Foreign Trade Policies of Nations of World: A Short Guide

Hi

Welcome.

Friends, in this section, I will be taking up the case study of India's foreign trade policy.

The purpose of taking this case study is to illustrate the things that I discussed in the earlier section, all about what I have talked about: the foreign trade policies, the role of the World Trade Organization, and the typical approaches of the local governments while making the foreign trade policies.

India's foreign trade policy is a very good example to help you understand the approaches, pitfalls, achievements, highs, and lows of the foreign trade policies made by different governments.

All these things can be seen if you understand the history of the foreign trade policy of India and the approaches of the recent foreign trade policies of India.

If you talk about the brief history of foreign trade policy in India:

India became independent from British rule in 1947.

After that, India tried to have some economic policies, domestic as well as overseas policies for economics, business, and trade.

What happened after independence? For different reasons, India could not think in the direction of the modern ways of doing international trade.

The modern theories of international trade, the advantages that international trade brings, and more specifically, the value of the liberalized trade regime, which is the cornerstone of development in most of the developed world, are the so-called triads of that time.

India had a very inward-looking foreign trade policy for a very, very long time.

Many decades were wasted by India in not integrating the country into the foreign trade regime.

The approach was export-import control rather than foreign trade development.

This continued till the late 80s.

By that time, for different reasons, the economy of India slid to the extent that it hit its bottom line.

Things were really bad.

After several famines in India and the burgeoning population, people wanted food and livelihood.

They wanted income, which was not happening.

Whatever foreign trade was possible was in a few hands.

This policy resulted in really bad consequences for the Indian economy.

By the early 1990s, the situation forced India to rethink foreign trade and its integration with the world trade regime.

In 1991, India changed its approach and the structure of the way it conducted foreign trade with the world.

In 1991, new rules were framed, and a new Foreign Trade Policy Act was enacted.

Instead of the Export-Import Control Act, it became the Foreign Trade Development Act.

This was a major change in India's approach towards foreign trade.

The result was very good.

Today, India is self-sufficient in food.

It is self-sufficient in many manufactured goods.

India is part of world trade.

India is moving towards becoming one of the top economies of the world, and it has surpassed the economies of many developed countries in terms of total GDP.

India is still a developing country, but it has a lot of potential because of its approach, because of its foreign trade policy, which saw the climax, the change of approach in 1991.

The so-called LPG—liberalization, privatization, and globalization.

All these approaches and the new policies, rules, and guidelines were framed by India post-1991. Post-liberalization, India is looking ahead.

It is progressing.

All of this is the result of the foreign trade policy approaches that India had, in spite of the many highs and lows of the various policies made post-liberalization.

After 1991, India embarked upon a great economic journey.

Foreign trade increased manifold.

India is exporting many items in different sectors, including high-technology items.

India is one of the top exporters of IT software products.

Today, if we look at the recent foreign trade policies of India and what has been the approach of India while making the foreign trade policies, you will understand the concepts that I discussed in section one.

Let's see and analyze India's foreign trade policy minutely.

So before I talk about the current policy and the forthcoming policy, if we talk of the finer areas, the finer points of the foreign trade policy in India, that in the past, as well as in the current and the future, certain concerns will always remain. Certain focus areas cannot be done away with. So the policy in India, which is formulated, basically serves as a plan of action and strategy. That is the idea of such kind of policies and the main focus areas in India, like in many other countries. I wouldn't say that other countries may not have those kinds of main focus areas. Like many countries, India has focus areas of this type, which are the different agreements, free trade agreements, which India has with other countries, which may be bilateral agreements, which may be multi-lateral agreements under the aegis of, e.g., the WTO multilateral agreement. So these agreements and the commercial relations are very, very important while formulating the FT policy as well as the concept of SEZ. Why?, because by experience it has been seen the World over, that the special economic zones play a very, very important role in modern times, especially in the process of making the status and the role of the country in the global value chain without this status, without this role in the world global value chain, in today's world, it is very difficult to have a very substantive export role, a substantive share in the world market. So you have to be part of this global value chain, very, very important.

And SEZs play a very, very important role in that. And promotion of exports. Very, very important for any FT policy. Every country needs it. Every country needs FX for importing. I gave you the example of Sri Lanka, and in this example, as I said to you, for small, small things, countries like Sri Lanka, or even Bangladesh, for example, they depend on foreign countries very well is one thing, because it doesn't make sense to manufacture those things in those countries. Or, probably, they had not conceptualized the production of many of the essential items that today's situation requires these countries to do. So they need to promote exports and facilitate foreign trade for their transactions. Foreign exchange management deals with foreign currencies. To deal with the border management programs, to spend less on the logistics, as well as the port facilities board handling. So those different costs are the so-called eight action costs. So those kinds of facilitation of trade are very, very important.

