Objectives of Foreign Trade Policy
India gets regarded as one of the world's most influential and rapidly developing economies. Its foreign trade policies and government changes have made it a popular destination for international investors.
Furthermore, technological and physical advances across the country allow for efficient commerce and commercial processes.
A robust foreign trade policy is critical for a country's economic development to be successful. As a result, India established the EXIM Policy, also known as the Export-Import Policy.
Let’s get into depth and learn more about the FTP of India.
What is the EXIM Policy?
Export-Import Policy is a set of standards and instructions that govern the import and export of products.
Under Section 5 of the Foreign Trade (Development and Regulation Act), 1992, the Government of India announced the Export-Import Policy for five years (1997-2002).
The current policy applies to the years 2021 to 2026. The Export-Import Policy is amended every year on March 31st, and the revisions, enhancements, and new schemes go into effect on April 1st.
What is Foreign Trade Policy?
The current policy was announced on April 1, 2022, by the Ministry of Commerce and Industry of the Government of India for the period 2015–2020, now extended up to March 31 2022.
Foreign trade strategy must get updated every five years to increase export capability, enhance export performance and structure, boost foreign trade, and achieve a favourable balance of payments.
Following liberalisation in 1991, India completely removed all trade restrictions to improve its balance of payment position. The economy was set free because there was a significant need for Indian markets to work globally.
However, in a developing economy, developing industries is impossible without protecting policies. As a result, India had to establish restrictions on its economy through trade regulations to govern import and export.
Objectives of India Foreign Trade Policy
The primary goal of the policy is to encourage more economic activity rather than only gain foreign cash. India's policy is guided by the following primary goals:
To stimulate the economy by allowing a significant increase in exports from India and imports into India.
Within the next five years, at least double the percentage of global goods trade conducted.
To improve the payment and trade balances.
To serve as an effective tool for economic growth by providing job possibilities for citizens, the greater the expansion of trade operations, the more workers are required.
To ensure long-term growth by providing access to critical raw materials and other components, consumables, and capital goods needed to boost production and deliver efficient services.
To improve industry and service cost-effectiveness and technological capacity, thereby boosting their competitiveness compared to other countries and stimulating the achievement of internationally accepted quality standards.
To supply high-quality goods and services at globally competitive pricing and quality to buyers or clients. 'Canalization' is a crucial aspect of India foreign trade policy in which only certain types of commodities can get imported through specified agencies.
By engaging in good and ethical actions, possibilities are created.
Allowing the entry of technology and equipment to help achieve higher international quality standards and lower production costs.
Creating an Advance Licensing System for imported products used in various export items. The Directorate General of Foreign Trade issues an Advance Licence to allow duty-free import of physically integrated inputs with the export output (making normal allowance for wastage).
To authorise the import of specific items mentioned in the Open General Licence, a type of export licence that the government issues to domestic providers.
To Conclude:
A country's foreign trade policy can lead to pricing equality, ensuring a steady demand and supply position within the economy. The policy also allows a country to import specific products in a natural disaster, allowing it to manage scarcity in times of high demand by providing higher quality and quantity of goods. It also contributes to enhancing the standard of living and lowering the cost of commodities. As a result, India's FTP is a comprehensive plan to strengthen India's position in the international market and benefit everyone.
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