Foreign Trade Policy brings India’s ‘strategic and economic interests’ into trade transit ties

Marking a significant shift in the country’s stance on allowing transit of goods in and out of neighbouring countries, the new Foreign Trade Policy has introduced an additional consideration in providing such trade transit facilities for adjacent countries — India’s strategic and economic interests. The changed language in provisions pertaining to transit facilities, as well as a subtle shift in the stance on trade with neighbouring countries in the new policy, released by Commerce and Industry Minister Piyush Goyal on March 31, could unnerve some land-locked countries around India such as Nepal and Bhutan that rely on goods’ transit through India. The Foreign Trade Policy 2015-20 that was applicable till last Friday stated: “Transit of goods through India from/or to countries adjacent to India shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with international conventions.” This has been revised in Section 2.23 of the new FTP document to state that such transit of goods “shall be enabled and regulated in accordance with strategic and economic interests of India as well as the bilateral treaties between India and those countries.” While the previous policy empowered the DGFT to frame schemes or issue necessary instructions “to promote trade and strengthen economic ties with neighbouring countries”, the new policy rephrases the first objective as “promote and regulate trade…”. Bhutan King Jigme Khesar Namgyel Wangchuck, accompanied by Bhutanese Foreign and External Trade Minister Tandi Dorji, begins a three-day visit to India on Monday.