New Foreign Trade policy

News: Union Commerce, Industry and Textiles Minister Piyush Goyal on Friday (31 March 2023)  unveiled a new foreign trade policy.

 

Aim: To triple goods and services exports by 2030 and increase services exports to $2 trillion by 2030, from an estimated $760 billion in 2022-23.

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About the news: this policy will replace the extant policy that had been in place since 2015 and will begin from 2023-24

Features

• It moves away from providing incentives to exporters.

• It lowers a few costs for smaller firms and promises swifter clearances.

• It also provides a one-time amnesty scheme for export obligation defaults.

• This policy will have no sunset date and will be tweaked based on the emerging world trade scenario and industry feedback.

• The policy also include “merchanting trade” within its ambit. “Exporters in India can source goods from another country and send them to a third country without touching Indian shores. This will also enable exports of restricted goods

• PM MITRA

• The new Foreign Trade Policy (FTP) has added the Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme as an additional scheme eligible for benefits as Common Service Providers (CSP) under the Export Promotion Capital Goods Scheme (EPCG).

• In between 2015 and 2020, the government introduced a special Advance Authorisation Scheme for export of articles of apparel and clothing accessories. Under the scheme, it allowed duty-free import of input fabric, including inter-lining for shipping articles of apparel and clothing accessories. 

• Under the new FTP, this scheme will continue to cover the apparel and clothing sector in order to facilitate the prompt execution of export orders. 

• Exporters will now also be allowed to self-declare.

 

Contribution of previous policy: In 2015-2016, India’s exports were $435 billion and post introduction of the policy it has grown nearly 75% to an estimated $760 billion in 2022-23.

 

PM MITRA Scheme

• Four more towns of export excellence are added to the list of 39 towns. 

• These are Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handmade carpets and Dari, and Varanasi for handloom and handicrafts.

•  The aim is to give a thrust to cluster-based economic development. 

• These towns get global recognition and brand credibility; 

• financial assistance for marketing under the Market Access Initiative Scheme; 

• visit to capacity building and technological services; and common service provider facility under the EPCG scheme that helps increase the competitiveness of the entire cluster by enabling common use of capital goods for exports.

 

Australia Lithium Exports

 

News: Australia's minister for trade in the context of IRA said Australia would rather have a diversified market for its lithium exports and this includes India.

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About Austalia Lithium exports

• Australia is the world’s biggest exporter of lithium with most of it going to China. China in turn dominates the lithium-ion battery production market.

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About News:

• The U.S. Inflation Reduction Act (IRA), passed in August 2022, grants subsidies to electric vehicles produced in the U.S.

• One of the clauses of the Act required that at least 40% of all the ‘critical minerals’ (which includes lithium) that go into making electric batteries must come from countries with a Free Trade Agreement with the United States. And Australia has FTA.

• Australia is looking to diversify away from a single market and this opened opportunities for India.

 

U.K. to join trans-Pacific partnership trade treaty

News: The U.K. acceded to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Impact of the deal

• It would mean that more than 99% of British exports including for key markets such as cheese, cars, chocolate, machinery, gin and whisky would have zero tariffs.

•  It also claimed that the deal would add £1.8 billion ($2.2 billion) annually to the U.K. economy in the long run. 

• This, however, translates to a modest boost of 0.08% to GDP.

• The government said the deal was a “gateway” to the Indo-Pacific region which would account for a majority (54%) of global economic growth in the future. 

• The U.K. is currently also negotiating a “free trade” deal with India. It will also, as a CPTPP member, get a veto on whether China joins the treaty. Beijing applied to become a member of the bloc in September 2021. 

• The U.S., during the Donald Trump presidency, had withdrawn from the CPTPP’s precursor, the TPP.

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About Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

• It is an 11-member bloc

• accounts for some 13% of the global GDP

 

Core output In February

News: Output across India’s eight core sectors rose at a three-month-low pace of 6% in February.

 

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About the News:

• Core output growth eased from January’s revised estimate of 8.9% which was the highest increase in seven months.

• Fertiliser production continued to lead growth with a 22.2% increase. 

• Coal, steel and electricity production decreased from double-digit growth in January to rising by a 7% - 8.5% range in February. 

• Cement production grew 7.3%, compared with January’s 4.6% expansion.

• Crude oil output shrank 4.9%, the ninth successive contraction and the sharpest drop in as many months.

• Natural Gas and refinery products’ growth moderated from about 5% in January to just over 3%.

• The overall Index of Core Industries, which constitutes about 40% of the Index of Industrial Production (IIP), dropped 7.8% sequentially in February, with all eight sectors recording lower numbers.