Meaning and Significance of India’s EXIM Policy
The EXIM policy is often called the Foreign Trade Policy (FTP). It was introduced in 1992 and
regulated by the Foreign Trade Development and Regulation Act. It comprises the guidelines
relevant to the import and export of products and services in and out of the country.
The EXIM policy is a collaboration between the Ministry of Finance and the Directorate General
of Foreign Trade (DGFT) and is subjected to amendments and changes through these bodies.
This policy contains rules and merits for different forms of imports and exports.
Historical Background: Export-Import Policy (1997-2002)
Self-sufficiency and self-reliance were the two primary areas of focus when the trade policies
were designed in the 1950s and 1960s. It was only later on in the 1970s that the policy was
defined to improve the export and import relationships of the country.
As an initial initiative, the EXIM policy was deployed for three years and its objective was to
boost the export rates of the country. However, the trade policy during this time was restrictive.
It was in 1991 that trade liberalisation was visible in India as it departed from its previous
protectionist trade policies. This time is referred to as the ‘post-reform period.’
The 1991 policy enabled the export and trading houses to import different items. The
authoritative bodies also allowed trading houses to set themselves up with 51% foreign equity.
This enables the promotion of exports. “Super Star Trading Houses” was a new category that
was deployed in the 1994-95 policy. Several benefits were provided to these houses including a
membership of apex consultative bodies that focused on trade promotion and policy.
In 2001-02, the Market Access Initiative Scheme was launched. It enables the undertaking of
marketing promotion efforts in foreign nations. It provided a detailed study of the market for
selected products and services in specific countries to gain data for understanding the export
scenario of these products.
Objectives of EXIM Policy
To increase growth in exports and imports in India.
To stimulate long-term economic growth by expanding access to components,
intermediates, essential raw materials, consumables and capital goods.
To improve agriculture service and industry competitiveness, create new employment
opportunities and encourage attaining internationally accepted quality standards.
To supply high-quality goods and services at an affordable cost.
To encourage economic expansion by providing access to necessary raw materials,
capital goods, installations, consumables, intermediate products and essential elements
for expanding production and providing services.
To improve the technological productivity and potency of Indian agriculture, services and
companies, thus enhancing competitive power while creating employment possibilities,
and to accomplish globally acknowledged quality norms.
To supply consumers with fine-condition services and goods at globally competitive
rates.
Key Features of India’s EXIM Policy
Features of EXIM Policy
The features of EXIM Policy 2023, effective from 1 April 2023 to 31 March 2028, are as
follows:
Process Re-Engineering and Automation
The FTP emphasises export development and promotion based on technology interface and
principles of collaboration, moving away from an incentive regime to a facilitating regime. The
ongoing schemes like EPCG, Advance Authorisation, etc., under the FTP 2015-20 will be
continued considering their effectiveness along with technology enablement and substantial
process re-engineering for facilitating the exporters.
Towns of Export Excellence
Four new towns, i.e. Mirzapur, Faridabad, Varanasi, and Moradabad, are designated as Towns of
Export Excellence (TEE) along with the existing 39 towns. The TEEs have priority access to
export promotion funds under the MAI (Market Access Initiative) scheme. They can avail of the
Common Service Provider (CSP) benefits under the EPCG scheme for export fulfilment, which
boosts the exports of handicrafts, handlooms, and carpets.
Recognition of Exporters
Exporter firms that are recognised based on export performance can be partners in capacity-
building initiatives on a best-endeavor basis. Two-star and above status holders are encouraged
to give trade-related training to interested individuals based on a model curriculum.
Promoting Export From the Districts
The FTP aims to build partnerships with State Governments and take forward the DEH (Districts
as Export Hubs) initiative for promoting district-level exports and accelerating the development
of the grassroots trade ecosystem.
