Foreign Trade Policy
4/22/2015 10:48:00 PM
Union Government has unveiled new Foreign Trade Policy (FTP) to
make India an exporting powerhouse in the next five years. The new trade policy
will incorporate government ambitious initiatives such as
Make in India
Digital India mission,
Skill India programme
ease of business in order to boost jobs and take India’s exports
to 900 billion dollars by 2020. The goals of the new policy will be achieved by
simplifying complex procedures, addressing infrastructural bottlenecks and
eliminating manufacturing hurdles.
Focus areas of the new FTP are
Labour intensive sectors to generate more employment
. Boosting to environment-friendly products
. High tech value addition
. Involving skill India programme to promote entrepreneurship
. Moving towards branding of products
. Incentives for units located in SEZs
. Making the life of traders easier
. Key facts FTP also takes into consideration e-commerce
Under the new policy,
India’s nascent, e-commerce sector would also be extended sops. The new trade
policy will be based on two new schemes-
1) Merchandise Exports from India Scheme (MEIS).MEIS is for export of specified goods in specified markets
with the rate of rewards range from 2 to 5% and
2)Services Exports
from India Scheme (SIES).
SIES is for increasing exports of notified services and the selected services
will be rewarded at the rates of 3 to 5%.
Under these two schemes, government has merged all earlier export
promotion schemes.
The new also move towards
paperless working. In this regard, a facility has been created to upload
documents in exporter/ importer profile in order to avoid need of repeatedly
submitting documents.
The long waited FTP has garnered much national interest as it was
first comprehensive report on government priorities on external sector.
UPA first introduced FTP in 2004
substituting the export imports policy .It was a first major change in
the eyes of policymakers but with 2 FTPs round the table since then the
government didn’t do much change.
The first major change by NDA
governments's amendments was the
Ministry of commerce decision to broaden its confines and share it with other
administrative misnitries to make foreign trade sector more vibrant.
The “whole-of-government approach” lists the possible areas of
engagement with state and union territory governments, but is silent about the
manner in which departments and ministries of the central government would be
involved in supporting conduct of foreign trade. As for states and union territory
governments, the FTPS mentions that they “can play a crucial role in promoting
exports and rationalising non-essential imports.”
Three Issues Highlighted
What are the steps
that the FTPS suggests for “setting our domestic house in order?” It suggests
this can be done by addressing three sets of issues.
The first is to
make better use of telecommunications and information technology (IT)
infrastructure, especially the internet, in trade transactions.
The second is to
remove the anomalies caused by the “absence of a uniform system of indirect
taxation in India.” The existing system, according to the FTPS, prevents
exporters from getting “a rebate or drawback on all indirect taxes paid on the
exported product and the inputs that went into its production, significantly
inflating the final price of the exported product and making it less price
competitive”.
And the third is the “liberalisation,
rationalisation and simplification of labour laws.” The FTPS insists,
SEZ Failure
Special economic
zones (SEZS) are another area where successive governments have ignored the
steps necessary to make them function effectively. Although the FTPS says that
exports from SEZs increased significantly from Rs 22,000 crore in 2005–06 to Rs 4,94,077 crore in 2013–14,
there is a facet of these zones that the government needs to consider. Since
the notification of rules under the SEZ Act in 2006, 435 SEZ had been formally
approved by the Board of Approvals until March 2015. Of these approved SEZS,
189 have been functional. Importantly, all but 20 of these SEZS were
established before 2010 and only three after 2013.
Although the FTPS is an important statement of the government’s intent
to improve the performance of the foreign trade sector, the results are not
likely to be delivered if the operational framework is not made functionally
more robust.
Provided By Dreamer
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