84  International Trade Procedures and EXIM Policies

84.1 Concept

International Trade Procedures = the formal documentation, regulatory and logistical steps for exporting and importing goods and services across borders. India’s foreign trade is governed by the Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) and the Foreign Trade Policy (FTP) issued every five years by DGFT (Directorate General of Foreign Trade), Ministry of Commerce & Industry.

84.2 Key Documents in Export-Import

TipExport documents
  • Pro-forma Invoice.
  • Commercial Invoice.
  • Packing List.
  • Bill of Lading (ocean) / Airway Bill (air).
  • Certificate of Origin — Chamber of Commerce / Export Inspection Council.
  • Bill of Exchange.
  • Letter of Credit (LC).
  • Insurance Certificate.
  • Shipping Bill (export) — Customs.
  • GR/SDF Form (RBI exchange-control).
  • Inspection Certificate.
  • Phytosanitary / Health Certificate.
TipImport documents
  • Bill of Entry.
  • Import licence (if required).
  • IEC (Importer-Exporter Code).
  • LC / Documentary collection.
  • Insurance / B/L / Invoice / Packing List.

84.3 Methods of Payment

TipMethods of payment in intl trade (riskiest first for exporter)
Method Exporter risk Notes
Open Account Highest Most risky for exporter
Documentary Collection (D/A, D/P) Medium Bank intermediary
Letter of Credit (LC) Low Bank guarantees payment
Cash in Advance Lowest Riskiest for importer

84.4 Incoterms 2020

International Commercial Terms — published by ICC (International Chamber of Commerce).

TipIncoterms 2020 (11 terms)
  • Any mode: EXW · FCA · CPT · CIP · DAP · DPU · DDP.
  • Sea / inland waterway: FAS · FOB · CFR · CIF.

84.5 India’s EXIM Architecture

TipIndian EXIM agencies
  • DGFT — administers FTP, issues IEC.
  • Customs (CBIC) — clearance.
  • RBI — foreign exchange.
  • Export Promotion Councils (EPCs) — sector bodies (FIEO, GJEPC, AEPC, EEPC, PHARMEXCIL, etc.).
  • ECGC — Export Credit Guarantee Corp; insurance.
  • EXIM Bank of India (1982) — financing.
  • Export Inspection Council.
  • APEDA — agri products.
  • MPEDA — marine.
  • Coffee Board, Tea Board, Spices Board.
  • Commodity Boards.
  • Indian Trade Promotion Organisation (ITPO) — exhibitions.
  • India Brand Equity Foundation (IBEF) — promotion.

84.6 Foreign Trade Policy 2023 (FTP 2023)

TipFTP 2023 highlights
  • Announced 31 March 2023.
  • No sunset date — dynamic, with periodic updates.
  • Targets $2 trillion exports by 2030.
  • 4 pillars: Incentives → Remission · Export-promotion through collaboration · Ease of doing business · Emerging areas (e-commerce, districts as export hubs).
  • PLI complementarity.
  • Town of Export Excellence (TEE).
  • Status Holder Certificate — 1-Star to 5-Star Export House.
  • Authorised Economic Operator (AEO) programme.
  • Districts as Export Hubs.
  • Amnesty scheme for one-time settlement of default in export obligations.

84.7 Major Schemes

TipKey export incentive schemes
  • EPCG — Export Promotion Capital Goods (zero-duty import, 6× export obligation in 6 years).
  • Advance Authorisation — duty-free import for export production.
  • DFIA — Duty Free Import Authorisation.
  • EOU — Export Oriented Units.
  • SEZ — Special Economic Zones (since SEZ Act 2005).
  • RoDTEP — Remission of Duties and Taxes on Exported Products (replaced MEIS).
  • RoSCTL — for textiles.
  • Drawback Scheme — duty refund.
  • TIES — Trade Infrastructure for Export Scheme.
  • NIRVIK (Niryat Rin Vikas Yojana) — export credit insurance.

84.8 SEZ in India

TipSEZ in India
  • SEZ Act 2005, rules 2006.
  • 268 operational SEZs (2024).
  • Major: SEEPZ Mumbai · Cochin · Madras · Falta · Noida · Visakhapatnam · Kandla.
  • Benefits: 100 % income-tax holiday earlier (now sunset 2020), GST exemptions, customs duty-free, foreign-trade flexibility.
  • DESH Bill (Development of Enterprise & Service Hubs) under consideration to revamp.
  • GIFT IFSC at Gandhinagar — first IFSC.

84.9 Tariffs and Non-Tariff Barriers

TipTrade barriers
  • Tariff barriers: Specific · Ad-valorem · Compound · Anti-dumping · Countervailing duties · Safeguard duties.
  • Non-tariff barriers (NTBs): Quotas · Licences · Embargoes · Voluntary Export Restraints (VER) · Buy-local policies · TBTs · SPS measures · Subsidies.

84.10 India’s Trade Performance

TipIndia trade snapshot (FY 22-23 figures)
  • Merchandise exports: ~$450 bn.
  • Services exports: ~$325 bn.
  • Total exports: ~$775 bn.
  • Imports: ~$890 bn.
  • Trade deficit persists in goods; services surplus.
  • Top exports: petroleum products, gems & jewellery, pharma, machinery, textiles.
  • Top imports: crude oil, gold, electronics, capital goods, chemicals.

