ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Foreign Trade Policy 2023

Ifs, Buts, and Nots

The Government of India came up with a new Foreign Trade Policy 2023 with an ambitious export target of $2 trillion by 2030. Against this backdrop, the paper appraises the key features of the new FTP, including the analysis of revamped schemes like focus on e-commerce exports, anchoring districts as export hubs, simplifying policy framework for dual-use material, and enhancing focus on trade facilitation. Elucidating each chapter of the FTP, it concludes that the policy remains below the expectations of the trade community and suggests key areas of improvement for this ever-evolving and responsive FTP.

The Foreign Trade Policy (ftp) of any country reflects the interest of national governments in stimulating exports and facilitating the required imports. Accordingly, it may incorporate not only generic policies but specific schemes aimed at tax exemption and remissions, building dedicated export capacity through exclusive export enclaves, facilitating deemed exports, nurturing market information and intelligence systems, extending export incentives, and other trade-related support, assistance, and facilitation. The regulatory aspects of trade policies have witnessed significant changes since the World Trade Organization (wto) creation in 1995. Consequently, the kind of incentives and benefits given by the government(s) came under the scrutiny of wto and a vast majority of them had to be phased out as they were identified as trade-distorting policies (Hoekman 2005). Therefore, there is a focus on framing an ftp that is compatible with the wto framework of rules, financially sustainable, encourages the trade community to excel, ensures ease in doing business, offers a level playing field to compete, and enables them to engage effectively with the external world.

Furthermore, trade policy plays an important role in a nation’s development as the higher level of external engagements catalytically boosts the economic activities in three constituents of an economy, that is, agriculture, manufacturing, and services. Marelli and Signorelli (2011) argued that emerging economies like China and India have extensively used trade as an instrument to speed up their process of economic development which is well reflected in their growing share of trade as a percentage of gross domestic product (gdp). Figure 1 illustrates the level of trade as a percentage of gdp of the top five economies of the world.

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Updated On : 4th Dec, 2023
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