Model Answer
0 min readIntroduction
The Foreign Trade Policy (FTP) 2009-2014 was formulated in the aftermath of the global financial crisis of 2008, aiming to arrest the decline in exports and provide a boost to the Indian economy. It sought to achieve this by diversifying export markets and promoting technological upgradation of Indian industries. The policy aimed to ‘arrest export decline’ and ‘return to a high export growth path’ by focusing on both traditional and emerging markets, and by incentivizing technological innovation and value addition. This FTP was a continuation of the export promotion strategy, but with a greater emphasis on resilience and sustainability.
Market Diversification Initiatives
The FTP 2009-2014 placed significant emphasis on diversifying India’s export markets, reducing reliance on traditional markets like the US and EU. Key initiatives included:
- Focus Market Scheme (FMS): This scheme provided duty credit scrips (incentives) to exporters focusing on specific markets in Latin America, Africa, and Central Asia. The scrips could be used to offset import duties.
- Focus Product Scheme (FPS): This scheme extended duty credit scrips to exporters of specific products with high export potential. This encouraged specialization and value addition.
- Export Promotion Council (EPC) support: Enhanced financial assistance was provided to EPCs to undertake market research, organize trade fairs, and promote Indian products in new markets.
- Visits of trade delegations: The government sponsored visits of trade delegations to explore new markets and establish business contacts.
Technological Upgradation Initiatives
Recognizing the importance of technology for enhancing competitiveness, the FTP 2009-2014 introduced several initiatives for technological upgradation:
- Technology Acquisition and Development Fund (TADF): This fund was established to facilitate the acquisition of appropriate technologies by Indian industries, particularly in the manufacturing sector. It provided financial assistance for technology transfer agreements and R&D collaborations.
- Zero Duty EPCG Scheme: The Export Promotion Capital Goods (EPCG) scheme allowed import of capital goods for export production at zero duty, encouraging modernization and technological upgradation.
- Duty Entitlement Passbook Scheme (DEPB): Although phased out later, DEPB continued to provide duty scrips for exports, enabling importers to acquire technology-intensive inputs.
- Incentives for R&D: The policy encouraged companies to invest in research and development by providing tax benefits and financial assistance for R&D projects.
Specific Schemes and their Impact
| Scheme | Objective | Impact |
|---|---|---|
| Focus Market Scheme | Promote exports to emerging markets | Increased exports to Latin America and Africa, but impact was limited by infrastructure constraints. |
| Technology Acquisition and Development Fund | Facilitate technology transfer and R&D | Slow disbursement and limited participation from SMEs hindered its effectiveness. |
| Zero Duty EPCG | Modernize production facilities | Led to increased import of capital goods, but benefits were concentrated in large enterprises. |
The FTP also emphasized streamlining export procedures, reducing transaction costs, and improving infrastructure. Initiatives like the introduction of online filing of documents and the development of dedicated freight corridors aimed to facilitate trade. However, the policy faced challenges such as global economic slowdown, volatile exchange rates, and infrastructure bottlenecks.
Conclusion
The Foreign Trade Policy 2009-2014 played a crucial role in stabilizing India’s exports during a period of global economic uncertainty. While initiatives like the FMS and FPS helped diversify markets, and schemes like TADF aimed at technological upgradation, their impact was constrained by implementation challenges and external factors. The policy highlighted the need for continuous monitoring, adaptation, and a long-term vision for sustainable export growth. Future FTPs need to focus on addressing infrastructure gaps, promoting innovation, and fostering greater participation from SMEs to achieve higher export targets.
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.