New Foreign Trade Policy 2021 to 2026: A Detailed Analysis

Recently, the Union Ministry of Commerce and Industry (MoCI) has announced the New Foreign Trade Policy 2021 to 2026. The same will come into effect from 01.04.2021 and will remain effective for a period of 5 years.

Further, the said policy was an outcome of the Meeting held by the Parliamentary Consultative Committee on 12.01.2021, which was chaired Mr Hardeep Singh Puri and was attended by various Senior Officer of the Ministry and Members of the Parliament.

In this blog, we will discuss the concept of New Foreign Trade Policy 2021 to 2026, together with the salient features of Foreign Trade Policy 2015 to 2020.

Concept of Foreign Trade Policy 2014-2020

The Foreign Trade Policy 2015-2020 was launched on 01.04.2015. It aimed to provide a framework for increasing the level of employment and exports in India. The same was made in consonance with various government initiatives, such as follows:

1. Make In India;
2. Digital India;
3. Skill India;
4. Startup India;
5. Ease of Doing Business;

Further, it shall be relevant to note that in March 2020, the government decided to increase the validity of Foreign Trade Policy 2014-2020 by one year. That means the same will remain in existence till 31.03.2021. Also, the same was done in the view of COVID 19 pandemic, to provide relief under various export promotion schemes.

Objectives of Foreign Trade Policy 2014-2020

The main objective of the Foreign Trade Policy 2014 – 2020 was to double the oversea sales to the US $900 billion by the Financial Year 2019 – 2020.

Features of Foreign Trade Policy 2014-2020

The salient features of the Foreign Trade Policy 2014-2020 can be summarised as:

1. Notified Scheme like MIES (Merchandise Export from India Scheme) and SEIS (Service Export from India Scheme);
2. These two schemes replaced various earlier implemented schemes, which were on different conditions, eligibility, and usage;
3. Changed the Nomenclature of the Export Houses to 1, 2, 3, 4, 5 Stars Export House;
4. Aligned the provisions of the Foreign Trade Policy or FTP with government initiatives;
5. The feature of Duty Credit Scrip is freely transferable and is made for the payment of Service Tax or Custom Duty;
6. State Government worked to fulfil the mission of Export Promotion;
7. MIES supported the Agricultural and Village Industry Products at the global level;
8. To have regular communication with the Stakeholder, the two institutional mechanisms that have been established are as follows:
9. BOT (Board of Trade);
10. CTD (Council for Trade Development);
11. BOT or Board of Trade was implemented to play the Advisory Role in the economy;
12. CTD or Council for Trade Development worked in regard to representations made by States and Union Territories;
13. Established CRIT (Centre for Research in International Trade) for the objectives as follows:
14. To Strengthen the Indian Research Possibilities in International Trade; and
15. To Enable all the Developing Countries to express their outlooks and concerns from a position of strength;

Concept of New Foreign Trade Policy 2021 to 2026

The New Foreign Trade Policy 2021 to 2026 was passed in the Meeting held by the Parliamentary Consultative Committee on 12.01.2021, which was chaired Mr Hardeep Singh Puri and was attended by various Senior Officer of the Ministry and Members of the Parliament.

However, it shall be taken into due consideration that the said policy is formed after the events as follows:

1. A BOT (Board of Trade^[1]) Meeting was held in the month of December 2020 to record the inputs and opinions of both the state government and stakeholders;
2. Meetings with Chambers of Commerce, Industry Associations, EPC (Export Promotion Councils) were held to record their inputs and opinions;
3. A Trade Notice was issued to invite suggestions from the various stakeholders concerning the Foreign Policy;

Objectives of New Foreign Trade Policy 2021 to 2026

The key objectives of the New Foreign Trade Policy 2021 to 2026 are as follows:

Make India an US $5 Trillion Economy

The New Foreign Trade Policy 2021 to 2026 aims to boost the exports of the service and merchandise sectors, as a result to make India an US $5 trillion economy.

Further, the same can be achieved by ways provided as follows:

1. By Addressing several Domestic and Overseas Constraints concerning policy and regulatory framework;
2. By Lowering the Transaction Cost;
3. By Enhancing the Ease of Doing Business;
4. By Creating a Low cost Environment with the help of Logical Infrastructure and Efficient Utility;

Implementation of District Export Hubs

Another significant feature of the New Foreign Trade Policy 2021 to 2026 is that it aims to make every Indian district a potential Export Hub.

For achieving the said objective, the Ministry of Commerce by way of the Regional Authorities of DGFT (Director General of Foreign Trade) will engage with both State Governments and Union Territories to implement the policy in a Phased Manner.

Correcting Imbalances within India

Last but not the least key objective of the New Foreign Trade Policy 2021 to 2026 is to correct the imbalances within India by improving the operations of the Manufacturing and Domestic Services Sector, together with the infrastructure support given by the government.

Conclusion

In a nutshell, the main reason behind the implementation of New Foreign Trade Policy 2021 to 2026 is to make India an US $5 Trillion Economy and for which the government aspires to enforce the policy of District Hubs and various other initiatives as mentioned above.

Further, in case of any other doubt or dilemma, reach out to Swarit Advisors, our experienced FEMA experts are there to cater to all your doubts and queries.

Also, Read: Companies (Compromises, Arrangements & Amalgamation) Second Amendment Rules 2020