Regulations For International Trade
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Regulations for International Trade
Foreign Trade (Development & Regulation) Act,1992: Under the authority of this act, the office of Director General of Foreign Trade brings out the export import policy & lays down the procedures. The policy determines: a)Whether export of a product is banned. b) Whether the export of the product is subject to quota restrictions or licensing arrangements. c)Whether export of a product is 10/05/09 Free template from www.brainybetty.com canalized through a govt
2
d) Whether there is any floor price regulation regarding that product. Objective of the act: It is to provide for the development & regulation of foreign trade by facilitating imports into & augmenting exports from India.
10/05/09
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Main provisions of the Act: a)Development & regulation: The act empowers the Central Government to make provisions for the development & regulation of foreign trade by facilitating imports & increasing exports. b)Prohibition & Restriction: The act empowers to make provisions for prohibiting, restricting & otherwise regulating the import or export of goods as & when required. 10/05/09
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4
c)Export Import Policy: The act lays down that the Central Govt. may from time to time formulate & announce the EXIM policy & may also amend it keeping in mind the national priorities. d)Director General of Foreign Trade(DGFT): The Act empowers to appoint the DGFT for advising it in the formulation of the EXIM policy & its execution. e)Importer Exporter Code Number (IEC No.): The Act empowers the DGFT to issue, suspend or cancel the 10/05/09 Free template from www.brainybetty.com 5 IEC No. No person shall make any
f) Search, Inspection & Seizure: Where any contravention of any condition of the licence is suspected, inspect & seize such goods, documents & conveyances subject to such requirements & conditions as may be prescribed. g) Penalty for contravention: Any person makes or attempts to make any export or import in contravention, he shall be liable to a penalty not exceeding Rs.1,000/or five times the value of the goods involved, which ever is more.
10/05/09
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Foreign Exchange Regulation Act,1973: Exchange control means regulating the demand for & supply of foreign exchange with the objective of making rational use of available foreign exchange for various purposes. It is usually imposed on both i.e., on payments as well as on receipts. The purpose of introducing this on receipts is to pool the countries foreign exchange reserves to 10/05/09 Free template from www.brainybetty.com
7
The purpose of imposing this on payments is to restrain the demand & contain it within the permissible limits.
10/05/09
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8
Main Provisions of the Act: a)Application of FEMA may be seen broadly from 2 angles: Capital Account Transaction: This relates to movement of capital. For e.g. transactions in property & investments & lending & borrowing money. Current Account Transaction: Such transactions are permitted freely subject to a few restrictions as given10/05/09
Free template from www.brainybetty.com
9
• Certain current account transactions would require RBI permission if they exceed a certain ceiling. • A few current account transaction need permission of appropriate Govt. of India authority irrespective of the amount. b) The Act provides that:For all cash exports, the foreign exchange proceeds from exports must be brought back to India within 180 days, except where exports are made on deferred payment, terms or on 10/05/09 Free template from www.brainybetty.com consignment basis. 10
Residents going abroad for business purposes or for participating in conferences or seminars will not need RBI permission to avail foreign exchange up to US $ 25,000 per trip irrespective of the period of stay. The Exchange Earner’s Foreign Currency (EEFC) a/c holders & Residents Foreign Exchange (RFC) a/c holders are permitted to freely use the funds held in such a/c for payment of all permissible current 10/05/09 Free template from www.brainybetty.com a/c transactions. 11
c) FEMA is a civil law unlike FERA. Contraventions under FEMA will be dealt with through civil procedures. d) The Act also contains comprehensive rules for foreign invt in India & Indian invt abroad. FEMA describes an elaborate redressal machinery for total justice & fairness to the implicated while deciding on the question of contravention. 10/05/09
Free template from www.brainybetty.com
12
Pre-shipment Inspection & Quality Control Act, 1963 In order to promote exports of quality goods as per the international standards, the Govt. has introduced Quality control & Pre-shipment Inspection. The items which come under this act: a)Food & agricultural products b) Chemicals & allied products c)Engineering goods d)Textiles, Coir, jute & leather 10/05/09 Free template from www.brainybetty.com products.
13
Customs Act, 1962: The customs dept. is vested with the task of carrying out physical as well as documentary check on all goods crossing the Indian customs frontier. International Commercial Practices: In this, the following two documents prepared by ICC, Paris, are widely used in international business:10/05/09
Free template from www.brainybetty.com
14
a)Uniform Customs & practices for Documentary Credits,1963: In order to ensure uniformity of interpretation in international trade, the ICC has worked out the Uniform Customs & Practices for Documentary Credits. b) INCOTERMS 2000: In order to have uniform export terms for delivery of goods & payment, there are several trade terms that are used at the international level. 10/05/09
Free template from www.brainybetty.com
15
EXIM Policy of India (2002-2007): This policy came into force with effect from 1st April 2002. Objectives: •To facilitate sustained growth in exports to attain a share of at least 1% of global merchandise trade. •To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components & capital goods required for augmenting production & providing services.
10/05/09
Free template from www.brainybetty.com
16
• To enhance the technological strength & efficiency of Indian agriculture, industry & services thereby improving their competitive strength while generating new employment opportunities. •To provide consumers with good quality goods & services at internationally competitive prices.
10/05/09
Free template from www.brainybetty.com
17
The objective will be met through the co-ordinated efforts of the State govt. & all the dept of the govt.of India in general & the Ministry of Commerce & Industry & the Directorate General of foreign trade & its network of regional offices.
