How the trade policy of India has progressed over the years
Government initiatives to aid India’s exports include:
- The success of the country’s exports was not an accident; rather, it was the result of well planned trade policy interventions, their effective implementation, and a number of other initiatives to create an environment that would promote exports.
- Export facilitation helped to conceptualise and effectively implement a number of export promotion programmes, including the Market Access Initiative (MAI), Remission of Duties and Tax on Exported Products (RoDTEP), Trade Infrastructure for Exports Scheme (TIES), and Interest Equalization Schemes on Pre- and Post-Shipment Rupee Export Credit, among others.
- According to this export development plan, India’s exports have constantly expanded.
- The country’s export portfolio has evolved as a result of the targeted strategy to leverage on its inherent capabilities. For instance, from April through December 2013 to April through December 2022, India’s toy exports climbed from barely Rs167 crore to Rs 1,017 crore.
The role of PLI (changes in export dynamics) in production-linked incentives
- The Production-linked Incentive (PLI) programme has changed the game. India’s trade deficit in electronics and other manufactured goods has decreased as a result of the country’s transformation into a manufacturing powerhouse.
- The PLI scheme, inaugurated in March 2020 with an investment of more than Rs 2 lakh crore, first concentrated on producing mobile phones, electrical components, and medical equipment, but was later expanded to 14 manufacturing industries.
- As a result, the electronics manufacturing industry attracted a lot of investment, and its exports have dramatically expanded by over 55% annually. Mobile phone exports alone could reach $10 billion during the current fiscal year.
To improve export competitiveness, increase logistical efficiency:
- Logistics, a significant obstacle to India’s export competitiveness, have been proactively addressed in the Union budget for 2023–2024.
- The capital expenditure budget has been drastically increased by 33 percent to a record Rs 10 trillion in order to improve the efficiency of the development of rail, road, air, and ocean infrastructure.
- By connecting Indian industrial systems with global value chains, it would also boost exports (GVC).
Future challenges for the export sector:
- Fears of a slowdown and an upcoming recession have put the world economy in peril. The global economic slump is projected to have an adverse effect on India’s exports.
- The IMF forecasts that global commerce will grow at a 2.3% annual rate through the year 2031, in contrast to the projected 2.5% growth in the world’s gross domestic product (based on the BCG’s global trade model).
- India’s trade strategy and policies must be forward-looking in order to address new challenges.
- Initially, trade policy announcements were mainly limited to short-term measures, focused on a small number of incentives, and lacking in any clear strategic goal.
How to get beyond the challenges they have in encouraging export:
- The rationalisation of employment allocation within the Ministry of Commerce and the reformation of its divisions and subordinate offices with forward-looking objectives are expected to transform India’s institutional mechanisms for encouraging exports.
- By implementing the most recent technology in the data collection, assimilation, processing, and distribution among stakeholders, as well as the accessibility of real-time information, the information gap between the exporters and the various government departments has been closed.
- In order to expedite and effectively carry out legislative steps to encourage exports, the Ministry of Commerce has been actively working with state governments and district administrations in recent years.
- Each Indian state was expected to prepare an export promotion strategy that included not only the identification of feasible items and markets but also the impediments that prohibited them from attaining the full potential of their exports.
- Also, a strategic shift has been undertaken by Indian missions abroad, who are now proactive in conducting market research and facilitating the introduction of new products.
- The Ministry of Commerce has examined each FTA and is actively negotiating new ones in favour of India.
- India recently negotiated new FTAs with the UAE, Mauritius, and Australia with remarkable speed and skill, and it is currently in the advanced stages of negotiations with the UK. It is also actively seeking out new trade agreements with the EU and the US.
- The trade strategy is gradually outlining a strategy to export goods and services worth $1 trillion by 2030.
