Making of the New Foreign Trade Policy for 2020 to 2025 is in the process as the old one ends on 31st March 2020. The ministry of commerce invited suggestions from its stakeholders and experts for the same.
Simpler Export Promotion Schemes
The ministry is laying special emphasis on simplifying and rationalizing the export promotion schemes. The ministry is also considering changes for services and e-commerce exports along with self ratification schemes.
Export Promotion Capital Good (EPCG) scheme allows the manufacturers of export goods to import duty-free inputs. EPCG promotes technological up-gradation of the production process for manufacturers in India. Similarly, advance authorization allows importing duty-free inputs that are physically included in the export product. The export obligation may complete within 18 months from the date of the issue of authorization.
Incentives for Exports
Exporters are demanding incentives for research and development under New Foreign Trade Policy. Also, the ministry is renewing the policies to make them WTO friendly. Currently, various incentives and import export policies do not comply WTO rules. In addition, the department of commerce is focusing on simplifying the export of several services.
Expert Suggestions
The expert advisory group suggested a ‘single window clearance’ system for foreign trade rather than separate entities. Further, the group strongly supported the formation of a separate commission on pharmaceutical and biotechnology. In addition, it recommended a simpler visa regime and flexibility in health insurance portability across countries. These suggestions were made for increasing foreign direct investment to India’s debt and equity capital markets.
The group recommended that India should aspire to reduce the cost of capital to an average of ten best performing OECD countries. Regarding the slow foreign trade, it also suggested the ministry to take the assistance of a data analytics firm for impressive solutions.
The government has suggested many incentives to improve foreign trade. We expect the new foreign trade policy to be beneficial to exporters and restrict imports.