New Foreign Trade Policy

Table of Contents

New Foreign Trade Policy- Relevance for UPSC Exam

General Studies III- Indian Economy

The government has extended the launch of new Foreign Trade Policy (FTP) (2022-27) by six more months and would continue with the existing one.

The geo-political situation is not suitable for long-term foreign trade policy, said Union Commerce Minister.
Currently, fears of a recession in major economies like the US and Europe have escalated a panic among investors.
Foreign investors have begun to pull back their money from equities.
The US Dollar is at a 22-year high, while the Rupee hit a new all-time low of $81.6.
The trade deficit widened by more than 2-folds to $125.22 billion (April – August 2022) compared to $53.78 billion in the same period last year.

India’s Foreign Trade Policy (FTP) is a set of guidelines for goods and services imported and exported.
These are developed by the Directorate General of Foreign Trade (DGFT), the Ministry of Commerce and Industry’s regulating body for the promotion and facilitation of exports and imports.
FTPs are enforceable under the Foreign Trade Development and Regulation Act 1992.

In line with the ‘Make in India,’ ‘Digital India,’ ‘Skill India,’ ‘Startup India,’ and ‘Ease of Doing Business initiatives, the Foreign Trade Policy (2015-20) was launched on April 1, 2015.
It provides a framework for increasing exports of goods and services, creating jobs, and increasing value addition in the country.
The FTP statement outlines the market and product strategy as well as the steps needed to promote trade, expand infrastructure, and improve the entire trade ecosystem.
It aims to help India respond to external problems while staying on top of fast-changing international trading infrastructure and to make trade a major contributor to the country’s economic growth and development.

Acting on Washington’s protest, a WTO dispute settlement panel ruled in 2019 that India’s export subsidy measures are in violation of WTO norms and must be repealed.
Tax incentives under the popular Merchandise Exports from India Scheme (MEIS) (now renamed as RODTEP Scheme) and Service Exports from India Scheme (SEIS) programmes were among them.
The panel found that because India’s per capita gross national product exceeds $1,000 per year, it may no longer grant subsidies based on export performance.

With incentives under MEIS and SEIS in the cloud, WTO-compliant tax benefits are a must.
Credit availability has long been a need of exporters, particularly MSMEs.
China’s network of ports, motorways, and high-speed trains, which are among the greatest in the world, is one of the reasons it is a manufacturing and export powerhouse.
India requires innovative trading procedures as a result of Covid-19 breaking old supply channels.