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FOREIGN TRADE (DEVELOPMENT & REGULATION) ACT ,1992 - A COMPARATIVE ANALYSIS
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FOREIGN TRADE (DEVELOPMENT &
REGULATION) ACT ,1992
- A COMPARATIVE ANALYSIS
AUTHORED BY - TANNU SHARMA &
TANISHA ARORA[1]
Abstract
This research paper provides a comprehensive
analysis of the Foreign Trade Act, its significance, and the implications it
holds for India's trade policies. Foreign trade plays a crucial role in the
economic development of a country, and understanding the regulatory framework
governing it is essential. The 1992 Foreign Trade (Development and Regulation)
Act is the supreme legislation that governs India's import situation,
superseding previous laws and granting the government extensive control rights.
Highlighting the foreign trade policy and its development in India, has been a
significant increase in both imports and exports with foreign countries,
leading to a safer and more secure trading environment.
Keywords: foreign trade development act ,1992,
economic development, foreign trade policy and significant increase in
import-export.
Research Objective
1. Elucidating the foreign trade
act,1992 and its development
2. Exploring the significance of the
Foreign Trade Policy
3. Analysing Foreign Trade Act's
significance in India's trade policies
Research Methodology
The research methodology employed involves a
comprehensive review of relevant literature, including academic papers,
government reports, and legal documents, to analyse the Act's provisions and
its implications. The findings of this research contribute to a better
understanding of the Foreign Trade Act's significance in India's trade policies
Introduction
The Foreign Trade Act is a
legislative framework that governs and regulates international trade activities
conducted by a country. It provides guidelines, rules, and regulations to
promote and control foreign trade for the benefit of the national economy. The
act typically covers a range of aspects, including import and export
regulations, tariffs, customs procedures, trade agreements, trade remedies, and
the establishment of trade promotion bodies. Its primary objectives are to
facilitate and promote international trade, protect domestic industries, ensure
fair competition, and balance economic interests between the country and its
trading partners. The specifics of each Foreign Trade Act may vary from country
to country, reflecting their unique economic priorities, geopolitical
considerations, and trade policies. In this paper we will be analysing about
the foreign trade (development & regulation) Act, 1992.
History Of the Act -
Foreign trade plays a crucial role in
the economic development of countries. In 1992, India underwent significant
changes in its foreign trade policies, which had a profound impact on the
country's economy. Here's an overview of the history of foreign trade in India
in 1992:
1. Pre-1991 Economic Policies: Before 1991, India followed
a highly regulated and protectionist economic policy. The government imposed
strict controls on imports and exports, including high tariffs, quantitative
restrictions, and licensing requirements. The objective was to promote domestic
industries, reduce dependence on foreign goods, and achieve self-sufficiency.
2. Economic Liberalization: In 1991, India faced a severe
economic crisis, characterized by low growth, high inflation, and a balance of
payments deficit. To address these challenges, the government initiated a
series of economic reforms known as the New Economic Policy or Economic
Liberalization. The reforms aimed to shift from a controlled economy to a
market-oriented one.
3. Introduction of LPG Reforms: The LPG (Liberalization,
Privatization, and Globalization) reforms were introduced in 1991. Under these
reforms, India opened its doors to foreign investment, reduced trade barriers,
and liberalized its foreign trade policies.
4. Trade Liberalization Measures: In 1992, the Indian government
implemented several measures to liberalize foreign trade. These included:
a) Reduction of Tariffs: Import duties and tariffs were
significantly reduced to promote international trade and encourage imports of
essential goods and technology.
b) Removal of Quantitative Restrictions: The government eliminated or
reduced quantitative restrictions on many products, allowing easier imports and
exports.
c) Exchange Rate Reforms: The Indian rupee was devalued,
making exports more competitive and promoting foreign trade.
d) Export Promotion: Various export promotion measures
were implemented to boost India's exports, such as export subsidies, tax
incentives, and the establishment of Export Processing Zones (EPZs) to
facilitate exports.
e) Foreign Investment: The government allowed greater
foreign direct investment (FDI) in various sectors, attracting international
companies to invest in India and participate in trade activities.
5. Integration with Global Trade: India actively engaged with
international organizations like the World Trade Organization (WTO) and
participated in global trade negotiations. It sought to align its trade
policies with international standards and regulations, fostering greater
integration into the global trading system.
6. Impact on Indian Economy: The liberalization of foreign trade
policies in 1992 had a transformative impact on the Indian economy. It led to
increased foreign investment, technological advancements, and access to a wider
range of goods and services. Indian industries faced greater competition but
also gained opportunities for growth through exports. The reforms contributed
to higher economic growth rates, improved living standards, and the emergence
of India as a global player in the international trade arena.
Overall, the year 1992 marked a
significant turning point in India's foreign trade history, as the country
embraced liberalization, reduced trade barriers, and actively participated in
global trade, setting the stage for India's subsequent economic growth and
integration into the global economy.
