India's Foreign Trade Policy (EXIM Policy) and Trade Reforms Since 1991

Meaning of Foreign Trade Policy. The Government of India periodically announces a comprehensive Foreign Trade Policy (earlier known as the EXIM — Export-Import — Policy) laying down the objectives, guidelines and procedures that regulate, promote and facilitate the country's exports and imports.

Objectives of India's Foreign Trade Policy. The policy broadly aims to: promote exports and increase India's share of world trade; ensure access to essential imports (raw materials, capital goods and technology) needed for domestic production; encourage a greater degree of self-reliance; improve the quality and international competitiveness of Indian goods and services; generate additional employment, particularly through export-oriented production; and augment India's foreign exchange earnings and reserves.

Key Trade Reforms Since 1991. The economic reforms of 1991 (the New Economic Policy of Liberalisation, Privatisation and Globalisation) marked a decisive shift in India's approach to foreign trade, away from the earlier, more restrictive and protectionist regime. Major reforms include:

• Exchange rate reform — the rupee was first devalued and subsequently moved toward a market-determined (largely floating) exchange rate, replacing the earlier fixed/administered rate regime.
• Trade liberalisation — a substantial reduction in import licensing requirements, quantitative restrictions (quotas) and tariff (customs duty) rates, opening the domestic market to greater foreign competition and cheaper imported inputs.
• Convertibility of the rupee — the rupee was made convertible on the current account, meaning trade-related foreign exchange transactions no longer required case-by-case government permission.
• Export promotion measures — schemes such as duty drawback (refund of duties paid on inputs used in exported goods), pre- and post-shipment export credit at concessional rates, and the establishment of Export Processing Zones (EPZs) and later Special Economic Zones (SEZs) offering infrastructure and fiscal incentives to export-oriented units.
• Simplification of procedures — reduction in the paperwork, licensing formalities and bureaucratic clearances earlier required for both importers and exporters.

The World Trade Organisation (WTO) and Its Impact on India. The WTO was established on 1 January 1995 as the successor to the GATT (General Agreement on Tariffs and Trade, 1948), and is headquartered in Geneva, Switzerland. Its main objectives are to administer multilateral trade agreements among its member nations, provide a forum for trade negotiations, settle trade disputes between members, monitor member countries' trade policies, and promote freer, fairer and more predictable, non-discriminatory international trade (notably through the Most-Favoured-Nation, or MFN, principle, under which a trade concession granted to one member must generally be extended to all members). …