India's Trade Policy: The Institutions and the Current Policy

In one line

India's trade policy is a notification issued by the Central Government under one section of one Act, administered by one officer, and it now has no end date.

In the wording a student can write in an exam: India's trade policy is contained in the Foreign Trade Policy 2023, notified by the Central Government in exercise of the power conferred by section 5 of the Foreign Trade (Development and Regulation) Act 1992, which came into force on 1 April 2023 and continues in operation unless otherwise specified or amended; it is administered by the Director General of Foreign Trade appointed under section 6, works through the Importer Exporter Code, the Indian Trade Classification (Harmonised System) and a set of duty exemption, duty remission and export promotion schemes, and is supplemented by an expanding network of bilateral trade agreements.

The legal foundation

Paragraph 1.00 of the Policy states its own legal basis: the Foreign Trade Policy 2023 "is notified by Central Government, in exercise of powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 ... as amended."

Paragraph 1.02, on amendment: the Central Government, in exercise of the powers conferred by sections 3 and 5, reserves the right to amend the Policy by notification in public interest.

Paragraph 1.03: the Director General of Foreign Trade may by Public Notice notify the Handbook of Procedures, including the Appendices and Aayat Niryat Forms, laying down the procedure to be followed by exporters, importers and authorities.

Note the hierarchy, because it is a question in itself. The Act confers the power; the Policy is a notification by the Central Government under section 5; the Handbook of Procedures is a Public Notice by the Director General under the Policy; and paragraph 1.04 provides that where a specific provision is spelt out in the Policy or the Handbook, it prevails over the general provision. A trade dispute is therefore very often a question of which of these four instruments governs.

The most important thing about the Policy of 2023

Paragraph 1.01, on duration: the Policy "shall come into force with effect from 1st April, 2023 and shall continue to be in operation unless otherwise specified or amended."

Read that clause against every earlier policy and the change is large. Indian foreign trade policies were previously announced for a fixed term, ordinarily five years, and lapsed at its end. The Policy of 2023 has no end date at all: it continues until it is replaced or amended. The reason given is predictability, since an exporter planning a five year investment no longer has to guess what will happen when a policy expires; and it also means that the policy can be changed continuously by notification rather than in one large revision, which is a shift of a different kind and one a careful answer notices.