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Export Policy of India

Export Import Policy of India

  • Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India.
  • Foreign trade in India is guided by the EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992.
  • Exim policy or Foreign Trade Policy for the years 2015-20, aims at doubling the overseas sales to $900 billion by 2019-20 and making India global,while integrating the foreign trade with “Make in India” and “Digital India Programme”.

Foreign Trade Policy 2015-20

  • It provided a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in keeping with the “Make in India” vision of Prime Minister.
  • The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the ‘ease of doing business’.
  • It described the market and product strategy and measures required for trade promotion, infrastructure development and overall enhancement of the trade ecosystem.

Targets of FTP 2015-20

  • Raise India’s share in world exports from 2 % to 3.5 %
  • Increase exports to USD 900 billion by 2019-20, from USD 466 billion in 2013-14
  • FTP to be aligned to Make in India, Digital India and Skills India initiatives, with paperless working in 24×7 Environment.
  • Unlike annual reviews, FTP will be reviewed after two-and-Half years, except for exigencies.

Impediments In Growth Of Exports In India

External factors:

  • Protectionist measures, along with withdrawal of Generalized System of Preferences (GSP) status, by US, which is our largest export destination.
  • Non-tariff barriers by other nations, mainly in case of phytosanitary products e.g. By European Union in case of mangoes.
  • In most of our FTAs, our counter parts are getting more benefits. For example, India-ASEAN FTA has negative impact on India’s export of oil palm and textiles because of competition from Indonesia and Vietnam.
  • Most of India’s preferential trade agreements (PTAs) have limited product coverage. For example, the India-Mercosur PTA doesn’t include textiles and apparel items.
  • Global issues like Brexit, macroeconomic stress in Argentina, Turkey and Italy, and the US-China wrangle cause uncertainty in the markets.        Export Policy of India
  • Decline in Economic growth due to worldwide lockdown during COVID-19

Internal factors:

  • Competition from neighbouring countries facilitating cheap labour and favourable policies. E.g. Competition in Textile from Vietnam and Bangladesh.
  • India’s export is not diversified which is evident from the fact that top 20 export categories account for 78 % of the total.
  • Poor logistics infrastructure results in weak trade facilitation regime. Cost of India’s logistics as a percentage of GDP remains as high as 13-14 %, compared with 7-8 % in developed countries. In World Bank’s Logistics Performance Index 2018, it ranks 44, below China (26) and Vietnam (39).
  • India is still exporting majority of raw material instead of the final products, for e.g. India is exporting cotton yarn rather than technical textiles
  • India’s ill-conceived trade pacts have resulted in inverted duty structure – High import duties on raw materials and intermediates, and lower duties on finished goods – That discourage the production and export of value-added items. For e.g. apparel can be imported into India duty free while its raw material -manmade fibers attract an import duty of 10 %.
  • As per Economic Survey, there is huge state-wise regional disparity in prevalence of manufacturing industries where few states contribute to major chunks of export.
  • Land and labour reforms are still pending, hindering large scale investments in export sectors.
  • Tightly regulated markets do not give enough space for exports to grow. Under the World Bank’s Doing Business rankings, India ranks 77, compared with China at 46 and Vietnam at 69.
  • In case of agricultural exports, low value addition & lack of food processing keeps export low by value.
  • Slow progress in drafting trade agreements impacts its ability to participate in global value chains, affecting export growth.

Policy Measures    (Export Policy of India)

  • Focus on new products like food commodity so that the growth is more resilient and sustainable. Also, it will cushion our exports from the global volatility and shocks in the long run.
  • India must move up from low-productivity sectors by improving the quality of its human capital.
  • Improve logistics, by developing industrial corridors, waterways, etc. as in case of Sagarmala and Bharatmala.
  • Ease of doing business by reducing red tape, enhancing foreign direct investment limits, revamping labour laws and environmental clearance processes, thus making manufacturing hassle free.
  • Quality control based on international standards so as to prevent our goods from non-tariff barriers.
  • Initiatives like Sampada, which are promoting food processing industry should be given impetus.
  • Diligent drafting of trade pacts taking into account the long term goals.

Conclusion

  • To realize the ambitious targets India has set for itself, it needs to provide not only an impetus to infrastructure and process involved but also invest highly in human capital to make necessary transition from agriculture to manufacturing and services.
  • Export Policy of India

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