Model Answer
0 min readIntroduction
India’s Foreign Trade Policy (FTP) serves as a roadmap for boosting the nation’s exports and trade. The recently unveiled FTP 2023, effective from April 1, 2023, aims to make India a leading global trade hub. It shifts from incremental changes to a focus on technology adoption, ease of doing business, and export diversification. However, the global trade landscape is increasingly competitive, marked by geopolitical tensions, rising protectionism, and disruptions to supply chains. Therefore, a critical examination of the FTP 2023 and suggestions for corrective measures are crucial to ensure its success in achieving ambitious export targets.
Overview of FTP 2023
The FTP 2023 is built on four pillars: Promotion of Exports, Development of Export Infrastructure, Streamlining Logistics, and Technology Adoption. Key features include:
- Emphasis on E-commerce: Facilitating exports through e-commerce platforms, with simplified procedures.
- Focus on Districts as Export Hubs: Identifying and developing export potential in each district of the country.
- Streamlined Export Promotion Schemes: Merging several schemes into fewer, more effective programs like the Advance Authorization Scheme and Export Promotion Capital Goods (EPCG) Scheme.
- Digitalization: Complete shift to online processes, reducing paperwork and enhancing transparency.
- New Export Incentives: Introduction of Common Digital Trade Platform (CDTP) for facilitating trade documentation.
Challenges to Indian Exports
Despite the progressive FTP 2023, several challenges hinder India’s export performance:
- Global Economic Slowdown: Reduced demand in major export destinations like the US and Europe.
- Protectionism & Trade Wars: Rising protectionist measures and trade disputes between major economies.
- Supply Chain Disruptions: Ongoing disruptions due to geopolitical events and logistical bottlenecks.
- Infrastructure Deficiencies: Inadequate port infrastructure, high logistics costs, and inefficient customs procedures.
- Non-Tariff Barriers (NTBs): Stringent quality standards, sanitary and phytosanitary regulations, and technical barriers in importing countries.
- Competition from Regional Trade Agreements: Countries with FTAs like RCEP enjoy a competitive advantage.
Corrective Measures to Boost Indian Exports
Strengthening Infrastructure & Logistics
Investing in port modernization, developing dedicated freight corridors, and improving connectivity are crucial. Reducing logistics costs through technology adoption (e.g., AI-powered route optimization) and streamlining customs procedures is essential.
Diversifying Export Markets
Reducing dependence on traditional markets and exploring new opportunities in Africa, Latin America, and Southeast Asia. Actively pursuing bilateral and regional trade agreements.
Promoting Value-Added Exports
Shifting from exporting raw materials to value-added products. Incentivizing R&D and innovation to enhance product quality and competitiveness. Focusing on sectors like pharmaceuticals, engineering goods, and chemicals.
Enhancing Export Credit & Insurance
Providing adequate export credit and insurance facilities to mitigate risks for exporters. Expanding the coverage of the Export Credit Guarantee Corporation of India (ECGC).
Addressing Non-Tariff Barriers
Working with importing countries to harmonize standards and regulations. Providing assistance to exporters in meeting quality and compliance requirements.
Leveraging Digital Technologies
Promoting the use of e-commerce platforms, blockchain technology, and data analytics to enhance trade efficiency and transparency. The CDTP needs to be effectively implemented and widely adopted.
| Challenge | Corrective Measure |
|---|---|
| Infrastructure Deficiencies | Invest in port modernization & freight corridors |
| Market Concentration | Diversify export markets (Africa, Latin America) |
| NTBs | Harmonize standards & provide compliance assistance |
Conclusion
The FTP 2023 represents a positive step towards enhancing India’s export capabilities. However, realizing its full potential requires addressing the challenges posed by the evolving global trade landscape. A concerted effort to improve infrastructure, diversify markets, promote value-added exports, and leverage digital technologies is essential. Furthermore, proactive engagement in multilateral trade negotiations and a focus on building resilient supply chains will be critical for sustaining export growth and establishing India as a leading global trade hub.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.