Why latest Amendment in the foreign trade policy 2015-20 in news?
- The Government of India has made suitable amendments in the existing Foreign Trade Policy 2015-20 and Handbook of Procedures to allow for International Trade Settlement in Indian Rupees (INR) i.e., invoicing, payment, and settlement of exports/imports in Indian Rupees.
Background of latest amendment in the Foreign Trade Policy
In July 2022, the Reserve Bank of India (RBI) and the Directorate General of Foreign Trade (DGFT) had carried out amendments in the existing Foreign Trade Policy 2015-20 and trade settlement procedures to enable the use of the rupee for invoicing, payment and settlement of export, import dues.
What Foreign Trade Policy Does?
The policy provides guidelines for enhancing exports to push economic growth and create jobs and incentives under different schemes such as Duty-Free Import Authorisation (DFIA) and Export Promotion Capital Goods (EPCG).
Which foreign trade policy we are having?
- We have currently the Foreign Trade Policy (2015-20), which had been extended from time to time.
- The government keep extending the existing Foreign Trade Policy by consecutive six months since 2020 due to currency volatility & global uncertainty. As also, the Geo-Political situation is not suitable for long-term Foreign Trade Policy.
Why a new amendment in the existing Foreign Trade Policy 2015-20?
- New changes in Foreign Trade Policy 2015-20 have now been introduced for granting export benefits and incentives as well as Fulfilment of Export Obligation norms for importers, for export realizations made in Indian rupees.
- In continuation to the notification, changes have been introduced under Para 2.53 of the Foreign Trade Policy, for grant of exports benefits/fulfillment of Export Obligation under the Foreign Trade Policy, for export realisations in Indian Rupees as per the RBI guidelines dated 11th July 2022.
- Given the rise in interest in the internationalization of the Indian rupee, the policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian rupees.
- Allowing trade settlements in the rupee under the various export promotion schemes should help boost exports and signals ‘internationalisation of the domestic currency’.
- These are early steps towards 100% convertibility of the Indian rupee.
Latest amendment in FTP 2015-20 : FAQs
Q. Which foreign trade policy does currently India has?
Ans. Currently, India has the Foreign Trade Policy (2015-20).
Q. Why did the government make the latest amendments in the existing Foreign Trade Policy 2015-20 and Handbook of Procedures?
Ans. To allow for International Trade Settlement in Indian Rupees (INR)
Q. What are the benefits of allowing International Trade Settlement in Indian Rupees (INR)?
Ans. Allowing trade settlements in the rupee under the various export promotion schemes should help boost exports and signals ‘internationalisation of the domestic currency’.
New Foreign Trade Policy