ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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India's New Foreign Trade Policy

Pluses and Minuses

Despite some steps in the right direction, the new policy has several limitations. This article makes a case for looking at them anew.

The long-awaited foreign trade policy (FTP) of the National Democratic Alliance (NDA) government evoked much interest both because it was the first comprehensive statement on the government’s priorities in the external sector, and also, perhaps more importantly, it would show if the present government has set its sights differently from the United Progressive Alliance (UPA) government.

It was the UPA government that tabled the first FTP in 2004, replacing the export–import policy. This seemed to suggest a change in the thinking of the policymakers—they had finally understood that it was necessary to move beyond export–import procedures and incentives for improving foreign trade performance, and that it was imperative for FTP to consider policies for improving production efficiencies and reducing transaction costs. In other words, FTP had to extend beyond the decision-making confines of the Department of Commerce, and the department had to develop a broader framework that provided the scope for coordinating with a number of administrative ministries to make the foreign trade sector more vibrant. But despite tabling two five-year FTPs, the UPA government did little to change the orientation of policymaking in trade.

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