Why the wait for new trade policy just got longer

Source: The post is based on the article “Why the wait for new trade policy just got longer ” published in Livemint on 29th September 2022

What is the News?

The Union government has extended the tenure of the Foreign Trade Policy (FTP) 2015-20 by another six months till March 2023. 

Why do we need a foreign trade policy? 

Amid declining exports and slowing global growth, the new Foreign Trade Policy(FTP) was aimed at making Indian exports more globally competitive by reducing transaction costs and time. 

It was expected to lay down simple and transparent procedures which would have been easy to comply with, boosting efficiency in the management of foreign trade in India.

The policy was all the more crucial following the Russia-Ukraine war and covid-19, which bruised supply chains and slowed global trade growth. 

What exactly were exporters expecting in the New Foreign Trade Policy? 

The industry was expecting support in the form of several fiscal and non-fiscal incentives to boost exports, especially in the services sector. 

They were hoping that the government will reform the discontinued Service Export Incentive Scheme (SEIS) to aid specific sectors such as travel and tourism and health. The SEIS scheme rewarded service exporters at 5% or 6% of the net foreign exchange earned.

The industry was also expecting a focused policy for e-commerce shipments, a broader duty remission scheme for exporters and a scheme to develop districts as export hubs.

Why was an intervention required right now? 

India’s merchandise exports grew at the slowest pace in 18 months in August at 1.62%. Several sectors, including. jewellery, engineering exports and ready-made garments contracted, underlining the need for government intervention.

Why has the new Foreign Trade Policy(FTP) been delayed then?

The new Foreign Trade Policy(FTP) has been postponed due to current global uncertainty and currency volatility.