Transport, Communication and International Trade Mains Test
Mains Test Series
Transport, Communication and International Trade
Q. Discuss the feature and potential impact of the newly announced Foreign Trade Policy 2023 on India’s foreign trade and economic growth.
Answer: Foreign trade policy is a policy document aimed at boosting India’s exports and promoting its growth manifold by shifting incentives to remission and entitlement regimes.
FTP 2023 rests on four pillars, which play a vital role in promoting export and fostering a conducive environment for business.
- Incentive to remission- the remission of duties on exported products.
- Export promotion through collaboration-exporters, states, districts, and Indian missions.
- E-initiatives for ease of doing business and reduction in transaction costs.
- Emerging areas- Focus on E-Commerce, developing districts as export hubs and streamlining SCOMET policy. Key features of the policy
- Process of Re-Engineering and Automation- The policy emphasises export promotion and moving away from the incentive regime(such as the Export from India Scheme(EIS)) to a facilitating regime based on technology interface and principles of collaboration.
- Towns of export excellence-TEFs will have priority access to funding for export promotion under the Market Access Initiative (MAI) scheme.
- Recognition exporters- exporter firms have been acknowledged with status based on export performance such as 2-star, 4-star, or 5-star will be encouraged to provide trade-related training and developing skills line of “each one teach one” initiative.
- Promoting export from districts- partnerships with the state government and advancement of the export hub at the district level to boost exports and accelerate the development of the local trade ecosystem.
- Streamlining SCOMET policy- Giving more importance to the ” export control” regime to adhere to international treaties, agreements and other obligations under
SCOMET(Special,Chemical,Organisms,Materials,Equipments, and technology)policy
- Facilitating E-Commerce exports- Outlines the intent and roadmap for establishing e-commerce centres and related features such as bookkeeping and export entitlements.
- Facilitation under Export Promotion Capital Goods (EPCG) scheme-The scheme is duty-free imports of capital goods for export production. PM MITRA has been included in availing benefits under CSP(common service provider).
- Facilitation under Advance Authorization Scheme(AAS)- AAS provides duty-freeimport of raw material, enabling ease of manufacturing.
- Amnesty scheme- for exporters, a scheme is launched for one-time settlement of default in export obligation by the holder of advanced and EPCG authorisations.
Potential impact on foreign trade and growth
- Increase export- FTP aims to promote export and facilitate ease of doing business. Encourage e-commerce exports to grow 200-300 billion US dollars by 2023.
- The employment increase in exports creates employment opportunities and a conducive environment for domestic manufacturing.
- Foreign exchange in exports leads to increased foreign exchange earnings, which could help improve foreign reserves.
- A step towards internationalisation of rupees-FTP envisages Indian rupees as a global currency and allows international trade settlement in the domestic currency.
- Capacity building to create new exporters and identification of new market
Future of FTP 2023
- FTP 2023 envisages a target export of 2 trillion dollars by 2030, making India a 5 trillion dollar economy.
- Allowing the internationalisation of domestic currency and facilitating global trade payments in rupees. The move is aimed at helping India save foreign exchange, get past banking curbs to trade with countries under sanctions and gradually enable the rupee to gain the status of an international currency.
- Emphasis on broader engagement with state and districts to promote grassroots exports, streamlining E-commerce exports, a sector-specific export.
Issues in FTP
- Lack of utilisations of FTA- India cannot use the rules of the multilateral trading system. India’s trade deficit has ballooned as the exporter has yet to take advantage of preferential market access.
- The loophole in regulatory standard – India often fails to notify the WTO standard and usually does not allow time for discussion with its trading partner before implementation.
FTP emphasises trade facilitation through technology digitisation and integrates India into the global value chain. Promoting cross-border trade in the digital economy gives a fillip to e-commerce exports. Small vendors, businesses and local artisans can access the international markets and participate in India’s exports.
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