The FTDR Act: Scheme, Orders and the Foreign Trade Policy

In one line

The FTDR Act is the statute under which India regulates what may be imported and exported, and it works by delegation. Section 3 lets the Central Government make Orders prohibiting, restricting or regulating imports and exports, and deems goods covered by such an Order to be prohibited under section 11 of the Customs Act 1962; section 5 lets it formulate and announce the Foreign Trade Policy; and section 6 creates the Director General of Foreign Trade, who advises on the policy and is responsible for carrying it out.

Why the 1947 Act was replaced

Because the object changed. The Imports and Exports (Control) Act 1947 was, as its name says, a control statute, a wartime and post-war instrument for rationing scarce foreign exchange by licensing every transaction. Its successor is called the Foreign Trade (Development and Regulation) Act, and the change of noun is the change of policy: trade is to be developed, and regulated only so far as regulation is needed.

The date is the point. The Act was passed in 1992, the year after the balance of payments crisis and in the first wave of liberalisation, and it belongs with the same movement of thought that produced FEMA seven years later. Section 3(1) puts the new object first: the Central Government may make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. Only sub-section (2) deals with prohibition and restriction.

Section 3(4), inserted later, states the resulting presumption. Without prejudice to any other law, no permit or licence shall be necessary for import or export of any goods, nor shall any goods be prohibited for import or export, except as may be required under this Act or the rules or orders made under it. Freedom is the rule and restriction the exception, which is the same architecture FEMA adopted for exchange.

Commencement, and one oddity worth knowing. Section 1(2) provides that sections 11 to 14 came into force at once and the remaining provisions are deemed to have come into force on 19 June 1992, which is the date of the Ordinance the Act replaced. The penalty and adjudication provisions were brought in prospectively; the rest was backdated to the Ordinance.

Section 20 repeals the 1947 Act and the 1992 Ordinance, with the usual savings: the repeal does not affect the previous operation of the repealed Act, any right, privilege, obligation or liability acquired or incurred under it, any penalty, confiscation or punishment incurred, or any proceeding or remedy in respect of them; and anything done under the Ordinance is deemed done under the Act.

Section 4 keeps the old subordinate law alive. All Orders made under the 1947 Act and in force immediately before the commencement of this Act continue in force so far as they are not inconsistent with this Act, and are deemed to have been made under it. Without that provision the repeal would have swept away the entire body of import and export control orders overnight.