INTRODUCTION
The Foreign Trade Policy is a set of guidelines established by the Directorate General of Foreign Trade (DGFT) governing matters related to the import and export of goods by India. It is the government’s seminal document on trade matters that is expected to guide economic relations with other nations and help develop domestic industry.It is the prime policy that lays down simple and transparent procedures which are easy to comply with and administer for efficient management of foreign trade in India. The Policy aims at enhancing the country’s trade for economic growth and employment generation.
Foreign trade in India includes all imports and exports to and from India. At the level of the Central Government it is administered by the Ministry of Commerce and Industry. The Foreign Trade Policy (FTP) was introduced by the Government to grow the Indian export of goods and services, generating employment and increasing value addition in the country. The Government, through the implementation of the policy, seeks to develop the manufacturing and service sectors. It is a snapshot of the various aspects of the policy.
History of Foreign Trade Policy
The barter system of goods or services among different peoples is an age-old practice, probably as old as human history. International trade, however, refers specifically to an exchange between members of different nations, and accounts and explanations of such trade begin (despite fragmentary earlier discussion) only with the rise of the modern nation-state at the close of the European Middle Ages. As political thinkers and philosophers began to examine the nature and function of the nation, trade with other countries became a particular topic of their inquiry.
OBJECTIVE OF INDIAN FOREIGN TRADE POLICY
Trade propels economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The foreign trade policy of India is based on two major objectives, they are as follows:
- To double the percentage share of global merchandise trade within the next five years.
2. To act as an effective instrument of economic growth by giving a thrust to employment generation.
3. Accelerate economic activity and make the most of global market opportunities
4. Encourage sustained economic growth by providing access to raw materials, components, intermediates (goods used as inputs for the production of other goods), consumables and capital goods required for production
5.Strengthen Indian agriculture, industry and services and it also aims to generate the pace of employment
6. Encourage stakeholders to strive for international standards of quality and to
provide quality consumer products at reasonable prices.
PRESENT STATUS OF INDIAN FOREIGN TRADE POLICY
On April 1, India was to unveil the Foreign Trade Policy 2021-2026. The existing policy was extended by a year due to Covid-19, which was to end on March 31. And the government decided to further extend it for 6 more months. The current policy will now be valid upto September 30. The foreign trade policy (FTP) outlines government strategies and steps to promote domestic production and exports with the objective of driving economic growth.
It remains to see how the new policy gets affected after India battles the second wave of the pandemic. The new policy is eagerly awaited as the economy continues to reel from the effects of the pandemic and disruptions to international trade caused by lockdowns and restrictions worldwide.
The prime objective of an FTP is to facilitate trade by reducing transaction cost and time. The current FTP 2015-20 was considered progressive because it consolidated various export incentive programmes into broadly two schemes – the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS). This consolidation promoted Duty Credit Scrips (DCS), issued by the Director General of Foreign Trade (DGFT), to exporters for them to pay import duties easily. These scripts were issued as an incentive to exporters for boosting their trade. The MEIS and SEIS helped reduce export obligation from 90% to 75% for capital goods sourced from local and permitted manufacturers meeting certain standards to self-certify manufactured goods as ‘originating from India’. The FTP also assisted the MSME sector in boosting exports and digitalised the licensing and application processes.
CONCLUSION
The Foreign Trade Policy provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in line with the ‘Make in India’, ‘Digital India’, ‘Skill India’, ‘Startup India’ and ‘Ease of Doing Business’ initiatives. The foreign trade policy Statement describes the market and product strategy and measures required for trade promotion, infrastructure development and overall enhancement of the trade ecosystem. It seeks to enable India to respond to the challenges of the external environment, keeping in step with a rapidly evolving international trading architecture and make trade a major contributor to the country’s economic growth and development.
REFERENCES
- www.yourarticlelibrary.com
- www.cogoport.com
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