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The government under the new Foreign Trade Policy will expand the definition of “political risk” under the export guarantee scheme to cover any fresh imposition of non-tariff barriers by importing nations. Image for representational purpose only.
| Photo Credit: The Hindu
Exporters may soon be able to get insurance cover for some losses suffered on account of countries’ sudden imposition of barriers to trade, under the new Foreign Trade Policy (FTP), which also envisages the formation of a “whole of government” ministerial panel to address the grievances of small exporters.
The government will expand the definition of “political risk” under the export guarantee scheme to cover any fresh imposition of non-tariff barriers by importing nations after a shipment has left Indian shores.
Typically, the Export Credit Guarantee Corporation (ECGC) indemnifies exporters for losses when buyers turn insolvent or default on payments, as well as political risks like war and sudden import restrictions or promulgations of laws or decrees, but does not cover anti-dumping steps or non-tariff barriers.
“Some of the anti-dumping measures or non-tariff barriers introduced after a shipment has been made, will come under the purview of the political risk,” the new FTP states.
MSME grievances
The policy also promises to set up an inter-ministerial committee to examine micro, small and medium enterprises’ (MSME) trade-related grievances, which have policy ramifications. “This will expedite decision making with a ‘whole of government’ approach,” it said.
The FTP also does away an earlier requirement for importers who store their merchandise in bonded warehouses, which mandated them to re-export such goods if they were not cleared for domestic consumption within one year or “such extended period as the customs authorities may permit”.
“The clearance of the warehoused goods shall be as per the provisions of the Customs Act, 1962,” states the new policy, which does not have an expiry date and will be tweaked on an ongoing basis, unlike past policies that had a tenure of five years. The 2015-20 policy was extended for three years in the wake of the COVID-19 pandemic followed by the conflict in Europe.
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