bop and exim policy

TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75

Affiliated Institution of G.G.S.IP.U, Delhi

B.Com (H), Indian Economy, 888301

BOP and EXIM PolicyDr Vandana Malviya

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Measures to correct deficit BOT

• Export promotion:– Export-Import bank was set up in 1982 to promote exports;– Devaluation of currency was taken up in 1991 to promote exports;– Cash assistance was given to exporters to compensate them for

custom duties;– Income tax concessions were given to exporters;– Advanced licences are given to exporters for duty free import of

goods used in production of export items;– Export procedures and formations have been simplified

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Measures to manage unfavourable BOP

• Import reduction and substitution: reduce import of goods that can be manufactured in house and to invest in industries that produce similar goods;

• Objectives of import substitution are to reduce import bills and to raise demand for domestic produced goods;

• Achievements of policy of import substitution are that India started producing goods like ACs, TVs, electronic appliances and also India has developed heavy and capital goods industries.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Measures to manage unfavourable BOP

• Export promotion:– Cash assistance to exporters for import of inputs to be used for

export goods;– Concession in income tax for income from export;– Concessional bank credit for financing production of goods for

export;– Concession in import of materials and machinery used for producing

export goods.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Measures to manage unfavourable BOP

• Encouraging FDI;• Tapping invisibles by providing services like shipping, insurance

and banking;• Increasing efficiency;• Encouraging tourist traffic;• Bilateral agreements.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Export-Import (EXIM) Policy 2002-07

• Objectives:– Double India’s share in world trade during 2002-07;– Exports to be increased at an annual rate of 12.4%;– Liberal imports of raw materials and capital goods to stimulate

economic growth;– Import of technology to improve technology in the country;– Simplification of export procedures;– Business centres to be set up to help Indian exporters in foreign

countries

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Exports of Agricultural items

• All quantitative restrictions prevailing on agricultural products have been removed;

• Transport subsidy is given to increase export of fruits, vegetables, flowers and dairy products;

• Transport assistance to be given for export of food grains;• Restrictions on the packaging of agricultural exports have been

removed.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Exports of Micro Sector (Cottage & Handicrafts)• Industries of this sector contribute about ¼ to India’s exports;• GOI as earmarked a fund of 5 crore under Market Access Initiative (MAI) under which

government agencies will make efforts to find new markets for products of small, cottage and handicraft industries;

• By utilizing funds of MAI, MICRO industries may develop their own web-sites for providing information about their products;

• Some industrial centres like Ludhiana, Panipat and Triupur have been acclaimed as centres of export excellence, more such areas will be developed;

• Technology support will be provided to MICRO industries to raise their level of technology;

• These units will be made strong enough to provide jobs to 80% artisans in rural areas.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Steps to help various industries

• To promote textile industry;• Diamonds and gems studded jewellery;• Promote information technology (software industry);• Production units promoting hardware technology.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Growth oriented Export Import Policy

• Diversification of markets for Indian goods: explore more markets in developing countries of Asia and Africa like Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania, etc ;

• Simplification of procedure related to Exim;• Exporting unit permitted to negotiate directly;

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

• Exemption of import duty;• Setting up special economic zone to promote export: 17

SEZs are there in India.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Merits of EXIM Policy

• Comprehensive: (agriculture, Small, cottage, handicrafts);• Encouragement to small, cottage and handicraft industry;• Growth oriented;• Incentive for agricultural export;• Setting up of agri-export zones: GOI sanctioned 32 zones;• Exports to new markets to go up;• Encouragement for hardware industry;• Boost jewellery industry;• Boost industrial growth.