Foreign Trade Policy 2023 has good intentions but these need to translate into action for $2-trillion exports
The new Foreign Trade Policy (FTP) is in sync with the basic thrust of the economic policy regime: doing away with incentives and moving towards a system in which is friendlier to exporters in terms of costs and procedural rigours. The key approach to the policy, according to the Government, is based on four pillars: incentive to remission; export promotion through collaboration involving exporters, states, districts and Indian missions; ease of doing business, reduction in transaction cost and e-initiatives; and emerging areas ase-commerce developing districts as export hubs and streamlining SCOMET policy. SCOMET is the acronym of special chemicals, organisms, materials, equipment and technologies. Announcing the policy, Commerce and Industry Minister Piyush Goyal said, “We will achieve $2 trillion in exports by 2030, but it shouldn’t be that merchandise exports are outperformed by services exports.” The Government’s focus is correct, for merchandise exports are laggards. In the first 11 months of 2022-23, they stood at $405.94 billion, which was 7.55 per cent more than $377.43 billion in the corresponding period 2021-22. In contrast, services exports went up from $227.58 billion in April 2021-February 2022 to $296.94 billion in April 2022-February 2023, which was a rise of 24.56 per cent. This is not surprising because India’s weakness in manufacturing is no secret; economic reforms began more than three decades ago, but they still have to percolate to the lowest levels. This explains the greater focus on states, districts, ease of doing business, reduction in transaction cost and e-initiatives in FTP.
FTP 2023 is based on continuity of time-tested schemes facilitating exports, an official press release said, adding that it is a document which is nimble and responsive to the requirements of trade. The release highlights the nimbleness and responsiveness by pointing out that changes were done subsequent to the initial release of FTP 2015-20. That may be true, but the point is that this did not help merchandise exports much, as the latest figures suggest. Services exports have been doing well, but that is primarily because the businesspersons in this sector don’t have to interact much with the government officials. For instance, an IT firm is not bothered by the boiler inspector. An important feature of FTP 2023 is that it is open-ended. As Director General of Foreign Trade Santosh Kumar Sarangi told the media, it will be updated “as and when required.” Another feature is a one-time amnesty scheme for exporters to close the old pending authorisations and start afresh. He also said, “The approach of the new policy is to move from an incentive-based regime to a remission of taxes regime.” Just as the proof of the pudding is in the eating, the efficacy of a policy is in its implementation. The target of exports worth $2 trillion can be achieved if the good intentions of FTP 2023 get translated into action.