Trade Truths

INDIA’S FOREIGNTRADE

policy (FTP) 2015-20, an­nounced on April 1, in ad­dition to regular features like market and product incentives and sops, talks about leveraging Modi government’s flagship pro­grammes Make in India, Skill India and Digital India to push the country’s foreign trade in the next five years.

On the face of it, there is nothing new about linking major policy announce­ments with the Prime Minister’s pet initiatives. The railway budget had its share of Make in India plans, while the Skill India and Digital India pro­grammes found prominent mention in the Union Budget speech.

A closer look, though, tells a different story. While the Make in India campaign aims at improv­ing the manufacturing capabilities of Indian industry, Skill India is all about providing necessary workforce to aid increased industrial or manufactur­ing activity. Digital India is expected to speed up business transactions, regulatory clearances and payments by use of elec­tronic channels.

By emphasising the need to link FTP with these programmes and create an Export Promotion Mis­sion, the government is of­
fering long-term solutions to the three problem areas — manufacturing capa­bilities, skilled manpower and trade facilitation, all key to overall competitive­ness — before the Indian exporters.

The candid admission that there is a lot of room for improvement in these areas also explains another assessment made in the FTP statement: That government subsidies and sops alone cannot push for­eign trade beyond a point in a globalised world.

The FTP goal of dou­bling India’s merchandise and services export from $465.9 billion in 2013-14 to $900billion and raising

The target India has set to increase its share in global trade to over the next five years

India’s share in global trade from 2 per cent to 3.5 per cent in the next five years would be possible only if Indian exports become globally competitive. The role of the nodal ministry

  • the commerce ministry which prepares FTP — in fulfilling these aims is limited. Hence the attempt to involve state and Union territory governments and various Central depart­ments and ministries

in the process of foreign trade through the Export Promotion Mission.

The ministry has also hinted that the policy is a pointer to the direction export promotion efforts will have to take in future

  • towards tackling more fundamental problems than announcing incen­tives and subsidies.

The FTP statement reveals that India has not been able to take full advantage of its free trade agreements with Korea, Japan and ASEAN. And the reason was not always tariff difference. It was competitiveness or rather lack of it. What FTP reveals was never a secret. We always knew the problem, and the solution. What was missing was concrete ac­tion. —Joe C. Mathew