Answer the following questions in about 150 words each: (b) Do you agree with the view that India's Foreign Trade Policy, 2023–2028 will boost country's trade surplus and generate employment? Give reasons.

Will FTP 2023-2028 Boost Trade Surplus?

While the FTP 2023-2028 is strategically designed to enhance India's export performance, achieving a significant trade surplus presents a complex challenge. The policy's measures are certainly conducive to increasing exports, which is a prerequisite for a trade surplus. However, India has historically experienced a trade deficit with many of its top trading partners, including China and Russia, despite having a surplus with countries like the US, UK, and Bangladesh.

• Export Promotion and Diversification: The FTP aims to diversify export markets and products, moving beyond traditional items. Initiatives like "Districts as Export Hubs" (DEH) and the "Towns of Export Excellence" (TEE) scheme seek to identify and promote export-worthy products and services from grassroots levels, broadening India's export basket.
• Ease of Doing Business: The policy emphasizes process re-engineering, automation, and a paperless environment to reduce transaction costs and time for exporters. This, combined with a one-time amnesty scheme for pending authorizations, simplifies compliance and can encourage more businesses, particularly MSMEs, to engage in international trade.
• E-commerce Exports: Recognizing the potential of digital trade, the policy raises the consignment cap for e-commerce exports through courier from ₹5 lakh to ₹10 lakh, with provisions for further revisions. This will significantly benefit small and medium-sized enterprises (MSMEs) by providing easier access to global markets.
• Internationalization of Rupee: The policy promotes the settlement of international trade in Indian Rupees, which could reduce foreign exchange-related barriers and stabilize the domestic currency, especially with countries where India has a trade surplus.

However, the actualization of a trade surplus faces headwinds. India's overall trade deficit narrowed to $238.3 billion in 2023-24, but merchandise exports dipped by 3% in the same period due to global disruptions. While services exports increased, the sustained improvement in the trade balance relies heavily on controlling imports, which are influenced by global commodity prices (e.g., crude oil) and domestic industrial demand.

Will FTP 2023-2028 Generate Employment?

The FTP 2023-2028 is expected to have a positive impact on employment generation, although the extent will depend on various factors, including the labor intensity of the boosted export sectors.

• Districts as Export Hubs (DEH): By promoting exports from districts, the DEH initiative aims to strengthen regional industrial clusters and create local employment opportunities, particularly in semi-urban and rural areas. This decentralization helps tap into untapped potential.
• MSME Focus: The policy's emphasis on simplifying procedures and reducing costs for MSMEs can lead to their expansion and, consequently, increased hiring. MSMEs are significant employers in India.
• Emerging Sectors: The focus on emerging sectors like e-commerce, high-tech manufacturing, and pharmaceuticals can create skilled and semi-skilled jobs. However, the World Bank noted that direct employment in export-related activities decreased from 9.5% in 2012 to 6.5% in 2020, partly due to a shift towards more capital-intensive exports.
• Global Value Chains (GVCs): Increased participation in GVCs, as targeted by the policy, can lead to job creation as India integrates more deeply into international production networks. The Economic Survey 2019-20 highlighted that increased exports contributed to the formalization of jobs.

Challenges remain, particularly in enhancing employment in labor-intensive sectors like apparel, leather, textiles, and footwear (ALTF), where India's share in global exports has declined while countries like Bangladesh and Vietnam have seen growth. To maximize employment, the policy needs to actively encourage growth in such labor-intensive industries.