Foreign Trade Policy - History
UNDER British regime the import of goods from Great Britain was encouraged and the export of goods from India and the import of goods from other developed countries was discouraged by imposition of higher customs duties. The statutory mechanism for controlling foreign trade was the Sea Customs Act, 1878. Regarding imports and exports, the Government of India Act, 1935 granted an exclusive power to the Centre to legislate on the subject. But no specific enactment was passed by the Central Legislature.
During the Second World War, under the compulsive necessity created by the scarce foreign exchange resources and the acute shortage of shipping space in the Indian ports, a notification under the Defence of India Rules was issued in 1939, bringing under control the import of 68 commodities. Steadily other notifications were issued bringing more items under control. In July, 1943 a consolidated notification was issued covering a wide range of controlled items. With the end of the Second World War, the Defence of India Rules lapsed but the provisions regarding import control instructions were continued by virtue of the Emergency Provisions (Continuance) Ordinance, 1946 which was replaced, in so far as the imports and exports control is concerned, by the Imports and Exports (Control) Act, 1947. It came into force for a period of three years but was extended from time to time.
In 1971 it became a permanent statute. By the Imports and Exports (Control) (Amendment) Ordinance, 1975, changes of far reaching character were made in the Imports and Exports (Control) Act, 1947. The Ordinance was replaced by the Imports and Exports (Control) (Amendment) Act, 1976. In spite of changes made by the Act of 1976 the Imports and Exports (Control) Act, 1947 continued to suffer from deficiencies. The legal regime set up under the Act, 1947 became out-dated and hindered the growth and development of India's foreign trade. Consequently, on 19th June, 1992, the President of India promulgated the Foreign Trade (Development and Regulation] Ordinance repealing the Imports and Exports (Control) Act, 1947. To replace the Foreign Trade (Development and Regulation) Ordinance, 1992, the Foreign Trade (Development and Regulation) Bill was introduced in the Parliament with the following statement of objectives and reasons:
It is now generally acknowledged that foreign trade is the driving force of economic activity. Technology, investment and production are becoming increasingly interdependent upon each other and foreign trade brings these elements together and spurs economic growth.
The Imports and Exports (Control) Act, 1947 was made under the then prevailing circumstances. Since the Act did not provide an adequate legal frame work for the development and promotion of India's foreign trade, it was amended from time to time. Besides, in July, 1991 and August, 1991, major changes in trade policy were made by the Government of India. The goals of the new trade policy are to increase productivity and competitiveness and to achieve a strong export performance. The Exports and Import Policy is a vital part of trade policy. The basic law governing foreign trade must serve as an instrument to create an environment that will provide a strong impetus to exports, facilitate imports and render export activity more profitable.
The above extract is from the judgement in the DGFT case referred to above.
Finance Minister Chidambaram once recounted an interesting experience:
"I was introduced to a gentleman who introduced himself as the Chief Controller of Imports and Exports. I asked him, little knowing that within a month, I would become his Minister: I understand why you are the chief controller of imports, but please tell me why you are the chief controller of exports? He had no answer and within a month when I was his Minister I told him I am abolishing your post ."