What is the objective behind the act? The Foreign Trade (Development and
Regulation) Act, 1992 is an important legislation in India that governs the
country's foreign trade policies and regulations. The objective of the Foreign
Trade Act, 1992 is to promote and regulate foreign trade in India with the aim
of enhancing the country's economic growth, development, and stability.
The main objective of the Foreign
Trade Act 1992 is to facilitate India's international trade, promote exports,
and regulate imports for the country's economic development. Overall, the objective of the Foreign Trade
Act, 1992 is to provide a legal framework for the promotion, regulation, and
development of foreign trade in India, with the ultimate goal of enhancing the
country's economic growth, competitiveness, and integration into the global
economy.
Salient Features of Foreign Trade
Development and Regulation (FTDR) Act 1992
The Foreign Trade (Development and
Regulation) Act, 1992 is an important legislation in India that governs the
country's foreign trade. Here are some salient features of the Foreign Trade
Act 1992:
1. Directorate General of Foreign Trade
(DGFT)[2]
2. Regulation of Imports and Exports: The Act empowers the government to
regulate the import and export of goods and services. It provides the
government with the authority to impose restrictions, prohibitions, or
licensing requirements on certain goods, depending on national interest, public
health, security, environmental concerns, or international obligations.
3. Export Promotion Schemes: The Act enables the government to
introduce export promotion schemes to encourage and support Indian exporters.
These schemes aim to enhance the competitiveness of Indian goods and services
in the global market and provide various incentives such as duty drawbacks,
export subsidies, and tax benefits to exporters.
4. Import Control: The Act empowers the government to
regulate and control the import of goods into India. It allows the government
to impose restrictions, bans, or licensing requirements on the import of
certain goods to safeguard domestic industries, maintain balance of payments,
or protect national interests.
5. Import and Export Procedures: The Act sets out the procedures and
documentation requirements for importers and exporters. It defines various
terms related to imports and exports, such as goods, customs ports, designated
authorities, and licensing authorities. It also specifies the penalties for
non-compliance with the Act's provisions.
6. Duty Exemption and Remission: The Act provides provisions for
duty exemption and remission for specified categories of importers and
exporters. It allows for duty-free import of raw materials, components, and
capital goods for the manufacture of export products under certain schemes.
8. Offenses and Penalties: The Act defines various offenses
related to foreign trade, such as smuggling, evasion of customs duties,
violation of licensing requirements, false declarations, and non-compliance
with export obligations. It prescribes penalties, including fines,
imprisonment, or both, for such offenses.
9. Regulation of Special Categories: The act also contains provisions
for the regulation of certain special categories of foreign trade, such as
export-oriented units (EOUs), electronic commerce, and duty-free shops. These
provisions aim to facilitate and regulate trade activities specific to these
categories.
However, the Foreign Trade Act 1992
has been amended several times since its enactment to align with changing trade
policies and international obligations.
What are the key aspects that act
covers under it?
The Foreign Trade (Development and Regulation) Act, 1992 covers various aspects
related to foreign trade and is divided into different sections. Here are some
key aspects covered under the Act:
Section 3: Power to make provisions relating
to imports and exports – This section empowers the government to make provisions and
regulations concerning imports and exports, including prohibitions,
restrictions, and licensing requirements.
Section 4: Appointment of Director General of
Foreign Trade – This
section deals with the appointment of the Director General of Foreign Trade,
who is responsible for implementing the provisions of the Act and overseeing
foreign trade activities.
Section 5: Power to prohibit, restrict, or
regulate imports and exports – This section gives the government the authority to
prohibit, restrict, or regulate the import or export of goods to safeguard
national interests, security, or public welfare.
Section 8: Power to grant exemptions – This section provides the
government with the power to grant exemptions from any provisions of the Act or
regulations made under it, based on certain conditions or considerations.
Section 9: Power to impose duties and fees – This section allows the government
to impose duties, fees, or charges on imports and exports, including export
duties, import duties, and licensing fees.
Section 11: Power to make rules – This section authorizes the
government to make rules for carrying out the purposes of the Act, including
rules related to licensing, registration, procedures, and penalties for
non-compliance.
Section 12: Offenses and penalties – This section outlines offenses and
penalties for contravening the provisions of the Act, such as unauthorized
imports or exports, false statements, non-compliance with licensing
requirements, etc.
These are just some of the aspects
covered under the Foreign Trade (Development and Regulation) Act, 1992. The Act
provides the legal framework for regulating and promoting foreign trade in
India.
What is foreign trade policy? foreign trade policy referring to
the set of rules, regulations, and measures implemented by a country to govern
its international trade relations and transactions. Investment law, on the
other hand, deals with regulations and policies that govern investments made by
foreign entities in a country. The interaction between foreign trade policy and
investment law can have significant implications for a country's economy and
its engagement in the global market.
Foreign trade policy, on the other
hand, focuses on the regulations and measures that govern the import and export
of goods and services. These policies typically aim to promote economic growth,
protect domestic industries, and ensure a favourable balance of trade. Trade
policies can include tariffs, quotas, export subsidies, import restrictions,
and various trade agreements.
The objectives of a foreign trade
policy can vary depending on the goals and priorities of a particular country.
