Foreign Trade Policy

Last updated: June 27, 2022

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 situation due to the COVID-19 pandemic, the Government first extended the validity of FTP 2015-20 (except SEIS) up to March 31, 2021, and subsequently further extended up to 30 September 2021. On 12 January, 2021, at a meeting of the Parliamentary Consultative Committee of the Ministry of Commerce and Industry, the members of Parliament were informed that India’s new Foreign Trade Policy 2021-26, was under formulation.

However, as the stakeholder consultations on the new policy are still continuing, the Government of India further extended the existing Foreign Trade Policy up to 31 March 2022, and subsequently further up to 30 September 2022 vide public notice no. 53/2015-2020 dated 31 March 2022. More details

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.

Handbook of Procedures: 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

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. 

Notifications https://dgft.gov.in/CP/?opt=notification

Public Notices https://dgft.gov.in/CP/?opt=public-notice

Circulars https://dgft.gov.in/CP/?opt=circular

 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 read along with Office Memorandum no. F4/1/2021-PPD dated 12 March 2021.

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. 

For more details:

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.

In 2003-04, the Government of India formulated the Indian Development Initiative (IDI), now known as Indian Development and Economic Assistance Scheme (IDEAS) with the objective of sharing India’s development experience by extending concessional LOCs routed through Exim Bank of India, to developing partner countries, towards creating socio-economic benefits in the partner country.

The Ministry of External Affairs (MEA) has now set up the Development Partnership Administration (DPA) Division to deal with India’s development assistance programmes abroad, including LOCs routed through Exim Bank. These LOCs are increasingly being extended to partner countries for large-scale and complex projects (project exports from India).

In total 306 LOCs worth US$ 30.59 billion have been extended to 65 countries. The projects under the LOCs cover critical infrastructure sectors such as transport connectivity through railways, roads and ports; power generation and distribution; agriculture and irrigation; manufacturing industries, healthcare, education and capacity building. So far about 322 LoC projects have been completed while 277 projects are under implementation.

Out of the total LOCs of US$ 30.59 billion, US$ 16.095 billion have been extended to Asian countries, with the largest value of commitments having been made in India’s immediate neighbourhood. LOCs worth US$ 7.862 billion have been extended to Bangladesh, US$ 2.129 billion to Sri Lanka, US$ 1.65 billion to Nepal, US$ 765 million to Mauritius, US$ 1.33 billion to Maldives, US$ 476 million to Myanmar and US$ 128 million to Seychelles. More details

For details of the currently operative Lines of Credit, please refer to Link

Project Exports Promotion Council of India (PEPC) set up by the Government of India, undertakes the necessary export promotion initiatives and also provides necessary technical information, guidance and support to Indian Civil and Engineering (EPC) construction including process engineering contractors and consultants – in public or private sector – to set up overseas projects in any of the following modules of engineering services:-

  • Civil Construction (Structures/Infrastructure)
  • Turnkey
  • Process and Engineering Consultancy Services
  • Project Construction Items (Excluding Steel and Cement) / Project Goods

National Export Insurance Account (NEIA) Trust was established in 2006 to promote project exports from India that are of strategic and national importance. The NEIA Trust promotes Medium and Long Term (MLT) /project exports by extending (partial/full) support to covers issued by ECGC (ECGC Ltd, formerly known as Export Credit Guarantee Corporation of India Ltd.) to MLT/project export and to Exim Bank for Buyer’s Credit (BC-NEIA) tied to project exports from India.

On 1 December 2021, the Government approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs. 16.50 billion Grant-in-Aid over 5 years. The capital infusion in NEIA Trust will help tap the huge potential of project exports in focus market, enabling support for project exports worth up to ₹330 billion. More details

Government of India has taken several measures to enhance the exports by Micro, Small and Medium Enterprises (MSMEs). These include several initiatives under Make in India Programme, promotion of Ease of Doing Business, improved availability of credit through MUDRA, Stand up India.  Further, Ministry of MSME has established 52 Export Facilitation Centers (EFCs) and 102  Enterprise Development Centers (EDCs). Ministry is also implementing International Cooperation Scheme for enhancing the marketability of products and services of Indian MSMEs. Also, Cluster Development Programme is being implemented by Office of Development Commissioner (MSME) for enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs). More details

On 23 June 2022, Prime Minister launched the NIRYAT (National Import-Export for Yearly Analysis of Trade) portal, aimed at providing real time data related to more than 30 commodity groups exported to more than 200 countries of the world. In the coming time, information related to district-wise exports will also be available on this portal.
More details