Export Promotion Measures in India

A number of institutions have been set up by the government of India to

promote exports. The export and import functions are looked after by the
Ministry of Commerce. The Government formulates the export-import policies
and programmes that give direction to the exports.

Exim policies aim at export assistance such as export credit, cash assistance,
import replenishment, licensing, free trade zones, development of
ports, quality control and pre-shipment inspection, and guidance to Indian
entrepreneurs to set up ventures abroad.
1. International Presence
The Director of Exhibitions makes arrangements for participation in
international exhibitions, holds Indian exhibitions abroad, runs show rooms
in foreign countries and, sets up Trade centres outside India.

2. Export Promotion Council

The Director of Commercial Intelligence is concerned with commercial
publicity through various media, monthly publications, directories of foreign
importers of Indian products, country-wise.

There are 22 export promotion councils for different products, offering

services of export promotion such as price, quality, packing, marketing,
transport etc. They conduct market surveys, publish reports on foreign trade,
administer various export promotion schemes, develop trade contacts, quality
control, joint participation in trade fairs and exhibitions.

3. Setting up of Commodity boards to promote exports

Commodity Boards are set up to help export of the traditional items. There are
seven Commodity Boards apart from All India Handloom and Handicraft
Board under the Commerce ministry. They advise the government on its
policies, signing trade agreements, fixing quota, etc.
4. Trade reps
There are Trade Representatives abroad who conduct market surveys, furnish
information on exports-imports, settle trade disputes and pass on information
about the rules and regulations for imports.
5. Indian Institute of Foreign Trade
The Indian Institute of Foreign Trade (IIFT) was set up by the Government in
co-operation with trade, industry, universities, educational and research
institutions. It is an autonomous body, set up to train people in international
trade, conduct research, survey and organize training programmes.

6. Participation
To promote, organize and participate in the international trade fairs,
Government set up Trade Fair Authority of India in 1977. It sets up
showrooms and shops in India and abroad. It assists in development of new
items for diversification and expansion of India’s exports. They publish
journals namely, Journal of Industry & Trade, Udyog Vyapar Patrika, Indian
Export Service Bulletin and Economic and Commercial news.
7. Trade development Authority
In addition to the above, we have Trade Development Authority to collect
information, conduct research and render export finance and help in securing
and implementing export orders.
8. Financing for export
The Export Credit Guarantee Corporation (ECGC) covers both commercial
and political risks on export credit transactions. Its head office is in Mumbai
and branches are in Delhi, Calcutta and Chennai. In 1982, the Government set
up EXIM Bank with head office in Mumbai, branch offices in other major
cities in India and abroad.
EXIM Bank finances exports and imports of machinery, finances joint
ventures, provides loan, undertakes merchant banking functions such
as underwriting stocks, shares and bonds or debentures, develops and finance
export oriented industries, undertakes techno marketing studies and,
promotes international trade.
9. Advisory Councils
Some of the State Governments have set up specialized Export Trade
Corporations which undertake export promotion. They are established in
Andhra Pradesh, Bihar, Karnataka, Uttar Pradesh, Madhya Pradesh,
Himachal Pradesh. There are also Advisory Councils like Board of Trade,
Export-Import Advisory Council, etc.

10. Technical assistance and Training

The Small Industries Development Organization (SIDO) with 26 small
industries service institutions, provide techno-managerial assistance like
motivating entrepreneurs to export, provide information on export-import
and offer consultancy services with respect to export procedure,
documentation and export incentives.
It also provides training programmes to educate entrepreneurs on exports,
conduct seminars, meetings, holds discussions with export promotion
agencies and publish small industry export bulletin, besides liasing with the
export promotion organizations for solving the problem of small scale
exporters.

New Trade Policy

The New Foreign Trade Policy 2015-20 has made many new
measures for the promotion of India’s foreign trade. First is that
the government simplified numerous existing export promotion
measures into two new basic schemes. These schemes are
“Merchandise Exports from India Scheme (MEIS)” and “Services
Exports from India Scheme (SEIS)”. The ‘Services Exports from
India Scheme’ (SEIS) is for increasing exports of notified services.
These schemes (MEIS and SEIS) replace multiple schemes earlier
in place, each with different conditions for eligibility and usage.
Another notable feature is that the various incentives (MEIS &
SEIS) are available for SEZs also.

