NEW DELHI : India’s foreign trade policy (FTP), due on April 1, has been further delayed, an official familiar with the matter says, citing plans for wider industry-government consultations in the context of new geopolitical developments.
The five-year FTP, originally scheduled for April 1, 2020, was postponed for a year due to the pandemic until March 31, 2021 and then to September 30, 2021 and later to April 1, 2022. According to the official quoted above, who spoke on condition of anonymity, the existing FTP can now continue for another six months.
The policy will aim to complement the ongoing overhaul of the Special Economic Zones (SEZ) policy to bring it in line with World Trade Organization rules. It will cover the ease of doing business, a program of “districts as an export hub”, the promotion of geographical indication (GI) products and e-commerce. However, direct exports are unlikely.
“I don’t think we can offer the FTP on April 1 because there is still a lot of consultation to do. There is also a change in the geopolitical climate, which can be studied with regard to the opportunities for our industry. Additionally, the Commerce Department is also busy dealing with the impact of the Russian-Ukrainian conflict. It is likely that the current policy will continue for another six months,” the official said.
The district hub scheme, likely to be part of the new FTP, will aim to help local producers in 700 districts expand their manufacturing and find potential buyers outside India.
While the government will not introduce schemes and flanking measures that are not WTO compliant, those that already exist such as the Capital Goods Export Promotion Scheme (EPCG) – which allows the duty-free importation of certain capital goods used in manufacturing subject to specific export obligations – may continue.
“The industry has asked for incentives. But we have made it clear that the government cannot give concessions to everyone. New initiatives must be WTO compatible. So we can look at the district hubs initiative, promotion of IG products, e-commerce and other measures for ease of implementation,” the official said.
The government is currently revising the SEZ policy to make it WTO compliant with a one-stop customs clearance system with improved infrastructure and simplified customs procedures. The Union budget proposed to replace the existing SEZ Act with new legislation to allow states to become partners in the “Development of Business and Service Clusters” (DESH).
“The FTP may also have trade promotion measures, including a dedicated ‘trade promotion body’ to drive overall promotion strategy, set export targets and execution. We have to create Brand India,” the official said. FTP can also facilitate the centralization and digitization of trade facilitation processes to facilitate compliance and program administration.