India prepares it Foreign Trade Policy which is aimed at growing the exports on the country, doubling the percentage of global trade India conducts. The delaying of the foreign trade policy is viewed as the shot in the wings needed to fly as new opportunities are arising amid concerns US-China Trade war.
If India has to make itself a global hub for manufacturing and retail it can only be possible by the increase in trade. India is the second top global manufacturing destination and has proved itself in meeting outsourcing requirements.
A delay in Foreign Trade policy could only stall India’s imminent opportunity for growth in trade at a time when India could benefit from plant relocation from China to other parts of Asia as our country has already an established base in pharmaceuticals, chemicals, and engineering.
MSMEs are the backbone of the Indian economy and contribute about 29 percent towards the GDP through its national and International trade making it vital for them to achieve the ambitious export target of 400$ billion for the year 2021-22.
There is a deep impact on MSMEs due to the extended FTP on MSMEs; Rising fuel cost and Input cost are hurting the operational efficiency of the MSMEs which inturn effects their profitability and survival. There is a rise in prices of raw materials such as metals, plastics, and the industry is also facing a shortage of containers which has led to rise in shipping cost, making the matters worse. Due to these hurdles, MSMEs in India are not able to take advantage of the increase in demand. The industry hopes that the new FTP will somehow address these problems.
It is been a long time that there are talks going on in the industry that the new FTP will include a separate chapter on e-commerce policy. The world has opened its arm for global trade via the internet and the industry hopes that the new FTP will promote India’s small tickets goods to the world which are widely accepted and in demand worldwide, a delay will only cause us to not take advantage of the long lost opportunity.
Service exporters in India receive benefits from SEIS (Services Export from India Scheme), which gives them the benefit of 3-7% of net foreign exchange earnings. The Industry wants a modification in the minimum cap which is currently USD 15000 for the net foreign exchange earnings eligible to claim under this scheme. The industry also needs faster GST refunds.
The renewed FTP could also change the fate of the exporters if the incentives provided to retail and wholesale traders who are into the MSME category are extended to exporters as well. Indian government also has strong plans for small businesses like mapping potential products for exports, enabling their geographical indications, products and setting up district export promotion panels to enhance the exports and increase the ease of doing business which are steps in the right direction, but unless an MSME- first policy is announced and sincere efforts are made to bring MSMEs on an equal footing with global competitors growing exports faster is a farfetched dream.