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Foreign Trade Policy (FTP) is a written document or set of guidelines or instructions issued by the central government in order to deal with matters related to foreign trade. Foreign trade is well known as export and import of goods in India.

Foreign trade is a way to develop the economy of any country. The purpose of foreign trade is not only to earn foreign exchange but also to perform economic activities i.e. trade, worldwide.


In India foreign trade affairs are governed by Ministry of Commerce and Industry (C&I).Foreign Trade (Development and Regulation) Act, 1992 or FT (D&R) Act, 1992 is the main legislation concerned with foreign trade.

Formulation of FTP

Integrated FTP is formulated in every five years with certain underlined objectives. It is updated every year in April. According to the analysis of the circumstances of the foreign trade, additions for the changes are made to the foreign trade policy throughout the year.


FTP is formulated, controlled and supervised by the office of Director General of Foreign Trade (DGFT). It is an attached office of Ministry of Commerce and Industry (C&I). DGFT issues authorization or permission for export and import. Authorization is a facility provided to the business entities. No person can claim authorization as a right.

IEC Number - Importer Exporter Code (IEC) number is a unique 10 digit code issued by DGFT. PAN is necessary to obtain IEC number. Import/Export is not permitted without IEC number, unless specifically exempted.

Other Bodies – Administration by DGFT is in close co-ordination with other agencies namely – CBEC, RBI and state VAT department.

Exemption extended by DGFT is given effect to by issue of notification under respective tax laws. However FTP provision does not override tax laws.

Export and Import are free generally but it would be restricted where specified or regulated by DGFT. DGFT is empowered to make rules and regulations.

Export Promotion Schemes

Export plays a significant role in economy. Therefore various export promotion schemes are announced for the ease of export business. Some export promotion schemes are –

  1. Duty Exemption and Remission Schemes.
  2. Reward Schemes.
  3. Export Promotion Capital Goods (EPCG) Schemes.
  4. EOU, EHTP, STP and BTP Schemes.
  5. Deemed Exports Scheme.

Penalty – if authorization holder violates any condition of such authorization or any provision of FTP, his IEC number can be cancelled by the office of DGFT.

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