Focus NGO, India's one policy, and the regulation and government of the different categories and commodities of exportable products. The project company produces products that would surely have demand in the international market. The products are available in our country. Our country has some competitive advantages or maybe as guarantees or the availability of supporting industries, the nature of competition in the country, the local demand, and the proper conditions. So those products enjoy the right ecosystem of being nationally and internationally competitive. So how do you regulate and develop those activities? So these are the main focus areas of different activities in India.

And also, I hope I have not taken too much time. And if we can briefly, within a couple of minutes, discuss this, you said that the pressure was instrumental in discontinuing the schemes like Yeah MEIS. Merchandise exports from India scheme and SEIS Services export from India scheme. But somehow I have a feeling that in a way it is good because you know, giving monetary incentives to export in the form of duty credit scrips or to I mean, export of merchandise or export of services might not help the exporters a lot. Rather, the government can invest the money in providing a great infrastructure in terms of, you know, special economic zones, making sure that various parks, technology parks, or textile parks have their suppliers nearby. And then it would sort of be a motivation for MSMEs not to remain MSMEs. I mean, there are two things. One is these schemes provides duty credit scrips. So, duty credit scrip, I think, is a note that is given to them where they can utilize that to import something later on without paying import duty. And maybe in some cases it can be used for paying the domestic tariffs also, you know, they seem to be doing away with the taxes, domestic taxes also. So that's in a way a monetary incentive.

And again, this is what the WTO also has. I mean, the WTO has this logic that instead of paying monetary incentives, it creates situations for the small companies to be able to grow big. Because unless and until the MSMEs grow too big. They might not be able to compete with the likes of SEZs that we find in China, or, for that matter, other fast-growing nations around. So that's one part of it. The other part is MSMEs; in any case, they get incentives and subsidies. You know, if I'm right, they get some benefits, monetary benefits, and some kind of subsidies from the government, which might motivate them not to grow beyond a particular size because they are incentivized to remain small or split into a few companies. And so there are two parts to it. I feel that one is that they're incentivized to remain small, and the other is that they do not have infrastructure facilities, or they do not have their suppliers nearby.

For example, I was reading an article about the home Decor company that makes cushions and is based in Noida- cushions and pillows. A lot of raw material comes from Chennai. They add value, and when it is exported, it is exported via the Nahva Sheva port, which is in Bombay. So it is so much of, you know, traveling and the expenses for transportation, which adds on to their cost. So if the government, rather than focusing on giving monetary incentives to MSMEs, focuses on giving them the needed infrastructure, which we would see for sure in the coming future, this government is going to do in terms of various parks and SEZs, and it needs to be expedited. I just want you to make a few clarifications on this, if you want to say something about this. Thank you, sir. Thank you. You are right. The country is now not eligible in the WTO to give any subsidy because India has already crossed the $1000 threshold of the GNP, which is a subsidy agreement. It is called a subsidy agreement. All the countries are signatories to that agreement at the WTO, and India is also a signatory. So knowing very well that we are not eligible to give any subsidy, this scheme should not have been launched actually on the very first place. MEIS and SEIS. So, the government, the best the government could have done was to continue the old schemes that are already there, which were accepted by the world, which were also accepted by the WTO with some tweaking.

That was the best approach. I don't know what happened, but somehow the government did not realize that or the government thought that we would not be able to cross $1000, which we were not actually. We were on the verge of crossing the 1000-dollar threshold. And as for the agreement, we actually cannot have those kinds of schemes now. So in. future, you will not see such schemes going through the scripts. And you're right. India is spending 14% of its GDP on logistics costs, which is way above the world average, which is 8% for other countries. And some other countries spent just 5 or 6% of their GDP on logistics. So spending 14% means you are already adding to the cost of the raw material coming from Chennai to Delhi, and then processed in Delhi, and then re-exported to Nahva Sheva. So, with the fact that you are spending 14% of the GDP on logistics, obviously, the price will go up. So the product will not be competitive unless it has some differentiating features. In India, what is happening is that most of the exports are not based on the efficiencies or the low cost of transportation or the right methods, external methods.

Most of the export that are happening from India is based on the achievements of the people who are exporting. The people, want to export. That's why it is being exported. They have some innovative minds. They have created some differentiation in the products. Somehow, they can sell. But it's a very difficult task for the exporters, and if they are doing it, they are doing a wonderful job in the given situation. If we compare our prices with many other countries, if you talk about China, China spends only 6% of its GDP on logistics, and we are spending 14%. So you have to understand that by default, we are not competitive. So you are right that instead of giving these subsidies, the government should focus and the government is focusing. Yes, like in the form of the dedicated freight corridors, which would pretty soon be operational between Dadri and Nahva Sheva Port, is going to reduce the time by seven times instead of taking five days to seven days to reach there, because these goods train always moving second priority to the passenger trains that would reduce the time to just one day less than that. And new dry ports, new dry ports are being established along the Dedicated freight corridors.

