India’s Foreign Trade Policy

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<<<-2a The subtopics of India’s Foreign Trade Policy are:

  • Objectives
  • Approach
  • Instruments
  • Sectoral Policies
  • Rules of Origin
  • Safeguards
  • Anti-dumping Measures
  • Countervailing Measures
  • Export Promotion Measures
  • Import Policy
  • InvestmentInvestmentForeign Direct Investment
  • Trade Agreements
  • Institutional Framework
  • Monitoring and Evaluation

India’s Foreign Trade Policy (FTP) is a comprehensive document that outlines the government’s approach to international trade. The FTP is designed to promote economic growth and development by encouraging exports, attracting foreign direct investment, and negotiating trade agreements.

The FTP is revised every five years, with the most recent revision being released in 2015. The 2015-2020 FTP has four main objectives:

  • To increase India’s share of global trade
  • To promote economic diversification
  • To create jobs and improve livelihoods
  • To ensure Food Security and environmental sustainability

The FTP pursues these objectives through a variety of instruments, including:

  • Tariffs: India’s tariff rates are generally low, but there are some exceptions for sensitive sectors such as agriculture.
  • Non-tariff barriers: India also uses a variety of non-tariff barriers, such as quotas, licensing requirements, and technical barriers to trade.
  • Export promotion measures: The government provides a variety of subsidies and incentives to exporters, such as duty-free imports of raw materials and Capital Goods, and tax breaks.
  • Import policy: The government regulates imports through a variety of measures, such as tariffs, quotas, and licensing requirements.
  • Foreign direct investment: The government encourages foreign direct investment through a variety of measures, such as tax breaks, investment guarantees, and simplified procedures.
  • Trade agreements: India has signed a number of trade agreements with other countries, including the Regional Comprehensive Economic Partnership (RCEP), the India-Japan Comprehensive Economic Partnership Agreement (CEPA), and the India-Korea Free Trade Agreement (FTA).

The FTP is implemented by a number of government agencies, including the Ministry of Commerce and IndustryIndustry, the Department of Commerce, and the Foreign Trade Development Corporation of India (FTDC). The FTP is also monitored and evaluated by the government to ensure that it is achieving its objectives.

India’s Foreign Trade Policy has been successful in promoting economic growth and development. India’s exports have grown at an average rate of 10% per year since 2000, and the country is now the world’s sixth largest exporter. India has also attracted significant foreign direct investment, and the country is now the world’s largest recipient of foreign direct investment in the services sector.

However, India’s Foreign Trade Policy faces a number of challenges. One challenge is the rise of protectionism in some countries. Another challenge is the need to diversify India’s exports away from a few key commodities, such as textiles and gems and jewelry. Finally, India needs to improve its InfrastructureInfrastructure and LogisticsLogistics to make it easier for businesses to export and import goods and services.

Despite these challenges, India’s Foreign Trade Policy is well-positioned to continue to promote economic growth and development in the years to come. The government has a clear vision for India’s role in the global economy, and it is implementing a comprehensive set of policies to achieve that vision. With continued effort, India can become a major player in the global trading system.

In addition to the above, here are some additional information about India’s Foreign Trade Policy:

  • The FTP is divided into three parts: the first part sets out the objectives of the policy, the second part outlines the approach to be adopted, and the third part describes the instruments that will be used to implement the policy.
  • The FTP is reviewed every five years, and the most recent review was conducted in 2015.
  • The FTP is implemented by a number of government agencies, including the Ministry of Commerce and Industry, the Department of Commerce, and the Foreign Trade Development Corporation of India (FTDC).
  • The FTP is monitored and evaluated by the government to ensure that it is achieving its objectives.
  • India’s Foreign Trade Policy has been successful in promoting economic growth and development. India’s exports have grown at an average rate of 10% per year since 2000, and the country is now the world’s sixth largest exporter. India has also attracted significant foreign direct investment, and the country is now the world’s largest recipient of foreign direct investment in the services sector.
  • However, India’s Foreign Trade Policy faces a number of challenges. One challenge is the rise of protectionism in some countries. Another challenge is the need to diversify India’s exports away from a few key commodities, such as textiles and gems and jewelry. Finally, India needs to improve its infrastructure and logistics to make it easier for businesses to export and import goods and services.
  • Despite these challenges, India’s Foreign Trade Policy is well-positioned to continue to promote economic growth and development in the years to come. The government has a clear vision for India’s role in the global economy, and it is implementing a comprehensive set of policies to achieve that vision. With continued effort, India can become a major player in the global trading system.
    Objectives
  • What are the objectives of India’s Foreign Trade Policy?

