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India’s foreign trade policy (FTP) to be delayed

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Shri Vaibhavi Logistics

No new export incentive expected; focus on ease of doing business, promoting e-commerce, GI products, district hubs

NEW DELHI : The government’s preoccupation with the fall outs of the Russia-Ukraine war and the lingering disruptions caused by the Covid-19 may delay the new five-year foreign trade policy (FTP) by another six months as inter-ministerial consultations are not over yet, a source has said.

India’s much-delayed foreign trade policy (FTP) which was expected on 1 April has been delayed further, an official aware of the matter said, citing plans for wider industry-government consultations amid new geopolitical developments.

The five-year FTP, initially scheduled for 1 April, 2020, was postponed by a year due to the pandemic till 31 March, 2021 and further to 30 September, 2021 and later to 1 April, 2022. According to the official cited above, who spoke on condition of anonymity, the existing FTP may now continue for another six months.

The policy will aim to complement the ongoing revamp of the special economic zones (SEZ) policy to make it compliant with World Trade Organization rules. It will cover ease of doing business, a ‘districts as exports hub’ scheme, promote geographical indication (GI) products and e-commerce. However, direct export sops are unlikely.

“I don’t think we can come up with the FTP on 1 April as still a lot of consultations need to be done. There is a change in the geopolitical climate too, which can be studied as far as opportunities for our industry is concerned. Besides, the commerce department is also occupied with handling the impact of the Russia-Ukraine conflict. It is likely that the existing policy will continue for another six months,” the official said.

The district hub scheme, likely to be part of the new FTP, will aim to help local producers in 700 districts to scale up manufacturing and find potential buyers outside India.

While the government will not introduce schemes and sops that are not WTO-compliant, existing ones like the export promotion capital goods (EPCG) scheme — which allows duty-free imports of some capital goods used in manufacturing subject to specific export obligations — may continue.

“The industry has been asking for incentives. But we have made it clear that the government cannot provide sops to everyone. The new initiatives need to be WTO-compatible. So, we can look at district hubs initiative, promotion of GI products, e-commerce, and other ease of doing measures,” said the official.

The government is currently revising the SEZ policy to make it WTO-compliant with a single-window clearance system with improved infrastructure and easy customs procedures. The Union budget has proposed replacing the existing SEZ Act with new legislation to enable states to become partners in the ‘Development of Enterprise and Service Hubs’ (DESH).

“The FTP may also have trade promotion measures including a dedicated ‘Trade Promotion Body’ to drive overall promotion strategy, set export targets, and execution. We need to create Brand India,” said the official. The FTP may also facilitate centralization and digitization of trade facilitation processes to drive ease of compliance and scheme administration.

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