Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Foreign Trade Policy


From UPSC perspective, the following things are important :

Prelims level : Foreign Trade Policy

Mains level : Read the attached story

The government has extended the launch of new Foreign Trade Policy (FTP) (2022-27) by six more months and would continue with the existing one.

Why such delay in Foreign Trade Policy?

  • Geopolitical uncertainty: The geo-political situation is not suitable for long-term foreign trade policy, said Union Commerce Minister.
  • Global recession: Currently, fears of a recession in major economies like the US and Europe have escalated a panic among investors.
  • Decline in USD inflows: Foreign investors have begun to pull back their money from equities.
  • Rupee depreciation: The US Dollar is at a 22-year high, while the Rupee hit a new all-time low of $81.6.
  • Huge trade deficit: The trade deficit widened by more than 2-folds to $125.22 billion (April – August 2022) compared to $53.78 billion in the same period last year.

What is a Foreign Trade Policy?

  • India’s Foreign Trade Policy (FTP) is a set of guidelines for goods and services imported and exported.
  • These are developed by the Directorate General of Foreign Trade (DGFT), the Ministry of Commerce and Industry’s regulating body for the promotion and facilitation of exports and imports.
  • FTPs are enforceable under the Foreign Trade Development and Regulation Act 1992.

What is India’s Foreign Trade Policy?

  • In line with the ‘Make in India,’ ‘Digital India,’ ‘Skill India,’ ‘Startup India,’ and ‘Ease of Doing Business initiatives, the Foreign Trade Policy (2015-20) was launched on April 1, 2015.
  • It provides a framework for increasing exports of goods and services, creating jobs, and increasing value addition in the country.
  • The FTP statement outlines the market and product strategy as well as the steps needed to promote trade, expand infrastructure, and improve the entire trade ecosystem.
  • It aims to help India respond to external problems while staying on top of fast-changing international trading infrastructure and to make trade a major contributor to the country’s economic growth and development.

Issues with FTP (2015-2020)

  • Acting on Washington’s protest, a WTO dispute settlement panel ruled in 2019 that India’s export subsidy measures are in violation of WTO norms and must be repealed.
  • Tax incentives under the popular Merchandise Exports from India Scheme (MEIS) (now renamed as RODTEP Scheme)and Service Exports from India Scheme (SEIS) programmes were among them.
  • The panel found that because India’s per capita gross national product exceeds $1,000 per year, it may no longer grant subsidies based on export performance.

Way forward

  • WTO-compliance: With incentives under MEIS and SEIS in the cloud, WTO-compliant tax benefits are a must.
  • Access to credit: Credit availability has long been a need of exporters, particularly MSMEs.
  • Infrastructure upgrade: China’s network of ports, motorways, and high-speed trains, which are among the greatest in the world, is one of the reasons it is a manufacturing and export powerhouse.
  • Digitization and e-commerce boost: India requires innovative trading procedures as a result of Covid-19 breaking old supply channels.


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