India currently has a significant trade deficit with a few countries, including China. While the NFTP aims to address these trade imbalances by increasing India’s exports (by promoting value-added exports and diversifying the Indian export basket), achieving these goals is likely to be a tough challenge for the Indian government. Undoubtedly, the steps highlighted under the NFTP are a positive step towards creating a conducive environment for exports in the country. The policy will play a role in not only increasing the competitiveness of Indian exports but also creating new opportunities for domestic manufacturers.
The global economic landscape is highly uncertain at the moment due to factors such as the aftermath of the COVID-19 pandemic, trade protectionism in various countries as well as geopolitical tensions such as the ongoing Russia-Ukraine conflict. The NFTP will have to be modified to adapt to these uncertainties to ensure that India’s trade policy is in tune with global economic conditions. Another major challenge will be improving the country’s logistics and infrastructure. The government will need to continue its efforts to improve infrastructure such as ports, roads, and railways to reduce transaction costs and enhance the competitiveness of Indian exports.