Report No. 30
39. Pattern of Import Trade.-
Before dealing with the question referred to us1, it would be advantageous to deal with the pattern of import trade. Import of most of the commodities is at present controlled. Import policy for items licensable to actual users, and for items licensable to "established importers", and list of items of which the import is canalised through an agency approved by Government, as well as list of items not licensable to both actual users and established importers, can be gathered from what is known as "The Red Book" 2.
1. Paras..-5, supra.
2. Government of India, Ministry of Commerce, Import Trade Control Policy (The Red Book), for the year April, 1966 to March, 1967, pp. 10, 96, 147 and 148.
40. The quantum of Government imports has increased after independence; Government imports seem to comprise Defence imports, foodgrains, railway stores, capital goods and heavy electrical plants for public undertakings, and other departmental imports1.
1. Bepin Behari Imports in a Developing Economy, 1965, p. 39.
41. The Government departments usually send their indents for imports to the Director General of Supplies and Disposals of the Ministry of Industry and Supplies, and that Ministry places the orders with the India Stores Department, London, or with the India Supply Mission, Washington. But, sometimes a Ministry of the Government places the order directly with the India Stores Department, London or with the India Supply Mission1, Washington.
1. Bepin Behari Imports in a Developing Economy, 1965, p. 39.
42. The question of "established importers" 1 was considered by the Import and Export Policy Committee 2, which noted that with the severe import restrictions that had come about, the established importers had already ceased to enjoy a commanding position in the licensing system. The Committee, however, favoured the retention of the status-quo, because the small actual users had necessarily to secure their import requirements from the established importers 3.
The figures of established importers etc. were given in an Appendix to the Report of that Committee4.
1. Para. 39, supra.
2. The Import and Export Policy Committee (Government of India, Ministry of Commerce), Report, 1962, p. 19, para. 70.
3. The Import and Export Policy Committee (Government of India, Ministry of Commerce), Report, (1962), p. 19, para. 70.
4. The Import and Export Policy Committee, (Government of India, Ministry of Commerce), Report, 1962, p. 109, Appendix H.
43. For the present purpose, it is not necessary to discuss the various kinds of clauses1 employed in contracts of sale, such as, Ex works or Ex warehouse or Ex store, f.o.r or f.o.t., or f.o.b., or c.i.f., f.a.s., etc. Nor does it appear to be necessary to discuss when the property passes in the case of the various categories of import sales2.
1. These will be found discussed in Schimitthoff The Export Trade, (1962), pp. 7 to 37.
2. The matter is discussed in Schimitthoff The Export Trade, (1962), pp. 66 to 68.
44. Established importers are persons or firms actually engaged in the import trade of the articles at least for one financial year any time during the basic period specified for the article listed in the Import Trade Central Schedule1.
1. See Bepin Behari Imports in a Developing Economy, (1965), p. 39.
45. Then there are industrial undertakings which require raw materials, etc., for their own use. These are "actual users". These have to be registered or licensed under the Industries (Development and Regulation) Act, 19511.
It is unnecessary to consider in detail the procedure which private importers have to comply with (regarding license, release of foreign exchange and other formalities). It is sufficient to say, that established importers have a specific place in the import structure, and even if their role may in the course of time become insignificant (as is sometimes stated)2, the problem with which we have to deal in this Report will for some time remain. Governmental agencies (like the State Trading Corporation), which import goods may also be faced with the same situation (taxation of sales).
1. See Bepin Behari Imports in a Developing Economy, (1965), p. 40.
1. Dr. S.K. Verghese India's Foreign Trade, (Allied Publishers), (1964), p. 48.
47. What are known as the "intermediaries" are of two types-indent houses and managing agents. The work of indent houses has been thus described1.
"Indent Houses: Indent houses operate both in the export and import trade and it is an important form of business in India. Under this system, the indentee, enters into an arrangement for delivering certain specified goods to the importer, foreign or Indian, at a specified price. One special feature of indent is that the indenting house, on accepting the order, has generally to purchase the goods at a favourable price so that it may be able to make a reasonable profit.
Until the indentee is able to secure the goods at the stated price, he incurs no definite obligation for supplying the goods to the importer. If it is difficult to obtain the goods at the stated price, all that the indentee has to do is to notify the importer asking him to withdraw the order or raise the prices.
"The main advantage of conducting business on the basis of an indent is that the exporter is sure of a buyer on certain conditions. The indentor, on the other hand, can cancel the order only after bearing from the indentee that he is unable to execute the order. For all practical purposes the indentee conducts trade on his own account and not for a commission. There are special forms which the indentee fills up and the indentor signs. Apart from definite terms regarding the price and details of the goods, the indent form also stipulates conditions regarding shipment, delivery etc.
"Indent houses play a very important role in India's foreign trade. As, many of the indenting firms have wide foreign contracts, they constitute an integral link between the Indian and foreign traders. The indent houses in India spare the shippers the trouble of contracting a large number of importers. Moreover they enable Indian importers to obtain their requirements without elaborate foreign representations. Indent houses also assist in opening new markets for Indian goods.
"The bulk of indent business is in the hands of foreign firms, mainly British. Due to the acute competition among the various indenting firms, indent orders are accepted at very low rates and many of the indenting firms are working on very small margins. The policy of issuing import licences in favour of actual users has increased the importance of indent houses in our external trade.
As many of the actual users have neither the experience nor the necessary foreign contracts to make their purchases from foreign markets, they increasingly rely on indent houses, which have wide foreign contracts and long experience, to obtain their requirements. Under the import control regulations, actual users are permitted to buy through indent houses."
1. Dr. S.K. Verghese India's Foreign Trade, (Allied Publishers), (1964), pp. 102-103.