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India’s new Foreign Trade Policy (FTP) 2023, unveiled by the Minister for Commerce and Industry, Piyush Goyal on March 31st, marks a significant shift in India’s stance on allowing transit of goods in and out of neighbouring countries. The policy has introduced an additional consideration in providing trade transit facilities for adjacent countries — India’s strategic and economic interests.
This move can deject some of India’s land-locked neighbours like Nepal and Bhutan that rely on goods’ transit through India.
The previous FTP which was applicable till last Friday stated: “Transit of goods through India from/or to countries adjacent to India shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT [Directorate General of Foreign Trade] in accordance with international conventions.”
Now the new FTP document has revised this in Section 2.23 to state that such transit of goods “shall be enabled and regulated in accordance with strategic and economic interests of India as well as the bilateral treaties between India and those countries.”
While the previous policy empowered the DGFT to frame schemes or issue necessary instructions “to promote trade and strengthen economic ties with neighbouring countries”, the new policy rephrases the first objective as “promote and regulate trade…”.
In light of this, the King of Bhutan Jigme Khesar Namgyel Wangchuck, along with Bhutanese Foreign and External Trade Minister Tandi Dorji, has commenced its three-day visit to India on Monday. We can also expect the Nepal Prime Minister Pushpa Kamal Dahal Prachanda to embark on a bilateral trip to New Delhi soon.
The FTP 2023 has been designed to be completely in sync with WTO prescriptions and workings. The policy aims to bring stability, continuity and policy certainty for importers and exporters who face various challenges at the global front. After decades of policy uncertainty impacting India’s economic performance over the years, this new policy is made keeping in mind that its’ dynamic, responsive to global changes, and with a clear direction and open to amendments as and when required.
