Foreign trade policy may be released in April

The policy may leave scope for interventions to address immediate issues, and outline measures to speed up clearances and reduce physical interface.

The new FTP will come at a time India’s outbound shipments have started declining due to slowing demand in advanced economies. The long-term vision may recommend measures to achieve $1 trillion worth of exports by 2030, the official cited above said. These may include setting up economic zones outside India as part of the Aatmanirbhar Bharat initiative, and diversifying services exports outside the US and EU.

“We are looking at a dynamic foreign trade policy that lays down the vision covering several areas that will facilitate achieving a long-term target. When policy tweaking is required, one cannot wait for five years…The government has been continuously doing IT enablement and tweaks…Earlier, exporters had to wait for the five-year foreign trade policy to launch any new scheme, like duty remission scheme, etc. We have already done that and did not wait for the FTP to launch,” the official cited above said on condition of anonymity.

A final call on announcing FTP will be taken at the highest government level in March. According to the official cited above, the FTP may have three new chapters—on e-commerce, districts as export hubs, and SCOMET (dual-use items used for civilian/industrial and military use).

FTP is a set of guidelines and instructions established by India’s Director General of Foreign Trade (DGFT) in matters related to the import and export of goods. The government in September deferred FTP for 2022-27, which was slated to be announced on 30 September, in a last-minute change of plans.

The government now expects exports in the current fiscal year to remain flat at $417 billion, against its earlier expectation of around $470 billion.

Exports in December declined by 12.2% from a year ago to $34.5 billion, as recessionary outlook dented consumer demand across several advanced and emerging economies. It was the second such decline in FY23.

The government introduced WTO-compliant schemes including Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Levies and Taxes (RoSCTL) Schemes last year.

Foreign Trade Policy 2015-20, which was to end on 31 March 2020, has been extended four times so far, earlier due to the covid-19 pandemic, and more recently due to global economic uncertainty. It is now valid till 31 March.

Queries emailed to the department of commerce remained unanswered till press time.

Ajay Sahai, director general and CEO of the Federation of Indian Export Organizations (FIEO) said that he expected the new FTP to draw a roadmap for exports in medium to long term, with a target to reach $1 trillion each in goods and services exports by 2030, by striking a balance between traditional exports and sunrise sectors of exports — the former as an effective tool of employment creation, and the latter to align India’s exports to the global imports profile. “A comprehensive FTP to address supply side issues ranging from liquidity to logistics is the need of the hour, though within the ambit of the WTO discipline,” said Sahai.

The commerce department will likely propose to develop 50 districts as export hubs in the first phase, which will be part of FTP and will take it to the cabinet for approval, according a second official in the know It is aimed to help domestic producers in these districts scale up manufacturing and find potential buyers outside India to boost exports. It will likely be proposed as a centrally sponsored scheme, with the Centre paying 60% of the cost estimated at ₹50 crore per district.

The chapter on e-commerce is likely to give a thrust to e-commerce exports, which have so far not received any special incentives, said the second official. The move aims to encourage small players to tap overseas markets for growth and accelerate exports of geographical indication (GI) products, and under the ‘one district one product (ODOP)’ initiative. It will essentially help enable facilitation in terms of quicker clearances.

Sanjay Budhia, chairman of the CII National Committee on EXIM said that exporters are keenly awaiting the new FTP as global export conditions have greatly changed since the last one was brought out. “We have submitted various inputs to the government for its formulation…Exporters expect that the FTP will address diversification of the export basket, expanding markets, right incentive policies, and trade facilitation, among others,” said Budhia.

Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT), who is also part of the Board of Trade said that the policy has to be planned in the backdrop of domestic trade. “It has to be planned that the policy should be framed in such a way that flow of goods and services from within the country to outside world policy has to be priority. It has to be in such a manner that foreign goods and services do not eat away the domestic market,” said Khandelwal.