These dry ports reduce the cost and the containerization, even for domestic travel; our percentage is 50% whereas the world average is above 80%. So even for domestic movement, we have to move to containerization to reduce the cost. So, you know, these are the areas actually which are actually important. And we are expecting that the focus of the new foreign trade policy will be on those concerns. So I'm very sure that MSMEs will benefit from these changes, and the goal to bring down the logistics cost to 9% of the GDP is there by 2025 will be achieved, and as you rightly said, the MSMEs can have a one-window system. MSMEs can have easy access to the raw materials. Easy availability of the credit lines. Microfinance. So those things I think will be taken care of. Now. I'm very sure of that. So this is, you know, what I wanted to say about.

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And I think if we talk of the other areas of focus and the achievements of FT policy 2015-20 as I just mentioned to you that despite the constraints like the poor infrastructure, road infrastructure logistics infrastructure, and the availability of electricity, for example, or the availability of the water or the raw materials, the cost of high transactions, the overall cost of the transactions, including the cost of transportation and warehousing, and the procedural complexities, the local regulations, state regulations, state laws, and the constraints which are inherent in the manufacturing units.

Many, many constraints are there. Many inexplicable. constraints are there and including the availability of skilled people in the manufacturing sector, lack of training of skilled people, semi-skilled people, and the inadequate diversification of the export in the sense that new products not being able to be identified for the export basket despite these constraints, and coupled with the many external factors, most recent being the COVID and now Ukraine war. Despite such external factors, India was still able to sign the Trade Facilitation Agreement at WTO, which is a good achievement of this policy, and this Trade Facilitation Agreement at WTO, which is very, very important to help the developing and least developed countries to reduce the cost of trade transactions. So it is not just about the cost of logistics, which is very high.

For example, in the case of our country, India, 14%, approximately of the GDP, but other transaction costs, which include the customs charges or procedural delays, dummerages that come into the picture, and the movement, release, and clearance of the goods and the complexities of the border management programs and high import tariffs, which the raw material which is used for exports. Many of the raw material has to be purchased locally, which have been there in the DTA -domestic tariff area, after paying the high tariff rates. So the Trade Facilitation Agreement aims at expediting the trade procedures, expediting the movement, release, and clearance of the goods, simplification of the border management programs, and bringing down the trade barriers. So this agreement has been signed by India. So the calculations and the research papers submitted at WTO by the expert committees, very clearly indicate that the potential of this TFA- Trade Facilitation Agreement is to reduce the total trade transaction costs by a minimum of 14% for countries like India or many countries in Africa, and most of the other developing countries or middle-income countries. So the TFA is very important, and India signed this agreement. India is a signatory to this agreement.

So India is committed to bringing down the cost at the ports, at the dry ports, and at the toll plazas where the movement of the goods happens, either for exports or even for domestic purposes. So, GST was probably part of this only because one tax was required. GST was required, actually, to achieve this. So, India is committed now because it is a signatory. So if India does not achieve it, then the stock-taking will take the place of India and its policy. So that's a good achievement for India.

If we talk of the significance of these policies in India in compliance with the World Trade Organization, India needs to eventually phase out subsidies. Basically, not eventually—now India is in a situation where it has to phase out. There is no second option, India. It is not “eventually,” it is “now.” Now it is India's need to phase out subsidies and move towards fundamental and systematic measures in the future.

Sir, can I just ask one thing in 30 seconds? Sir, I've heard and I have this understanding that, you know, when the subsidy is given to the exporters, as you've said, these are not good. But what all comes under subsidies? I heard the reason why India is not able to compete with the likes of China and maybe some other nations is that we are not able to focus on the value chain and supply chain in the way the Chinese have done. For example, it's pretty much a mobile phone made in India. Almost half of the inputs are imported from outside, and it is assembled in India. One of the reasons is that you do not have a lot of motivation. I mean, why would businesses want to come into making spare parts for mobile phones?

For that, the motivation could be tax holidays given by the government, like five years or ten years of tax holidays, to become suppliers, to not depend on outsiders for imports, and to make it in India. It could be done very well. It could be done if there is that kind of motivation that businesses have. Now, my question here is: if the government gives tax holidays, would that also come under subsidy?

There is a complete manual of the WTO available online. You can download it, and it gives you what kind of tax holidays, or the so-called WTO-compliant tax relief report, there is. You can have this kind of tax holiday and even… And that would probably be able to motivate businesses to come to a place where they could reduce their transaction costs. Yes, WTO encourages governments to introduce taxes.

