What is Trade Policy?
Historical Background
Key Points
9 points- 1.
Tariffs: Taxes imposed on imported goods to protect domestic industries or generate revenue.
- 2.
Quotas: Quantitative restrictions on the amount of specific goods that can be imported or exported.
- 3.
Subsidies: Government financial support to domestic industries to make them more competitive in international markets.
- 4.
Non-Tariff Barriers (NTBs): Regulations, standards, licensing requirements, and customs procedures that restrict trade.
- 5.
Trade Agreements: Bilateral, regional, or multilateral agreements (like FTAs, CEPAs, WTO agreements) to reduce trade barriers.
- 6.
Export Promotion Schemes: Incentives and support for exporters (e.g., MEIS, RoDTEP) to boost outbound trade.
- 7.
Import Regulations: Rules governing the entry of goods into the domestic market, including quality and safety standards.
- 8.
Exchange Rate Policy: Influences the competitiveness of exports and imports by affecting their prices.
- 9.
Foreign Trade Policy (FTP): India's overarching policy document, typically announced every 5 years, outlining objectives and strategies for international trade.
Visual Insights
Trade Policy: Key Components and Impact
This mind map illustrates the key components of trade policy and their impact on various aspects of the economy and international relations.
Trade Policy
- ●Instruments
- ●Objectives
- ●Legal Framework
- ●Geopolitical Influence
Evolution of India's Trade Policy (2016-2026)
This timeline highlights key events and policy changes in India's trade policy over the past decade.
India's trade policy has evolved from protectionist measures to a more liberalized approach, with a recent emphasis on using trade for strategic purposes.
- 2016Focus on Make in India initiative to boost domestic manufacturing and exports.
- 2018India imposes retaliatory tariffs on US goods in response to US tariffs on steel and aluminum.
- 2020COVID-19 pandemic disrupts global supply chains, leading to a renewed focus on self-reliance (Atmanirbhar Bharat).
- 2022India signs Comprehensive Economic Partnership Agreement (CEPA) with the UAE.
- 2023India-Australia Economic Cooperation and Trade Agreement (ECTA) comes into effect.
- 2025India actively negotiates FTAs with the UK and Canada to diversify trade relations.
- 2026Government emphasizes the use of trade policy as a tool for geopolitical influence and national security.
Recent Developments
6 developmentsIndia's current Foreign Trade Policy 2023 aims to make India a global trading hub and achieve $2 trillion in exports by 2030.
Shift from MEIS to RoDTEP scheme for export incentives to comply with WTO norms.
Increased focus on Ease of Doing Business and trade facilitation to reduce transaction costs and time.
Strategic engagement in FTAs with key partners (e.g., UAE, Australia, UK, EU) to expand market access.
Emphasis on diversifying export basket and new markets to reduce trade risks.
Promotion of Make in India and Atmanirbhar Bharat initiatives, which have implications for import substitution and domestic manufacturing.