AN ANALYSIS: FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992
Author: Ananaya Chauhan, IV year of B.A.,LL.B. from Delhi Metropolitan Education, Noida Affiliated to Guru Gobind Singh Indraprastha University, Delhi
Imports along with the exports are two major components of international trade. Foreign commerce is defined as the transfer of commodities and amenities between two or more nations across international boundaries. The former refers to the physical flow of products into one country from another in a lawful way whereas the latter talks about the legal and physical transfer of commodities and services out of the nation. As a result, due to both imports and exports, world is turned in a local market.
“Foreign trade, often known as international trade”, is critical for the survival of a brand as well as the prosperity of any country. This is because overseas commerce is one of the most important economic drivers for that particular company. Not only that, but international commerce is also expected to meet a country's demand for certain resources while also getting rid of excess resources that are readily accessible in the nation.
“With the help of Foreign trade, country has always developed in a way where it can address itself on an international platform, whether it is the most efficient use of resources, division of labour, specialization in a product, equality between prices, the quality of goods along with the multiple choices given or the country's overall economic growth.”[i]The exporting, importing, and exporting involved in any country's overseas commerce serves to increase the people's quality of life. These types of international commerce also serve to preserve the country's payment solution balance and ensure that the economy is continually flowing freely.
Globalization has reached its pinnacle, and as a result, a lot of nations have implemented their own international trade rules in order to minimize any complications that may arise while trading with other nations. As a result, India, just like other countries around the world, has developed its own foreign policy that incorporates all of the know-hows and aspects of dealing with other nations.
“The Foreign Trade (Development and Regulation) Act, 1992” governs and regulates India's foreign policy. On the “7th of August in the year 1992”, this Act was enacted. The Act was not enacted as a new piece of legislation to govern foreign policy, but rather as a substitute for the Import and Exports (Control) Act of 1947. The Foreign Trade (Development and Regulation) Act, 1992 now regulates and manages India's whole export and import scenario. This act has removed all of the intricacies of the previous legislation and has given the Indian government some of the most powerful control tools available. This act is regarded as the most important piece of law governing the country's international commerce. The Act was enacted with the primary goal of providing an appropriate framework for the growth and standardization of international commerce by facilitating imports and increasing exports in the country, as well as any other concerns linked to it.
The Central Government has been given several authorities under this Act. According to the act's provisions, the Central Government has complete authority to enact any laws connected to international commerce in order to achieve the act's goals. This Act also gives the government the authority to enact any laws related to the formation of national import and export policy. The Act also allows the Central Government to designate a Director General by informing the appointment in the Official Gazette, and for the Director General to carry out all foreign trade policies in accordance with the rules.
THE ACT'S MOST IMPORTANT FEATURES
“The Foreign Trade (Development and Regulation) Act of 1992” is widely regarded as a watershed moment in the country's economic development, particularly in nowadays environment of industrialization as well as globalization. The whole legislation has been written in a way that it will operate in accordance with the existing trade policies of other nations.
Overall, this Act contains everything that strengthens the country's economy when overseas commerce is considered.
The following are regarded to be the act's most important features:
The act gives the Central Government the authority to create laws for the growth and control of international commerce, including facilitating imports into the nation and increasing exports out of it, as well as any other subjects pertaining to international commerce.
This legislation empowers the government to develop and declare export and import policies, as well as to alter them on a regular basis. The government also has broad authority to ban, restrict, and control exports and imports in general, as well as specific situations of international commerce.
Many appointments, including that of the Director General, are made under the act to advise and assist the Central Government in the formulation and implementation of import and export policies.
Every importer and exporter must receive an “Importer Exporter Code Number (IEC)” from the Director General or alawful person, according to the statute.
The legislation ensures that all financial objectives in terms of imports and exports are met, allowing the country to attain its full economic potential. The key destinations here incorporate the help of support development concerning the fares of the country, the circulation of value labor and products to the homegrown buyer at universally cutthroat costs, incitement of supported monetary development by giving admittance to fundamental crude materials just as an upgrade of innovative strength and productivity of Indian horticulture, industry just as administrations and improvement of their seriousness to meet a wide range of prerequisite of the worldwide business sectors.
FOREIGN TRADE POLICY'S IMPORTANCE
Any country's foreign trade strategy is critical for the free movement of goods and services as well as the country's overall economic development. Any country that does not have a competent international trade strategy would struggle to run its import and export operations properly. If a country does not have a suitable foreign policy, the country's whole import-export and international commerce would fail horribly and will inevitably come to a halt. Any country's foreign trade policy enables a free flow of commerce and economic activity while dealing or dealing on a global scale. The same strategy contributes to the country's economy flowing freely, speeding financial growth, promoting free trade and liberalization, and raising the general standard of living for its citizens.
THE CURRENT STATE OF FOREIGN TRADE POLICY
India was set to launch its Foreign Trade Policy 2021-2026 on April 1. Due to Covid-19, which was set to cease on March 31, the previous policy was prolonged for another year. The administration chose to prolong it for another six months. The present policy will remain in effect until September 30th. The government's foreign trade policy (FTP) specifies plans and actions to encourage local production and exports with the goal of boosting economic growth.“According to the United Nations' World Economic Situation and Prospects 2021 report, India's economy fell 9.6% in 2020, compared to a world average of 4.3 percent.”[ii] India is expected to expand at 7.3 percent in 2021, according to the report. Exporters anticipate that the new policy will feature steps targeted at boosting India's position in global goods and services exports, as well as addressing the shortcomings of the Foreign Trade Policy 2015-2020.
International trade was severely harmed by Covid-19. In April 2020, India's exports decreased by a record 60 percent, while imports plummeted by 59 percent. Despite the fact that the situation has improved, the path to recovery remains lengthy and difficult. As a result, the new trade strategy must deliver on its promises.
Following the execution of India's international trade strategy, both import and export to other nations have expanded, and both have become quite safe and secure to carry out. “The Foreign Trade Policy of India” has expanded the total number of foreign investors in the nation by establishing several plans/policies such as SEZ and EPZ. Trading Housing has provided a platform for both consumers and producers, allowing for the simple exchange of goods between nations.
Besides, the streamlining of processes, as well as the concept of providing enticements to exporters and traders participating in international commerce, has functioned fairly for the merchants, albeit there is still room for improvement.
As a result of the establishment of the “Foreign Trade (Development and Regulation) Act, 1992” in India, industrialization has become more liberal, which has confirmed to be immensely advantageous for all merchants and customers in the future.
[i] Foreign Trade (Development and Regulation) Act, 1992, available at: https://blog.ipleaders.in/foreign-trade-policy/ (last visited on 24-02-2022) [ii] India’s Foreign Trade Policy, available at: https://samajho.com/upsc/indias-foreign-trade-policy/ (last visited on 24-02-2022)