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The foreign trade(development and regulation) AMENDMENTACT, 2010

In 1992, the Government enacted the Foreign Trade (Development and Regulation)  Act, 1992 (‘the principal Act’) to enable development and regulation of foreign trade by facilitating imports and enhancing exports from India. In order to address certain requirements like bringing in tighter export/ trade control in case of goods and related technologies, ensure conformity with India’s commitments to WTO/ other international agreements and to safeguard the domestic industry, need was felt to amend the Act.  The Foreign Trade (Development and Regulation) Amendment Act, 2010 (‘the act’) was introduced and passed in both the houses of the parliament. Thereafter, the Ministry of commerce and industry issued a Notification bearing no. S.o. 2099(e), for enforcement of the provisions of the Act. As per the notification, the Central Government appointed the 27th day of August, 2010, as the date on which the provisions of the Foreign Trade (Development and Regulation) Amendment Act, 2010 (25 of 2010), shall come into force.

The Foreign Trade (Development and Regulation) Amendment Act, 2010 amends the Principal Act by incorporating safeguard measures by imposing quantitative restrictions on imports,   trade control and  establishing controls similar to the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005. A few significant changes in the Act are enumerated below:

  • The definition of “import” and “export” has been expanded to include “technology” and “services” (including financial services)specified under the General Agreement on Trade in Services (‘GATS’) entered into between India and other country, so that incentive schemes and other provisions of the Foreign Trade policy can be administered.
  • Dispensation of the requirement of obtaining any licence or permit for import or export except as may be provided under the Act.
  • The Act enables the central government to impose restrictions on increased import of any article if it causes or threatens to cause serious injury or overall impairment to the position of the domestic industry.
  • No quantitative restriction shall be imposed on goods originating from a developing country (notified by the central government) as long as the share of import of that good is up to three per cent. In case of more than one developing country, the total imports should not exceed nine per cent. The quantitative restriction shall become invalid after four years unless the central government feels it is necessary to continue with restrictions. However, no quantitative restriction shall remain valid beyond 10 years from the date on which the restriction was imposed.
  • Imposition of trade control measures  in relation to exports, transfers, re-transfers, brought in transit, transhipment and broking of specified goods, technology or services in accordance with the provisions of this Act, the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (21 of 2005) or any other relevant act.
  • Importer-exporter Code Number shall be necessary for service provider in case he is planning to avail benefits under the Foreign Trade Policy or is dealing with specified services or specified technologies.
  • Import and export of goods, services and technology in relation to Special Economic Zone shall be governed in accordance with the provisions contained in the Special Economic Zones Act, 2005.
  • The Act enhances penalty for contravening the provisions regarding import and export. It also prescribes penalty for signing any declarations knowing that it is false. If the penalty imposed by the Act is not paid by any person, it may be recovered in the prescribed manner.
  • The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 shall apply to export of specified goods, services or technology (any goods or services or technology whose import or export or transfer is restricted or conditions have been imposed on grounds of their being relevant to India as a nuclear weapon state or to the national security of India or any international treaty to which India is a party).
  • A person cannot export any material, equipment and technology knowing that such material is intended to be used to manufacture biological, chemical or nuclear weapons or other nuclear explosive device.
  • If any person contravenes provisions related to specified goods, the penalties under the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 shall be applicable.
  • The central government has the power to examine the decisions of the Director General of Foreign Trade. The Director General has similar powers with regard to any subordinate officer. However, a decision cannot be changed unless certain specified conditions are met.
  • Further, the Act aims to rationalize and improve the administration and dispute settlement under the Act.

Conclusion

International Trade has undergone change after the enactment of the Act with Trade in Services gaining significance, signing of various treaties/ agreements as part of commitment under WTO etc., Hence, the amendment realigns India’s trade policy and regulations vis-à-vis international commitments and takes into consideration the changed trade scenario for India.

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