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What is the article about?
- In the coming week, the Government will unveil a new Foreign Trade Policy. This article discusses the issues that surround it.
Relevance:
- GSIII: Indian Economy: Foreign trade
Analysis:
- The Government will release a new foreign trade policy in the coming week that could include measures to help push up goods and services exports as well as rein in the runaway import bill.
- The current trade policy was introduced in 2015. When its five-year term ended a week after the national lockdown to curb the pandemic, it was extended for a year considering the extenuating circumstances.
- Enunciating India’s strategy to cash in on a world seeking to become less dependent on China would also enable exporters (and importers) to plan their investments ahead.
Last January, a WTO-compliant export incentive scheme was kicked off to refund domestic taxes to exporters, but the rates were only notified months later with a few sectors left out. Despite this completely avoidable uncertainty, goods exports touched a record $422 billion in 2021-22. - This year, the Government expects goods exports to hit at least $450 billion, but growth has slipped to the low single digits over July and August, while imports have been over $60 billion each month since March.
- A global growth slowdown and recession fears in Europe and the U.S. do not augur well; and though order books are still full, many buyers are seeking to defer deliveries.
Way Forward:
- The new policy will have to find ways to provide a leg-up to exports and address some of industry’s key concerns, including a buffer against rising interest rates.
With revenues buoyant, it is also time to reconsider the stance to exclude key growth sectors such as pharma, chemicals, and iron and steel from the duty remission scheme. - If there is a genuine constraint, a solution must be sought, perhaps, by roping in economic policy makers with residual bandwidth. But surely, there are better ways to drive home India’s rising clout than by driving away potential partner countries, however small.
Do you want to know more about India's current foreign policy?
===> Click here: India's Foreign Trade Policy
To learn more about Trade, click here.
