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The GoI announced the new Foreign Trade Policy 2015–20 on April 1, 2015. The new five year Foreign Trade Policy, 2015–20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in keeping with the Make in India. The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the ‘ease of doing business’. The special features of the FTP 2015–20 are as follows:
(i). Two new schemes have been intorduced, namely—
(a) Merchandise Exports from India Scheme (MEIS) for export of specified goods to specified markets.
(b) Services Exports from India Scheme (SEIS) for increasing exports of notified services, in place of a plethora of schemes earlier, with different conditions for eligibility and usage.
There would be no conditionality attached to any scrips issued under these schemes. Duty credit scrips issued under MEIS and SEIS and the goods imported against these scrips are fully transferable. For grant of
rewards under MEIS, the countries have been categorized into 3 Groups, whereas the rates of rewards under MEIS range from 2 per cent to 5 per cent. Under SEIS the selected Services would be rewarded at the rates of 3 per cent and 5 per cent.
(ii) Measures have been adopted to nudge procurement of capital goods from indigenous manufacturers under the EPCG scheme by reducing specific export obligation to 75 per cent of the normal export obligation. This will promote the domestic capital goods manufacturing industry. Such flexibilities will help exporters to develop their productive capacities for both local and global consumption.
(iii) Measures have been taken to give a boost to exports of defense and hi- tech items. At the same time e-Commerce exports of handloom products, books/periodicals, leather footwear, toys and customized fashion garments through courier or foreign post office would also be able to get benefit of MEIS (for values upto INR 25,000). These measures would not only capitalize on India’s strength in these areas and increase exports but also provide employment.
(iv) In order to give a boost to exports from SEZs, government has now decided to extend benefits of both the reward schemes (MEIS and SEIS) to units located in SEZs. It is hoped that this measure will give a new impetus to development and growth of SEZs in the country.
(v) Trade facilitation and enhancing the ease of doing business are the other major focus areas—
(a) One of the major objective of new FTP is to move towards paperless working in 24×7 environment.
(b) The government has reduced the number of mandatory documents required for exports and imports to three, which is comparable with international benchmarks.
(c) A facility has been created to upload documents in exporter/importer profile and the exporters will not be required to submit documents repeatedly.
(d) Attention has also been paid to simplify various Aayat Niryat Forms, bringing in clarity in different provisions, removing ambiguities and
enhancing electronic governance.
(e) Approved Exporter System (AES) has been launched to enable manufacturers to self-certify their manufactured goods originating from India with a view to qualifying for preferential treatment under various forms of bilateral and regional trade agreements This will help these manufacturer exporters considerably in getting fast access to international markets.
(vi) A number of steps have been taken for encouraging manufacturing and exports under 100 per cent schemes. The steps include a fast track clearance facility for these units, permitting them to share infrastructure facilities, permitting inter unit transfer of goods and services, permitting them to set up warehouses near the port of export and to use duty free equipment for training purposes.
(vii) Considering the strategic significance of small and medium scale enterprise in the manufacturing sector and in employment generation, MSME Clusters-108 have been identified for focused interventions to boost exports. Outreach activities will be organized in a structured way at these clusters with the help of EPCs and other willing Industry Partners and Knowledge Partners.
(viii) Niryat Bandhu Scheme has been galvanized and repositioned to achieve the objectives of Skill India.
The FTP Statement describes the market and product strategy and measures required for trade promotion, infrastructure development and overall enhancement of the trade ecosystem. It seeks to enable India to respond to the challenges of the external environment, keeping in step with a rapidly evolving international trading architecture and make trade a major contributor to the country’s economic growth and development. The Government of India promised to have regular interactions with all stakeholders, including state governments to achieve the national objectives.
Need of Shift: The environment for global trade policy has probably undergone a paradigm shift in the aftermath of Brexit and the US elections. The Brexit was motivated by protectionist sentiments in the UK. Similar sentiments are being signalled by the new US government, too. This may
lead to sharp appreciation in the US dollar—it has already appreciated 5.3 per cent during November-December 2016, settling at 3.1 per cent higher by January 2017 (against an index of partner currencies). During the most protectionist phase of the USA (mid to late 1980s) a sharp rise was seen in the dollar—caused by tighter monetary policy and relaxing fiscal policy.
(i) India could get much benefits by promoting labour-intensive exports and negotiating free trade agreements with the UK and Europe. The potential gains for export and employment are substantial—additional export of US$ 3 billion (specially in the apparel and leather & footwear sectors) and additional employment of 1.5 lakhs.
(ii) The likely retreat of USA from regional initiatives such as the Trans- Pacific Partnership (TPP) in Asia and the Trans-Atlantic Trade and Investment Partnership (TTIP) with the EU, it is possible that the relevance of the WTO might increase. As a major stakeholder and given the geo-political shifts under way, India should proactively pursue to revive WTO and multilateralism.