Foreign Trade Policy 2015-2020: A Detailed Analysis and Future Directions

On April 1st, 2015, the Government of India unveiled the New Foreign Trade Policy (FTP) 2015-2020, a landmark document that set the stage for India's export-driven growth strategy. This policy, aiming to make India a significant player in international trade, introduced a range of strategic measures, trade facilitation initiatives, and export incentives, with a strong emphasis on procedural simplification and digitalization.

### Core Objectives and Key Strategies

The FTP 2015-2020 outlined several core objectives aimed at boosting India's exports while making it easier for businesses to engage in international trade. The policy sought to:

1. Increase India's share in global trade by enhancing the competitiveness of Indian goods and services.

2. Simplify and rationalize the export-import procedures to reduce transaction costs.

3. Facilitate trade through digitalization by allowing businesses to upload soft copies of documents online using digital signatures.

4. Promote the ease of doing business in India by addressing the infrastructural and procedural bottlenecks.

### Focus Initiatives and Trade Facilitation Measures

The policy introduced several focus initiatives to encourage exports from specific sectors, including agriculture, handlooms, handicrafts, and marine products. The emphasis on trade facilitation was evident in the measures that aimed to simplify customs procedures, improve infrastructure, and streamline the export-import process. The introduction of the online filing of documents and digital signatures marked a significant step towards reducing bureaucratic hurdles and improving efficiency.

### Export Incentives and Procedural Simplifications

One of the highlights of the FTP 2015-2020 was the introduction of new export incentive schemes and the rationalization of existing ones. The policy provided comprehensive guidelines on export incentives under various schemes, such as the Merchandise Exports from India Scheme (MEIS) and the Service Exports from India Scheme (SEIS). These schemes were designed to reward exporters based on the value of their goods and services, thereby encouraging higher exports.

The policy also addressed the simplification of procedures related to export and import activities. By streamlining processes and reducing the compliance burden on exporters and importers, the FTP aimed to make India's trade regime more user-friendly and less cumbersome.

### Analytical View on India’s External Sector and Future Directions

Chapter 1: Legal Framework and Trade Facilitation

The policy’s legal framework emphasized creating a more robust and transparent trade environment. By introducing trade facilitation measures, the FTP 2015-2020 aimed to align India's trade practices with global standards, thereby reducing the time and cost associated with cross-border trade. Future directions should focus on further enhancing the legal framework by incorporating more technology-driven solutions to facilitate real-time trade data analysis and monitoring.

Chapter 2: General Provisions Regarding Exports and Imports

The general provisions under the FTP 2015-2020 provided clarity and uniformity in the export-import procedures. The simplification of these provisions was critical in reducing the complexities faced by traders. Moving forward, there should be continuous efforts to align these provisions with international best practices to ensure seamless integration with global trade networks.

Chapter 3: Exports from India Schemes – Analysis of New Schemes

- Merchandise Exports from India Scheme (MEIS): MEIS consolidated various export incentive schemes, providing a single, uniform reward structure for goods exports. This was a significant step in simplifying the incentive structure, making it more accessible for exporters.

- Service Exports from India Scheme (SEIS): SEIS extended export incentives to service providers, recognizing the growing importance of services in India's export basket. The scheme aimed to boost India's competitiveness in the global services market.

Future improvements could focus on enhancing the scope of these schemes, including more sectors and providing higher incentives for high-value exports.

Chapter 4: Duty Exemption/Remission Schemes – Analysis of Changes

- Advance Authorization, Annual Advance Authorization, and Duty-Free Import Authorization: These schemes provided duty exemptions on the import of inputs required for export production, which significantly reduced the cost of manufacturing for exporters.

- Gems and Jewellery Sector Provisions: Special provisions were made for the gems and jewellery sector, recognizing its significant contribution to India's export earnings.

Continuous refinement of these schemes to make them more accessible and beneficial for exporters, especially SMEs, could further enhance India’s export potential.

Chapter 5: Export Promotion Capital Goods (EPCG) Scheme – Analysis of Changes

The EPCG Scheme facilitated the import of capital goods at zero customs duty, provided the exporter met the stipulated export obligation. The changes in the EPCG scheme under the FTP 2015-2020 aimed to make it more flexible and aligned with the needs of exporters. Future directions should focus on reducing the export obligation and simplifying the compliance requirements to make the scheme more attractive.

Chapter 6: Export Oriented Units (EOUs), EHTPs, STPs, and BTPs

The policy provided various benefits to EOUs, EHTPs, STPs, and BTPs, such as duty exemptions and simplified import-export procedures. These provisions played a crucial role in promoting exports in the IT, biotechnology, and electronics sectors. To further bolster exports from these units, the government should focus on enhancing infrastructure support and reducing procedural delays.

Chapter 7: Deemed Exports – Analysis of Changes

The policy expanded the scope of deemed exports, providing benefits to suppliers of goods that are considered exports for purposes like EPCG, AA, and DFIA. The future focus should be on simplifying the claim process and ensuring timely disbursement of benefits to encourage more participation in this segment.

Chapter 8: Quality Complaints and Trade Disputes

The FTP 2015-2020 emphasized the resolution of quality complaints and trade disputes through a robust mechanism, ensuring fair and quick resolution. This was crucial in maintaining India’s reputation in the global market. Future directions should include the establishment of a more transparent and time-bound dispute resolution mechanism.

Chapter 9: Definitions and Miscellaneous Matters

The policy provided clarity on various definitions and miscellaneous matters related to trade, ensuring that all stakeholders have a clear understanding of the rules and regulations. Continuous updates and revisions in line with global trade practices are essential for maintaining the relevance and effectiveness of these definitions.

### Practical Tips and Future Directions

- Leverage Digital Platforms: The digitalization of trade processes should be further enhanced to include real-time tracking of shipments, automated compliance checks, and integrated financial settlements.

- Focus on Value-Added Exports: India should focus on exporting value-added goods and services, moving up the value chain in global trade.

- Strengthen Trade Infrastructure: Continuous improvement in port infrastructure, logistics, and connectivity is crucial to reducing trade costs and time.

- Enhance SME Participation: Special schemes and incentives should be designed to encourage small and medium enterprises (SMEs) to participate more actively in international trade.

- Align with Global Standards: India’s trade policies and practices should be continuously aligned with global standards to ensure competitiveness and ease of doing business.

### Conclusion

The New Foreign Trade Policy 2015-2020 laid a strong foundation for India’s aspirations to become a global trade powerhouse. By addressing key challenges and introducing strategic measures, the policy provided a clear roadmap for enhancing India’s trade competitiveness. Moving forward, continuous policy refinement, focus on digitalization, and infrastructure improvements will be critical in achieving the ambitious goals set out in the FTP 2015-2020.

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