INDIA'S TRADE POLICY
INDIA’S FOREIGN TRADE POLICY
The Department of Commerce has the mandate to make India a major player in global trade and assume a role of leadership in international trade organizations commensurate with India’s growing importance. The Department devises commodity and country-specific strategy in the medium term and strategic plan/vision and India’s Foreign Trade Policy in the long run.
India’s Foreign Trade Policy (FTP) provides the basic framework of policy and strategy for promoting exports and trade. It is periodically reviewed to adapt to the changing domestic and international scenario.
The Department is also responsible for multilateral and bilateral commercial relations, special economic zones (SEZs), state trading, export promotion and trade facilitation, and development and regulation of certain export oriented industries and commodities.
The current Foreign Trade Policy (2015-20) focusses on improving India’s market share in existing markets and products as well as exploring new products and new markets. India’s Foreign Trade Policy also envisages helping exporters leverage benefits of GST, closely monitoring export performances, improving ease of trading across borders, increasing realization from India’s agriculture-based exports and promoting exports from MSMEs and labour intensive sectors. The DoC has also sought to make states active partners in exports. As a consequence, state governments are now actively developing export strategies based on the strengths of their respective sectors.
While the external environment has a major role to play in the success of export policies, it is also critical to address constraints within India including infrastructure bottlenecks, high transaction costs, complex procedures, constraints in manufacturing and inadequate diversification in India’s services exports. India is a signatory to the Trade Facilitation Agreement (TFA) at the WTO, which will contribute to the simplification and lowering of transaction costs.
According to current WTO rules as well as those under negotiation India needs to eventually phase out subsidies and move towards fundamental systemic measures in the future. Under the Agreement on Subsidies, India has moved on from Annex VII countries of WTO on breaching the US$ 1,000 per capita income benchmark for 3 consecutive years in 2015.
The present Commerce & Industry Minister Shri Piyush Goyal has also asserted that India needs to evolve from a dependence on subsidies, “I do not think that any programme or ambitious scheme can run only on subsidies and government help. We have to move out of this continuous effort and demand and make our industry truly competitive and self-reliant.”
The government is looking to focus on promoting exports of high value-added products, where India has a strong domestic manufacturing base, including engineering goods, electronics, drugs and pharmaceuticals, textiles and agriculture. This is apart from the continued push to AYUSH and the Indian services sector.
Around 70% of India’s exports constitute products that have just 30% share in global trade. The government is looking at some more promising product groups like defence equipment, medical devices, agro-processing, technical textiles and chemicals.
In 2018, then Commerce & Industry Minister Shri Suresh Prabhu envisaged a strategy to double India’s exports by 2025. The approach included devising a commodity-specific strategy for key sectors like gems and jewellery, leather, textile & apparel, engineering sector, electronics, chemicals and petrochemicals, pharma, agri and allied products and marine products. Territory specific strategy will cover North American Free Trade Agreement (NAFTA), Europe, North East Asia, ASEAN, South Asia, Latin America, Africa and WANA, Australia, New Zealand, and CIS.