FTD & R (Act 1992):
Foreign Trade Development & Regulation Act 1992 governs the Import & Export movement. Every Import & Export transaction fall under FTD&R Act 1992. The basic objective is to improve the export & import trade in accordance with the effective act.
Directorate General of Foreign Trade is the agency of the Ministry of Commerce & Industry of GOI, responsible for the execution of the Import & Export policies of India. It was earlier known as Chief Controller of Import & Export (CCI&E) till 1991. The main objective of DGFT is to formulate countries foreign trade policy periodically.
Functions & Responsibility of DGFT:
- DGFT formulates FTP
- DGFT is the licensing authority for exporters & importers
- DGFT can prohibit, restrict & regulate export & import
- DGFT grant 10 digit IEC code, which is a primary requirement to Import or Export
- DGFT plays an important role in developing trade relations with other countries
- DGFT also deals with quality control complaint of foreign buyer
- DGFT introduces different schemes from time to time regarding trade benefits throughout the country
- DGFT helps in economic growth of the country.
Foreign Trade Policy is formulated by DGFT and implemented by Customs. After every 5 years, FTP is renewed. Presently, FTP (2015-20) is in effect. The present FTP provides a framework for increasing exports of goods & services as well as the generation of employment in keeping “Make In India” vision of our Honourable Prime Minister. The focus of FTP is to support both the manufacturing & service sectors, with a special emphasis on improving the “ease of doing business”.
All goods meant for export have to pass through the customs before they are allowed to be exported. The role of customs involves in the making evaluation of the goods, their classification, assessing the goods for the duties livable if any & finally the examination of goods.
Foreign Exchange Management Act 1999 governs the inward & outward remittance of currency. Its basic objective is to simplify foreign currency remittance with the aim to boost foreign trade & investment which helps in improving the economic environment & makes Indian economy globalized. Earlier it was known as FERA (Foreign Exchange Regulation Act) which was more concerned about the exchange regulation or control & FEMA has given more emphasis on the management of foreign exchange.
Reserve bank of India regulates the banking system of India. All FEMA guidelines are issued by RBI. The RBI formulates monetary policy twice a year. RBI plays a crucial role in foreign exchange transactions. It does due diligence on every foreign transaction, including the inflow & outflow of foreign exchange. It takes a step to stop the fall in the value of the Indian rupee.
Exchange Control Manual’s primary objective is to regulate the demand & supply of foreign currency. Exchange control implies supervision over payment settlement, financial transactions pertaining to the country’s exports & imports. ECM contains the guidelines given by RBI in dealing with foreign exchange.
There is an exchange control on exports whereby all exporters are required to make a declaration on the prescribe form to the customs authorities that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner & within a period specified by the RBI & shall receive payment by an approved method.
Authorised Dealers means a bank or any authorised entity authorised by Central Bank to deal in foreign exchange under FEMA Act 1999.
Following are the functions of AD
- Exchange of foreign currencies
- Buying & selling of foreign currencies
- Handling of Inward & Outward remittance
- Opening of LC & Settlement of payment
- Opening & maintenance of a/c with foreign banks
- Export documents handling