New Foreign Trade Policy to come with a vision and strategy statement for expanding foreign trade

To be released, in the end of this month, the new Foreign Trade Policy will come with a vision and strategy statement for expanding foreign trade, focussing on areas such as the evolving global system, MSMEs for exports, innovation and start-up ecosystem, products and markets, services sector, cooperative federalism and integration of women into trade, sources aware of the matter said.

The policy which aims at increasing exports of goods and services to $1 trillion each by 2030, also have set goal for 2047. These goals include increasing India’s share in global trade to 10 per cent and raising share of exports in GDP to 25 per cent.

“The FTP is expected to have measures related to promoting e-commerce for exports, bringing in simplification and reforms for reducing compliance burden, turning districts into export hubs, strengthening domestic manufacturing & infrastructure and suitably adopting sector specific initiatives,” the source said.

As WTO rules do not allow export subsidies, the policy will not have big bang incentive schemes. However, it will announce a plethora of steps that will reduce transaction costs and improve ease of doing business.

Existing popular schemes such as the Advance Authorisation scheme and the Export Promotion Capital Goods scheme will be introduced to several flexibilities to make it easier for the trading community to yield the benefit from it. These include fee simplification, self-declaration, automatic extension and easing export obligation in some cases.

Initially to be introduced on 1st of April, 2022, the FTP was postponed several times, mainly due to the Covid-19 pandemic. The last extension of the FTP (2015-20) is set to expire on March 31, 2023, and the new FTP is expected to be in place from April 1, 2023.

The policy is also likely to introduce new chapters on dual items under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET).

The current fiscal saw, a slowdown in India’s export of goods since July. It is estimated that only a small increase over last fiscal’s exports of $422 billion will be noted. The slowdown is caused by the shrinking of demand in major markets in the West struggling with high inflation and rising interest rates and uncertainties due to the on-going Russia-Ukraine war.

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

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