India will introduce its foreign trade policy in 2022. This policy will be the guiding principle of foreign trade for the next five years. Amid global pressure, Covid-19 and the vision of a self-sufficient India, the task of formulating policy will be much more difficult.
âOne of the main challenges that require immediate attention is boosting domestic manufacturing. We depend on imports for a range of products, so the new trade policy should stimulate domestic manufacturing and should also suggest ways to make it competitive, âsaid Ram Singh, professor at the Indian Institute of Foreign Trade.
Another important industry demand is to have WTO compliant programs. According to the WTO, countries should not have a lot of subsidy programs for exporters. The government has already taken some steps in this direction, but more steps are needed in this direction.
To bring export promotion programs into line with WTO standards, India terminated the MEIS program, which was the incentive program and introduced duty clearance rates as part of the duty remission. and Taxes on Exportable Products (RoDTEP), which will reimburse built-in duties and taxes not reimbursed earlier, such as fuel, stamp and electricity taxes, including those implemented at national and local levels. The 2021-2022 Union budget allocated 13,000 crore rupees to RoDTEP.
Shedding light on the red tapism involved in obtaining refunds under various programs, Singh added, âIn other countries there is a built-in tax neutralization mechanism – a one-stop-shop. But in India, for example, there is a duty drawback scheme that provides for the refund / recovery of customs and excise duties paid on inputs or raw materials, etc. On top of that, to get state tax refunds you will have to redo the paperwork which is a huge burden. So just like other countries, we need to have a one-stop-shop for this, âSingh explains.
According to Singh, reducing logistics costs is mandatory to make products competitive. He thinks that will happen in the next few years.
In the wake of the Covid-19 pandemic, which disrupted supply chains across the world, lessons learned from the ongoing pandemic must be taken into consideration. According to industry insiders, digitization and e-commerce are two ways to achieve this. Singh also says the same, suggesting the way forward, he says that the two government policies, one district, one product and e-commerce policy should not work in silos but should complement each other.
Ronak Chiripal, CEO of Nandan Terry Ltd believes that a new trade policy should cover upgrading the technology and strengthening the skills of exporters, which will eventually help Indian exporters to be competitive on their advantage rather than relying on government grants that can be obtained through technology upgrading and training. .
One area on which India needs to focus more is that of free trade agreements, now part of the new foreign trade policy. Various industries are demanding new strategies for their regional and bilateral trade agreements. Under the new trade policy, India can further explore the possibilities of exploiting trade opportunities with major economies using the FTA on services.
In addition to this, industry insiders believe that export awareness is an issue of great importance, so trade policy may include government workshops and outreach programs that educate and inform traders about the issues. international laws and standards, global markets, intellectual property rights, patents and geographical indication (GI).
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