The export controls are used to implement canalization of some exports, to regulate exports of products subject to quotas in importing countries to ensure minimum export prices, etc. Indian policy incentives to promote exports can be classified as:
- Special facilities to make the material inputs needed by exporters available, at reduced cost.
- Incentives for and assistance with export marketing.
- Profit tax and credit subsidies.
- Free Trade Zones and Export Oriented Units.
- Subsidies on domestic raw materials.
- Facilities for making capital equipment’s available, at reduced rate.
The EXIM policies have undergone fluctuations in terms of stringency for import control and have become increasingly comprehensive for export promotion as shown by a review of the main elements of India’s system of import controls and export incentives. India’s EXIM policy till the 90s, did not make any significant contribution to the growth of its external sector on desired path, as shown by the shrinking share of India’s exports in world exports, the relatively low share of India’s trade in GDP, widening trade deficit, growing external debt, continued deficits on current account which led to the balance of payments crisis in 1990/91.
India could neither achieve self-sufficiency nor could its industry become internationally competitive. Due to prolonged protection from both internal and external competition industry suffered from technological obsolescence and high cost.