Streamlining SCOMET Policy
There is a broader outreach and understanding of the SCOMET (Special Chemicals, Organisms,
Materials, Equipment and Technologies) among stakeholders. The FTP is being made more
robust to implement international agreements and treaties entered into by India. A robust export
control system would provide access to dual-use high-end technologies and goods to Indian
exporters while facilitating exports of controlled technologies or items under SCOMET from
India.
Facilitating e-Commerce Exports
FTP outlines the roadmap for establishing e-commerce hubs and related matters, such as
bookkeeping, returns policy, payment reconciliation and export entitlements.
Rationalisation of the Export Promotion of Capital Goods (EPCG) Scheme
The EPCG scheme, which allows capital goods imports at zero customs duty for export
productions, are being further rationalised. PM MITRA (Prime Minister Mega Integrated Textile
Region and Apparel Parks) scheme is added as an additional scheme to claim benefits under the
CSP (Common Service Provider) scheme of EPCG.
Dairy Sector Exempted From Maintaining Average Export Obligation
Dairy sectors are exempted from maintaining the average export obligation to support them in
upgrading technology. Vertical farming equipment, Battery Electric Vehicles (BEV) of all types,
rainwater harvesting systems and rainwater filters, wastewater treatment and recycling, and
green hydrogen are added to green technology products and are eligible for reduced export
obligation requirements under the EPCG scheme.
Facilitation Under the Advance Authorisation Scheme
The advance authorisation scheme provides duty-free raw material imports for manufacturing
export items and is similar to the EOU and SEZ schemes. The FTP contains certain facilitation
provisions under the Advance Authorisation scheme based on interactions with industry and
Export Promotion Councils.
Merchanting Trade
Under the FTP, merchanting trade of prohibited and restricted items is possible. Merchanting
trade involves the shipment of goods from a foreign country to another foreign country without
touching Indian ports by involving an Indian intermediary. However, it will be subject to
compliance with the RBI guidelines and will not be applicable for items or goods classified in
the SCOMET and CITES list. This will allow Indian entrepreneurs to convert places like GIFT
City into major merchanting hubs, like certain places in Singapore, Dubai and Hong Kong.
Current Status of EXIM in India
The EXIM policy lays down simple and transparent rules and procedures that are extremely easy
to comply with. They are extremely useful as they administer efficient management of foreign
trade in India. The EXIM Policy strives to highlight the country’s trade for employment
generation and economic growth. The Tariff Act lays down how the customs duties will be
levied on import and export trade.
The overall exports of our country have exhibited immense growth in the year 2023-24. They
have officially reached a target of 776.68 billion dollars in exports in the last financial year. In
the merchandise export sector, about 17 of the 30 crucial sectors have shown positive growth
when compared to the year 2022-23. The following sectors show the following growth
percentages:
Engineering Goods (2.13%)
Tea (1.05%)
Textile and handloom products (.71%)
Miscellaneous products and cereal preparation (8.96%)
Oil meals and seeds (7.43%)
Tobacco (19.46%)
Fruits and vegetables (13.86%)
Ceramics and glass products (14.44%)
Iron ore (117.74%)
Electronics (23.64%)
Infrastructure for EXIM in India
Approximately 95% of India’s merchandise trade is controlled by its maritime transport. The
biggest port in the country is the Jawaharlal Nehru Port Trust in Maharashtra. It handles over
55% of the container cargo across the country’s major ports. The country has a presence of about
20 container depots and freight stations for trade.
The Port Network:
To efficiently manage the costs of the logistics process while also promoting port-led industrial
development, the Sagarmala program was launched by the Government of India. The Sagarmala
program includes six new major ports and approximately 14 coastal economic zones. Enhanced
connectivity, modern port technologies, and industrialisation of ports are the prime development
sectors of the program.
The Rail Network:
India has a well-established network of railways. The Indian Railways transported over 1.4
Billion Tonnes of freight in 2023-24. There are over six high-capacity and speedy freight
corridors in the country. The Indian Railways manage approximately 40% of the modal freight
share of the economy.