Actually, as part of the TFA (Trade Facilitation Agreement), the WTO encourages governments to consider tax holidays or income tax reliefs. India still does not have major income tax relief for exporters or for people in service exports. It is very much possible, and it is WTO-compliant. Why is the government not doing it? I am pretty sure they would be doing this. In terms of recent developments, we have seen a lot of hoardings of the Textile Park coming up in Noida. You know those ads and hoardings of textile parks throughout the expressway from Greater Noida to Agra. On both sides, I think two kilometers on each side, this entire corridor is earmarked for the future, similar to SEZs. Yes, I think it’s on the Yamuna Expressway. Yes, the Yamuna Expressway goes from Greater Noida to Agra. That is true.

This probably means that the government has the very same intention of inviting even outside companies into India to establish themselves there and reduce their costs. That is what is expected out of the Foreign Trade Policy 2021–26—that they should at least look at the taxes, tax rebates, refunds, and holidays which are WTO compliant, rather than giving any populist kind of incentive schemes which will actually be red-flagged by WTO. In any case, it is very obvious. I mean, the people who are sitting there at NITI Aayog—how can they even propose such incentive schemes, when they know that these will be red-flagged? This is not expected out of professional policymaking for the FT policy, as happened in the past, which created problems for many exporters.

Anyway, you are right. Even after these bottlenecks, we have seen that India's exports in the last few months have done very, very exceptionally well, and the government would be achieving its budgeted export targets. There are various external reasons for that, like the conflict in Ukraine and other factors. Definitely, these external factors have impacted the course of policymaking. It is good news that India has now crossed the benchmark of USD 1000 per capita income for three consecutive years. As per the agreement, since 2014, India has crossed this figure. Under the subsidies agreement, India cannot give any subsidy. If it had been less, then India would have been eligible. When this policy came, India thought we may not be able to cross this, but we did. That is good news and, as you rightly said, in the recent past India has achieved very good numbers in exports. This is a very good indication of things to come.

The focus of the foreign trade policy, whatever we have just talked about, is one of the solutions and a necessity: to focus on value-added “Made in India” goods. This is very important. When I say “Made in India” goods, I would go further to say that India has to look at the global value chain and supply chains. When I say “Made in India,” I would say even a 10% or 15% value addition should make it “Made in India.” We should import intermediate goods from other countries. I would rather say that India should develop its global value chain and help some African countries supply intermediate goods to India. India can then add value. India should focus on value addition rather than making the complete product. That is very important.

Also, increasing the export basket is essential. As I just mentioned, 70% of the current export basket accounts for only 30% of world demand. The items required in the world—India is focusing on only 30% of them.

What about the other 70% of the world's demand? Why are we not even making them, let alone being competitive? We are not even making those products for the world market. This is not acceptable, and the situation has to change. We also need to increase the destination basket. Again, we are dependent on maybe 15–20 countries for the bulk of our exports, which is also a matter of concern. Why are we depending on such a small set of countries for our exports?

These are some of the areas. This means that the key focus has to be on the growth of Indian export products, both current and new ones that have to be included. The need now is to fulfill the major demand of the world market, enhance India’s value addition, and generate employment. This would remain a very important political, economic, and social goal. Enhancing the services and manufacturing sectors in a balanced way is also critical. India cannot say that since we are doing well in IT, there is no need to focus on manufacturing. That will not solve the problems.

Otherwise, India will not be part of the global value chain, will lose many opportunities, and, very importantly, will not be able to generate employment, especially for semi-skilled and unskilled people. The manufacturing sector is very important from this perspective.

Other focus areas of these policies will always remain:

• The primary aim I just mentioned.

• Durability and duration of five-year policies. Continuity has to be there.

The 2015–20 FT policy was not a good continuation of older policies, which is probably why it failed miserably.

Aiming towards ease of doing business—that is, trade facilitation—we are already a signatory to the WTO’s Trade Facilitation Agreement and have undertaken major initiatives like the Niryat Bandhu scheme, electronic importer-exporter code, electronic bank certificates (eBRC), and the exporter-importer profile database.

Online filing of different applications, such as for import licenses, online inter-ministerial consultations (initiated during COVID and likely to continue), and facilities for CAs/CSs at government-approved charges are available.

Electronic data interchange links local regulatory authorities like Customs and the RBI with incentive-providing authorities. Export consignment schemes under the MDA scheme allow associations and EPCs for exporters to provide customs-bonded warehouses in major markets for facilitating export consignments, enabling members to sell goods in a stock-and-sell mode.

Other measures include withdrawal of seizure of export-related stocks, round-the-clock customs clearance, single-window interfaces, the Authorized Economic Operator Program, online filing of shipping bills, facilitating exports of perishables and reefers in refrigerated containers at reasonable prices, time-release studies, and the Towns of Export Excellence Scheme, identifying small towns as major exporters.

These schemes were never questioned by the WTO. The National Committee on Trade Facilitation has now become very important after India signed the TFA at the WTO. Other facilities include email notification services, deferred payment for imports of export inputs, etc.

