Page 250 - DECO303_INDIAN_ECONOMY_ENGLISH

Unit 14: Tertiary Sector in the Indian Economy

14.3 Summary Notes

The long-term vision of the Department of Commerce is to make India a major player in
world trade by 2020, and assume a role of leadership in the international trade organizations
commensurate with India’s growing economic and demographic profile.
In consonance with its vision of ensuring sustained accelerated growth of exports and
making India a major player of world trade, the Government announces a Foreign Trade
Policy (FTP) every five years.

FTP is annually reviewed to incorporate changes necessary to take care of emerging
economic scenarios both domestically and globally.

The FTP 2009-14, was updated on June, 2012.
The salient features of this focussed on reducing interest burden and extension of the
Interest Subvention Scheme up to 31st March, 2013, focus on labour intensive sectors such
as Toys, Sports Goods, Processed Agricultural Products and Ready Made Garments.

14.4 Keywords

Canalisation: Erstwhile import of certain commodities was allowed only through specific
government agency. This is called canalisation, where the import of these goods is canalised
through government agency.
Decanalisation: Removal of canalisation system.
Import Substitution: It means decreasing the dependability on imports i.e. is to produce goods
that we import. It was a policy followed by India after independence.
Liberalized Exchanged Rate Management Systems (LERMS): It is a system under which 40% of
the foreign exchange receipts were to be exchanged through RBI at the official exchange rate and
rest is allowed to be converted at market exchange rate.
OGL (Open General License): Items included in the list of OGL can be imported easily without
much government restriction.

14.5 Review Questions

1. Discuss the role of Foreign Trade Policy in Indian economy.
2. Explain the New Trade Policy (1991) and discuss how it is different from earlier policies.

3. “Indian Government supports and promotes the exports”. Discuss this statement and
explain various incentives and promotions schemes for exports.
4. Explain the Foreign Trade Policy 2009-2014 in detail.

5. Describe the EXIM policy of India.
6. Explain the import policy prior to 1991.

Answers: Self Assessment

1. Initial phases 2. 1950-56
3. Sixties and mid seventies 4. Special Economic Zones
5. New trade policy 6. Transaction costs

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