The objectives of India’s Foreign Trade Policy are to:

  • Promote exports and increase India’s share in global trade.
  • Attract foreign direct investment (FDI) and promote economic growth.
  • Create jobs and improve the standard of living of the people.
  • Protect the interests of domestic industries and consumers.
  • Promote Sustainable Development and environmental protection.

Approach

  • What is the approach of India’s Foreign Trade Policy?

The approach of India’s Foreign Trade Policy is to:

  • Promote exports through a variety of measures, including export promotion schemes, market access initiatives, and trade facilitation measures.
  • Attract FDI through a liberalized FDI regime and a favorable investment climate.
  • Protect the interests of domestic industries through a variety of measures, including tariffs, quotas, and anti-dumping measures.
  • Promote sustainable development and environmental protection through a variety of measures, including environmental impact assessments and green trade initiatives.

Instruments

  • What are the instruments of India’s Foreign Trade Policy?

The instruments of India’s Foreign Trade Policy are:

  • Tariffs: Tariffs are taxes imposed on imported goods. They are used to protect domestic industries from foreign competition and to raise revenue for the government.
  • Quotas: Quotas are restrictions on the quantity of goods that can be imported. They are used to protect domestic industries from foreign competition and to conserve scarce resources.
  • Anti-dumping measures: Anti-dumping measures are used to counter unfair trade practices by foreign countries. They are imposed when a foreign country sells goods in India at a price that is lower than the cost of production in the exporting country, or below the price at which the goods are sold in the exporting country.
  • Countervailing measures: Countervailing measures are used to counter subsidies provided by foreign governments to their exporters. They are imposed when a foreign government provides a subsidy to its exporters that results in the goods being sold in India at a price that is lower than the price at which the goods would be sold in the absence of the subsidy.
  • Export promotion measures: Export promotion measures are used to promote exports. They include a variety of measures, such as export subsidies, export credits, and export insurance.
  • Import policy: The import policy is a set of rules and regulations that govern the importation of goods into India. It includes a variety of measures, such as tariffs, quotas, and licensing requirements.
  • Foreign direct investment: Foreign direct investment (FDI) is the investment of capital by a foreign company in a domestic company. FDI can take a variety of forms, such as the establishment of a new subsidiary, the acquisition of an existing company, or the purchase of SharesShares in a domestic company.
  • Trade agreements: Trade agreements are agreements between two or more countries that reduce or eliminate tariffs and other barriers to trade. They can also include provisions on other issues, such as investment, Intellectual Property Rights, and competition policy.
  • Institutional framework: The institutional framework for India’s Foreign Trade Policy is the Ministry of Commerce and Industry. The Ministry is responsible for formulating and implementing the Foreign Trade Policy. It also provides a variety of services to exporters and importers, such as export promotion schemes, market access initiatives, and trade facilitation measures.
  • Monitoring and evaluation: The Ministry of Commerce and Industry monitors and evaluates the implementation of the Foreign Trade Policy. It also conducts research on various aspects of India’s foreign trade.

FAQ #1

Q: I want to start exporting my products from India. Are there government programs to help me? A: Yes, there are various schemes and incentives designed to promote exports. These might include financial assistance, market access support, or participation in trade exhibitions.

FAQ #2

Q: Are there special benefits for businesses operating within particular zones in India that focus on exporting? A: Yes, designated zones, often with streamlined procedures and tax benefits, are set up to encourage export-oriented industries and boost India’s global trade.

FAQ #3

Q: India has trade agreements with other countries. How do these impact businesses? A: Trade agreements aim to reduce barriers like tariffs and quotas, potentially making it easier and cheaper for Indian companies to export to partner countries and to access goods and services from those nations.