These schemes, major initiatives by the Government of India, were part of earlier and current FT policies. Tweaking and interventions are required for these focus areas in the policies.

So talking about the, uh, the highs of the foreign policy 2015-20, MEIS was a good idea, but it was not feasible. We were not eligible because we knew that we were, we were moving towards, and we knew we had already signed the subsidy agreement. So it was not a scheme to be introduced, and as expected, it was red-flagged by the WTO, and the complainant was the U.S.. In this case, if it had not been the USA, it would have been some other country. But it had to happen. SEIS also had some positive impact. But again, the same problem, it is controversial, although the government has not yet scrapped it.

Yes, it is still there. But MEIS has already been replaced by the RoDTEP scheme, which I'll just talk about after the break. I'll talk about the new scheme, which is there, which replaces MEIS and enables the manufacturers in this policy to self-certify their manufactured products, for example Indian manufactured goods that are made in India. So these kinds of. relaxations were there and the facilitation was there, which is very much a WTO complaint, and the reduced EPCG obligations to 75% from 90%. So these are some of the good ideas. Great ideas. But many were not feasible ideas.

Many were not to be included, actually, like MEIS or SEIS. It would have been better to have the old Wine in a new bottle kind of thing, that should have been there instead of having the old bottle with the new wine. That wasn't a good idea. So this is what the highs are in the sense that the ideas were good, but those were the lows also. And the other thing, a very important thing, is the focus of the MSMEs and the recognition of the definition of micro-enterprises, small and medium enterprises. So 108 different sectors were included in MSMEs. So that was a high part of the policy. Promoting the filing of the different papers, licenses, and applications in a paperless form. So these were some of the good things of the policies, or if not good things, the good ideas.

Lows of the policy were that it failed to address the multi-dimensional issues in terms of insecurity among the exporters. What kind of insecurity among the exporters? That insecurity of the investment—they invest in certain products and wonder whether they will be able to export in the given scenario, whether what they manufacture will be competitive internationally because of the high cost of logistics, high cost of infrastructure, and many constraints, which I have already discussed. Those multi-dimensional issues were not addressed in the policy. A very myopic view was there. Certain focus areas were there, and many other things were conveniently overlooked. That was the low.

The dropping of global demand, for example, was not the result of any government policy. Global demand dropped because of unprecedented world situations like COVID or, more recently, the war that is going on. A very unexpected war, creating a lot of uncertainty. Many commodities have been affected, and prices are going up for different items in the world. Dropping global demand was another area of the lows of different policies, along with many protectionist measures by countries because of COVID. Again, this was not the result of any foreign trade policy initiatives of the GOI, but just external factors like protectionist measures announced by many countries.

The removal of old schemes of earlier policies also created problems. Exporters were very comfortable with them. They knew how to deal with the government, how to get those incentives, or how to be part of those schemes. Years of learning by exporters immediately became irrelevant in the new policy because of the removal of many export schemes. And these were schemes for which there was no WTO red flag.

What are these schemes that got removed? I will show you in later slides and show you the evolution of different schemes in India in the next session. I will tell you about decade-old schemes, what export schemes were there, and I will show you graphically.

In the present foreign trade policy, which is the new one, I think only the MEIS—Merchandise Exports from India Scheme—has been discontinued. Right? Like EPZ, the duty drawback, the duty-free import authorization, or advance authorization, they have remained. But I will show you graphically the latest schemes that were removed. In fact, when the MEIS and SEIS schemes were announced, many of these schemes were merged. Focus schemes, like market focus or product focus schemes, and many sector-specific schemes for gems and jewelry or textiles were there.

I feel that some of these schemes from ten years back, even if they are not here, we can just skip those because, quite frankly, they would not be of much use to us now. But you may be right when you look at the ground level. For example, someone exporting small diamonds from Surat, cutting and polishing them. He is investing based on certain schemes. He knows these schemes are robust and the government will not do away with them. But the government did not act with bad intentions. They were trying to simplify. Many of these product-specific and area-specific schemes were merged into MEIS, thinking that, in any case, people were getting MEIS and SEIS, and it would take care of their requirements.

But suddenly, these MEIS and SEIS schemes became so visible to the world, looking like subsidies. That led to a global backlash. Otherwise, there would not have been any backlash if these schemes had been kept under earlier names. At least in the 2015–20 policy, no questions would have been asked. Only now, with the new policy coming, the world would have said India has to re-look at those policies as per the subsidy agreement. That question would have come anyway.

What happened is that all these schemes were merged into a single, simplified scheme. And those schemes were red-flagged. So everything is gone. This is not good for the country, especially grassroots exporters like handicraft exporters, handloom exporters, or jewelry manufacturers. Special schemes suited to certain sectors that were doing well became redundant, as no such schemes now exist.