10/05/09
Free template from www.brainybetty.com
18
Foreign Trade (Development & Regulation) Act,1992: Under the authority of this act, the office of Director General of Foreign Trade brings out the export import policy & lays down the procedures. The policy determines: a)Whether export of a product is banned. b) Whether the export of the product is subject to quota restrictions or licensing arrangements. c)Whether export of a product is 10/05/09 Free template from www.brainybetty.com canalized through a govt
2
d) Whether there is any floor price regulation regarding that product. Objective of the act: It is to provide for the development & regulation of foreign trade by facilitating imports into & augmenting exports from India.
10/05/09
Free template from www.brainybetty.com
3
Main provisions of the Act: a)Development & regulation: The act empowers the Central Government to make provisions for the development & regulation of foreign trade by facilitating imports & increasing exports. b)Prohibition & Restriction: The act empowers to make provisions for prohibiting, restricting & otherwise regulating the import or export of goods as & when required. 10/05/09
Free template from www.brainybetty.com
4
c)Export Import Policy: The act lays down that the Central Govt. may from time to time formulate & announce the EXIM policy & may also amend it keeping in mind the national priorities. d)Director General of Foreign Trade(DGFT): The Act empowers to appoint the DGFT for advising it in the formulation of the EXIM policy & its execution. e)Importer Exporter Code Number (IEC No.): The Act empowers the DGFT to issue, suspend or cancel the 10/05/09 Free template from www.brainybetty.com 5 IEC No. No person shall make any
f) Search, Inspection & Seizure: Where any contravention of any condition of the licence is suspected, inspect & seize such goods, documents & conveyances subject to such requirements & conditions as may be prescribed. g) Penalty for contravention: Any person makes or attempts to make any export or import in contravention, he shall be liable to a penalty not exceeding Rs.1,000/or five times the value of the goods involved, which ever is more.
10/05/09
Free template from www.brainybetty.com
6
Foreign Exchange Regulation Act,1973: Exchange control means regulating the demand for & supply of foreign exchange with the objective of making rational use of available foreign exchange for various purposes. It is usually imposed on both i.e., on payments as well as on receipts. The purpose of introducing this on receipts is to pool the countries foreign exchange reserves to 10/05/09 Free template from www.brainybetty.com
7
The purpose of imposing this on payments is to restrain the demand & contain it within the permissible limits.
10/05/09
Free template from www.brainybetty.com
8
Main Provisions of the Act: a)Application of FEMA may be seen broadly from 2 angles: Capital Account Transaction: This relates to movement of capital. For e.g. transactions in property & investments & lending & borrowing money. Current Account Transaction: Such transactions are permitted freely subject to a few restrictions as given10/05/09
Free template from www.brainybetty.com
9
• Certain current account transactions would require RBI permission if they exceed a certain ceiling. • A few current account transaction need permission of appropriate Govt. of India authority irrespective of the amount. b) The Act provides that:For all cash exports, the foreign exchange proceeds from exports must be brought back to India within 180 days, except where exports are made on deferred payment, terms or on 10/05/09 Free template from www.brainybetty.com consignment basis. 10
Residents going abroad for business purposes or for participating in conferences or seminars will not need RBI permission to avail foreign exchange up to US $ 25,000 per trip irrespective of the period of stay. The Exchange Earner’s Foreign Currency (EEFC) a/c holders & Residents Foreign Exchange (RFC) a/c holders are permitted to freely use the funds held in such a/c for payment of all permissible current 10/05/09 Free template from www.brainybetty.com a/c transactions. 11
c) FEMA is a civil law unlike FERA. Contraventions under FEMA will be dealt with through civil procedures. d) The Act also contains comprehensive rules for foreign invt in India & Indian invt abroad. FEMA describes an elaborate redressal machinery for total justice & fairness to the implicated while deciding on the question of contravention. 10/05/09
Free template from www.brainybetty.com
12
Pre-shipment Inspection & Quality Control Act, 1963 In order to promote exports of quality goods as per the international standards, the Govt. has introduced Quality control & Pre-shipment Inspection. The items which come under this act: a)Food & agricultural products b) Chemicals & allied products c)Engineering goods d)Textiles, Coir, jute & leather 10/05/09 Free template from www.brainybetty.com products.
13
Customs Act, 1962: The customs dept. is vested with the task of carrying out physical as well as documentary check on all goods crossing the Indian customs frontier. International Commercial Practices: In this, the following two documents prepared by ICC, Paris, are widely used in international business:10/05/09
Free template from www.brainybetty.com
14
a)Uniform Customs & practices for Documentary Credits,1963: In order to ensure uniformity of interpretation in international trade, the ICC has worked out the Uniform Customs & Practices for Documentary Credits. b) INCOTERMS 2000: In order to have uniform export terms for delivery of goods & payment, there are several trade terms that are used at the international level. 10/05/09
Free template from www.brainybetty.com
15
EXIM Policy of India (2002-2007): This policy came into force with effect from 1st April 2002. Objectives: •To facilitate sustained growth in exports to attain a share of at least 1% of global merchandise trade. •To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components & capital goods required for augmenting production & providing services.
10/05/09
Free template from www.brainybetty.com
16
• To enhance the technological strength & efficiency of Indian agriculture, industry & services thereby improving their competitive strength while generating new employment opportunities. •To provide consumers with good quality goods & services at internationally competitive prices.
10/05/09
Free template from www.brainybetty.com
17
The objective will be met through the co-ordinated efforts of the State govt. & all the dept of the govt.of India in general & the Ministry of Commerce & Industry & the Directorate General of foreign trade & its network of regional offices.
10/05/09
Free template from www.brainybetty.com
18
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