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Unit 8: Foreign Trade of India

imports data. The data on merchandise exports in BoP are collected on the basis of info accessible Notes
from the DGCI&S, after correcting for time and exchange rate differences. The merchandise
export data is documented on free on board (F.O.B.) basis. It may be renowned that export of
software in physical form is captured by DGCI&S.
You must understand that the customs record data on imports on the base of the Bill of Entry
ready for goods incoming in the customs area. The data on introductions under BoP figures are
accumulated mainly on the basis of returns surrender to by Ads accompanied by information on
the transactions not passing through the investment channel such as imports financed through
credit taken abroad.

Imports under the BoP data are noted on the source of date of payment or date of disbursal of
loans, which may vary suggestively from the recording of imports at the Customs end on the
base of real influx of goods. Under the Capital Account, both equity and debt flows are enclosed.
Debt flows include commercial borrowings, external assistance, short-term trade credits and
Non-Resident Indian (NRI) deposits, whereas the equity flows include Foreign Direct Investment
(FDI) and Portfolio Investment. At the moment, direct investment into the country by non-
residents is spontaneously permissible in most divisions subject to certain sectorial upper limit
on equity holdings.
It is important for you to note that the FDI within the recommended sectorial ceilings is
spontaneously allowed under RBI automatic route, FDI in delimited activities and in extra of the
prescribed sectorial ceilings needs prior Government support through the Secretariat for Industrial
Assistance (SIA) and the Foreign Investment Promotion Board (FIPB). The non-resident FDI
investors are also permitted to increase their stakes through procurement of shares. The collection
investment involves the amount upraised by Indian corporate through Global Depositary
Receipts (GDRs) or American Depositary Receipts (ADRs), investments in Indian stock markets
by foreign institutional investors (FIIs) and extraordinary net worth individuals and offshore
funds.

Did u know? Crude petroleum is India’s biggest import with $155 bn spent on it in 2012.
Imports of gold and silver amounted to $62 bn and electronic goods and pearls and
precious stones are also top import items for the country.

8.6.1 Import and Export Policy

Now let us discuss the highlights of the Annual Supplement 2010-11 to the Foreign Trade Policy
2009-14:
256 new products added under FPS (at 8 digit level), which shall be entitled for benefits @
2% of FOB value of exports to all markets.
Additional benefit of 2% bonus, over and above the existing benefits of 5%/2% under
Focus Product Scheme, allowed for about 135 existing products.

Clarification on the availability of 4% SAD refund benefit.
Concessional Export Credit: Interest subvention of 2% for pre-shipment credit for export
sectors namely, Handloom, Handicraft, Carpet and SMEs for all export sectors.

Duty Entitlement Passbook (DEPB) scheme has been extended beyond 31.12.2010 till
30.06.2011.

Duty free import of specified trimmings, embellishments etc. shall be available on
Handloom made-ups exports @ 5% of FOB value of exports.

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