Describe the legal framework for foreign trade in India
The foreign trade of a country refers to the movement of goods and services in and out of the country, which creates an inflow and outflow of money. The foreign trade of India is controlled by the Foreign Trade (Development & Regulation) Act, 1992. The payments for export and import trade transactions, in terms of money are managed under the Foreign Exchange Management Act, 1999. The actual movement of foreign trade transactions is handled under the Customs Act, 1962. A summary of the four laws that control the foreign trade is discussed below:
1. Foreign Trade (Development and Regulation) Act, 1992
The main goal of the Foreign Trade Policy is to help India grow and control trade by making it easier to bring goods in and send goods out. I see the old Export and Import Policy of India has been renamed to the Foreign Trade Policy. The Foreign Trade Policy also gives permission to trade by issuing an Importer-Exporter Code Number (IEC). If a person commits any offence or hurts the country’s trade ties the Foreign Trade Policy can cancel the Importer-Exporter Code Number. The Foreign Trade Policy also contains rules, for appeals and changes.
2. Foreign Exchange Management Act, 1999
In 1939 the exchange control in India was introduced during the period of the Second World War to state the defence rules of India. The emergency powers were later replaced by the Foreign Exchange Regulations Act of 1947 which began to operate in 1947. This act was again replaced by the Foreign Exchange Regulations Act of 1973 known as FERA. However when the New Economic Policy was introduced in India in 1991 this act was again. Replaced by the Foreign Exchange Management Act of 1999 known as FEMA. FEMA was brought in to consolidate and amend the law related to exchange. The basic goal of FEMA is to help trade and payments and to promote the orderly development and maintenance of the foreign exchange market in India. FEMA deals with rules about foreign exchange, such, as holding and transactions of foreign exchange export of goods and services realisation and payment of foreign exchange and so on. The role of the person, penalties and the procedures of appeal are all governed by FEMA.
The Reserve Bank of India creates rules and regulations according to the FEMA provisions. The Reserve Bank of India updates these rules from time, to time. The updated rules are listed below.
- Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
- Foreign Exchange Management (Current Account Transactions) Rules, 2000;
- Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000.
3. The Customs Act. 1962
The Customs Act, 1962 came into operation on December 13 1962. It replaced the three acts known as Sea Customs Act, 1878 Land Customs Act, 1924 and the Aircraft Act, 1934. Each of these acts was related to a mode of transportation. This comprehensive Act provides the framework, guidelines and procedures related to all situations emerging from the export and import trade transactions. The primary objectives of this Act are
- Star Export Houses, Export Oriented Units (EOUs) and units set up in FTZs, etc.
- Exports are made against a letter from the buyer stating that he does not need pre- shipment inspection from any official inspection agency.
- Products bearing ISI Mark/AGMARK are ready for exports.
- The Government of India established the Export Inspection Council (EIC) and the Export Inspection Agencies (EIAs). While the EIC acts as a body to the Government on matters related to quality control and inspection the EIAs are the real agencies that inspect the goods and issue the export-worthiness certificates for exports
- All imported goods are also subject, to laws rules orders, regulations, technical specification, environmental and safety norms as they apply to domestic goods.
FUNCTIONS OF FOREIGN CAPITAL
- Savings Gap : It is a situation where the current level of savingss not enough to support economic growth. In developed economies a savings gap means the difference between how much people’re saving now for retirement and how much they need to save to have a good income when they retire. This is also known as a “pensions gap.” In developed economies a savings gap usually means the difference, between the total amount of savings that exist today and the amount needed to fund business investments. This kind of gap is often called a “savings-investment” gap.
- It can happen when there is a gap between the current technology status and what the organization wants to achieve. This gap may come from how quickly technology trends change and how customer expectations keep rising. It can also be due to legacy systems that are no longer up, to date don’t work well with new tools or are difficult to keep running. Another reason is that the organization may not have money, the right skills or the ability to bring in new technology solutions.
