GOVERNMENT POLICIES

EXIM POLICY

ExportImportEntrepot: Importing goods with the purpose of re-exporting them after some value addition is called entrepot. EXIM Policy/Foreign trade policy : Government Policy that direct, regulate and promote foreign trade.Pre-liberalisation policy - Protective policy -- Import Restriction -- Import substitution > Limited foreign exchange reserve > Shortage of essential commodities in the country > Requirements of capital goods > Scope of import substitution > Import licensing, Import quotas, Import duties

-- Export promotion > Duty drawback system/International price reimbursement > Export credit > Market development assistance > Fiscal concessions for exports > Developing export processing zones (EPZ) > Simplification of export procedures > Financial incentives > Cash Compensatory Support(CCS) 1966 1991 > Replenishment licenses (IES 1957) (IRS-1966) > Subsidies on domestic raw materials > Blanket Exchange Permit Scheme - 1987

Preamble of FTP 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 countrys 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 in EXIM policy, it is necessary to go much beyond and take an integrated approach to the developmental requirements of Indias foreign trade. This is the context of the new foreign trade policy.

Objectives of EXIM policies Post liberalisation Trade is not the end in itself, but a means to economic growth and national development. - To double our percentage share of global merchandise trade within next five years. - To act as an instrument of economic growth by giving a thrust to employment generation. Strategies - Liberalising of controls and creating the atmosphere of trust and to encourage entrepreneurship among our businessmen, industrialists and traders. - Simplifying the procedures and bringing down transaction costs - Nuetralising all levies and duties on inputs used in export products.

- Identifying and nurturing special areas which would generate additional employment, particularly in semi urban and rural areas. - Facilitating technologies and infrastructural up- gradation of all sectors of the economy, specially through import of capital goods. Promotional measures - ASIDE Assistance to State for Infrastructure Development of Exports - MAI Market Assistance Initiatives - MDA Marketing Development Assistance - Towns of export excellence Handloom, Handicraft, Agriculture & Fisheries - Brand promotion and quality - Target plus scheme - DEPB - Duty entitlement passbook scheme (Dec 2010) - EPCG Export promotion capital goods scheme (march 31, 2011) - Export houses EOUs, SEZs, AEZs, - Service Exports Promotion councils - Free trade warehousing zones

Trade policy before 1980

- First phase 1951-55 - Second phase 1956-66 - Third phase 1966-78 - Fifth phase 1978 onwards

Trade policy after 1980 - OGLs - EOUs - 1981 - First phase 1985-88 - Second phase 1988-90 - Third phase 1990-92 - Reduction of import duty on non agri. good 1993 onwards - Decanalisation 1992 onwards - Convertibility of Rupee on current account 1993-94 - SEZs 2000, 2005, 2006 - AEZs 2001

- 2004-2009 FTP --Trading Houses 2007 -- Export Promotion Councils -- FTWZs -- Served From India as a brand -- Five Thrust Sectors -- Rationalisation measures - 209-2014 FTP -- Expansion of Focus Market Scheme -- More incentives for FMS & FPS -- Diamond Bourses -- Value added manufacturing -- Re-export of unsold raw skin and semi-finished leather

INDUSTRIAL POLICY

Industrial Policies Industrial policy reflects the socio-economic and political ideology of the development. It is described as the economic constitution of India. Industrial policy indicates the respective roles of the public, private, joint and co-operative sectors, small and large scale industries and underlines the national priorities and the economic development strategy. It expresses Governments policy towards foreign capital and technology, labour policy, tariff policy etc. in respect of industrial sector. The industrial development and thereby economic development to a significant extent is guided, regulated and fostered by the industrial policy. Industrial policy is a comprehensive policy. It is a package of different policy measures like; fiscal policy, monetary policy, tariffs policy, labour policy, EXIM policy etc. which cover various issues concerned with the Industrial development & in turn economic development of the nation.

Pre-liberalisation policyIndustrial policy resolution - 1948 - Four broad categories of industries -- Monopoly of State -- Mixed Sector -Exclusive right of State to set up new undertakings, allowing the existing ones to continue operations. -- Pvt. Ownership with Central Govt. regulations -- Pvt. Sector industries - Cottage and Small scale Industries - Role of foreign capital - Mixed economy - Suitable tariff policy, taxation policy, labour policies etc

Industrial policy resolution 1956 - Economic constitution of India Objectives - Development of heavy and machine making industries - Expansion of public sector - Establishment of large & growing cooperative sector - Encouragement to the diffusion of ownership & management of Pvt. sector Main Features - New classification of Industries Schedule A Exclusive responsibility of State Schedule B Progressively State owned Schedule C Private sector

- No watertight compartments - Fair and Non-Discriminatory treatment to private sector - Encouragement to small scale & cottage industries - Removing regional disparities - Labour welfare - Technical & managerial personnel - Decentralisation of power - Progressive Indianisation of foreign concerns

Industrial policy statement - 1977 - Development of small scale industrial sector - Distinct role of large scale sector basic, capital goods, high-tech, others - Control of big business houses - Role of public sector - Technological self reliance - Labour welfare - Approach towards sick units - Licensing policy - Approach towards foreign collaborations

Industrial policy statement - 1980 Objectives - Optimum utilisation of installed capacity - Maximum production, higher productivity & higher employment generation - Correction of regional imbalances - Strengthening of agriculture sector - Promotion of export oriented & import substitution Industries. - Promotion of economic federalism - Removing the infrastructural gaps

Review of Pre1991 Industrial policy - Licensing & Underutilisation of capacity - Licensing & concentration of economic power - Licensing & regional imbalances - Delays in processing applications - Liberalisation trends -- Exemption from licensing -- Relaxation to MRTP & FERA companies -- Delicensing -- Re-Endorsement of Capacity -- Broad Banding of Industries -- Minimum Economic scale of operation -- Incentives for Export production -- Expansion of Investment limits for SSIs & Ancillary units

New Industrial policy - 1991 Objectives - Unshackle the Indian Economy from the cobweb of unnecessary bureaucratic controls. - To build on the gains of experience & to correct the distortions/weaknesses involved in the system. - To introduce liberalisation with a view to integrate the Indian economy so that India grows as part of the world economy and not in isolation. - To abolish the restriction on direct foreign investments - To free the domestic entrepreneurs from the restrictions of MRTP Act. - To foster R&D efforts for the development of indigenous technologies. - To assign the right areas for the public sector undertakings

Initiatives - Industrial licensing - Public sector policies - MRTP Act - Foreign Direct Investment - Liberalisation of location policy - Abolition of phased manufacturing programs - Removal of mandatory Convertibility clause - Policy for the small scale sector

Critical Evaluation Positives - Our industries are becoming more competent both internally & internationally. - Reduction in bureaucratic controls - Scraping of MRTP is heartily welcomed by business world - Reforms relating to public sectors leads to the improvement of pubic sector undertakings. - It helps integrating the domestic economy with the world economy - Sets up the growth rate of industrial production through an efficient use of resources.

Criticisms

Negatives - Foreign investment -- Countering the Neharuvian model -- Removal of distinction between high & low priority sector -- Negative financial implications of reverse outflow of foreign exchange. -- Threat from foreign competition -- Dangers of economic colonisation - Diluted public sector role - MRTP provisions Consumer protection - Overlooking unemployment - Labour problems - Little role of R & D

- Uncertain prospects for the small scale industries -- Credit policy -- Integration of industries policy goes against the concept of small scale -- Small scale industry not geared to face the kind of competition unleashed by this policy