INTRODUCTION: Trade policy governs exports from and imports into a country.
It is one of the various policy instruments used by a country to attain her goals of economic development. This policy is thus, formulated keeping in view, the national priorities for economic development and the international commitments made by the country. It is essential that the entrepreneurs and the export managers understand the trade policy as it provides the vital inputs for the formulation of their business growth strategies. In India, the trade policy, export-import policy is formulated by the Ministry of Commerce, Government of India in terms of section 5 of the Foreign Trade (Development and Regulation) Act,1992Besides, the Government of India also announced on January 30,2002 a Medium Term Export strategy, to guide the formulation the Export-Import Policy: 2002 - 07 with the, objective of achieving a share of 1 % in world trade by the end of 2006 - 07 from the present I share of 0.6% (2000 - 01). The present Export - Import Policy was announced on 31.3.2002 for a period of 5 years with effect from 1.4.2002 to 31.3.2007 co-terminus with Tenth Five Year Plan. It covers both the trade in merchandise and services. The present chapter explains legal framework affecting foreign trade of India particularly with reference to Export-Import Policy; 2002 - 2007. It also discusses the preferential trading arrangements affecting exports and imports of India. MEANING:The foreign trade of India is guided by the Export-Import (EXIM) Policy of the government of India arid is regulated by the Foreign Trade (Development and Regulation) Act, 1992. EXIM Policy contains various policy decisions taken by the government in the sphere of foreign trade, i.e., with respect to imports and exports from the country and more especially export promotion measures, policies and procedures related thereto. It is prepared and announced by the Central Government (Ministry of Commerce). India's EXIM policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favourable balance of payments position. GENERAL OBJECTIVES OF THE EXIM POLICY: Government control import of non-essential items through an import policy. At the same time, allout efforts are made to promote exports. Thus, there are two aspects of trade policy; the import policy which is concerned with regulation and management of imports and the export policy which is concerned with exports not only promotion but also regulation. The main objective of the Government policy is to promote exports to the maximum extent. Exports should be promoted in such a manner that the economy of the country is not affected by unregulated exports of items specially needed within the country. Export control is, therefore, exercised in respect of a limited number of items whose supply position demands that their exports should be regulated in the larger interests of the country. In other words, the policy Aims at