Page 368 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes imports were both essential for a growing economy and therefore, urged upon the government to
provide facilities for the import of raw materials, components, etc., for all existing industries subject
to higher priorities to new industries in (i) power and transport which had proved a serious bottleneck;
(ii) ‘export-oriented’ industries; and (iii) industries producing raw materials and components now
imported. Industries depending almost entirely on indigenous raw materials could arrange their
own foreign exchange for the import of plant and machinery. The recommendations of the committee
were accepted by the Government.
The import policy of restriction of non-essential goods on the one side and liberalisation of imports of
essential goods on the other was successful to a large extent—imports were controlled and exports
were pushed up. This policy helped to reverse the persistent trade deficit.

Export-oriented Export-Import Policy
Since 1975-76, the Government of India has been following a liberalised import policy with the objective
of increasing production, especially export production. There has been an increased emphasis on
enhancing maintenance imports in order to promote capacity utilisation. Since the principal purpose
of the import policy was to encourage exports, it is characterised as export-oriented import policy.
Export-Import Policy (1985)
Mr. Vishwanath Pratap Singh, the then Commerce Minister, announced the Export-import Policy on
the 12th April 1985. For the first time, the Government announced the policy on a three-year basis.
The basic aim of the new policy was to facilitate production through easier and quicker access to
imported inputs, impart continuity and stability of Exim Policy, strengthen the export production
base, facilitate technological upgradation and effect all possible savings in imports.
Import-Export Policy (1990)
The government announced on April 30,1990 a new Import-Export Policy for a 3-year period. The
Policy statement made it clear : “Improvement in our Balance of payments position can be achieved
not so much through import curtailment as through promotion of exports. “The new policy has,
therefore, provided further momentum to the ongoing process of liberalisation with emphasis on
strengthening the impulses of industrial and export growth. The salient features of the new policy
were :
1. List of items imported under Open General Licence (OGL) were expanded to facilitate easy
access to import of items that are not available within the country.
2. The number of capital goods items permitted under OGL was increased from 1,261 to 1,343.
This has been the major thrust of liberalisation.
3. Imports of certain raw materials such as petroleum products, fertilizers, oils/oilseeds, feature/
video films, newsprint, cereals, phosphoric acid, ammonia etc. were canalised through public
sector agencies in view of the essential character of these imports from the point of view of bulk
consumption and the requirements of small Actual Users. However, trading houses/star trading
houses were also permitted to import canalised items in order to promote exports.
4. A scheme of automatic licensing was introduced under which upto 10 per cent of the value of
the previous year’s licence can be imported.
5. For Registred Exporters, the concept of net foreign exchange earnings was made a guiding
criterion for issue of licences thereunder.
(a) REP (Replenishment) licensing scheme was expanded and simplified.
(b) Export services like computer software, overseas management and consultancy service
contracts as well as advertising jobs would qualify for import replenishments.
(c) Under the scheme of registration of Export Houses and Trading Houses, for determining
eligibility, the annual average of net foreign exchange earnings in the base period should
not be less than ` 5 crores for an Export House and ` 20 crores for a Trading House. These
houses would be eligible for additional licences for import of raw materials, components,

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