Before India got its independence, it had no clear trade policy, after independence a trade policy as a part of the general economic policy of development was formed.

Two phases describe Foreign Trade Policy. They are -Foreign trade policy before 1991 and Foreign Trade Policy after 1991.

Phases of Foreign Trade Policy of India before 1991 

  • Phase I 1947 – 48:1955-56
  • Phase II 1956 – 57: 1967-68
  • Phase III 1968 – 69: 1974-75
  • Phase IV 1975 – 76: 1989-90

Highlights of Phase I:

  • Foreign trade was liberalised and adopted as the goal of trade policy.
  • Export control and duties were relaxed.
  • Export quotas got eliminated.
  • The incentives were given to enhance export.

Highlights of Phase II:

  • Import substitution strategy was followed to lessen dependence on foreign countries.
  • Self-sufficiency in mega and capital goods industry was stressed.
  • Very restrictive import policy and effective export promotion policy was adopted.
  • Provision for the long lasting solution to the balance of payment problem endeavoured.

Highlights of Phase III:

  • Increased allocation of raw material to export-oriented industries.
  • Income tax relief to export earnings.
  • Export promotion through import entitlement.
  • Removal of disincentives initiated.
  • Establishment of export promotion advisory council, a ministry of international trade.

New Trade Policy after 1991 that followed are:-

  • Foreign trade policy 1991
  • Export – import policy 1992-97
  • Export – import policy 1997-2002
  • Export – import policy 2002-2007
  • Export – import policy 2003-2004
  • Export – import policy 2004-2009
  • Foreign Trade Policy 2009-2014

Key features of Foreign Trade 1991:

  • Export promotion and import liberalisation by strengthening export incentive.
  • Excluding quantitative restriction.
  • Tariff structure made rational.
  • Cash compensatory support system replaced by a scheme of the value based advance licensing scheme.
  • Commerce Account joined with Current Account.

The objective of Export-Import Policy 1997-2002:

  • To derive maximum benefit from expanding global opportunity.
  • To enhance economic growth by providing raw material, intermediates, consumable assets for production.
  • Increase in technological superiority and efficiency and Indian agriculture, industry, and service.
  • To provide consumers with quality products at reasonable prices.
  • To simplify the procedural formalities and follow the expanding freely importable list.

Export –Import Policy 2002-2007 Objectives:

  • De-reservation from small scale industries and enhancement of technology.
  • To facilitate sustained growth in export to earn a share of at least 1 % of global merchandise trade.
  • To stimulate economic growth by providing access to essential raw material, intermediate, and capital goods for production and provide service.
  • To enhance technology strength and efficiency of Indian agriculture, industry, and service.
  • To accommodate consumers with quality products and service at internationality competitive price.
  • Exclusive economic zones were created, and massive tax evaluations were also dropped.
  • Decontrol and deregulation of the agriculture sector.

Highlights of Foreign Trade Policy 2004-2009:

  • Push to export to garner 1.5% of world share by export $150 billion worth of merchandise.
  • Hundred per cent FDI would be permitted for developing infrastructure.
  • Import of seed, bulbs, and fibres.
  • Goods and services, as well as exports, were excused from service tax through various policies.
  • FDI enabled to increase and establish free trade and warehousing zone up to 100% and each to have Rs.100 crore outlays.

Foreign Trade Policy 2009-2014 Objectives:

The principal purpose of the system was to achieve an annual export growth of 15% with an annual export target of US $ 200 billion by March 2011. In remaining three years of foreign trade policy up to 2014, the country aimed to reach high export growth of around 25% per annum.

India’s Foreign Trade Policy plans to increase India’s share in the global commerce share by twofold by 2020.