Foreign Trade Policy is a set of guidelines for the import and export of goods and services of the country. In India, it is formulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry. DGFT is a body formed for promotion and facilitation of exports and imports. The policy is formulated every five years for the next five years.

India’s first foreign trade policy was formulated in the year 1985 with the aim of boosting exports (by finding opportunities and encouraging exporters by making industry-friendly policies), generating employment and improving competitiveness of the local market and the quality of the products. With 2020 coming to an end, it was announced that the 2015-2020 policy has been extended till September 2021. Let’s take a look at the highlights of 2015-2020 policy and the new 2021-2026 policy.

2015-2020 Highlights

• Policies were simplified and new export incentives were introduced for the following categories- Merchandise Export of India (MEIS) and Service Export of India (SEIS). Under these schemes, countries have been categorized into 3 groups and the rewards vary from 2-5% under MEIS and 3-5% under SEIS.
• Main focus was on Skill Development and Make in India to increase value-addition.
• It encouraged ‘ease of doing business’ by promoting E-documentation and Digitalisation.
• It facilitated and encouraged exports.
• Export Obligation has been reduced to 75% under Export Promotion Capital Goods scheme (EPCG).
• It also focused on giving a boost to Defence Exports- Tanks, Helicopters, Aircraft etc.
• New duty exemptions on certain items.
• Addressal of quality complaints and improvement.
• Manufacturers labelled as “status holders” (certified by DGFT for their major contribution leading to growth of India’s exports) to self-certify their goods as a product originated from India. This helps them qualify for preferential treatment under various bilateral and regional trade agreements.
• Construction of three additional ports (to improve connectivity) which is still in progress. These ports are being constructed in Kerala, Gujarat and Andhra Pradesh.
• Introduction of duty-free schemes for reduction in tariffs
• Development of additional export excellence zones. Moreover, fast track clearance facility, permitting inter unit transfer of goods and services and permitting warehouses set ups near ports for businesses located in 100% EOU (Export Oriented Units)/EHTP (Export Hardware Technology Park)/STPI (Software Technology Parks of India).

2021-2026 Highlights

Due to the ongoing pandemic, the new policy mainly revolves around ‘ease of doing business’ and digitalisation to promote and support export business in these tough times. It is an extension of 2015-2020 policy as it was extended till September 2021.

The main highlights of the 2021-2026 policy-

• Digitalisation of business
• Simplification of export-import procedures- Making documents accessible in digital form.
• Ease of business by providing easy access to credit and self-certification.
• Increasing Export awareness: Many exporters and manufacturers are not aware of the duty exemptions and schemes they can benefit from.
• Help districts reach their potential as an Export Hub. Commerce department will ensure implementation with the help of the State Governments and Union Territories.
• Improve infrastructure for domestic manufacturing sector to correct the trade imbalance.