Foreign Trade Policy 2015

The Foreign Trade Policy 2015 (FTP 2015) represents India’s strategic overhaul of its trade regulatory framework, designed to invigorate exports, diversify global market access, and mitigate chronic trade deficits. Introduced by the Ministry of Commerce and Industry in April 2015, it replaced the earlier 2004 policy and marked a shift toward market-oriented incentives, notably through the Merchandise Exports from India Scheme (MEIS), which provided duty credit scrips to exporters of specified goods. Its emphasis on procedural simplification via a single-window system and targeted sectoral support distinguished it as a pivotal tool in India’s economic liberalization journey.

Origins and Historical Background

FTP 2015 emerged in response to India’s growing trade imbalance, which saw imports surpassing exports by over $150 billion annually in the early 2010s. The policy was formulated under the Foreign Trade (Development and Regulation) Act, 1992, and built upon recommendations from the 2014–15 Task Force on Foreign Trade Policy. It sought to address structural inefficiencies in export promotion by replacing the outdated Export Promotion Capital Goods scheme with MEIS, which directly incentivized exporters by allowing them to offset duties on imports using credits earned from export earnings. The policy’s rollout coincided with India’s broader economic reforms under the Narendra Modi government, aiming to align trade practices with global standards.

Key Provisions

Central to FTP 2015 was the MEIS, which offered duty-free import authorization or reduced customs duties for exporters of goods classified under the Harmonized System codes for sectors like textiles, engineering goods, and gems and jewelry. Under the scheme, exporters could claim duty credit scrips equivalent to 5–10% of their export value, redeemable for duty payments on imports. The policy also introduced the Scheme for Promotion of Industrial Exports (SPIEX) to support micro, small, and medium enterprises (MSMEs), while the Remission of Duties and Taxes on Export Products (RoDTEP) replaced the controversial Merchandise Exports from India Scheme (MEIS) in 2020, addressing WTO compliance concerns. Additionally, the policy streamlined documentation through the Integrated Goods and Services Tax (IGST) portal and the ICEGATE system, reducing clearance times for cargo.

Implementation and Impact

FTP 2015 was implemented in phases, with MEIS becoming operational in October 2015. By 2017, the policy had facilitated a 12% increase in merchandise exports, reaching $295 billion, as reported by the Directorate General of Foreign Trade (DGFT). The textile sector, a key export earner, saw a 15% growth in shipments to global markets, particularly in Southeast Asia and Africa. However, challenges persisted, including delays in scrip redemption and disputes over WTO violations, which led to the eventual replacement of MEIS with RoDTEP in 2020. The policy’s single-window reforms also reduced procedural bottlenecks, with the DGFT reporting a 40% decline in export-related paperwork processing time.

Significance

FTP 2015 marked a paradigm shift in India’s trade policy by prioritizing export competitiveness through direct financial incentives and regulatory simplification. Its MEIS scheme, though later superseded, demonstrated the potential of credit-based mechanisms to stimulate sectoral growth, while the focus on MSMEs underscored the policy’s inclusivity. The emphasis on diversifying markets beyond traditional destinations like the EU and USA also laid groundwork for later initiatives like "Act East" trade partnerships. Despite its eventual obsolescence, FTP 2015 remains a landmark in India’s trade policy evolution, illustrating the interplay between domestic reforms and global economic integration.