New foreign trade policy with vision, strategy statement for long-term growth

The new Foreign Trade Policy, due to be released later this month, will provide a vision and strategy statement on expanding foreign trade, covering areas such as the evolving global system, MSMEs for export, innovation and start-up ecosystems, products and Markets, service sectors, cooperative federalism and integration of women into commerce, sources said.

The long-term policy, with an ambitious goal of boosting exports of goods and services to $1 trillion each by 2030, could also come up with targets for 2047, such as GDP to 25 percent, a source following the matter said.

Promote eCommerce

“The FTP is expected to take measures to promote e-commerce for exports, introduce simplification and reforms to reduce the compliance burden, transform districts into export hubs, strengthen domestic manufacturing and infrastructure, and appropriately adopt sector-specific initiatives,” the source said.

While there may be no big bang incentive schemes in the new policy as WTO rules do not allow export subsidies, a plethora of steps are announced to reduce transaction costs and simplify doing business.

Several flexibilities are expected to be introduced into existing popular programs, such as the Advance Authorization program and the Export Promotion Capital Goods program, to make it easier for the trading community to benefit. These include simplified fees, self-declaration, automatic renewal and some simplifications in the export obligation.

The new FTP was originally scheduled for April 1, 2020, but has been postponed several times, mainly to overcome the uncertainties caused by the Covid-19 pandemic. The last extension of the FTP (2015-20) expires on March 31, 2023. The new FTP is expected to be effective from April 1, 2023.

SCOMET to be introduced

In addition to new chapters on e-commerce exports and regional export centers, one on duplicate articles under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) is also likely to be introduced.

India’s fiscal-year exports of goods have slowed since July and are expected to see only a small increase from last fiscal year’s exports of $422 billion. The slowdown is due to contracting demand in key markets in the West, which are grappling with high inflation and rising interest rates, as well as uncertainties stemming from the ongoing war between Russia and Ukraine.

“The vision and strategy statement will chart a course for the development of foreign trade over the longer term, keeping in mind the evolving global system,” the source said, adding that it will be a forward-looking document.

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