Unpacking India's Foreign Trade Policy 2024: Impact and Opportunities

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Strategic Approach of FTP 2024:

The FTP 2024 is built on four key pillars: incentive to remission, export promotion through collaboration with exporters, states, districts, and Indian missions, ease of doing business, and emerging areas such as e-commerce.

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This strategic approach emphasizes the importance of trust and partnership with exporters, ensuring that India's export opportunities are effectively utilized, especially during its G20 presidency.

Policy Objectives Outlined in FTP 2024:

The primary objectives of FTP 2024 include:

• Encouraging broad-based growth in exports through cross-border e-commerce and district export action plans.
• Boosting domestic demand in India amid a slowdown in global trade.
• Enhancing engagement with the United States in areas such as critical minerals, customs and trade facilitation, supply chains, and trade in high-tech products.
• Addressing longstanding trade disputes at the World Trade Organization and concerns stemming from the state visit of India's Prime Minister Narendra Modi to the United States in June.

How FTP 2024 Affects India's Global Trade:

United States-India Trade Policy Forum

India's Foreign Trade Policy 2024 has significantly influenced the country's international trade landscape, particularly in its bilateral trade relations.

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The United States-India Trade Policy Forum has played a pivotal role in strengthening the trade ties between India and the United States, with both countries committed to developing a forward-looking roadmap for areas such as critical minerals, customs and trade facilitation, supply chains, and trade in high-tech products. 

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This has led to increased trade engagement and the potential for further economic collaboration between the two nations.

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The Impact on Competitive Landscape

Trade Targets and Growth

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The Foreign Trade Policy 2024 focuses on emerging areas of export, such as high-tech manufacturing, pharmaceuticals, and e-commerce.

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 This has led to the establishment of special economic zones (SEZs) and the provision of subsidies for research and development to promote exports in these sectors.

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Consequently, India's overall economic growth has been positively impacted, with Deloitte forecasting the country's GDP growth to be between 6.9% and 7.2% for the fiscal year 2024.

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The Makeover of Indian Trade Structure

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Incentives and Export Promotion

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The Foreign Trade Policy 2024 offers numerous incentives to exporters, including duty drawback, export promotion capital goods (EPCG) scheme, advance authorization scheme, and free trade agreements (FTAs).

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These incentives help exporters reduce their costs and improve their competitiveness in the global market. 

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Furthermore, the policy emphasizes collaboration between exporters, states, districts, and Indian missions abroad to promote exports.

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Opportunities and Hurdles for Businesses

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Potential Market Opportunities Following FTP 2024

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The Foreign Trade Policy 2024 (FTP 2024) aims to raise India's outward shipments to US$ 2 trillion by 2030, through various initiatives such as pushing rupee trade and incentivizing e-commerce exports.

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This presents new market opportunities for Indian businesses, especially in the manufacturing sector, which is expected to drive growth in the coming years.

Vis-a-vis Comparison of Opportunities and Challenges

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While the FTP 2024 presents numerous opportunities for Indian businesses, there are also challenges that need to be addressed. 

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The ongoing global economic slowdown and trade tensions can impact India's export growth.

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Additionally, the rise in trade protectionist measures by major export destinations like the EU and the US can potentially affect Indian exports.

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Consequences for Small and Medium Enterprises (SMEs)

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The FTP 2024 can have both positive and negative consequences for SMEs. On one hand, the policy's focus on diversification of exports across sectors and improvement of infrastructure can benefit SMEs by providing them with new opportunities to expand their businesses.

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On the other hand, the challenging global economic conditions and increased trade protectionism can pose difficulties for SMEs, making it harder for them to compete in the international market.

How FTP 2024 can encourage Technological Advancements

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Fostering of Tech-oriented Trade

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The Foreign Trade Policy 2024 (FTP 2024) aims to promote technology-driven trade by focusing on high-tech manufacturing and emerging areas of export.

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By providing incentives and support for research and development, FTP 2024 can boost India's competitiveness in the global market.

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Impact on Digital Trade & E-commerce

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The FTP 2024 builds upon the FTP 2023, which sought to increase India's e-commerce exports by enabling vendors to access international markets.

