India makes stakeholder consultations legally binding before FTP tweaks

The Union government has made stakeholder consultations legally mandatory before the formulation or amendment of India’s Foreign Trade Policy (FTP) in future. However, the government retains the authority to make changes without any such consultation in contingency situations.

The Directorate General of Foreign Trade (DGFT) has notified amendments in the Foreign Trade Policy, 2023 to bring legal backing to these changes in the FTP on January 2. The changes have made it necessary to consult with stakeholders to seek views, suggestions, comments or feedback from relevant stakeholders, including importers, exporters and industry experts concerning the formulation or amendment of the FTP in future. It also provides the mechanism to inform reasons for not accepting views, suggestions, comments or feedback concerning the formulation or amendment of the FTP.

In 2023, the Central government had put an end to the practice of a five-year term for FTP and made it open-ended. Commerce Minister Piyush Goyal had said the decision to keep FTP open-ended was ‘to accommodate the emerging needs of the time’. “Hereafter, the revisions of the FTP shall be done as and when required. Incorporating feedback from trade and industry would also be continuous to streamline processes and update FTP, from time to time,” the minister had stated at the time of the announcement of FTP 2023.

The latest amendments in FTP have taken this one step forward by making stakeholder consultation legally binding, unless in exceptional cases, before making any changes in the policy. “It reflects upon the Central government’s commitment towards strengthening the scope of Ease of Doing Business (EoDB) in India by encouraging stakeholder and expert participation through consultation in the decision-making process,” the Commerce Ministry said in a statement.

According to the ministry, the key objective of the amendments is to encourage the participation of all stakeholders in the decision-making process before introducing or changing policies and procedures affecting the importation, exportation, and transit of goods along with a reasonable opportunity to comment and contribute in the process.

“The government is committed to ensuring due consideration is given to every valuable opinion/feedback which is received from stakeholders. However, at the same time, the government has to remain cognizant of the fact that multiple stakeholders may offer different opinions on the same subject and in such cases for smooth functioning of business the government ought to reserve to itself the right to take a final call. It is only to deal with exceptional circumstances such as this, that the right to suo moto formulate policies has been reserved with the government,” the statement said.