FOREIGN TRADE POLICY
PREAMBLE
For India to become a major player in world trade, an all encompassing,
comprehensive view needs to be taken for the overall development of the
country’s foreign trade. While increase in exports is of vital importance, we
have also to facilitate those imports which are required to stimulate our
economy. Coherence and consistency among trade and other economic policies is
important for maximizing the contribution of such policies to development. Thus,
while incorporating the existing practice of enunciating an annual Exim Policy,
it is necessary to go much beyond and take an integrated approach to the
developmental requirements of India’s foreign trade. This is the context of the
new Foreign Trade Policy.
Trade is not an end in itself, but a means to economic growth and national
development. The primary purpose is not the mere earning of foreign exchange,
but the stimulation of greater economic activity. The Foreign Trade Policy is
rooted in this belief and built around two major objectives. These are:
- To double our percentage share of global merchandise trade within the next
five years; and
- To act as an effective instrument of economic growth by giving a thrust to
employment generation.
These objectives are proposed to be achieved by adopting, among others, the
following
strategies:
- Unshackling of controls and creating an atmosphere of trust and transparency
to unleash the innate entrepreneurship of our businessmen, industrialists and
traders.
- Simplifying procedures and bringing down transaction costs.
- Neutralizing incidence of all levies and duties on inputs used in export
products, based on the fundamental principle that duties and levies should not be exported.
- Facilitating development of India as a global hub for manufacturing,
trading and services.
- Identifying and nurturing special focus areas which would generate
additional employment opportunities, particularly in semi-urban and rural areas,
and developing a series of ‘Initiatives’ for each of these.
- Facilitating technological and infrastructural upgradation of all the
sectors of the Indian economy, especially through import of capital goods and
equipment, thereby increasing value addition and productivity, while attaining
internationally accepted standards of quality.
- Avoiding inverted duty structures and ensuring that our domestic sectors
are not disadvantaged in the Free Trade Agreements/Regional Trade
Agreements/Preferential Trade Agreements that we enter into in order to enhance
our exports.
- Upgrading our infrastructural network, both physical and virtual, related
to the entire
Foreign Trade chain, to international standards.
- Revitalising the Board of Trade by redefining its role, giving it due
recognition and inducting experts on Trade Policy.
- Activating our Embassies as key players in our export strategy and linking
our Commercial Wings abroad through an electronic platform for real time trade
intelligence and enquiry dissemination.
The new Policy envisages merchant exporters and manufacturer exporters, business
and industry as partners of Government in the achievement of its stated
objectives and goals. Prolonged and unnecessary litigation vitiates the premise
of partnership. In order to obviate the need for litigation and nurture a
constructive and conducive atmosphere, a suitable Grievance Redressal Mechanism
will be established which, it is hoped, would substantially reduce litigation
and further a relationship of partnership.
The dynamics of a liberalized trading system sometimes results in injury caused
to domestic industry on account of dumping. When this happens, effective
measures to redress such injury will be taken.
This Policy is essentially a roadmap for the development of India’s foreign
trade. It
contains the basic principles and points the direction in which we propose to
go. By virtue of
its very dynamics, a trade policy cannot be fully comprehensive in all its
details. It would naturally require modification from time to time. We propose
to do this through continuous updation, based on the inevitable changing
dynamics of international trade. It is in partnership with business and industry
that we propose to erect milestones on this roadmap.
(KAMAL NATH)
MINISTER FOR COMMERCE & INDUSTRY GOVERNMENT OF INDIA
NEW DELHI
31ST AUGUST, 2004