India is putting a positive spin on its absence from the U.S.-led Trans-Pacific Partnership (TPP) negotiations by taking steps to improve the quality of its products. The government on Wednesday announced a five-year Foreign Trade Policy (FTP) that seeks to lift the country’s exports and double overseas sales to $900 billion by 2020.
Due to poor standards, India was not invited to join the pending TPP, which would link a dozen Asia-Pacific economies by eliminating trade barriers and harmonizing regulations in a pact covering two-fifths of the world economy and a third of all global trade.
Marking a shift in its approach to foreign trade, the commerce ministry presented a framework for increasing the export of goods and services, reducing transaction costs for exports and extending incentives to special economic zones and e-commerce.
Related Stories
“The focus of the trade policy is to support services and exports along with improving the ease of doing business,” said Commerce and Industry Minister Nirmala Sitharaman while announcing the FTP on Wednesday. “The new trade policy will boost exports and create jobs while supporting Make in India and Digital India.”
India’s exports fell for a third straight month in February, posting a 15 percent decline because of a global slowdown and a strong rupee. Merchandise exports account for about one-fifth of the country’s $2 trillion economy. Under a new strategy — dubbed the Merchandise Exports from India Scheme (MEIS) — incentives will be given for export of specific goods to specific markets.
Products supported for export to the E.U., the U.S., Canada and Japan under MEIS include handloom, coir, jute products, technical textiles, handmade carpets and other textile and ready-made garments. Incentives such as duty credit scrips, valued at 10 percent of the foreign exchange earned, will be fully transferable for payment of service tax, customs and excise duty.
In addition, the policy proposed setting up a host of institutions, including a Council for Trade Development and Promotion, to improve India’s share in global trade.
According to a statement released after the announcement: “The mega agreements [such as TPP] are bound to challenge India’s industry in many ways, for instance, by eroding existing preferences for Indian products in established traditional markets such as the U.S. and E.U. and establishing a more stringent and demanding framework of rules. Indian industry needs to gear up to meet these challenges for which the government will have to create an enabling environment.”
The new FTP will be reviewed mid-policy.
