Introduction : Globalization, liberalization and multilateralism has given to a new league of businessmen and entrepreneurs. While International trade has been present throughout much of the history, its economic, social, and political importance has been on the rise in recent centuries. International Trade not only enables a nation to specialize in the goods which it can produce most cheaply and efficiently, but also to consume more than it would be able to produce with its own resources. International trade enlarges the potential markets for the goods of a particular economy.
Foreign Trade Policy (earlier called as Export Import Policy i.e. Exim Policy) is a set of guidelines and instructions established by the DGFT (Directorate General of Foreign Trade) in matters related to the import and export of goods in India. The Foreign Trade of India is guided by the Export Import Policy of the Indian Government and is regulated by the FT(D&R) Act – Foreign Trade (Development and Regulation) Act,1992.
DGFT is the main governing body in matters related to EXIM Policy. The main objective of the FT(D&R) Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. Foreign Trade Act has replaced the earlier law known as the imports and Exports (Control) Act 1947.
The Indian Foreign Exchange Policy(FTP) contains various policy related decisions taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports from the country and more, especially export promotion measures, policies and procedures. The policy aims at developing export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange. FTP assumes great significance as a fall in exports has led to the closure of several small and medium scale export oriented units, resulting in large scale unemployment.
The Union Commerce Ministry, Government of India announces the integrated Foreign Trade Policy (FTP) every five years. This policy is updated every year with some modifications and new schemes. New schemes come into effect on the first day of financial year i.e. April 1, every year. The Foreign trade Policy which was announced on 28th August, 2009 is an integrated policy for the period 2009-14.The existing Foreign Trade Policy 2009-14 will remain in force until further orders are issued.
Some of the salient features of the Act are as follows –
It is heartening to note that we had achieved our previous objective (FTP yr 2004-09) of fashioning trade into an instrument of economic growth and employment generation. This was vindicated by the fact that total trade in goods and services formed nearly half our GDP and around 136lakh new jobs are estimated to have been created in this period. The ministers appreciated the contribution of the services sector which accounted for more than 20% of our total trade. The Special Economic Zones (SEZs) are an important policy tool in this effort to increase our exports, generate employment and provide momentum to economic growth. These zones are intended to be magnets for attracting foreign investment and acting as a one stop shop for the state-of-the-art infrastructural facilities. With the multitude of activities governing international trade and their increasing complexity, the era of single tasking or specialization is no longer in vogue. Increasingly, companies are on the lookout for professionals who can multi-task i.e. handle both commercial and technical functions. The role of the CAs has therefore to be re-defined in this new era.
Advisory Services Related to Foreign Trade Policies & Instruments
Advisory Services to National Governments in framing WTO Compliant Foreign Trade Policies & modifying the existing schemes.
I. Exports and imports for Export-Import Policy
V. Foreign Trade Policy Finance
VI. Foreign Trade Policy legal matters
i. With DGFT, RBI and Ministries for import-export licenses & other matters,
ii. For Foreign companies/NRIs in India, Indian Investments Abroad, etc
iii. Planning, Strategizing and implementation for clearances of Project Imports,Plant Relocations, Restricted Items Imports.
Advisory Services Related to Special Economic Zones/100 % Export Oriented Units (EOU) / Software Technology Parks (STP) / Electronic Hardware Technology Parks (EHTP)
|Where–Rule 55 of Special Economic Zones Rules, 2006 states that any person aggrieved by an order passed by the Approval Committee under section 15 of the Special Economic Zones Act, 2005or against cancellation of Letter of Permission under section 16, may prefer an appeal to the Board.Rule 61 of the Special Economic Zones Rules, 2006 states that every appellant may appear before the Board in person or authorize one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of his or its officers to present his or its case before the Board.|
To specialize in this area, one has to have a deep understanding of our Foreign Trade Policy administered by the office of the DGFT as also the trade related measures being applied by other government agencies such as Customs, Excise, Service Tax, Income Tax, Ports, RBI etc.
A Chartered Accountant is also required to keep himself updated with the international trade laws and WTO’s state of negotiations to compete with other professionals in other countries.
With this mindset, the Institute of Chartered Accountants of India has included indirect taxes in its curriculum. Given the expectations from recruiting companies, we should expect that Foreign Trade Policy would also be a significant thrust area in the courses.
Some of the subjects that are important from the perspective of a CA for venturing into the area of foreign trade are:
(Author –Srishti Suri is a CA Final final student and can be reached at srishcolboss @ yahoo.co.in)