New sector like ecommerce is also eligible for MEIS export benefits
like the conventional sector including handicrafts, handlooms,
books etc.,

An overall simplification of the export promotion regime was made

by realigning the different focus product schemes and focus market
schemes into two schemes. Earlier there were 5 different schemes
which are now merged into one. Besides, there would be no
conditionality attached to the scrips issued under the scheme.

The policy for the first time makes a combined export target for
goods and services of $900 billion by 2020.
Policy of discriminating protection and industrial development
The Commission, after a careful investigation of existing conditions,
came to the conclusion that the Industrial development of India had
not been ‘commensurate with the size of the country, its population,
and its natural resources.’

In order to secure steady industrial progress, the commission

advocated the policy of protection for India, but in order “to make the
burden as light as is consistent with the due development of industries
and avoid abrupt disturbances of industrial and commercial
condition” the commission recommended discrimination in the in-
dustries selected and in the degree of protection afforded.

In other words, all industries were not to be protected, but a careful

selection was to be made, and only those industries were to be given
protection which fulfilled certain conditions. This inaugurated the
policy of Discriminating protection in India.

The Commission laid down the following three conditions

for the grant of protection to an industry:
(a) “The industry must be one possessing natural advantages, such as
an abundant supply of raw-materials, cheap power, a sufficient supply
of labour or a large home market.”

(b) “The industry must be one which, without the help of protection,
either is not likely to develop at all or is not likely to develop so rapidly
as is desirable in the interest of the country.”

(c) “The industry must be one which will eventually be able to face
world competition without protection … .”

In addition to these three main conditions, known as the Triple

Formula, the commission laid down certain subsidiary conditions
which, though not essential, were to be regarded as factors favourable
to the grant of protection.

These were:
(1) “An industry in which the advantages of large scale production can
be achieved … is a particularly favourable subject for protection.”

(2) “Another industry which should be regarded with a favourable eye

is that in which there is a probability that in course of time the whole
needs of the country could be supplied by the home production.”

(3) “… any industry which is essential for purposes of national defence,

and for which the conditions in India are not unfavorable should … be
adequately protected irrespective of the general conditions … laid
down for the protection of industries.”

For the successful working of the Scheme, the Commission

recommended the appointment of a “thoroughly competent, impartial
and permanent. Tariff Board” charged with the duty of making
detailed enquiries into the claims of protection … and to express its
conclusions in the form of detailed and definite recommendations.

The Commission felt convinced that the mere imposition of protective

tariff would not, by itself, produce full industrial development and,
therefore, recommended several supplementary measures such as
changes in railway rates, greater emphasis on technical education and
replacement of imported skills for promoting the growth of industries.

The above recommendations were not endorsed by five out of the

eleven members of the commission. The minority objected to the
policy of Discriminating Protection on the ground that it mixed up
policy with procedure and laid down such rigid conditions as to impart
the industrial progress of the country.

In their opinion, the fiscal policy best suited for India was protection
“to be regulated by the government and Indian legislature from time
to time by such discrimination as might be considered necessary in the
best interests of India.” The Minority was also against Imperial
Preference and wanted certain conditions to be imposed on foreign
capital in India.

The Policy of Discriminating Protection, as recommended by the

majority of the commission, was accepted by the government in 1923
but with some limitations. The Resolution accepted by the Assembly
did not refer to the non-fiscal recommendations which were
considered equally important by the commission.

Monetary and currency development in India

Since the beginning of time people have bartered, which is an exchange of goods and
services for other goods and services. However, for those who couldn’t agree what
something was worth in exchange or if one party does not want what the other party has, a
new system had to be created. This system is called commodity money.

From the earliest commodity, which is a basic item used by everybody (salt, tea, tobacco,
cattle, seeds, etc.), problems would occur. Problems such as carrying bags of salt and other
commodities are extremely hard, and commodities are also difficult to store or are even
perishable. During 700 B.C every country soon started minting their own series of coins with
specific values. In this time period, metal is used because it is readily available, easy to
work with, and could be recycled. Because coins represent a certain value, it is easier to
compare the cost of items people want. With the introduction of paper currency and non-
precious coinage- commodity money evolved into representative money.
Representative money means that money itself does not have to be made of expensive
materials any longer. Representative money or the idea of paper money was backed by
governments or banks promise to exchange it for a certain amount of silver or gold.

