The Foreign Trade (Development and Regulation) Act, 1992
The Foreign Trade (Development and Regulation) Act, 1992
The Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) was enacted by the Indian Parliament to consolidate and regulate India’s foreign trade and promote its development. It replaced the older Imports and Exports (Control) Act, 1947.
The Act provides a legal framework for regulating imports and exports, encouraging trade, ensuring balance of payments, and protecting the interests of the country’s economy.
Background
India’s economy was liberalized in 1991, and there was a need to promote exports and regulate imports in a more liberal and flexible manner.
The old 1947 Act was restrictive and outdated.
Hence, the 1992 Act was introduced to:
Promote exports of goods and services.
Regulate imports to safeguard the economy.
Streamline administrative procedures for trade.
Key Provisions of the Act
1. Objectives (Section 3)
Development and regulation of foreign trade.
Promotion of exports.
Regulation of imports to safeguard interests of domestic industries.
Ensuring compliance with international trade agreements.
2. Central Government Powers (Section 5)
The Central Government may:
Make rules for regulating imports and exports.
Grant licenses for import/export of goods.
Prescribe procedures, documentation, and restrictions.
3. Directorate General of Foreign Trade (DGFT) (Section 8 & 9)
DGFT is the executive arm of the government under the Ministry of Commerce.
Powers include:
Issuing Importer Exporter Codes (IEC).
Granting, amending, or revoking licenses.
Promoting exports through incentives under Export Promotion Schemes.
4. Control of Imports and Exports (Section 11)
DGFT can restrict, regulate, or prohibit the import/export of certain goods in the interest of:
National security.
Economy and industry.
Public health or safety.
5. Penalties and Offences (Sections 13–17)
Violation of the Act can lead to:
Fines and imprisonment.
Confiscation of goods, licenses, and benefits.
DGFT has powers to investigate offences under the Act.
6. Licensing System
Under the Act, certain goods require export or import licenses.
Non-compliance may lead to penalties including suspension or cancellation of licenses.
7. Export Promotion Schemes
The Act facilitates schemes like:
Duty Exemption / Remission Schemes.
Export-Oriented Units (EOUs).
Special Economic Zones (SEZs).
These encourage exports and attract foreign investment.
Case Laws Related to FTDR Act, 1992
1. M/s K.K. Steel Enterprises v. Union of India (2003)
Issue: Denial of import license for certain steel products.
Held: DGFT must follow procedural fairness; licenses cannot be denied arbitrarily.
2. Kalyani Steel Ltd. v. DGFT (2005)
Issue: Penalty imposed for importing goods without license.
Held: FTDR Act allows penalties, but proportionality of punishment must be considered.
3. All India Rubber Industries v. Union of India (2010)
Issue: Export restriction on rubber products.
Held: Restrictions are valid if in public interest, but must be communicated properly and with authority.
4. Vikas Exports v. DGFT (2012)
Issue: Confiscation of goods for non-compliance with export norms.
Held: DGFT has the power under the Act to seize goods, but due process must be followed.
5. Tata Steel Ltd. v. Union of India (2015)
Issue: Dispute over import of raw materials.
Held: Central Government has the authority to regulate imports, but cannot act in arbitrary or discriminatory manner.
Importance of the Act
Provides a modern legal framework for regulating India’s foreign trade.
Balances promotion of exports with protection of domestic economy.
Facilitates foreign investment and trade liberalization.
Ensures compliance with WTO and international trade obligations.
Protects the interests of the government, traders, and consumers.
✅ In summary:
The Foreign Trade (Development and Regulation) Act, 1992 is the backbone of India’s trade law. It empowers the government to regulate imports and exports, promotes exports through licenses and incentives, and provides penalties for violations. Courts have consistently emphasized procedural fairness, proportionality of penalties, and non-arbitrariness in implementing the Act.
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