India is currently recognized as one of the most significant participants in the world economy. It is one of the most sought-after locations for foreign investments worldwide because of its trade policies, government reforms, and innate economic capabilities. Also, technological and infrastructural development across the country augurs well for the trade and financial sector in the coming years. The Government of India has been working on striking vital deals with the Governments of Japan, Australia, and China to increase contribution towards the country's economic development and growth in the global market. India can potentially increase its goods and services export to Australia to US$ 15 billion by 2025 and US$ 35 billion by 2035. Mr Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution, and Textiles, want India to export $2 trillion worth of goods by 2030. This would enable India to take a leading role in global commerce. This article overviews the pros and cons of the Indian Trade Policy.
The Department of Commerce is tasked with making India a significant participant in international commerce and assuming leadership positions in organizations that promote trade in line with India's expanding significance. In the medium term, the Department develops commodities and nation-specific strategies, and in a long time, a strategic plan/vision and India's foreign trade policy.
The fundamental foundation of policy and strategy for encouraging exports and trade is provided by India's Foreign Trade Policy (FTP). It is revised regularly to adjust to the shifting domestic and global environment.
The current Foreign Trade Policy aims to increase India's market share in its product and market segments while examining potential new markets and product opportunities. As part of its foreign trade strategy, India plans to assist exporters in maximizing the benefits of the GST, closely monitor export performance, make international trade more convenient, boost the value of its agricultural exports, and encourage exports from MSMEs and labor-intensive industries. Additionally, the DoC has worked to engage states as active export partners. State governments are now actively creating export plans based on the capabilities of their particular industries.
The main benefit of India's trade strategy is that it constantly seeks to strengthen its business ties with the rest of the globe. For foreign business people who are interested in purchasing Indian goods and services, this is a fantastic opportunity. The South Asian economy has opened up to a great extent recently. Its exports and imports have increased significantly as a result of this. Secondly, another advantage of India's trade policy is that the country provides easy access to a large population base. Unlike China, India does not deter foreign players from engaging with its vast population. India's open business environment makes it much easier for international traders to consider the country.
Approximately 65% of India's current export revenues come from exports of goods, with the remainder coming from services. It is still being determined if the policy's overall increase proposal anticipates that this current ratio will remain constant over time. If so, exports of goods and services would have to rise annually from current base levels by around $65 billion and $35 billion, respectively.
Given that India's exports of goods and services averaged growth rates of 15% and 14%, respectively, from 2005 to 2013, a yearly rise of 20% seems ambitious. For Indian exports to see the kinds of growth rates that the program anticipates, they would need to reach beyond their current borders.
Trade involves two-way movement—other nations import goods from India. Importing countries do not view exports as favors or charitable contributions. They are either imported as requirements or because they are more affordable and of higher quality than comparable items made domestically.
India manufactures only several essentials on a global scale. It lacks sufficient oil, gas, mineral, and nuclear resources to feed the rest of the globe. Furthermore, it lacks China's extensive manufacturing sector, which produces a wide range of affordable goods. Only if its exports are practical—for instance, through inexpensive production, distinctive characteristics like design, or other qualities like environmental friendliness—can they compete on the global market.
Recent developments in foreign trade policy are as follows:
• India and the UK finished the fifth round of negotiations for the India-UK Free Trade Agreement in August 2022. (FTA).
• India and the EU decided to establish the EU-India Trade and Technology Council in April 2022, and they intended to sign a free trade deal by the following year.
• India had signed 13 Free Trade Agreements (FTAs) with its trading partners as of April 2022, including essential trade agreements like the Comprehensive Partnership Agreement (CEPA) between India and the United Arab Emirates and the Economic Cooperation and Trade Agreement between India and Australia (Indus ECTA).
• The value of goods exported in April 2022 was US$38.19 billion, up 24.22% from the previous month. The government intends to boost goods exports with the following trade strategy 2021–2026, focusing on the increased proportion of MSMEs.
• MSMEs and new export potential are anticipated to be a priority of foreign trade strategy from 2021 through 2026. The federal government intends to create a new system in March 2021 to strengthen import screening to defend indigenous firms. The foreign trade strategy 2021-26, anticipated to start next month, would contain specifics on the new screening procedure.
• The data readily available would assist domestic producers in evaluating the market potential of such items.
• Additionally, it is anticipated that the foreign trade strategy 2021–26 will increase MSMEs and e-commerce exports and discover new industries to increase domestic exports.
• Under the leadership of Minister of Commerce and Industry Mr Piyush Goyal, the Board of Trade (BOT) met on December 2, 2020. The meeting's primary objectives were to discuss the new Foreign Trade Policy (2021-26) and to lay out strategies for boosting domestic production and exports. "We look at a single window that can assist us increase the convenience of doing business," Mr Piyush Goyal remarked. People from all around the globe should have faith that they may visit India to purchase real estate, obtain the necessary permissions, engage in commerce and industry, and develop the country's manufacturing sector and service network
• The Ministry of Commerce and Industry increased the reach of the Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), raised the MEIS incentive for ready-made garments and made-ups by 2%, raised the SEIS incentive by 2%, and extended the validity of Duty Credit Scrips from 18 months to 24 months in the mid-term review of the Foreign Trade Policy (FTP) 2015–20. The prolonged government FTP for another year, ending on March 31, 2021.
India can make use of the enormous potential in the export markets. India is competitive in several markets, but its export share is relatively modest, suggesting unrealized potential. Future trade policies for India should concentrate on industries like iron and steel (2.4%), medicines (0.4%), electrical manufacturing and equipment (0.4%), cars and other parts (1.2%), and edible fruits and vegetables (1.3% and 1.8%, respectively). In particular, initiatives should be taken to increase exports of specific product categories. Special initiatives should be taken to boost agro-exports with emphasis on dairy, fish, livestock, fruits and vegetables because India is one of the largest producers of these products, and its export share in world exports is relatively low.
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