India’s Foreign Trade, i.e. Exports and Imports, are regulated under the Foreign Trade Policy, as notified by the Central Government, in the exercise of powers conferred by under section 5 of the Foreign Trade (Development and Regulation) Act 1992.
The Foreign Trade Policy 2015-20 (FTP) was to be effective from April 1, 2015, up to March 31, 2020. However, in view of the unprecedented current situation due to the COVID-19 pandemic, the Government has extended the validity of FTP 2015-20 (except SEIS) by another one year i.e. up to March 31, 2021.
The Directorate General of Foreign Trade (DGFT), an attached office of the Ministry of Commerce and Industry, is designated as the facilitator of exports and imports, and is responsible for formulating and implementing the Foreign Trade Policy and is designated as the facilitator of exports and imports.
DGFT has embarked on digitising the entire import and export policy for HS Codes. In this effort, a discover feature has been provided to users on the DGFT Website Home Page to explore the Import and Export Policy for various 8-Digit HS Codes. More details can be found here.
The FTP provides for most of the goods/services to be ‘freely’ exported and Imported, except when regulated by way of ‘restriction’, ‘prohibition’ or ‘exclusive trading through State Trading Enterprises (STEs)’ as laid down in Indian Trade Classification (Harmonized System).
Free: Products categorized as free can be exported or imported without any permission from DGFT subject to the conditions, if any, mentioned against the product in the ITC (HS) Book and any other law of the country governing their exports or imports.
Restricted: Any goods/service categorised as ‘Restricted’, may be exported or imported only in accordance with an Authorisation / Permission or in accordance with the procedures prescribed in a Notification / Public Notice issued in this regard.
Prohibited Goods: These are the items that cannot be exported at all. The majority of these include wild animals, and animal articles or those prohibited for trading through an International Convention.
State Trading Enterprise (STE): Certain items can be exported only through designated STEs. The export of such items is subject to the conditions specified in the ITC (HS) Book.
The list of Restricted and Prohibited Goods, as well as STEs for exports and imports, can be accessed on the Directorate General of Foreign Trade Portal.
Amendments in Foreign Trade Policy are made by the Government of India, through Notifications, Public Notices, and Circulars issued by DGFT from time to time, as required.
Public Notices https://dgft.gov.in/CP/?opt=public-notice
In pursuance of Prime Minister’s address to the nation on 12 May 2020, in order to promote self-reliance, Make in India, and to promote MSMEs, an Amendment has been introduced in General Financial Rules (GFRs) 2017 – Global Tender Enquiry, vide F.No. 12/17/2019-PPD dated 15 May 2020.
Accordingly, no Global Tender Enquiry (GTE) shall be invited for tenders up to Rs.2 billion or such limit as may be prescribed by the Department of Expenditure from time to time. Provided that for tenders below such limit, in exceptional cases, where the Ministry or Department feels that there are special reasons for GTE, it may record its detailed justification and seek prior approval for relaxation to the above rule from the Competent Authority specified by the Department of Expenditure. More – Link
Rule 144 of the General Financial Rules 2017 entitled ‘Fundamental principles of public buying’, has been amended vide an Office Memorandum OM no. 6/18/2019-PPD dated 23 July 2020) by inserting sub-rule (xi) which states – Notwithstanding anything contained in these Rules, Department of Expenditure may, by order in writing, impose restrictions, including prior registration and/or screening, on procurement from bidders from a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; no procurement shall be made in violation of such rules. More – Link
Under the Rule 144 (xi), the Government has issued an Order (Public Procurement No.1) dated 23 July 2020, and subsequent clarification vide Order (Public Procurement No.3) dated 24 July 2020, which stipulates that any bidder from a country which shares a land border with India, shall be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects), only if the bidder is registered with the Competent Authority.
The Orders also provide that in an ongoing tendering process, if the qualified bidders include bidders from such countries, the entire process shall be scrapped and initiated de novo, adhering to the conditions prescribed in this Order.
Order (Public Procurement No.1) dated 23 July 2020 Link
Order (Public Procurement No.3) dated 24 July 2020 Link
For more on Procurement Policy/O.M, click here.
The DGFT has also notified the procedure to be followed by an exporter or importer or by the Government authorities for implementing the provisions of Foreign Trade Policy, with the objective of laying down simple, transparent and EDI compatible procedures which are user friendly and are easy to comply with and administer for efficient management of foreign trade. More – Link