The new schemes introduced became the talk of the world. I feel this was very unprofessional. Probably the people at the helm did not understand the WTO or the global scenario. My reading from many articles is that they tried to look different. But while trying to show Indian people they were different, they also showed the world they were different in a way not liked by competitors. This was playing the game the wrong way, with a bad strategy.

The result was also bad. Even before COVID, our exports were going down, and many problems were faced. COVID only worsened it. These are some lows of the foreign trade policy.

Other crucial internal concerns included pending payments to exporters or GST issues. Exporters were affected by new schemes under GST. With pending ITC refunds, exporters were left uncertain. If you don’t get refunds on time, you can’t function. You can’t keep exporters guessing about when payments will be made. Pending duty drawbacks or duty scrips under MEIS also hurt exporters.

These internal concerns were not entirely new—they existed earlier, too. But they had been streamlined and re-emerged because of policy changes. Good intentions, but wrong strategy. Strategy is very important because ultimately the DOC and MOC’s role is to strategize properly. A plan of action has to be strategic. The plan was right, but the strategy was not. This is what happened.

The failure to address these issues was serious. The USA immediately filed a complaint at the WTO after the policy was announced. Not later—immediately. India, meaning the exporters, was not ready for the more complex system introduced by the FTP. The new system looked modern but was complex and difficult to understand. This was again a failure of the plan of action of the Ministry of Commerce, Department of Commerce, when formulating policies.

Adverse impacts also came from free trade agreements (FTAs). Goods became importable free of duty, but the results were not as expected. Exporters did not benefit from FTAs. Even small issues like certificates of origin for FTA partner countries created problems. Internal concerns were there. Rising imports meant exporters could not sell goods in the domestic market either. Economies of scale are required, but heavy imports destroyed those opportunities.

I won’t say imports should not be promoted. Imports must be promoted, but they must be well managed. Mismanagement contributed to the trade deficit and inflation. We have seen continuous inflation, making our products uncompetitive internationally.

These are some of the lows of this policy.

And finally, the refusal of India to join RCEP. RCEP is the world's biggest free trade agreement, which comprises all ASEAN countries, China, South Korea, Japan, and Australia. Almost half the population of the world is included in RCEP. India has been consistently working with RCEP. Just at the end of November, if I remember correctly, it was November 2020 or maybe 2021 — India refused to sign RCEP, to the surprise of the world.

The reason for India not being part of RCEP was that India was not happy with the earlier FTAs for whatever reason. Nobody even thought about what went wrong with those FTAs, but they were not good. India very conveniently refused to join RCEP. It appears to me that the main reason for the Indian government not accepting RCEP in its present form was the adverse impact it would have had on Indian farmers, Indian agriculture, and especially dairy. We probably might have suffered competition from Australia and New Zealand. Also, there were concerns about Indian MSMEs: cost factors such as logistics are a major cost for MSMEs. Roughly, if I am right, about 80% of India's exports still come from MSMEs.

In the absence of good infrastructure and better supply chain and value chain networks, MSMEs are struggling. If MSMEs are subsidized or given monetary incentives, subsidized loans are okay, but other subsidies may motivate MSMEs to remain small and not grow beyond their size. It is not that they do not want to grow — MSMEs want to become big and win large overseas orders — but in the absence of sufficient external infrastructure, and with certain incentives or monetary subsidies, they find it challenging to compete. The government should focus on giving tax holidays to businesses that become suppliers to manufacturers; rather than depending on imports, if they could manufacture in India and become suppliers to bigger manufacturers, it would be good for trade and the trade balance of the nation. These are various factors that policymakers might have considered in deciding not to join RCEP.

However, the more we delay joining RCEP, the more we are at a loss because we do not have access to those markets and become alienated from a very large grouping that is happily doing business with each other. Geographically, we are close; we can make shipments and supply goods despite the problems. The question is that we have to work on internal problems, but that does not mean we should not enter the market. For example, when Tata invested in passenger cars, Tata knew there were problems with the Nano, yet they did not stop manufacturing because stopping would have removed them from the market. If India says it will not join RCEP because it cannot solve internal problems, it is effectively getting out of the market. That approach is not how business works. Politics may take such a stand, but business requires presence in the market.

I read a news article a few months back about tensions between China and Australia after RCEP, where political friction affected trade in natural resources. Joining RCEP would give a lot of short-term advantages to more efficient countries; that may be why India hesitated, and majorly because of concerns for farmers and dairy livelihoods — millions depend on dairy in India. You need to learn to swim: you cannot avoid the water forever. You have to enter the market and learn; otherwise, how will your industry become efficient?

This is one of the lows of the foreign trade policy: it was largely driven by subsidies and did not sufficiently support MSMEs, which are major players. Those subsidies were not available to many other crucial sectors. When you focus on some sectors, you cannot ignore others that were receiving support earlier. Many crucial sectors had government support earlier; these have been reallocated to build a single pillar stronger because of limited resources.