FAQ #4

Q: How does the government try to make Indian exports more competitive globally? A: There are initiatives related to improving infrastructure, logistics, and reducing procedural complexities. The goal is to reduce costs and make it easier for Indian businesses to participate in international trade.

FAQ #5

Q: Are there any restrictions on what Types of Goods can be exported from India? A: Yes, some goods might have export controls or require special licensing due to strategic reasons, safety concerns, or preserving domestic supply.

 

MCQS

India’s Foreign Trade Policy is aimed at:

(A) Promoting exports and imports
(B) Promoting exports and discouraging imports
(CC) Discouraging exports and promoting imports
(D) Discouraging exports and discouraging imports

Answer
(A)

Question 2

India’s Foreign Trade Policy follows an approach of:

(A) LiberalizationLiberalization
(B) Protectionism
(C) Both liberalization and protectionism
(D) Neither liberalization nor protectionism

Answer
(A)

Question 3

India’s Foreign Trade Policy uses the following instruments to achieve its objectives:

(A) Tariffs, quotas, and subsidies
(B) Only tariffs
(C) Only quotas
(D) Only subsidies

Answer
(A)

Question 4

India’s Foreign Trade Policy has the following sectoral policies:

(A) Agricultural, manufacturing, and services
(B) Only agricultural
(C) Only manufacturing
(D) Only services

Answer
(A)

Question 5

India’s Foreign Trade Policy has the following rules of origin:

(A) Goods must be wholly produced in India or must meet certain criteria to be considered Indian goods
(B) Goods must be wholly produced in the country of export
(C) Goods must be wholly produced in the country of import
(D) Goods do not need to meet any rules of origin

Answer
(A)

Question 6

India’s Foreign Trade Policy has the following safeguards:

(A) Temporary measures that can be taken to protect domestic industries from sudden surges in imports
(B) Permanent measures that can be taken to protect domestic industries from foreign competition
(C) Neither temporary nor permanent measures
(D) Both temporary and permanent measures

Answer
(A)

Question 7

India’s Foreign Trade Policy has the following anti-dumping measures:

(A) Temporary measures that can be taken to counter unfair trade practices such as dumping
(B) Permanent measures that can be taken to counter unfair trade practices such as dumping
(C) Neither temporary nor permanent measures
(D) Both temporary and permanent measures

Answer
(A)

Question 8

India’s Foreign Trade Policy has the following countervailing measures:

(A) Temporary measures that can be taken to counter unfair trade practices such as subsidies
(B) Permanent measures that can be taken to counter unfair trade practices such as subsidies
(C) Neither temporary nor permanent measures
(D) Both temporary and permanent measures

Answer
(A)

Question 9

India’s Foreign Trade Policy has the following export promotion measures:

(A) Measures to encourage exports, such as export subsidies and duty drawbacks
(B) Measures to discourage exports, such as export taxes and import quotas
(C) Neither measures to encourage nor measures to discourage exports
(D) Both measures to encourage and measures to discourage exports

Answer
(A)

Question 10

India’s Foreign Trade Policy has the following import policy:

(A) A policy of import liberalization
(B) A policy of import protectionism
(C) Both import liberalization and import protectionism
(D) Neither import liberalization nor import protectionism

Answer
(A)

Question 11

India’s Foreign Trade Policy has the following foreign direct investment policy:

(A) A policy of encouraging foreign direct investment
(B) A policy of discouraging foreign direct investment
(C) Both encouraging and discouraging foreign direct investment
(D) Neither encouraging nor discouraging foreign direct investment

Answer
(A)

Question 12

India’s Foreign Trade Policy has the following trade agreements:

(A) Bilateral trade agreements with other countries
(B) Regional trade agreements with groups of countries
(C) Multilateral trade agreements with all WTO member countries
(D) All of the above

Answer
(D)

Question 13

India’s Foreign Trade Policy has the following institutional framework:

(A) The Ministry of Commerce and Industry
(B) The Reserve Bank of India
(C) The Export-Import Bank of India
(D) All of the above

Answer
(D)