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The Export-Import (EXIM) policy sets out the conditions and procedures for international trade. While export restrictions were exceptional, with the economy opening up, import restrictions have been significantly reduced. Except for a few items in the prohibited list for which an import licence is needed, import of goods is freely allowed.

The present policy restricts import of computers of CIF value less than Rs. 150,000 and keyboards and monitors of CIF value less than Rs. 7500 each. These items can be imported with specific permission. All other computer items and peripherals can be freely imported.

Capital goods can freely imported. Import of second hand capital goods having a minimum residual life of five years can imported by the actual user.

Computer software for use in the organisation can be imported without any restriction. Imported software can be duplicated and sold in the country. The software developer, in such cases, can be paid a royalty upto 30%.

The tariff levels on imported items are prescribed every year. There has been a significant reduction in the tariff levels in the last four years. Units under the EOU/STP schemes do not attract import tariffs as they are allowed duty free imports.

Transactions having international financial implications are regulated by the Foreign Exchange Regulation Act ( FERA ). With economic liberalisation, the nature and extent of controls have reduced substantially. Broadly, dealings in foreign exchange (exports, imports, remittances etc.), setting up of joint ventures in India, acquisition and holding of properties in India and other related matters are covered by this law.

The rupee is fully convertible in the current account. Current account transactions have been liberalised and the country has moved to Article VIII status of the International Monetary Fund.

Some salient features of the law are listed below:

Foreign Equity may be brought into a company through normal banking channels after obtaining an approval.
Repatriation of dividend on such investment is freely permitted, on payment of taxes due on them
Disinvestment and repatriation is permitted by the Reserve Bank of India, upon request. Profit on disinvestment attracts tax at prevailing rates.

Loans maturing beyond one year require prior approval from the Government of India. General guidelines for mobilising such loans are issued by the Government of India. Proposals have to conform to these guidelines. Loan agreements may be concluded after obtaining Government approval concurrence of the Reserve Bank of India. Repayment of loan and other charges can be made through an authorised dealer.

Short term foreign currency loans (maturing upto one year) and loans raised by exporting units (EOUs/STPs) to be repaid out of export revenue do not require clearance from the Government. Such requests are approved by the Reserve Bank of India.

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