Opinion Express View on new trade policy: The focus of the new policy on reducing points of friction across the system is unmistakable

The Foreign Trade Policy 2023, unveiled by the Union government Friday, comes after considerable delay — the last trade policy (2015-20), whose term ended in March 2020, has remained in effect till now. The aim of the new trade policy is fourfold — to shift from an incentive to a tax remission-based regime, to improve the ease of doing business, promote exports through collaborations and focus on emerging areas. The government has now articulated a goal of achieving $2 trillion in export of goods and services by 2030, up from the $900 billion target that the previous policy had hoped to achieve by 2020. At the end of 2022-23, India’s total exports are likely to have touched $760 billion, up from $676 billion in 2021-22.

The focus of the new policy on reducing points of friction across the system is unmistakable. The measures focus on providing automatic approvals for various permissions. For instance, under the new framework, the processing time for revalidation of various authorisations, which currently ranges from three days to one month, is expected to be brought down to one day. Similarly, the processing time for extension of the export obligation period is also expected to be brought down sharply, as is the time for processing advance authorisation and EPCG issuances. The policy has also lowered the application fee for these schemes for MSMEs. This is a step in the right direction. As is the facilitation of e-commerce exports, widening the basket covered under RODTEP (Remission of duties and taxes on exported products), the steps being taken to boost manufacturing, rationalising the thresholds for recognition of exporters, merchanting trade reform, as well as the move towards greater use of the rupee in international trade. Further, a one-time amnesty scheme has been introduced that aims at faster resolution of trade disputes.

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While this policy comes at a time of considerable uncertainty across the world, as India accounts for a minuscule portion of global trade (its share in global merchandise exports stands at around 1.8 per cent, while that in services is roughly 4 per cent), there is considerable scope for improvement for the country on this count. The new policy needs to be supplemented with other measures to boost the country’s trade performance. These range from lowering import tariffs and ensuring a competitive exchange rate to signing broader and deeper free trade agreements.