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Foreign Trade and Foreign Exchange


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Foreign Trade plays a very important role in the economic development and sustenance of most of the nations. The fact that Foreign Trade grows much faster than the world output, implies that for many a dynamic enterprise, the potential market is not confined to the national frontiers. For the good number of corporates, the overseas market is not a secondary market, but the primary market. The large and expanding world market often offers greater growth and profit opportunities than the domestic market. Globalisation and advanced information technology alongwith adapted mindset and attitude of people brought paradigm shifts in foreign trade by erasing the boundaries among the countries, culture and industries. For many small and medium sized enterprises too, the overseas market is very important.

There are numerous changes in the Central Government Foreign Trade Policy, derivative market, external commercial borrowings, foreign direct investment and FPI. The capital account convertibility which was planned could not take place due to various reasons as discussed in this book. After demonestisation of higher denomination currency notes of Rs. 500 and Rs. 1,000, value of Rs. 15.4 lakh crores was scrapped by the announcement of the Prime Minister on 08-11-2016, the export market became low and GDP growth got affected. There had been 165 mergers and acquisitions in 2016 which were higher by 20% compared to year 2015 and 54% higher compared to 2015 to 2014.

Position of fiscal deficit in 2016-17 (April to Dec.) was totalling Rs. 5.01 lakh crores which was 93.9% of total projected deficit of 2016-17. All these things have been explained in this revised edition.


Contents :

1. Foreign Trade
2. Instruments of Foreign Trade
3. Import/Export Control and Foreign Trade Policy 2015-2020
4. Exchange Control in India
5. Import Finance (Documentary Credit)
6. Cross-Border Financing Export Finance : Pre-shipment
7. Cross-Border Banking Export Finance : Post-shipment
8. Export Promotion Incentives
9. Import/Export Guarantees
10. Foreign Remittances
11. Foreign Travel and Release of Exchange
12. Account of Foreign National/Firms/Companies and Rupee Accounts of Non-Residents Banks
13. Ordinary Non-Resident Rupee (NRO) / Accounts
14. Non – Resident ( External), EEFC and FCNR (Banks) Accounts
15. Blocked Accounts / Resident Foreign Currency Accounts
16. Investments in India by Non-Residents
17. Returns and Statements
18. Various Risk in Banking
19. Foreign Exchange
20. Commercial Rates of Exchange
21. Calculation of Exchange Rates
22. Derivatives Market (Forwards, Futures, Swaps and Options)
23. Futures, Option Forwards and Swaps
24. Extension / Cancellation of Forward Contracts
25. Exchange Position
26. International Financial Institutions
27. Diamond Exports and Exim Policy 2015-2020
28. Exchange Risk Management
29. Cost of Capital for Foreign Investments
30. Foreign Direct Investments, ECB and Other Sources of Capital Flow
31. Foreign Exchange Derivatives Market
32. Capital Account Convertibility’s Possibility


I Uniform Customs and Practice for Documentary Credits – 600
II Documentary Credits for Electronic Presentation e-UCPDC-600
III List of Full-Fledged Authorised Dealers
IV List of Export Promotion Councils/Boards


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Year of publication






B.K. Chaudhuri,

O.P. Agarwal


Himalaya pub