New Delhi: The government may announce the much-delayed Foreign Trade Policy (FTP) in April that will establish its long-term vision for exports and a policy for sectors such as e-commerce, an official aware of the plans said, at a time of heightened global economic volatility.

The policy can allow for interventions to address immediate issues, and outline measures to accelerate releases and reduce the physical interface.

The new FTP comes at a time when India’s outbound shipments are starting to decline due to declining demand in advanced economies. The long-term vision may recommend measures to reach $1 trillion in exports by 2030, the official said. This could include setting up economic zones outside India as part of the Aatmanirbhar Bharat initiative, and diversifying service exports outside the US and EU.

“We are looking at a dynamic foreign trade policy that establishes the vision that covers several areas that will facilitate the achievement of a long-term goal. If policy needs to be revised, one cannot wait five years… The government has been constantly engaging and adapting IT… Previously, exporters had to wait for the five-year foreign trade policy to launch a new scheme, such as an import duty remission scheme, etc. We have already done that and we have not waited for the launch of the FTP,” the above-mentioned official said on condition of anonymity.

A final call will be made at the highest level of government in March to announce FTP. According to the above official, the FTP may have three new chapters: on e-commerce, districts as export hubs, and SCOMET (dual-use items used for civil/industrial and military use).

FTP is a set of guidelines and instructions prepared by the Indian Director General of Foreign Trade (DGFT) in matters related to the import and export of goods. The government in September postponed FTP for 2022-27, to be announced on September 30, in a last-minute change of plans.

The government now expects exports to remain stable at $417 billion in the current fiscal year, up from earlier expectations of around $470 billion.

Exports fell 12.2% year-on-year in December to $34.5 billion as the recession outlook reduced consumer demand in several advanced and emerging economies. It was the second such decline in FY23.

The government introduced WTO-compliant schemes last year, including schemes for the remission of duties and taxes on exported products (RoDTEP) and schemes for the refund of state and central duties and taxes (RoSCTL).

The 2015-20 Foreign Trade Policy, which was due to expire on March 31, 2020, has been extended four times so far, previously due to the Covid-19 pandemic and more recently due to global economic uncertainty. This is now valid until March 31.

Questions emailed to the Department of Commerce went unanswered until it went to press.

Ajay Sahai, director-general and CEO of the Federation of Indian Export Organizations (FIEO) said he expected the new FTP to set out a mid- to long-term export roadmap, with a target of $1 trillion each in exports of goods and services by 2030, by balancing traditional exports and sunrise sectors of exports — the former as an effective tool for job creation, and the latter to align Indian exports with the global import profile. “A comprehensive FTP to address supply-side issues ranging from liquidity to logistics is urgently needed, albeit within the scope of WTO discipline,” said Sahai.

The commercial department is likely to propose developing 50 districts as export hubs in the first phase, which will be part of FTP and take them to the cabinet for approval, a second well-known official said. It aims to help domestic producers in districts scale production and find potential buyers outside India to boost exports. It is likely to be presented as a centrally sponsored scheme, with the center paying 60% of the estimated cost €50 crore per district.

The e-commerce chapter is likely to boost e-commerce exports, which have not received any special boost so far, the second official said. The move is designed to encourage small players to tap into overseas markets for growth and accelerate the export of geographically indicated (GI) products, and under the one district one product (ODOP) initiative. It will essentially help facilitate in terms of faster approvals.

Sanjay Budhia, chair of the CII National Committee on EXIM said exporters are eagerly awaiting the new FTP as global export conditions have changed greatly since the last one was released. “We have presented various inputs to the government for its formulation… Exporters expect the FTP to include diversification of the export basket, expansion of markets, appropriate stimulus policies and trade facilitation,” said Budhia.

Praveen Khandelwal, secretary-general of the Confederation of All India Traders (CAIT), which is also part of the Board of Trade, said the policy should be planned against the backdrop of domestic trade. “It should be planned that policies should be designed to prioritize the flow of goods and services from domestic to foreign policy. It must be the case that foreign goods and services do not eat away at the domestic market,” said Khandelwal.

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