Export-Import Policies and Impact on the Indian Economy

Export Import Policy, or Exim Policy, is a collection of guidelines and instructions governing the import and export of products. Section 5 of the Foreign Trade (Development and Regulation Act) of 1992 gives the Indian government the authority to announce its Exim Policy for five years. Each year on March 31, import and export policies in India have amendments, enhancements, and new programs take effect on April 1. In collaboration with the Directorate General of Foreign Trade, the Ministry of Finance, and its network of regional offices, the Union Minister of Commerce and Industry announces any changes or amendments to the Exim Policy.

What are the objectives of the Exim Policy?

• To increase India’s export and import growth.
• To stimulate long-term economic growth by increasing access to intermediates, components, consumables, essential raw materials, and capital goods.
• To improve the competitiveness of the agriculture industry and services, create new employment opportunities and encourage the attainment of internationally accepted quality standards.
• To supply high-quality services and goods at an affordable cost. Canalization is a critical component of Exim Policy, as it restricts the import of certain goods to designated agencies. For example, only SBI and a few foreign banks or recognised organisations may import gold in bulk.

Foreign trade’s role in economic development

Foreign trade and economic development

Economic development is mainly dependent on trade with other nations. As a result, a country’s economic progress is dependent on foreign trade.

Foreign exchange earning

Foreign trade gives foreign exchange for poverty alleviation and other purposes.

Market expansion

Demand plays a vital role in increasing a country’s production. As a result of foreign trade, the market for goods and services expands and encourages the producers to increase production.

Increase in investment

Foreign trade promotes investment. As a result, the investment rate rises.

Foreign investment

In addition to promoting local investment, foreign trade encourages foreign investors to invest in countries with a shortage of investment.

Increase in national income

Foreign trade boosts country production and income, and to meet foreign demand, we increase production, which also increases GNP.

Decrease in unemployment

Rising demand for goods increases the country’s rate of development and reduces global unemployment.

Price stability

Foreign trade helps to stabilise the price of goods and services. You can import any goods in short supply and whose prices are rising and export any goods you have in excess, thus stopping price fluctuation.

Specialisation

The quality and quantity of various production factors vary by country. Each country focuses on producing commodities where it has a comparative advantage. So all trading countries profit from international trade.

Remove monopolies

Foreign trade discourages monopolies. While monopolists raise prices, the government enables imports to lower prices.

Removal of food shortage

Food shortages are also a problem in India. India has imported wheat numerous times to alleviate the country’s food shortage. So, we’ve solved this problem for years due to foreign trade.

Agricultural development

Our economy relies heavily on agricultural development. Our agricultural sector has grown tremendously due to foreign trade. We ship rice, cotton, and fresh fruits and vegetables to countries worldwide every year, and our farmers’ incomes rise due to goods exports. It encourages them to grow.

To increase local product quality

Foreign trade improves the quality of local products and expands the market by changing demand and supply.

External economics

Foreign trade can also achieve external economics. Large-scale food producers in India benefit from foreign trade.

Competition with foreign producers

Competition in international trade improves product quality and lowers production costs because we can compete against foreign producers.

Beneficial for world peace

All countries now have trade ties with one another. As a result, foreign trade contributes to global peace and prosperity.

Import of capital goods and technology

In less developed countries, foreign trade has accelerated economic growth by bringing in capital goods and cutting-edge technology.

Import substitution

These countries produce import substitutes, but they also help reduce their countries’ balance of payment deficits.

Better understanding

People from different countries can meet, talk, and exchange ideas about their social, economic, and political problems due to foreign trade.

Factors productivity

Trade increases labour, capital, and organisational productivity. Demand makes them mobile on a national and international level, helping developing countries develop and maintain high growth rates.

The impacts of EXIM policy

From the perspective of developing economies, India’s foreign trade policy is critical. If we did not have a foreign trade policy, it would be a daunting and costly task. For example, India’s Iron and Coal reserves are well-established business opportunities, but we must import technical know-how from countries that pioneered it to expand this sector.

Another area that could bring our country to a standstill is our inability to meet the demand for petroleum products. The absence of a foreign trade policy would severely impede our country’s economic growth.

For some time now, India has been one of the world’s most important financial and political players. The current trade policies, economic reforms, and India’s inherent strengths are all factors that contribute to this rise in global demand for Indian products and services. The country is also investing in infrastructure and technological advancements, which are likely to positively impact the economy in the years to come.

Conclusion

The Foreign Trade Development and Regulation Act, 1992 guides India’s export-import policies. India’s Foreign Trade Development and Regulation Act regulates and promotes foreign trade. A new Foreign Trade Act replaced the 1947 Imports and Exports Act, and the DGFT is the main governing body for Exim Policy.

India’s Export Import Policy, also known as the foreign trade policy, aims to boost export performance, promote foreign trade, and maintain a favourable balance of payments. Exports and imports from India and policies and procedures for export promotion are part of the Indian EXIM Policy, a collection of various government decisions in foreign trade. The central government prepares and announces trade policy.