Foreign Trade Policy - aiming at continuity, stability

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Bikky Khosla | 01 Sep, 2009
The recently announced foreign trade policy (FTP) in the current difficult times was indeed a tough task, but our Commerce Minister, Mr Anand Sharma, has done a fairly good job. Two facts in the blueprint of the 2009-14 Foreign Trade Policy that came as good news was the realistic target of $ 200 billion in the next two years and the focus on 26 new markets.

I feel the new trade policy has aimed at continuity and stability, technology upgradation, reduction in transaction costs, diversification and market expansion, and also focuses on giving a boost to the labour-intensive export-oriented sectors. Without doubt the slew of measures and incentives announced in the FTP will greatly benefit the exporters who have been hit due to the slowdown in the country's traditional export markets.

The FTP rightfully provides an extended tax holiday, duty refund for exporters and allows duty free import of capital goods. These initiatives will help to double the country's share of global trade in the next five years, and will also help in increasing employment opportunities.

Meanwhile, the employment-oriented sectors, especially textiles, leather and handicrafts will get a major thrust from the increased incentives available under the Focus Markets Scheme to promote exports in new markets in the Latin American and Asia-Oceaniaic region. The scheme as of now covers 83 countries in Africa, Central America, CIS and Eastern Europe.

In addition, the hike in allocation for existing schemes under the Markets Development Assistance and Market Access Initiative will also benefit exporters who can now seek financial assistance under these schemes to hold trade fairs, buyer-seller meets and brand promotion to develop new markets.

Another positive factor is that the policy seeks to rationalize and simplify procedures and duties across the board by implementing e-governance in trade for the benefit of exporters. The Minister has indicated that the process will start with nine products and services with five states and hopes that by 2015 all states will be covered by this initiative. However what needs to be seen is how states ruled by political parties other than those in the UPA react and act to this.

With the notifications on the Foreign Trade Policy to be released in the next couple of days, the Finance Ministry's reactions to the various incentives announced in the policy is not yet known considering the in-fight between the two ministries on earlier occasions. Hope good sense will prevail.