Covid-19 has shifted many paradigms in numerous industries. And Import-export industry is no exception to it. When India was battling the second wave of covid-19, the unveiling of Foreign Trade policy 2021-2026 got delayed by a year. The existing EXIM policy was already due on 31 March. Still, the government decided to give it more than six months and then extended it for six months as the pandemic continues in the country.
And due to such a critical situation, the global economy took a very dark turn. As per the UN reports Indian economy has drastically shrunk during the pandemic year 2020. While the global GDP numbers were at 4.3%, India recorded about 9.6% GDP, which is not quite promising, especially while trading across the national borders. Now everyone is eyeing how the existing policy will be in the first quarter of 2022 and how the new EXIM policy of India will bring any significant changes in its first phase.
Furthermore, experts are also hoping to get the export business picked up after implementing the new policy. Speculations are also saying it may improve the current position of India in service exports and global merchandising to make up for the dent of deficiencies of the foreign trade policy 2015 to 2020 has been made till now to the industry.
Typically, Foreign policy is considered The Bible if you want to know each current dynamics of importing and exporting goods and services. The principal objective of foreign policy is to facilitate trade by reducing the time and cost of transactions in the most convenient way possible. With that being said, the question remains the same regarding whether the new policy would make the most out of the global opportunities by encouraging the sustainable economical growth of the Indian economy or not.
The FTP 2023 introduces several new schemes
- One time Amnesty Scheme for exporters to close old pending authorizations and start afresh.
- Encourages the recognition of new towns through the Towns of Export Excellence Scheme and the recognition of exporters through the Status Holder Scheme.
- The policy also streamlines the popular Advance Authorization and EPCG schemes and enables merchanting trade from India.
- One of the key objectives of the FTP 2023 is to process re-engineering and automation to facilitate ease of doing business for exporters.
- The policy emphasizes the use of automated IT systems with risk management systems for various approvals and codifies implementation mechanisms in a paperless, online environment.
- The policy also reduces fee structures and IT-based schemes to make it easier for MSMEs and others to access export benefits.
- Promotion of exports from the district level and accelerating the development of the grassroots trade ecosystem. The policy builds partnerships with state governments and takes forward the Districts as Export Hubs (DEH) initiative to identify export-worthy products and services and resolve concerns at the district level.
- The policy also aims to prepare district-specific export action plans for each district outlining the district-specific strategy to promote the export of identified products and services.
- The FTP 2023 places a wider outreach and understanding of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) among stakeholders to ensure compliance with international regulations.
Apart from these forecasts and speculations, pragmatically speaking, considering the current situation in India, there are certain expectations from the new EXIM policy in 2023.
Let’s go through those one-by-one dynamics to get a precise idea of how they would impact the industry.
- Convenient Credit Access
Credit access is one of the long-standing demands of MSME exporters. Due to the inadequate collateral, financial institutions like banks are mostly hesitant to provide any credit. The launch of a new EXIM policy can offer multiple options for alternate credit resources to the small exporters.
Further, it will also significantly boost the many small yet aspiring business entities such as finance tech start-ups by raising the bar of borrowing limits.
- More support, less subsidy
Commerce minister Piyush Goyal said in 2020, technology, quality ad scale of production is the key answers to the global ambitions of India, not the subsidy. Many would agree with this statement. However, technological up-gradation and skill development programs seem to be a vital element when it comes to creating a competitive economy.
Numerous sectors like biotechnology, pharmaceuticals, and medicine can use some of the upscaling in the skill management domain, and even the trade industry can put more focus on skill up-gradation through research and development practices
- The Infrastructure Upgrade
China is considered the powerhouse of exporting and manufacturing business. The main reason behind that tag is its network of ports, high-speed trains, and well-maintained highways, which is considered the most reliable quality across the globe.
India can first adopt china’s model by fixing its current flagging infrastructure through proficient quality testing and upgrading warehouses and existing ports.
- Digitization and e-commerce
Covid-19 has already proven that our conventional supply chain ways are way too traditional now, and we need to upgrade ourselves with modern trade practices. The first step of digitalization is digitization.
We can initiate digitization by making all the transactions paperless. In addition to that, we can encourage e-commerce exports through the scheme of NiryatBandhu, which is a monitoring entity for the traders doing business internationally.
- Tax breaks
Apart from numerous types of subsidies, Indian traders would still need a bit more financial support from the government. One of the best ways to fill this gap is to make the tax bar a bit lower and convenient.
We can do a small start by simplifying the structure of import duties. Moreover, we can also follow this principle of lower or minimal duties on raw or intermediate goods and higher duties on finished goods.
- Export Awareness
Often, Indian exporters get behind not by the lack of opportunities but by the lack of awareness of the potential opportunities. New trade policy can include the provision of commencing new awareness programs and government workshops to educate the traders with the concepts like global markets, intellectual property rights, Geographic Indication, and international laws.
These were some of the exporters’ community’s major expectations from the upcoming FTP 2021-2026. Apart from that, there are three major aims that the government has mentioned briefly in one of the Ministries of commerce briefings that are worth mentioning here. And that includes,
- Making India a $5 trillion economy by 2025
- Correcting the imbalances by providing cost-effective and adequate utilities and logistical infrastructure
- Set up the district export promotional panels and commence the action plans in order to make each district an export hub!
To sum up, the Indian economy has a lot on its plate right now, and the expectations from the Indian exporters have been grown since the extension of the current EXIM policy has been done not once but twice. Nevertheless, if the new FTP can commit well to the expectations of the government Indian economy surely can reach the bar of $5-trillion by 2025!
If you don’t want to miss out on any global opportunities in the import-export industry in 2022 and move forward in the right direction, connect with the experts of impexperts now!