One idea that comes to mind is promoting mergers of various MSMEs. For example, corrugated-box manufacturers in different cities — if the government proposes a model and incentives for marketing agencies to coordinate mergers, these businesses could grow beyond MSME size, achieve economies of scale, reduce costs, and serve domestic and export markets. It is a random thought, but India needs passionate, result-oriented leadership — people with proven track records, like company CEOs, who can deliver. Policies and leadership matter. The IT sector grew because meritocrats and appropriate policies drove it; a similar approach is needed for manufacturing and exports now. It is high time.

The policy did not focus enough on crucial areas like skill development and technology upgradation. Without technology upgrades, you cannot increase the export basket or make products competitive. India manufactures syringes, vaccines, biotech products, automotive batteries, and tires — all of which require the latest technology. Instead of incentivizing imports at zero duty, the focus should be on making products in India. Schemes like Make in India and Stand Up India are fine, but Make in India must mean value-added, high-tech manufacturing with R&D. Where is R&D? Without R&D, how will you upgrade technology? Countries are increasingly reluctant to transfer technology; you have to create your own.

Rather than promoting the EPCG (Export Promotion Capital Goods) scheme that allows easy import of machinery (with export obligations), the focus should be on encouraging domestic manufacture of those machines and offering tax holidays of five to ten years for manufacturers. As you said, some tax holidays are WTO-compliant. The WTO manual lists what tax reliefs are allowed. There is a paucity of WTO experts in the country; when the USA filed a case, India struggled to find people to respond. Skill development and R&D incentives are therefore critical. China invested heavily in R&D; institutions like Tsinghua produce top research and remarkable outputs. We need similar emphasis on research and innovation.

Hello friends.

Welcome back to the course.

Friends, I wish to congratulate you on completing this short course on foreign trade policies of the nations of the world. Although this was a short course, I tried in this course to make you understand the different issues and different components of the typical foreign trade policies made by the local governments around the world.

And what are the perceptions and the focus of the different governments in making and formulating these foreign trade policies under the different factors, the different pressures which are there, both domestic pressure of the different stakeholders as well as the pressure of the World Trade Organization and the genuine need of the countries to progress in trade and business, international trade and business, with these compulsions, these pressures, the needs of different countries, it is but obvious that some differences will come among the foreign trade policies made by different local governments around the world.

That was very well illustrated in this course by the case study, which we had taken of the foreign trade policy of India.

This foreign trade policy of India, we discussed the red flagging of some of the schemes that were introduced by this foreign trade policy, and how the Government of India tried to make things better for the domestic market as well as for the exporters and to resolve the local issues and the issues that can be addressed by such kind of policies, as well as try to balance out the needs of the country to become a significant international trader in the world market.

Every country has such kinds of approaches and intentions, but what happens is that so many different compulsions and pressures, and certain silly mistakes by some of the local governments, can create havoc for international trade, especially exports.

So in the very competitive world that we have today, exporting goods requires a lot of government policy support, which has to be very well thought out and very professional in nature.

That is the lesson that was indicated by the case study that we had taken in this course.

If you like this course, do share this course with your friends, colleagues, and contacts, and if you have any feedback to send to me on this course, do send me any suggestions that can improve this course and make it world-class.

My objective was to provide you, in very short details, the major aspects of the foreign trade policies of the nations of this world.

Do explore the courses, similar courses that are there on the Udemy platform in the VJ Export Import Mastery series of courses, a part of which this course was.

Thank you very much.

Hello to you. Today,

I have some appreciative comments for you.

I want to take a moment to congratulate you on fully completing this course.

Your dedication and perseverance throughout this journey have been truly commendable.

Completing a course is no small feat, and I'm incredibly proud of the progress you have made and the knowledge you have gained along the way.

I also want to remind you that this course is just one piece of the puzzle.

It is part of our larger VJ Export Mastery Courses series, consisting of 25 courses that I had told you about earlier, also. These courses are designed to provide you with a comprehensive understanding of the export industry.

On my part, as I had told earlier, also, I am also committed to helping you expand your learning even further by giving access to more similar courses in the series. On your part, I again have a small request for you as well.

Your feedback and rating are incredibly valuable in refining this course and ensuring it remains world-class.

So I kindly ask you to leave a rating for the course along with your honest feedback, in case you have not done so yet.

Once again, congratulations on completing the course.

Keep up with this fantastic work that you have done in this course, and remember, I am here to support you every step of the way, personally. Even after you have completed this course. You can reach out to me any time for any mentoring or support that you may need.

Thank you very much.

Hello and welcome, and thank you so much for completing this amazing course.

I truly appreciate the time and effort you have invested in developing all types of skills, whether related to export documentation, compliance, international regulations, logistics, or global marketing strategies.

