Changes in India’s Foreign Trade policy

 In India Foreign trade (development & regulation) Act, 1992 was enacted for regulating imports
and exports after the implementation of a new economic policy that brought Liberalisation,
Privatisation, and Globalization. According to the act, the government is authorized to announce
foreign trade policy for achieving certain objectives related to foreign trade. This policy is
commonly known as the Exim policy (export-import policy). The long term objectives of foreign
trade policy are: simplifying business procedures, reducing transaction costs, facilitating trade
services, updating infrastructure, etc.
Features Of Indian Foreign Trade Policy

After every five years, India makes amendments to its foreign trade policy. The commerce
ministry is responsible for announcing new foreign trade policy.  The current foreign trade policy
is for the period 2015-20. Usually, foreign trade policy is announced on the 31st of March and
comes into effect from 1st April. But due to the COVID pandemic, the last foreign trade policy
was extended for a year i.e. up to 31st March 2021

Union Commerce Minister, Piyush Goyal has recently announced the new foreign trade policy of
India for the period of 2021-26, which will be implemented from 1 st April, 2021. The main aim
of the new policy is to make India, a leader in international trade.

Key Provisions Of The Foreign Trade Policy 2021-26:

The policy aims to make India, an economy of USD 5 trillion, by the year 2024. This is to be
done by increasing exports in both services and merchandise sectors.

The policy tries to address various overseas and domestic obstacles to enhance ease of doing
business and reduce transaction costs.

The infrastructure is to be developed to create a low-cost operating environment.

District hub export initiative: This scheme will be implemented in a phased manner by the
commerce department through regional authorities of DGFT (Directorate General of Foreign
Trade) to make each district of India, an export hub.

To correct the trade imbalance in India, the domestic services and manufacturing sectors will be
improvised with the infrastructure support of the government.

Meetings will be held with industry associations like FICCI (Federation of Indian Chamber of
Commerce and Industry), chambers of commerce, export promotion councils, and state
government to take their views.

Comparison With Previous Foreign Trade Policy (2015-2020)

Although the long-term objective of increasing exports remains the same in both the policies, the
components by which this objective is to be achieved differs. The foreign trade policy for a
period of 2015-20 was aimed at ‘Make in India’ while the new policy aims to boost exports at
the district level. ‘Merchandise export from India scheme’ was the main scheme in 2015 foreign
trade policy to boost exports. Other schemes included the Authorised Economic Operators
scheme for clearing customs in both India and foreign countries, creation of a new logistic
division and national logistics information portal, etc. 

Challenges That Should Be Overcome For Successful Results Of

New Foreign Trade Policy:

Unemployment and under-employment: For a successful foreign trade policy it is very important
to address the issue of unemployment and under-employment, only then this Exim policy can
bring positive returns.

Agriculture: It is often seen that while promoting trade agriculture sector gets neglected.
Therefore it is important to balance the two.

Funding issues: The highly optimistic targets and policies of India could only be achieved if
adequate funds are provided for it. Lack of funds must not become a hurdle in achieving USD 5
trillion economy.

Infrastructure development: The policy gives priority to infrastructure but it must not remain on
paper only. An actual infrastructure is a must for development. 

Other Key Initiatives In Field Of Trade And Infrastructure:

Payment infrastructure development fund (PIDF) by RBI: To boost digital payments, the central
bank has formed an advisory council under B.P.Kanungo to plan a transparent mechanism for the
digitalization of the payment system. This will enhance point of sale infrastructure and reduce
cash demand.

Startup India seed fund scheme: A scheme of Rs. 945 crore for providing financial assistance to
startups is launched by DPIIT (Department for Promotion of Industry and Internal Trade). A
startup with a viable business idea has not received monetary support of more than 10 lakh and
started not before 2 years can get funds through selected incubators spread across the country. It
is expected to promote trade and innovation in India that could boost foreign trade of India.

Prarambh startup India International Summit: DPIIT and Commerce ministry organized a world
level discussion on innovation, technologies, and other topics. The main objective was to grab
the international attention towards Indian startups and promote foreign investments that could
boost Indian trade. 

Conclusion
The foreign trade policy of a country is an important highlighter of trade-related objectives of the
Government. The year 2020 had brought negative growth for India. Due to the pandemic, the
whole country was in lockdown and the trade in the country became minimal. Foreign trade
reduced drastically. Therefore it became important for the government to bring a new foreign
trade policy for boosting exports. The government is trying to revive the economy with different
schemes. But the implementation of the schemes will remain an issue to look upon because if a
scheme is not implemented properly then, even a good scheme will fail to bring the desired
change. Other impediments like unemployment, lack of infrastructure, etc. also need attention for
boosting foreign trade. With the economic survey being published and the annual budget
presented, everyone is optimistic about growth and V-shaped recovery. IMF has also projected
double-digit growth for India (11.5%). Therefore it becomes very important for the government
to stand upon everyone’s expectations, overcome all the lacunae and establish India as a global
leader in international trade. Only then, we can expect that India will raise its GDP chart and
make itself a USD 5 Trillion economy.