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The policy proposes to create E-Commerce Export Hubs (ECEHs) that provide favorable business infrastructure and facilities for cross-border e-commerce. 

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Additionally, the FTP 2024 aims to promote e-commerce through postal routes by operationalizing 'Dak Niryat Kendras'.

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FTP 2024's Contribution Towards Sustainable Trade

Promotion of Sustainable Development Goals (SDGs)

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The Foreign Trade Policy 2024 (FTP 2024) is designed to support sustainable development goals (SDGs) by promoting ethical and sustainable sourcing, and contributing to climate change mitigation and management.

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The policy leverages several strategies to support sustainable development goals (SDGs) and promote ethical sourcing and climate change mitigation:

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Incentivizing Sustainable Practices: FTP 2024 offers financial incentives for businesses adopting renewable energy and environmentally friendly processes, encouraging the shift towards sustainability across industries.

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Strengthening E-commerce and Digital Trade: The policy promotes e-commerce exports through E-commerce Export Hubs, facilitating digital trade that supports sustainability by reducing the traditional retail distribution network's carbon footprint.

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Promoting Rupee Trade for Sustainable Development: By increasing trade settlements in rupees, FTP 2024 aims to reduce foreign currency reliance, lower transaction costs, and promote a more sustainable and stable economic relationship with trading partners.

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Enhancing Export Diversification: FTP 2024 focuses on diversifying India's export sectors to include sustainable products like renewable energy technologies and eco-friendly textiles, tapping into the global demand for green products.

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Building Capacities for Climate Change Mitigation: The policy supports training programs and investments in green technologies, enhancing India's capabilities in climate change mitigation and sustainability.

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Fostering International Collaboration: FTP 2024 encourages sharing best practices and innovations in sustainability through international partnerships, contributing to global sustainable development efforts.

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Role in Climate Change Mitigation and Management

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FTP 2024 plays a crucial role in addressing climate change by promoting sustainable practices in international trade.

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The policy focuses on reducing greenhouse gas emissions, promoting renewable energy sources, and encouraging businesses to adopt environmentally friendly practices.

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Impact on Ethical and Sustainable Sourcing

India's Foreign Trade Policy 2024 (FTP 2024) is set to have a profound impact on ethical and sustainable sourcing, aligning with global demands for environmentally responsible and socially equitable trade practices. By promoting sustainable development goals (SDGs), FTP 2024 encourages Indian exporters to adopt ethical sourcing practices that prioritize environmental sustainability and social responsibility.

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This focus is expected to enhance India's competitiveness in international markets that increasingly demand ethically sourced and sustainably produced goods.

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The policy's emphasis on ease of doing business, technological advancement, and digital trade further supports transparency and traceability in supply chains, allowing businesses and consumers to understand the origins and production conditions of products.

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Consequently, FTP 2024 not only contributes to global climate change mitigation efforts but also enables Indian businesses to meet international standards for ethical sourcing, opening up new opportunities in markets that value sustainability and ethics.

Conclusion

Underlining the significance of India's Foreign Trade Policy 2024, it heralds a strategic pivot towards enhancing the ease of doing business and minimizing transaction costs, aiming to position India as a prominent hub for merchanting trade.

The policy pays special attention to burgeoning sectors such as e-commerce, high-tech manufacturing, and pharmaceuticals, leading to the creation of Special Economic Zones (SEZs) and the extension of subsidies for research and development.

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These measures are poised to significantly remodel India's trade framework, opening up new avenues for business growth and innovation.

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In this transformative trade environment, Pazago emerges as an invaluable ally for businesses striving for a seamless and scalable international trade experience. Through features like Pazago Insider Alerts and Pazago Insider News, available on both its website and mobile app, businesses can closely monitor real-time policy shifts and stay abreast of the latest EXIM news.

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This dual functionality not only empowers businesses to make informed decisions swiftly but also aligns perfectly with the dynamic nature of the Foreign Trade Policy 2024, ensuring companies are well-equipped to navigate the evolving landscape of global trade.