In this short bonus video lecture, I want to share with you a few optional ways you can continue your learning journey, access additional resources, and stay connected with me for future guidance, all while remaining fully compliant with Udemy policies.

If you want to continue receiving educational content on exports, global compliance updates, HS code classification tips, EU/US regulations, logistics strategies, and real-world case studies, you are welcome to connect with me on LinkedIn.

I regularly post export-related insights, free updates, and practical examples that many learners find very useful.

Again, this is completely optional, but if you would like to connect, this is my LinkedIn profile: LinkedIn.com/in/vijeshjain. Along with my activities on LinkedIn, YouTube, Instagram, and many other social media platforms, I frequently share publicly available articles, guidance notes, and updates related to topics such as documentation and compliance, Indian and international customs rules, labeling requirements, global market trends, and policy changes in the EU, USA, UK, and Middle Eastern regions, as well as best practices for exporters.

These free resources can help you stay informed and confident as your export business grows.

For learners who need personalized clarity on specific export matters, such as HS decisions, regulatory compliance, product classifications, labeling reviews, customs queries, international market strategies, or even Amazon US product launch advisory, I also provide such guidance outside Udemy.

If you ever require any of this tailor-made support, you may contact me directly. My email ID is vijesshjain@gmail.com.

Please note that this is only an optional way to reach me outside Udemy, and it is not required to complete this course. It is also not part of the Udemy purchase for this course, which keeps this message fully compliant with Udemy policies.

In addition, I want to cordially invite you to my Discord Knowledge Hub, which has several channels, including the Q&A section, discussion channel, discussion lounge, video lectures channel, and announcement channel. No registration is required to access this knowledge hub or any of these channels.

Simply click the invite link, which is also provided in the resource section of this lecture, and you can access my Discord Knowledge Hub.

Before I close, I want to sincerely thank you once again for joining this course.

I truly hope that this specialized training has added real value to your knowledge base and to your professional journey in international trade.

My mission is to help learners navigate exports more confidently, whether it is compliance, export documentation, import documentation, logistics, or expanding into global markets.

I wish you tremendous success in your future business endeavors, and I look forward to staying connected with you on your path ahead.

Thank you once again, and all the best in your international journey.

Take care of yourself, and see you in another course in this course series.

Dear Learner,

Thank you for completing this course. I appreciate your time, dedication, and interest in strengthening your knowledge of export documentation, compliance, HS classification, logistics, and global market strategy.

This Bonus Section offers optional ways to continue your learning journey, stay connected, and access additional guidance outside Udemy.
Everything here is completely optional, not required to complete the course, and not included in your Udemy purchase, in full compliance with Udemy policies.

1. Connect With Me on LinkedIn (Optional)

If you'd like to follow my educational posts, updates, and insights on global trade, compliance, and international markets, you can connect with me on LinkedIn:

LinkedIn (Optional):
https://www.linkedin.com/in/vijeshjain/

I regularly share free content, industry news, case studies, and compliance tips useful for exporters and global professionals.

2. Visit My Udemy Instructor Profile (Optional)

If you’d like to explore more of my courses on international trade and global business:

Udemy Instructor Profile (Optional):
https://www.udemy.com/user/vijesh-jain-4/

You can browse additional courses, all focused on simplifying global trade and helping professionals succeed in international markets.

3. Optional Personalized Guidance Outside Udemy

If you ever need individual clarity on export documentation, HS code decisions, customs queries, EU/US/UK/UAE compliance, labeling reviews, market-entry strategy, or Amazon USA marketplace compliance, you may reach out to me directly:

Email (Optional):
vijeshjain@gmail.com

Additional Educational Video Resources at YouTube: https://www.youtube.com/@VijeshJain0506

This is only an optional way to connect and is not required for completing the course.

4. Join the Free Discord Knowledge Hub (No Signup Required)

To support continuous learning, I’ve created an open-access Discord Knowledge Hub for all students.
You can join anytime to access discussions, free resources, shared insights, and regular updates.

Join Optional Discord Knowledge Hub (No Registration Required):
https://discord.gg/wHgqdYe6tz

This community is free, optional, and designed to help learners share knowledge and stay updated with global trade trends.

5. Free Public Resources for Ongoing Learning

I regularly share publicly accessible updates on topics such as:

• HS classification best practices

• Compliance rules for the USA, EU, UK, and UAE

• Labeling and documentation tips

• Customs procedures

• Market-entry insights

• Global trade risks and opportunities

These resources are available on my social channels and are fully free for learners.

Thank You & Best Wishes

Thank you once again for learning with me. I hope this course has added clarity and confidence to your global trade journey. I look forward to staying connected and supporting your continued growth.

Wishing you success in all your international business endeavors.

Warm regards,
Vijesh Jain
Export–Import Consultant & Trainer
VJ Global Academy