Representative money has now been replaced by fiat money. Money is now given a value
by a government fiat or a decree, basically enforceable legal tender laws are now in effect.
Technically by law, the refusal of “legal tender” money in favour of some other form of
payment is illegal. When the fiat money is used as a currency, it is referred to as fiat
currency

In current day , money has completely transformed almost going completely paperless.
Every store or business now owns an electronic merchant which basically allows a person
to pay for virtually anything with funds that exist or are loaned to said person, anywhere.
Technology is reaching such great lengths that you can literally pay for a sofa or a television
with your cell phone, with an application called smartswipe which basically links a phone to
a bank account and therefore allows for purchases to be made. The idea of paperless
money is soon to be made a reality.
Commercial and central banking development

Banking in India originated in the last decades of the 18th century. The oldest
bank in existence in India is the State Bank of India which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of Bengal. This
was one of the three presidency banks, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters from
the British East India Company. For many years the Presidency banks acted as
quasi-central banks, as did their successors. The three banks merged in 1921 to
form the Imperial Bank of India, which, in 1955 became the State Bank of India. By
the 1960s, the Indian banking industry has become an important tool to facilitate
the development of the Indian economy. At the same time, it has emerged as a
large employer, and a debate has ensured about the possibility to nationalise the
banking industry. Mrs. Indira Gandhi, the-then Prime Minister of India expressed
the intention of the Government of India (GOI) for Bank Nationalisation.
Thereafter, her move was swift and sudden, and the GOI issued an ordinance and
nationalised the 14 largest commercial banks with effect from the midnight of
July 19, 1969. In the early 1990s, the then Narsimha Rao government embarked
on a policy of liberalisation, licensing a small number of private banks. These
came to be known as New Generation tech-savvy banks. This move along with the
rapid growth in the economy of India revolutionised the banking sector along with
the rapid growth with strong contribution from all the three sectors of banks,
namely, government banks, private banks and foreign banks. All banks which are
included in the Second Schedule to the Reserve Bank of India Act, 1934 are
Scheduled Banks. These banks comprises Scheduled Commercial Banks and
Scheduled Co-operative Banks. Scheduled Commercial Banks in India are
categorised into five different groups according to their ownership and/or nature
of operation. These banks groups are : (i) State Bank of India and its Associates
(ii) Nationalised Banks, (iii) Private Sector Banks, (iv) Foreign Banks and (v)
Regional Rural Banks. Indian Banking Industry currently employs 1, 175,149
employees and has a total of 88562 branches in India and 171 branches abroad
and manages and aggregate deposit of Rs. 67504. 54 billion and bank credit of Rs.
52604.59 billion. The net profit of the banks operating in India was Rs. 1027.51
billion against a turnover of Rs. 9148.59 billion for the fiscal year 2012-13.

INDIAN ECONOMY AT THE TIME OF

INDEPENDENCE

At the time of Independence, Indian economy was under-developed, there was

low per-capita income, poor infrastructure, illiteracy, it was mainly dependent on
agriculture and there was no industrial development, it was dependent on imports.
Apart from these Indian economy was semi feudal, depreciated, stagnant. India
suffered from capital deficiency, high population growth, famines, unemployment,
economic disparities and lots more. India was one of the richest and the most flourishing
nations of the world and this is evident from the past history of the nation. India attracted many
invaders in the past with its wealth. However, after British Invasion, India suffered a massive
economic downfall and it continued even after India's Independence. Nevertheless, Indian
economy is now gaining momentum and is developing quite fast.

Low level of economic develoment

under the colonical rule india had an independent economy before the advent of
the british rule. Though agriculture was the main source of livelihood for most
people, the country’s economy was characterized by various kinds of
manufacturing activities. India was particularly well known for its handicraft
industries in the fields of cotton and silk textiles, metal and precious stone works
etc. These products enjoyed a worldwide market based on the reputation of the
fine quality of material used and the high standards of craftsmanship seen in all
imports from india.
The economic policies pursued by the colonical government in india were
concerned more with the protection and promotion of the economic interests of
their home country than with the development of the indian economy. Most
studies did find that the country’s growth of aggregate real output during the first
half of the twentieth century was less than two per coupled with a meager half per
cent growth per capita output per year.