e-commerce signals the commitment of the government to
encourage India’s exports through cross-border digital trade. India’s digital trade with the
rest of the world has grown fast, with the outbreak of COVID-19 acting as an accelerator.
Several MSMEs have become major sources of products for large online retailers like
Amazon, Flipkart, Alibaba, Myntra, Nykaa and Snapdeal. Creating national e-commerce
export hubs with top-class warehousing facilities and involving post offices and the
national postal service network in the drive to expand e-commerce exports can
significantly impact the export prospects of many MSMEs selling globally through online
platforms.
• Encouraging “Invoicing, payment and settlement of exports and imports” in INR has been
a notable aspect of the FTP. Such transactions will be through Special Rupee Vostro
Accounts (SRVA), maintained by exporters and importers in authorised Indian banks and
their corresponding banks in partner countries, according to guidelines issued by the RBI.
• There are two important implications of India’s trade being settled in INR. As noted
during the recent announcement declaring India and Malaysia’s decision to settle trade in
INR, traders from both countries will be spared the difficulty of converting their local
currencies to the United States (US) dollar, if they trade in INR. The SRVAs for India-
Malaysia trade will be maintained by the Union Bank of India and its corresponding
partner bank, the India International Bank of Malaysia.Besides avoiding costs of
converting to the US dollar, which has become significant for traders after the hardening
of the US dollar in the aftermath of the Ukraine crisis, more trade invoiced in INR will
pave the way for INR’s gradual acceptance as a global currency for trade.
• The government aims to increase India’s overall exports to USD 2 trillion by 2030, with
equal contributions from the merchandise and services sectors.
• The government also intends to encourage the use of the Indian currency in cross-
border trade, aided by a new payment settlement framework introduced by the RBI in
July 2022.
• This could be particularly advantageous in the case of countries with which India enjoys a
trade surplus.
• The policy emphasizes export promotion and development, moving away from an
incentive regime to a regime which is facilitating, based on technology interface and
principles of collaboration.
• Reduction in fee structures and IT-based schemes will make it easier for MSMEs and
others to access export benefits.
• Duty exemption schemes for export production will now be implemented through
Regional Offices in a rule-based IT system environment, eliminating the need for manual
interface
• Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, have been
designated as TEE in addition to the existing 39 towns.
• The TEEs will have priority access to export promotion funds under the MAI scheme and
will be able to avail Common Service Provider (CSP) benefits for export fulfillment
under the Export Promotion Capital Goods (EPCG) Scheme.
Recognition of Exporters
• Exporter firms recognized with 'status' based on export performance will now be
partners in capacity-building initiatives on a best-endeavor basis.
• Similar to the 'each one teach one' initiative, 2-star and above status holders
would be encouraged to provide trade-related training based on a model curriculum
to interested individuals.
• Status recognition norms have been re-calibrated to enable more exporting firms to
achieve 4 and 5-star ratings, leading to better branding opportunities in export
markets.
Promoting Export from the Districts:
• The FTP aims at building partnerships with State governments and taking forward the
Districts as Export Hubs (DEH) initiative to promote exports at the district level
and accelerate the development of grassroots trade ecosystem.
• Efforts to identify export worthy products & services and resolve concerns at the
district level will be made through an institutional mechanism – State Export
Promotion Committee and District Export Promotion Committee at the State and
District level, respectively.
• District specific export action plans to be prepared for each district outlining the
district specific strategy to promote export of identified products and services.