New foreign trade policy may not bank on incentives to boost exports

Set to be unveiled on Friday, it is likely to focus on export hubs, e-com

The Centre is set to unveil the much-awaited new foreign trade policy (FTP) on Friday, after extending the current policy for three years. The new FTP is likely to focus on areas, such as developing districts as export hubs, e-commerce, and promoting ease of doing business.

The latest FTP, a comprehensive policy strategy to promote the export of goods and services, will be accompanied by a vision statement that will outline the long-term strategy for India’s foreign trade. The roadmap for achieving $2 trillion worth of goods and services exports will also be drawn.

While the existing policy’s focus has been on incentive-driven schemes, the new policy is likely to make Indian exports competitive through non-fiscal measures. No new export incentive scheme is expected, according to people in the know.

“There could be some measures for small (MSME) exporters in the FTP, as they are the ones that often get badly affected by any disruption. Schemes, such as the Districts as Export Hubs, can be provided a push through the FTP. There could also be a separate chapter on e-commerce and measures pertaining to ease of doing business,” a source said.

An exporter said that some of the unfulfilled promises, such as extending the export boosting scheme Remission of Duties and Taxes on Export Products (RoDTEP), may find favour in the new FTP. Apart from that, exporters hope that there will be measures to reduce the logistics cost of exports.

Narendra Goenka, chairman of Apparel Export Promotion Council (AEPC), said long-running schemes, such as Export Promotion Capital Goods (EPCG), should not be discontinued as the scheme has majorly contributed towards capacity building.

“We expect that all (incentive) schemes that are currently in operation will continue. Right now, e-commerce firms are insignificant players as far as exports are concerned. We have proposed setting up e-commerce parks or zones, with an idea that all entities, such as logistics companies, banks, fintech firms, and income tax authorities, are located in one place,” said Ajay Sahai, director-general and chief executive officer, Federation of Indian Export Organisations (FIEO).

The FTP will be rolled out at a time when the global economy has gone through a series of disruptions, starting with Covid-19 in 2020 to the ongoing Russia-Ukraine conflict, resulting in recessionary trends among major developed economies. The existing policy came into force on April 1, 2015, and was valid for five years -- until 2020. The FTP got several extensions since 2020, as businesses grappled with the disruptions caused by the Covid-19 pandemic and the Russia-Ukraine conflict.

Key points

The current FTP is valid till March 31

FTP will focus on developing districts as export hubs, e-commerce, promoting ease of doing business, MSMEs

New export incentive scheme unlikely

Existing export incentive scheme likely to continue