New foreign trade policy to give thrust to export of R&D services
The thrust on R&D services came after it became one of the fastest-growing segments among India's services exports
The soon-to-be-announced New Foreign Trade Policy 2021-26 may give a special emphasis to export of research and development (R&D) services. A separate section focusing on R&D services exports is being planned, a government official said.
The changes are being worked out by the Department of Commerce at the behest of the office of the Principal Scientific Advisor of India. The government had extended the validity of foreign trade policy 2015-2020 by a year - till March 31, 2021 due to the Covid-19 pandemic. The new policy is to be effective from April 1, 2021 for a period of five years.
The Department of Commerce has indicated that the policy's focus will be to channelise the synergies gained through merchandise and services exports for growth and employment with a goal to make India a $5 trillion economy.
The department had in January informed the Parliamentary Consultative Committee of the Ministry of Commerce and Industry that the District Export Hubs initiative will form an important component of the new foreign trade policy.
"The Department of Commerce through the Regional Authorities of DGFT has engaged with State/UT Governments to take forward this initiative in the districts and enable its implementation in a phased manner, with the objective of mobilising the potential of each district of the country to achieve its potential as an export hub," it had stated.
As part of formulating the new Foreign Trade Policy, the department had conducted extensive stakeholder meetings in recent months. In December 2020, the Board of Trade meeting was held where state governments and other stakeholders' inputs were received.
The suggestions of various Chambers of Commerce, industry associations and Export Promotion Councils were also received. The department had informed the parliamentary panel that over 2,000 suggestions received from various stakeholders will be examined before finalising the new foreign trade policy.
The thrust on R&D services came after it became one of the fastest-growing segments among India's services exports. In addition to export promotion, the government has been working to promote foreign direct investment (FDI) in the area of R&D services. An empowered technology group has also been established by the government to unshackle the entire R&D ecosystem, including the strengthening of linkage between the public sector R&D labs and the market.
Foreign Trade Policy 2015-20 does not talk much about R&D service exports other than mentioning that royalty payments received by the authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under the Export Promotion Capital Goods Scheme.