Different Foreign Trade Policies of India in the past are typically made to resemble each other. Not because our Babus where reluctant to apply innovation, ingenuity to the subject but because it was always good to maintain status quo. Status quo has been good for the industry since it makes things more predictable and long term planning at the organizational level can be done more so while dealing with large international foreign partners. Nevertheless it is very unlikely that the most anticipated Foreign Trade Policy 2015-20 (or 2014-19) is going to resemble the earlier ones. Probably this is the reason new government is taking its own time to announce the same which is pending to be announced since April 2014.
Institutions representing different stakeholders have already given their inputs for the new integrated five year foreign trade policy. Federation of Indian Export Organization had suggested applying more focus on ‘Services Exports’ and ‘High Tech Products’ in the anticipated policy. Services sector which contribute around 55% to the total GDP is comparatively a laggard when it comes to overall export of India which has been languishing around 300 Billion USD per year over the last few years. Growth of overall exports is sluggish and an only area for further gains seems to be services exports.
All of the export and import activities of India are governed by foreign trade policy aim of which in the past has solely been to enhance exports and facilitate imports for overall economic growth of the country. The share of India in the world trade has been dismal 2 % approximately in recent years as against the approximate 11% share of China. No wonder it remains one of the major objective for any foreign trade policy of India to increase its share in the world trade. Typically the objective of the new integrated five year policy too will aim at more than doubling India’s share in the world trade in next five years. New Policy is likely to echo many of the recently announced missions of ruling party BJP, more importantly ‘Make in India’, ‘Smart Cities’ Project, ‘Housing for all by 2020’ and probably also about ‘Swachh Bharat Abhiyan’.
Directorate General of Foreign Trade was already giving final touches to the new foreign trade policy by as early as August 2014. Why the new government has probably taken time is to incorporate the significant provisions of foreign trade policy in order to leverage foreign trade exploits for these missions. One of the schemes which have always benefitted from past foreign trade policies measures is the Export Promotion Capital Goods (EPCG) Scheme. In the wake of ‘Make in India’ mission, there are likely to be significant further gains for the aspirants, under this scheme. Probably these gains will be more significant than tried in earlier policies.
However WTO guidelines will ensure there are no ‘knee jerk’ measures to boost exports. One of the areas which are likely to be the major focus of the new foreign trade policy seems to be the ‘simplification of foreign trade procedures’ both for exports and imports. This goes well with the new government focus on improving India’s world ranking in ‘ease of doing business index’. A major focus can be in exploring new areas of ‘Electronic Data Interface’ between regulatory bodies, customs and traders. Inland tax formalities may also be made simpler. Likely impact of introducing GST in 2016 will require new provisions in procedures and documentation. However these provisions may not be announced in the main policy documents expected in next few months, but may be included in annual policy notifications.
With the new acts being already passed by the new government related to mining and industries, insurance and new initiatives related to expanding overall infrastructure of the country more specifically transportation, railways and ports facilities, a series of new measures helping these areas, are likely to be appearing in the new foreign trade policy. Aviation, waterways, seaways and railways are likely to be figuring prominently in the new provisions. There are likely to be new provisions helping develop high-speed railways and waterways infrastructure in the country. India, at present has very dismal know-how and technologies related to these areas and is solely dependent on foreign companies and foreign rolling stock.
There is likely to be a major thrust to regional cooperation including those related to SAARC nations, FTA partners and other regional blocks of the world. New provisions are likely in this regard in the forthcoming foreign trade policy. Regional cooperation has been associated with regional security in the South Asia and protection of India’s interests in the Indian Ocean. Therefore this regional cooperation is likely to include several far-east nations and Australia. ‘Market focused schemes’ are likely to be given new color in this respect. Our trade cooperation with countries like Sri Lanka, Bangladesh, Nepal and Myanmar among others in the neighborhood is likely to be taken care of.