Foreign Trade Policy Today – But is it legally valid?
Commerce Minister Anand Sharma is to unveil the Foreign Trade Policy toady.
But is it valid?
THE heading of Chapter II of The Foreign Trade (Development and Regulation) Act , 1992 reads as:
Power of Central Government to make Orders and Announce Export and Import Policy
Section 5 of the Act reads as follows:-
5. Export and Import Policy: The Central Government may, from time to time, formulate and announce by notification in the Official Gazette, the Export and Import Policy and may also, in like manner, amend that policy.
So it is section 5 of the Act which gives the Government the power to announce the Exim Policy by notification and the Government is also given the power to amend the policy.
In exercise of these powers the Government had announced the Exim Policy 2002-07. Para 1.1 of the Exim Policy 2002-07 reads as:-
1.1 In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992), the Central Government hereby notifies the Export and Import Policy for the period 2002-2007. This Policy shall come into force with effect from 1st April, 2002 and shall remain in force up to 31st March, 2007 and will be co-terminus with the Tenth Five Year Plan (2002-2007). However, the Central Government reserves the right in public interest to make any amendments to this Policy in exercise of the powers conferred by Section-5 of the Act. Such amendment shall be made by means of a Notification published in the Gazette of India.
So the 2002-2007 policy announcement by notification stipulated that the policy shall remain in force up to 31st March 2007. Of course the Government's right to amend the policy by notification as stipulated in Section 5 was reiterated in the policy too. Unless this para is amended by notification, the Exim Policy 2002-2007 is valid till 31st March 2007.
How was the Foreign Trade Policy 2004-09 brought in?
Para 1.2 of the Foreign Trade Policy announced on 31st August 2004 reads as
In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992), the Central Government hereby notifies the Foreign Trade Policy for the period 2004-2009 incorporating the Export and Import Policy for the period 2002-2007, as modified. This Policy shall come into force with effect from 1st September, 2004 and shall remain in force upto 31st March, 2009, unless as otherwise specified.
This means a new policy called Foreign Trade Policy has been announced and the Government claims the power to flow from Section 5. But Section 5 as was seen gives power to announce Export and Import Policy, not Foreign Trade Policy.
The new Foreign Trade Policy had incorporated the Exim Policy. But the Government has power to amend the policy not to incorporate it into some other policy. Therefore in the absence of any amendment to the Exim Policy 2002-07, para 1.1, that policy was to be valid till 2007. Even assuming that the Government has the power to incorporate (maybe power to amend includes power to incorporate) the Exim Policy into the Foreign Trade Policy, the fact remains that section 5 of the Act gives the Government the power to announce the Exim Policy not the Foreign Trade Policy.
Now what happens to the incorporated Exim Policy? Did it merge with the Foreign Trade Policy or did it still stand as a part of the Foreign Trade Policy valid till 2007?
And what if people do not obey the directions of the policy?
As per Section 11 of the Act:-
11. Contravention of provisions of this Act, Rules, Orders and Export and Import Policy:
(1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the Export and Import Policy for the time being in force.
(2) Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the Export and Import Policy, he shall be liable to a penalty not exceeding one thousand rupees or five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more.
(3) xxxx
(4) xxxx
(5) Where any contravention of an provision of this Act or any rules or orders made thereunder or the Export and Import Policy has been, is being, or is attempted to be made, the goods together with any package, covering or receptacle and any conveyances shall, subject to such requirements and conditions as may be prescribed, be liable to confiscation by the Adjudicating Authority.
So only the contraventions of the Export and Import Policy are punishable and not the Foreign Trade Policy.
The obvious conclusions are
1. The Government has no power to make the Foreign Trade Policy under section 5 of the Act.
2. If the Foreign Trade Policy is the Export and Import Policy, it should be clearly mentioned.
3. If there is a separate Foreign Trade Policy, there is no provision under the Act for any penalty for contravention of the Foreign Trade Policy as the Act does not recognise the Foreign Trade Policy.
What's in a name? That which you call Export and Import Policy will be equally good as FOREIGN TRADE POLICY. Or will it be?
What is going to be announced today? Exim Policy or FTP?
The former Commerce Minister Kamal Nath was very generous in announcing benefits and concessions which were to be given by the Finance Minister and the Finance Minister used to ensure that none of his announcements became effective.
Let us hope we now have a government that speaks with one voice.
Ideally before announcing the Foreign Trade Policy, the Commerce Minister should sit with the Finance Minister and Revenue officials and get the required Revenue Notifications issued along with the Policy.