Foreign Trade Policy

Topics: International trade, Trade, Export Pages: 8 (1508 words) Published: April 4, 2011
”Critical analysis of new Foreign Trade Policy 2009-14 of Govt. of India”

The Foreign Trade Policy 2009-14 of the Govt. of India is a “holistic strategy, driving export growth to new markets and addressing issues of labour-intensive export and intensive export and transaction cost effectively.”

On trade climate and export target

The world has not witnessed in the last seven decades a situation as it has been in recent years and it is very important that the Government steps in the act as a facilitator to intensive exporters to get them out of what we may call the tsunami.

Objectives of last 2 policies of Foreign Trade of Govt. of India


The last 5 years (2004-09) FTP was released on 1st September in the year 2004.

i) To double India’s share of global merchandise trade within next 5 years of policy and

ii) To act as an effective instrument of economic growth and generation of additional employment opportunity

We won commendably on both the fronts over the last five years as the performance bears out.


The current new FTP of 5 years (2009-14) FTP was released late on 27th August, 2009.

There are three set targets.

i)In the short-term, to reach US $200 billion exports, growing 15 per cent over the next two years

ii)Over 2011-14 double the exports of goods and services from the current level, growing at 25 per cent over the three years.

iii)Long-term objective of 2020 – earmarked to double our Indian share of global trade in goods and shares from 1.65% to 3.2%. Thrusts areas
This current Foreign Trade Policy 2009-14 concentrates on five specific main areas and it is in many ways different from what had been done in the past. a)The first main pillar is stability and continuity in that •it continued the existing DEPB scheme for one more year, •extended 10A/10B IT exemption to EOUs and to SITP units to one year, •increased the EPCG coverage

(i)to 95 per cent and
(ii)increased the duration of the scheme over the next fiscal and extended the interest subventions of 2 per cent to the next fiscal. b)The Second pillar is on rationalization of incentive schemes ranging from 1.25% – 7.5% across eight groupings of incentives. It has been rationalized in such a way so that four groupings of incentives that giving a higher amount to areas where it is needed them more and on areas which got less increase them to a higher level. c)The third pillar– labour-intensive export industries get the required incentives ranging from gem and jewellery, leather, textiles, handicrafts and handlooms. While the rate under the Focus Product Scheme has been increased across all products from 1.25% to 2%, in the case of handloom and handicrafts this has been increased to 5 per cent. Specific intervention within labour-intensive segments include setting up diamond bourses, duty drawback on gold jewellery exports and hike in value limits of personal carriage to promote gem and jewellery products exports. d)The Fourth pillar is technological up-gradation to let status-holders import duty-free capital goods with a sunset clause of two years — so advantages must be taken over the next two years. e)The fifth pillar is market diversification to 26 new markets and 13 identified markets which hold tremendous potential for India. We must look at the world as a market and must look at areas where we have comparative and competitive advantages. It is important we must broaden and deepen our coverage – combination of both and that is what the policy is about. SOPs and incentives

New FTP have announced various SOPs and incentives for exporters to look beyond US and European markets. Every good quality system is based on its standard operating procedures (SOPs).

This comes at a challenging time as the entire world is facing an unprecedented...
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