In the dynamic landscape of Indian foreign trade, importers and exporters must navigate through a complex set of general provisions. Between 2010 and 2014, the Indian government outlined specific regulations that governed trade activities. These regulations were designed to streamline processes, ensure compliance with international norms, and protect national interests. Understanding these provisions is crucial for traders to conduct business effectively and legally.
The default position for exports and imports in India is one of freedom, with the caveat that this is subject to regulation by the Foreign Trade Policy (FTP) or other prevailing laws. The Directorate General of Foreign Trade (DGFT) specifies item-wise policies through the Indian Trade Classification (Harmonized System) [ITC(HS)], which is updated periodically.
Traders must adhere to the Foreign Trade (Development & Regulation) Act, 1992 (FT(D&R) Act), the rules and orders under it, the FTP, and any authorization conditions. Imported goods are also subject to domestic regulations, including environmental and safety standards. The Kimberley Process Certification Scheme (KPCS) is strictly enforced for the import and export of rough diamonds, with no trade permitted with non-compliant countries like Venezuela.
In cases of ambiguity regarding FTP provisions or item classification, the DGFT's decision is final. The DGFT also outlines procedures for implementation, which are subject to public notice and can be amended as needed.
The DGFT has the authority to provide exemptions or relaxations based on hardship or adverse trade impacts. This is done after consulting various committees, such as the Norms Committee, the EPCG Committee, and the Policy Relaxation Committee (PRC).
Restrictions can be imposed to protect public morals, health, intellectual property rights, and national treasures, among other reasons. These measures are in line with international conventions and national security concerns.
Goods listed as restricted can only be traded with an authorization or as per public notice. Licenses come with specific terms and conditions, including quantity, user conditions, and export obligations.
An IEC number is mandatory for all traders, except for those exempted. This number is issued by the competent authority following the prescribed procedure.
The FTP addresses trade with neighboring countries, transit facilities, trade under debt-repayment agreements, and conditions for actual users. It also outlines provisions for the import of second-hand goods, scrap/waste in Special Economic Zones (SEZs), and the import of samples and gifts.
Exports are generally free unless regulated. The FTP details the export of samples, passenger baggage, gifts, spares, and third-party exports. It also covers the export of imported goods, replacement goods, and repaired goods.
The government encourages the use of Information Technology in trade through fiscal incentives. Efforts are made to simplify and standardize trade documents, and the DGFT is moving towards an automated environment for document handling.
The Settlement Commission in the Central Board of Excise and Customs has been empowered to address cases of export obligation defaults, facilitating the resolution of issues faced by traders.
Service tax exemptions are available for goods and services exported from DTA and SEZ units, as well as for services received abroad related to exports.
While the general provisions of 2010-2014 set the stage for Indian foreign trade, there are several statistics and trends that are often overlooked:
Understanding these nuances and the evolving landscape of Indian foreign trade is essential for importers and exporters to make informed decisions and remain competitive.
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