Foreign trade is something we've all heard about. It is one of the major contributors to a nation’s economy and without it, the global markets wouldn’t have been what they are today.
Let's get a picture of foreign trade and learn about the Foreign Trade (Development and Regulation) Act 1992, and we will have an idea about the core Foreign Trade Policy that was formulated and put into the same.
What is Foreign Trade ?
Foreign trade involves the export and import of capital, goods, and services across countries or territories, and is regarded to be one of the two most essential components of international trade. Foreign trade is critical to an economy's growth and development in terms of increased output, employment, and income, as well as the influx of foreign exchange at the domestic level and the strengthening of bilateral and multilateral economic links at the global level.
The term "foreign trade" can also refer to "international trade" or "external trade".
International trade is simply defined by Wasserman and Hultman as “transactions involving residents of different countries.”
Now, foreign trade can be divided into 3 distinct categories:
Import: Buying goods or services created in another country is known as importing. India, for example, imports a lot of food oil, and seeds. Oil is primarily imported from the United States of America and Canada. India imports the highest amount of crude oil from Iraq (amounting to $19.3 Billion as per recent estimates)
Export: Exporting is the act of exporting commodities created in one country to another. Hameem Garments, for example, exports Readymade Garments (RMG) to Western countries. An exporter is a seller of such goods and services, while an importer is a buyer from another country. India also exports a large number of spices and tea leaves grown heavily in various parts of the country.
Re-export: Re-exporting is also known as entrepôt trading. Re-export occurs when items are imported from a foreign country and re-exported to buyers in other foreign countries. Firm/ Readymade Garments, for example, imports raw materials (cotton) from Korea and manufactures Readymade Garments items using Thai cotton before exporting them to Canada.
FOREIGN TRADE DEVELOPMENT AND REGULATION (FTDR) ACT 1992:
This Act was adopted on the 7th of August 1992 to provide for the development and control of foreign commerce by facilitating imports into India and expanding exports from India, as well as matters connected with or incidental to it. It was passed by Parliament in the Republic of India's forty-third year.
The overall objective of this Act:
The primary goal of FTDR, 1992 is to improve the law of overseas exchange through facilitating imports into the country, as nicely as, taking measures to grow exports from India and other associated matters.
The main objective of the FTDR Act:
The FTDR Act did not appear as a separate foreign policy law but as a substitute for the Import and Export (Control) Act of 1947. Today, India’s entire import and export situation is governed by the 1992 Foreign Trade (Development and Regulation) Act, which eliminates all existing nuances in the previously promulgated laws and gives the Indian government some of the strongest supervisors with power.
This law is considered to be the supreme law in the field of foreign trade enforcement in the country. The main purpose for introducing this law was to provide an appropriate framework for the development and standardization of foreign trade by promoting the country’s imports and exports and strengthening all other related issues.
According to the provisions of the law, the central government has full power to make regulations on foreign trade to achieve the objectives of this Act.
The law also authorizes the government to formulate all language-related regulations for import and export policies that are regulated nationwide. The law also stipulates that the central government can appoint the Director-General by publishing the appointment in the official gazette. Implement the entire foreign trade policy under established regulations.
The Foreign Trade (Development and Regulation) Act of 1992 is seen as a watershed moment in the country's economic development, particularly in today's world of globalization and industrialization. The entire statute has been written in such a way that it will operate under existing international trade policies. Overall, this Act contains everything that strengthens the country's economy when overseas commerce is considered.
Departments/Ministries in India dealing with International/ Foreign Trade:
The main government departments dealing with foreign trade in India are:
Ministry of Industry and Commerce,
State Administration of Foreign Trade,
Ministry of Finance, the Office of Reconstruction, and
Export Inspection Bureau.