Some common objectives include:
1. Promoting economic growth: Trade policies are often designed
to stimulate economic growth by expanding exports, attracting foreign
investment, and increasing market access for domestic industries.
2. Protecting domestic industries: Governments may implement trade
policies to protect domestic industries from unfair competition by imposing
tariffs, quotas, or other trade barriers on imported goods.
3. Enhancing competitiveness: Trade policies can focus on
improving the competitiveness of domestic industries by providing subsidies,
incentives, or support for research and development activities.
4. Fostering international relations: Trade policies can be used to
strengthen diplomatic ties and promote cooperation with other nations.
Bilateral and multilateral trade agreements are often negotiated to facilitate
trade relationships and reduce barriers.
5. Ensuring national security: Trade policies can also be shaped by
national security considerations, such as imposing export controls on sensitive
technologies or goods with potential dual-use applications.
Foreign trade policies are typically
formulated and implemented by the relevant government agencies responsible for
trade, commerce, and economic affairs. These policies can be adjusted
periodically in response to changing domestic and international economic
conditions, geopolitical factors, and trade negotiations.
Objectives Of The Foreign Trade
Policy (Ftp) -
The primary objectives of the Foreign
Trade Policy (FTP) of this country, known as the 2004-2009 policy, were focused
on utilizing trade as a means to drive economic growth and national development
rather than merely acquiring more currency. The FTP aimed to enhance economic
activities and achieve comprehensive progress for the country. In line with
this approach, the subsequent
FTP for 2015-2020 established two core goals:
a) Firstly, it aimed to double India's
share of global trade in goods within the next five years.
b) Secondly, it sought to foster
economic growth by generating employment opportunities, with specific emphasis
on sectors such as agriculture, handicrafts, gems and jewellery, handloom,
leather, and maritime industries.
Foreign Trade Policy 2023
The FTP 2023 is a policy that focuses
on establishing trust and partnership with exporters, aiming to simplify
business processes and promote ease of doing business. It emphasizes four key pillars:
1. providing incentives for remission,
promoting collaboration among exporters, states, districts, and Indian missions
to boost exports,
2. enhancing ease of doing business and
reducing transaction costs through electronic initiatives, and
3. focusing on emerging areas such as
developing export hubs in e-commerce districts ;
The government's goal is to increase
India's overall exports to USD 2 trillion by 2030, with equal contributions
from the merchandise and services sectors.
Additionally, the government intends to encourage the use of the Indian
currency in cross-border trade, facilitated by a new payment settlement
framework introduced by the RBI in July 2022. This move can be advantageous,
particularly in countries where India has a trade surplus.
Conclusion
Foreign trade plays a vital role in a
nation's overall economic progress, but for ordinary individuals, it can be a
complex domain involving numerous policies and procedures formulated by
different government agencies responsible for this activity. In India, the 1992
Foreign Trade (Development and Regulation) Act serves as the primary
legislation governing the country's import situation. This act consolidates and
simplifies previously enacted laws, granting the Indian government extensive
control rights. The key objective of this comprehensive law is to establish a
suitable framework for the growth and standardization of foreign trade,
facilitating imports and exports while benefiting relevant sectors of the country. Since the implementation of the foreign trade
policy in India, there has been a significant increase
in both imports and exports with foreign countries, leading to a safer and more
secure trading environment. The establishment of Special Economic Zones
(SEZs) and Export Processing Zones (EPZs) through the Foreign Trade Policy has
attracted a greater number of foreign investors to the country. The creation of
Trading Houses has provided a platform for consumers and manufacturers,
facilitating easier trade between countries. Additionally, streamlining
procedures and offering incentives to exporters and importers involved in
foreign trade has created a fair environment for traders. However, there is
still ample room for improvement in these aspects. Overall, the introduction of
the Foreign Trade (Development and Regulation) Act in 1992 has brought about a
more liberal approach to industrialization in India, benefiting traders and
consumers alike in the future.
[1] TANNU SHARMA 3rd Year, B.A.LL. B, Delhi Metropolitan
Education, GGISPU, New Delhi (Email ID- Tannusharma2266@gmail.Com).
TANISHA
ARORA 3rd Year, B.A.LL. B,
Delhi Metropolitan Education, GGISPU, New Delhi (Email ID – Tanishaarora981@gmail.Com).
[2] The Directorate
General of Foreign Trade (DGFT) is the agency of the Ministry of Commerce and
Industry of the Government of India responsible for administering laws
regarding foreign trade.
[3] Foreign Trade
Policy is a set of guidelines and instructions established by the DGFT in
matters related to the import and export of goods in India.
[4] SCOMET item is an
acronym for Special Chemicals, Organisms, Materials, Equipment, and Technologies,
and these are dual-use items that can be used for both civilian and military
applications.
Article Information
FOREIGN TRADE (DEVELOPMENT & REGULATION) ACT ,1992 - A COMPARATIVE ANALYSIS
Authors: TANNU SHARMA, TANISHA ARORA
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/06/14
- Issue 7
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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