From UPSC perspective, the following things are important :
Prelims level : Recent Free Trade Agreements
Mains level : Foreign Trade Policy 2023
- Foreign Trade Policy 2023 focuses on shifting from an incentive to a tax remission-based regime, improving the ease of doing business, promoting exports through collaborations, and targeting emerging areas. It aims to achieve $2 trillion in export of goods and services by 2030, up from the previous $900 billion target.
Foreign Trade Policy 2023
- Reducing Friction Points:
- Automatic approvals for various permissions will streamline processes and reduce bureaucratic hurdles for businesses.
- Reduced processing times for revalidation of authorizations (expected to be brought down to one day), extension of export obligation periods, advance authorizations, and EPCG issuances will expedite export activities.
- Lowered application fees for MSMEs will provide financial relief and encourage more small businesses to participate in global trade.
- Supporting Export Growth:
- Facilitating e-commerce exports will enable Indian businesses to tap into the growing global e-commerce market, estimated to reach $6.07 trillion by 2024.
- Widening the basket covered under RODTEP will ensure more exporters benefit from tax remission, increasing competitiveness.
- Boosting manufacturing, particularly in labor-intensive sectors, will create more jobs and enhance the export potential.
- Rationalizing thresholds for exporter recognition will make it easier for businesses to be acknowledged and incentivized for their export performance.
- Merchanting trade reform will promote services exports and reduce transaction costs.
- Promoting the use of the rupee in international trade can help reduce exchange rate risks and increase trade with countries facing currency restrictions.
- One-time Amnesty Scheme: The amnesty scheme aims at faster resolution of trade disputes, clearing pending cases, and improving the overall trade environment.
- Boost to domestic manufacturing: Lowering import tariffs will make raw materials and intermediate goods more affordable, boosting domestic manufacturing and export competitiveness.
- Competitive Indian goods and services: Ensuring a competitive exchange rate will enhance the affordability of Indian goods and services in global markets.
- FTA’s: Signing broader and deeper free trade agreements can open new markets for Indian exporters and attract foreign investments.
- The Foreign Trade Policy 2023 comes at a time of global uncertainty, but with India’s small share in global trade (around 1.8% in merchandise exports and roughly 4% in services), there is significant room for improvement. The new policy, along with additional measures, can enhance the country’s trade performance and achieve the ambitious $2 trillion export target by 2030. However, it is crucial to monitor the policy’s implementation and address potential challenges for businesses to fully reap the benefits.