In formulating policy, the government has always involved all stakeholders. In light of the above, the Foreign Trade Policy 2015-20, which is valid till September 30, 2022, has been decided to be extended for another six months. This will take effect from October 1st, 2022.
Foreign Trade is an integral part of every country’s fiscal policy and economy. India has grown tremendously over the last two decades and is now a top exporter of several agricultural products. This influx of products to foreign countries has led to the growth of our domestic economy.
For every country, setting up and laying down the right policies for foreign trade and commerce is an important part of governance. An accelerated growth can be achieved by integrating trade channels and capital. Consequently, it has helped India’s GDP reach ₹ 167.73 trillion from ₹ 167.71 trillion in 2018. Our foreign trade has led to an increase in per capital income that has nearly trebled.
Now that we know how important such trade is to our country, let us take a look at the various foreign trade policies that our government has invested in.
India’s Economic Growth
Trade has had a significant impact on India’s GDP growth and per capital income growth. The GDP of India grew to a further ₹ 190 trillion in 2018-19 and is expected to grow at a rate of 5% in 2019-20. Total Indian exports have grown at 1.51% between 2018 and 2019 to hit US$ 310.23 billion, and total imports have cost us US$ 359.68 billion. Between April and October 2019, the export stood at US$ 185.95 billion while imports reached ₹ 19,67,625.73 crore. The total value for these exports and imports came in at US$ 107.06 billion and US$ 68.10 billion respectively.
Hence, the total trade deficit for this period comes up to US$ 49.45 billion. The Minister for Commerce and Industry has stated that the Government plans on growing exports and sees it as a means to provide more jobs to India’s youth.
External Foreign Trade Policies
- The All India Institute of Ayurveda has signed a Memorandum of Understanding with Western Sydney University.
- In 2019, India signed a Memorandum of Understanding with Finland to strengthen Tourism.
- Four Memorandums of Understanding were also signed between India and Mongolia to allow cultural exchange, disaster management, and dairy production.
- Petronet LNG has struck a deal with Tellurian Inc. worth US$ 2.5 billion.
- Four Memorandums of Understanding have been signed between India and France to improve skill development, training, renewable energy and space exploration.
- India and Kyrgyzstan have successfully signed 15 agreements for defence, trade and health.
- India has struck a deal with the National Bank for Agriculture and Rural Development Consultancy Service to set up an Institute of Agriculture and Rural Development in South Africa.
- The US has improved India’s status to at par with North Atlantic Treaty Organization allies.
- The UAE and India have agreed to a currency swap agreement to improve trade relations.
- India and Iran had entered a bilateral agreement to settle oil trades via United Commercial Bank.
- India has signed a Memorandum of Understanding with China for the export of non-basmati rice.
Mid-Term Review of Foreign Trade Policy
- Enhanced the scope of the MEIS and SEIS
- Provided an increased MEIS incentive for garments by 2%
- Similarly, raised SEIS incentive by over 2%
- Increased the validity of Duty Credit Scrips to 24 months from the previous 18 months
- The Ministry of Commerce will introduce a new trade policy aimed at increasing export for the years 2020-25.
- The government also plans to establish bodies in 15 different countries to promote trade and boost exports.
- Duty incentives have been raised for 28 milk items under MEIS
- Inclusion of additional items under MEIS
- Development of an integrated declaration process by the Central Board of Excise and Customs to create a single window for the customs clearance of goods.
- India has also entered into a Comprehensive Economic Partnership Agreement with South Korea to provide greater market access to Indian exports via India’s Look East Policy.
- Simplified credit rules by the RBI to exporters
- The Government also plans on announcing an interest subsidy scheme for exporters
Major Initiatives Under the Foreign Trade Policy:
- Niryat Bandhu Scheme
The DGFT’s Niryat Bandhu Scheme helps with the mentoring of budding exporters to help them learn about the intricacies of foreign trade. Indeed, this is made possible by engaging in counselling sessions, training programmes, and outreach initiatives. Further, the government is helping with the identification of clusters of small and medium scale enterprises to help with an increase in exports.
- Export Promotion Councils
To achieve boosted export rates, the Export Promotion Council will help with the organisation of academic and research communities to build meaningful relationships. Also, to improve the utilization of resources, all stakeholders, such as Customs offices, ECGC and Banks are brought under one umbrella.
- Electronic IEC
The Import exporter code is a permit that is mandatory for carrying out exports and imports and this permit may be procured from the DGFT website via online filing of the IEC application.
The e-BRC enables the DGFT to get the details of export proceeds from via a secure electronic method. Moreover, this initiative helps with moving the idea of paperless transactions and is a great way of avoiding physical interfaces. This E-BRC has led to the signing of over 14 Memorandums of Understanding to benefit the exporters.
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- Exporter Importer Profile
Such profiles help to gather data regarding exporters and is essential for any manufacturer to export products from India. However, this system helps to reduce the cost of transaction and the time involved with export paperwork. The DGFT has also facilitated online filing of applications making it easier than ever before to procure the necessary documents.
Our Foreign Trade Policy (2015-20), which has been extended several times, has been requested by Export Promotion Councils and leading exporters.
As a result of the current, volatile global economy and geopolitical situation, exporters and industry bodies have urged the government to extend the current policy and conduct more consultations before implementing the new policy.