Trade tactics – on India’s Foreign Trade policy

Source: The post is based on an article “Trade tactics” published in The Hindu on 22^nd September 2022.

Syllabus: GS 3

News: The Government will release a new foreign trade policy in the coming week.

The new foreign trade policy could include measures to boost goods and services exports as well as control the rising import bill.

The current trade policy was introduced in 2015 for a five year term.  However, the policy was extended for a year due to the pandemic.

What are the problems with new trade policy?

It is not ideal to begin a new trade policy in the middle of financial year.

Moreover, exports have been one of the reasons for better post-COVID recovery and ending an old policy with new one to boost exports is not understood.

How has exports performed recently?

Goods exports have touched a record 422 billion dollar in 2021-22.

The government is expecting better exports revenues this year but it has declined to the single digit in July and August this year.

The reasons for declining export could be a slowdown in the global growth and fear of recession in Europe and the US among the buyers.

Thus, the new policy should be focused on boosting exports and reducing issues associated with it.

What can be further course of action for the new trade policy and for India?

Trade policy: The new policy will have to address some of industry’s key concerns such as a buffer against rising interest rates.

The new policy can exclude growth sectors such as pharma, chemicals, and iron and steel from the duty remission scheme due to their better performance.

India: India’s recent decision to stay away from the trade agreement of IPEF has shown that there are not many options left for India. India should adopt other ways to negotiate the terms not suitable to it than by moving away from the trade agreements.