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Foreign Trade Policy 2015-2020
The Foreign Trade Policy 2015‑2020 is the Indian government’s framework governing imports, exports and related incentives for that five‑year period. It aims to boost export competitiveness, diversify markets and reduce trade deficits. For example, the policy introduced a 10 % duty remission on export of specified electronic components to promote high‑tech manufacturing.
Foreign Trade Policy 2015‑2020 (FTP 2015‑20) is the five‑year regulatory framework issued by the Ministry of Commerce and Industry to govern India’s import‑export regime, prescribe incentives, and set quantitative targets for merchandise and services trade. Uniquely, the policy blends duty‑remission mechanisms with export‑oriented capital‑goods incentives, aiming to shift India from a low‑value‑added exporter to a hub for high‑technology manufacturing and services. Approved by the Union Cabinet on 30 March 2015 and operational from 1 April 2015, FTP 2015‑20 superseded the 2010‑15 policy and remained in force until 31 March 2020.
Historical Background
The legal foundation of FTP 2015‑20 rests on the Foreign Trade (Development and Regulation) Act, 1992, which empowers the Directorate General of Foreign Trade (DGFT) to issue policy directions. The previous policy (2010‑15) had emphasized market diversification but fell short of meeting the government’s export‑growth aspirations. In response, the 2015‑20 policy was drafted under Commerce Minister Suresh Prabhu and incorporated recommendations from the Cabinet Committee on Economic Affairs, which set an ambitious target of raising merchandise exports from US $317.5 billion (FY 2014‑15) to US $500 billion by FY 2020‑21. A parallel services‑export goal sought to lift earnings from US $210 billion to US $300 billion within the same horizon.
Key Provisions and Mechanisms
The policy introduced a Duty Remission Scheme (DRS) that replaces the earlier Merchandise Exports from India Scheme (MEIS). Under DRS, exporters receive a 10 % remission of customs duty on the export of specified electronic components such as printed circuit boards, semiconductor devices, and telecom equipment, thereby lowering the landed cost for high‑tech manufacturers. A 5 % remission applies to a broader list of items, including textiles and engineering goods, contingent on compliance with export‑performance benchmarks.
Export Promotion Capital Goods (EPCG) scheme (Rule 5 of the 1992 Act) was expanded to grant 100 % duty exemption on capital equipment imported for export production, with a ceiling of 5 % of the exporter’s total export turnover per annum. The Advance Authorization Scheme allows duty‑free import of inputs for a pre‑approved export order, provided the exporter fulfills the order within a stipulated time‑frame, typically 12 months. The Export Oriented Units (EOU) scheme continues to offer 100 % duty exemption on inputs for units that achieve a minimum export obligation of 30 % of their total production, while Special Economic Zones (SEZs) retain a 100 % exemption on customs duties and a five‑year tax holiday on profits.
A novel “Service Export Promotion” component grants a 10 % remission on customs duties levied on services‑related inputs, such as software licences and consultancy tools, reflecting the policy’s emphasis on services‑led growth.
Implementation and Institutional Framework
DGFT, headquartered in New Delhi, functions as the nodal agency for policy rollout, issuing licences, monitoring compliance, and publishing the “Export Promotion Capital Goods” and “Duty Remission” notifications in the Official Gazette. The policy mandates quarterly reporting by exporters through the online “Foreign Trade Data Management System” (FTDMS), enabling real‑time tracking of export performance against the FY 2020 targets. A dedicated “Export Promotion Council” for each sector—such as the Engineering Export Promotion Council (EEPC) and the Services Export Promotion Council (SEPC)—provides sector‑specific guidance and liaises with DGFT to resolve bottlenecks.
During the 2015‑20 window, the Ministry released 12 amendment notifications to fine‑tune duty‑remission rates, expand the list of eligible electronic components, and adjust EPCG ceilings in response to market feedback. The policy also instituted a “One‑Window Clearance” mechanism for SEZ units, reducing average clearance time from 45 days (2014) to 22 days by 2019.
Impact and Significance
By the close of FY 2019‑20, merchandise exports had risen to US $324 billion, short of the $500 billion target but marking a 2 %