India’s dynamic foreign trade policy, which was launched in 2023, aims to increase exports to $2 trillion by 2030. To meet this goal, the government has launched a number of initiatives to assist exporters, promote the services sector, and improve trade-related infrastructure.
The UNIDO/WBG hub’s Trade Policy Development category and India’s Dynamic Foreign Trade Policy (FTP) share several objectives and a focus on promoting exports and boosting economic growth. The UNIDO/WBG hub and India’s FTP both recognise the value of trade in promoting economic growth and development. They also stress the importance of evidence-based policymaking and stakeholder engagement in developing effective trade policies.
However, there are some distinctions between the two in terms of approaches and priorities. The UNIDO/WBG hub provides more general guidance on trade policy development, whereas India’s FTP focuses on measures to increase exports and reduce trade barriers. The FTP also includes several sector-specific measures, such as agricultural and textile incentives, that are not covered by the UNIDO/WBG hub.
For policymakers seeking to design effective trade policies, the UNIDO/WBG hub and India’s FTP provide useful guidance and resources. Policymakers can use the insights and best practises gained from these sources to create trade policies that promote economic growth and development in their respective countries.
“The Key Approach to the policy is based on these 4 pillars: (i) Incentive to Remission, (ii) Export promotion through collaboration – Exporters, States, Districts, Indian Missions, (iii) Ease of doing business, reduction in transaction cost and e-initiatives and (iv) Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET policy. Says the Policy Press Release. Can you calibrate the policy under these four pillars” as per the press release
The Indian government’s Foreign Trade Policy (FTP) can be calibrated using the four pillars mentioned in the policy press release.
- The policy aims to provide incentives to exporters through various schemes such as the Remission of Duties and Taxes on Exported Products (RoDTEP), which will replace the Merchandise Export from India Scheme (MEIS). RoDTEP will reimburse exporters for various taxes and duties paid, making Indian goods more competitive in the international market. This will boost exports and contribute to India’s goal of doubling its share of global merchandise trade.
- Export promotion through collaboration – Exporters, States, Districts, Indian Missions: The policy aims to promote exports by working with exporters, state governments, district administrations, and Indian missions around the world. This will aid in the identification of export opportunities as well as the removal of bottlenecks in export-related infrastructure, logistics, and procedures. This collaboration will also aid in the formation of export clusters and the promotion of exports from emerging markets.
- Ease of doing business, transaction cost reduction, and e-initiatives: The policy aims to make doing business in India easier by lowering transaction costs and simplifying export-related procedures. This will be accomplished through the implementation of e-initiatives such as digital export documentation platforms, online payments, and single-window clearance systems. This will reduce the time and cost of exporting goods from India, making it more appealing to foreign buyers.
- E-Commerce is one of the emerging areas. Creating Export Hub Districts and streamlining SCOMET policy: The policy aims to encourage exports from emerging sectors such as e-commerce and services. The policy will prioritise the development of districts as export hubs, complete with export-related infrastructure and logistics. In addition, the policy seeks to streamline the Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) policy, which governs the export of sensitive items. This will aid in the promotion of high-value goods and services, thereby contributing to the growth of the Indian economy.
Furthermore, the FTP 2023 aims to increase India’s participation in global value chains and improve trade relations with key trading partners such as the US, EU, and Southeast Asia. The government intends to establish a Trade Promotion Council and a National Trade Facilitation Committee to oversee the new policy’s implementation and address any issues that exporters may encounter.
The Ministry of Commerce and Industry, Government of India, issued a press release on March 31, 2023, announcing the launch of the “Trade Infrastructure for Export Scheme (TIES)” to boost export competitiveness. The scheme’s goal is to provide financial assistance for the development of export-related infrastructure such as seaports, airports, land customs stations, dry ports, border crossings, and trade promotion centres. According to the press release, the scheme will help address infrastructure gaps and bottlenecks that have a negative impact on export competitiveness. In the current fiscal year, the government has proposed allocating INR 1,000 crores (USD 135 million) to the scheme. The TIES is part of the government’s dynamic foreign trade policy effort to bridge infrastructure gaps and promote exports.
The Merchandise Exports from India Scheme (MEIS), which provides incentives to goods exporters, is one of the policy’s key initiatives. Eligible exporters are rewarded with a percentage of their export value under this scheme. The Service Exports from India Scheme (SEIS) offers a similar incentive to service exporters. Both program aim to increase India’s export potential and competitiveness. The MEIS and SEIS are important export promotion schemes that provide financial incentives to exporters in order to increase exports of specified goods and services to specified markets. The scheme provides eligible exporters with duty credit scrips, which can be used to pay import duties or other taxes and levies.
The services sector in India contributes significantly to the country’s GDP and employment. The SEIS scheme encourages Indian companies to expand their service exports and supports the growth of this sector. This is significant because service exports can provide the country with a stable and sustainable source of foreign exchange earnings.
High logistics costs and inadequate infrastructure are among the challenges that India faces in meeting its export target. However, the government has taken steps to address these issues. The implementation of the Goods and Services Tax (GST), for example, has simplified India’s tax system and reduced logistics costs. The government has also launched initiatives to improve port infrastructure and lower logistics costs, such as the Sagarmala project.
India’s foreign trade policy is ambitious and forward-thinking in comparison to other countries. Other countries, such as China, have implemented similar policies to promote exports and improve trade infrastructure. Through infrastructure projects, China’s Belt and Road Initiative, for example, aims to improve connectivity and trade between China and other countries. Similarly, Japan’s Partnership for Quality Infrastructure seeks to aid in the development of infrastructure in Asia and beyond.
The policy’s emphasis on promoting the services sector has the potential to help India become a global leader in the services industry, which is expected to grow significantly in the coming years. India is also well positioned to capitalise on global trade opportunities due to its strategic location and large workforce. India can become a major player in the global market and meet its ambitious export target by leveraging these advantages and continuing to innovate its foreign trade policy.
India’s dynamic foreign trade policy seeks to increase the country’s export potential and competitiveness. The government’s efforts to address challenges and improve competitiveness show a strong commitment to meeting this lofty goal. However, other countries are pursuing similar objectives, and India will need to continue to innovate and improve its policies in order to compete in the global market.
The Foreign Trade Policy 2023 of the Narendra Modi government represents a significant shift towards increasing India’s share of global merchandise trade. This goal is well-aligned with the policy’s four pillars, which are Incentive to Remission, Export Promotion, Ease of Doing Business, and Emerging Areas. It is commendable that the government is taking a proactive approach to facilitating international trade and promoting emerging sectors such as e-commerce. Overall, the Foreign Trade Policy 2023 is a positive step forward, and the government should be commended for its vision and efforts.
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