The Road Network:
The world’s second-largest road network in the country is striving to reach the pinnacle soon
through its targeted construction of 40 kilometres. The Bharatmala Pariyojana was launched by
the Government of India to develop industrial corridors and enhance connectivity via roadways.
Establishing an EXIM Unit: Procedure Overview
To benefit from the incentives under the EXIM Policy, individuals or business units must
register themselves as an EXIM unit. You must follow the steps given below to register as an
EXIM unit:
You must register a company or firm.
You must then open a current account with an authorised bank in any foreign exchange.
The next step is to obtain a permanent account number (PAN) from the Income Tax
Department followed by your Importer Exporter Code (IEC).
To gain benefits, the company must gain a registration and membership certificate
(RCMC) from the Export Promotion Council (EPC).
You must also get all your risks covered by the ECGC with an insurance policy.
Incentives for Export Promotion
Several incentives are advocated by the government for exports. The incentives provided
include the following:
RoDTEP Scheme (Rebate of Duties and Taxes on Exported Products): This scheme
is available to all the exporters of this country. It strives to reimburse all the duties and
taxes paid by manufacturers during the export process in the production sector. It
concentrates on helping manufacturers to minimise costs that are linked with exporting
goods and services boosting the country’s exports.
Service Export Incentive Scheme (SEIS): This incentive export scheme is meant to
promote service exports from this country. It enhances the exchange rates and earnings of
the country while also creating different employment opportunities for Indian citizens. Its
merit is that it provides a reimbursement of up to 15% for their net foreign exchange
earnings every financial year for all exporters.
MEIS Export Scheme: Another incentive by the EXIM Policy is designed to give
rewards to all exporters to offset all the inefficiencies and associated costs for
infrastructural reasons. Moreover, the scheme also offers incentives to enable all
exporters to gain credit toward future customs duties through credit duty scripts.
Exemption of duty and remission schemes: The industry and the government together
have launched two specific schemes to allow duty-free importation of inputs for
exporting goods and services. This scheme is the only exception scheme that enables the
duty-free importation of inputs used in the exportation of products.
Key Players in EXIM Policy Implementation
Mr Piyush Goyal, the Union Minister, launched India’s EXIM Policy in 2023. It is dynamic and
flexible enough to accommodate the future needs of the export market. It strives to drive the
exports of the nation while serving as a roadmap for the same. The four key pillars of the
EXIM Policy include:
Remission Incentive: The 2023 amendments introduced different schemes to provide
incentives and remissions to various businesses to promote exports. The deployment of
RoDTEP Schemes has replaced the present rebate schemes and offers a detailed and
optimal approach for exporters to gain timely and adequate support.
Collaboration through the promotion of exports: This policy highlights collaboration
among stakeholders inclusive of central and state governments, export councils, and
Indian Missions.
Business ease and reduction of transaction cost: The recent changes to the FTP
concentrate on the ease of doing business for exporters. The policy now simplifies the
processes, minimises the costs of transactions, and also implements IT-based systems.
The policy also introduces measures that can be used once for pending authorisations and
optimising export promotion schemes.
Emerging Areas: Emerging sectors like e-commerce exports, districts as hubs for
exports, optimising the SCOMET Policy, etc., are also key areas of focus. This policy
strives to harmonise courier and postal exports with ICEGATE and raise the cap for
consignments.
Conclusion
The EXIM Policy of India encompasses several policy measures and related decisions taken by
the government for imports to and exports from the country. Moreover, it also discusses the
different promotion measures deployed for exports, the policies and procedures that govern it,
and more. In 1991, the EXIM policies slowly became more liberal, and a 5-year policy was
introduced in the year 1992. The EXIM Policy has slowly transformed from ‘import
liberalisation’ to ‘export promotion’. The focus has recently been on the strengthening of bonds
between indigenous industries to take the country’s exports to greater heights.