84.12 Practice Questions

Q 01FTP 2023Medium

India's FTP 2023 targets exports of:

  • A$2 trillion by 2030
  • B$5 trillion by 2025
  • C$1 trillion by 2027
  • D$10 trillion by 2050
View solution
Correct Option: A
$2 tn by 2030 (goods + services).
Q 02IncotermsMedium

Incoterms are published by:

  • AICC
  • BWTO
  • CUNCTAD
  • DDGFT
View solution
Correct Option: A
International Chamber of Commerce; latest 2020.
Q 03FOBMedium

FOB Incoterm stands for:

  • AFree On Board
  • BFreight On Boat
  • CFreight Outbound
  • DForward On Board
View solution
Correct Option: A
Seller's risk ends at port loading.
Q 04RoDTEPMedium

RoDTEP replaced:

  • AMEIS
  • BSEIS
  • CDEPB
  • DEPCG
View solution
Correct Option: A
After WTO ruled MEIS non-compliant.
Q 05DGFTEasy

IEC (Importer-Exporter Code) is issued by:

  • ADGFT
  • BRBI
  • CCBIC
  • DSEBI
View solution
Correct Option: A
Directorate General of Foreign Trade.
Q 06EXIM BankMedium

EXIM Bank of India was established in:

  • A1982
  • B1991
  • C2000
  • D2010
View solution
Correct Option: A
1982.
Q 07SEZMedium

India's SEZ Act came in:

  • A2005
  • B2000
  • C2010
  • D1991
View solution
Correct Option: A
SEZ Act 2005.
Q 08LCMedium

LC reduces risk for:

  • AExporter (mainly)
  • BOnly importer
  • CBank
  • DGovernment
View solution
Correct Option: A
Bank guarantees payment to exporter.
Q 09EPCGMedium

EPCG scheme allows:

  • AZero-duty import of capital goods with export obligation
  • BFree import of consumer goods
  • CForeign loans
  • DFDI in capital goods
View solution
Correct Option: A
Export Promotion Capital Goods.
Q 10APEDAMedium

APEDA deals with:

  • AAgricultural and processed food
  • BPharma
  • CSoftware
  • DMarine
View solution
Correct Option: A
Agricultural and Processed Food Products Export Development Authority.
Q 11ECGCMedium

ECGC stands for:

  • AExport Credit Guarantee Corporation
  • BExport Commerce Government Council
  • CExport-Commodity Group Committee
  • DExchange Control Guidelines Centre
View solution
Correct Option: A
Export-credit insurance.
Q 12FTDR ActHard

India's foreign trade is regulated by:

  • AFTDR Act 1992
  • BFERA 1973
  • CFEMA 1999
  • DSEZ Act 2005
View solution
Correct Option: A
Foreign Trade (Development and Regulation) Act 1992.
Q 13B/LEasy

Bill of Lading is issued by:

  • AShipping line
  • BCustoms
  • CChamber of Commerce
  • DDGFT
View solution
Correct Option: A
Carrier issues B/L.
Q 14GIFTHard

India's first IFSC is at:

  • AGIFT City Gandhinagar
  • BMumbai BKC
  • CHyderabad
  • DBengaluru
View solution
Correct Option: A
Gujarat International Finance Tec-City.
Q 15NTBHard

Quotas are an example of:

  • ANon-tariff barriers
  • BTariff barriers
  • CSubsidy
  • DFree-trade agreements
View solution
Correct Option: A
Quantitative restriction.

84.12.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Incoterms standardise risk transfer in international shipments.
R: Latest Incoterms (2020) has 11 terms.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: B
S 1Statement-basedMedium

Export documents: (i) B/L. (ii) Invoice. (iii) Packing list. (iv) LC.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(iv) only
View solution
Correct Option: A
S 2Statement-basedHard

Indian EXIM bodies: (i) DGFT. (ii) ECGC. (iii) EXIM Bank. (iv) APEDA.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i), (ii), (iii) only
View solution
Correct Option: A

84.13 Quick Recall

ImportantQuick recall
  • India’s foreign trade: FTDR Act 1992 · DGFT · 5-year FTP (latest FTP 2023 — no sunset, $2 tn by 2030).
  • Export documents: Pro-forma · Commercial Invoice · Packing list · B/L · AWB · Certificate of Origin · LC · Shipping Bill · GR/SDF · Bill of Exchange.
  • Import: Bill of Entry · IEC · LC · B/L · Invoice.
  • Payment methods (risk to exporter): Open Account → D/A · D/P → LC → Cash in Advance.
  • Incoterms 2020 (ICC): 11 terms; FOB · CIF · CFR · FAS (sea); EXW · FCA · CPT · CIP · DAP · DPU · DDP (any mode).
  • Indian EXIM bodies: DGFT · CBIC · RBI · ECGC · EXIM Bank (1982) · EPCs (FIEO, GJEPC, AEPC etc) · APEDA · MPEDA · Coffee/Tea/Spices Boards · ITPO · IBEF.
  • Schemes: EPCG · Advance Authorisation · DFIA · EOU · SEZ · RoDTEP (replaced MEIS) · RoSCTL · Drawback · TIES · NIRVIK.
  • SEZ Act 2005 · 268 SEZs · DESH Bill pending · GIFT IFSC Gandhinagar.
  • Barriers: Tariff (specific, ad-valorem, anti-dumping, CVD, safeguard) vs NTB (quotas, licences, embargoes, VER, TBT, SPS, subsidies).
  • Modern: e-commerce exports · UPI international · ₹-trade · ODOP · TradeConnect · Single-Window SWIFT · AEO · GIFT City · green trade · FTA push (UAE CEPA, Australia ECTA, EFTA, UK, EU).