About the Project

This project entitled ‘Development Dimensions of the National Foreign Trade Policy’ is currently being undertaken by CUTS with support from the DFID Knowledge Partnership Programme to direct attention to instruments, institutions and schemes in the National Foreign Trade Policy which could be rendered increasingly inclusive with a view to aid developmental objectives, apart from addressing the growing trade deficit.

The UNCTAD studied the connection between trade and poverty and recognised that the benefits of trade were not always easily transmitted to all countries, or to income classes within countries, owing to a number of factors like limited productive capacity, less-than-optimal generation of employment and the institutional structures which exist. While some countries have successfully captured the linkage between trade and human development, many other countries despite attempting to diversify their sources of exports encountered a trap where either their agricultural sectors or natural-resources sectors constituted a substantial portion of their exports. It has been identified that one single policy cannot be used to address the linkage between trade and poverty. The report recommends that a specific tailored approach has to be developed depending on social structures, resource endowment and extant institutional frameworks.

The five specific areas which will be focussed in this project are as follows:

Inclusiveness with respect to SMEs as major beneficiaries

Coordination with external trade negotiations

Linkages between NFTP and FDI Policy

Role of NFTP in exploring and strengthening participation of Indian business units in regional/global value chains

Role of NFTP in domestic policy and regulatory reforms for better economic governance

The project is being implemented at a critical point of time when the next National Foreign Trade Policy is imminent. The next NFTP should not only include a gamut of policy instruments which are capable of being adjusted to macroeconomic shocks and ripple-effects from the outside economies, but also instruments which operate seamlessly with other domestic macroeconomic policies.

The duration of the project is initially 5 months from November 2013 to March 2014, following which the second phase of the project may be reinstituted