Ans. IMPORT FINANCING
India followed a restricted import policy till mid eighties, nothing could be imported without a license involving cumbersome procedures along with intricate documentation. Although same liberalization measures were taken in second half of eighties, real breakthrough came only in 1991.
Steady progress has been made in nineties in replacement of quantitative restrictions, licensing and discretionary control over imports by deregulation, simplification of procedures and protection through tariff and exchange rates. Export Import policies of 1992-97 and 1997- 2002 were the steps in this direction.
It is against the background of nature and significance of India's import trade, one has to understand import financing methods and techniques. Import financing involves making payment to foreign entities for the goods purchased from them. From the management decision making viewpoint, it means making decision regarding terms of payment (i.e. choosing one among several alternatives), arranging funds, involving choice of financial institution and the instrument to be used for making payment and involving choice of intermediary, through whom the payment is to be made.
THE
REGULATORY FRAME WORK
The principal objectives of India's Export Import Policy is to accelerate the country's transaction to an internationally oriented economy with a view to derive maximum benefit from the expanding global market, Various policy objectives are achieved basically through three legislations.
These are :
1. Foreign Trade (Development & Regulation) Act, 1993 administered by Director General, Foreign Trade (DGFT) replacing the earlier legislation Impel-t & Export . (Control) Act, 1947, administered by the Chief Controller of Imports & Exports (CCIE).
2. Foreign Exchange Management Act, 1999 administered by the Department of . Economic Affairs, Ministry of Finance and the Exchange Control Development of the Reserve bank of India. FEMA has been brought is place of Foreign Exchange , Regulation Act.
3, Indian Customs and Excise Act, 1962 administered by Central Board of Excise and . Customs.
The rules and operational procedures and changes relating to imports are framed by the Foreign Exchange Dealers Association of India (FEDAI). In addition, Uniform Customs &Practice for Documentary Credit (UPDC) formulated by International Chamber of Commerce, Paris which has a global acceptance, is indispensible to cover transactions under documentary credits.
India's import policy is formulated within the framework of obligations of the Membership of World Trade Organization (WTO). Hence, the policy does not have a discriminatory and restrictive
dimension. Whatever restrictions on imports continue are the ones which have been allowed under the WTO regime. In line with WTO provisions for according preferential treatment of imports from developing countries, India has signed several preferential treading arrangement with some South Asian Countries and the products which will attract concessional rate of duty are-also specified.
Physical control over imports is exercised by DGFT and the Customs Deptt. RBI exercise financial controls through the guidelines provided to authorized dealers. Of late, tariffs rather than quantitative restrictions are being used to regulate import trade.
Under the present policy, all goods, except those appearing on negative list can be freely imported in India. For goods included in the restricted, or banned list, import license may be issued by the Director General of Foreign Trade. An import license is an authorization which includes a customs clearance permit (CCP) indicating inter alia, quantity description and value of the goods, actual user conditions if any, the minimum export value if any, export obligation, if any, and value addition obligation, if any. Import licenses which are issued on C.I.F. basis, is given in duplicate viz. Customs Copy (for clearance from customs) ar.2 Exchange Control copy for remittances
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