The new United Progressive Alliance (UPA) Government at the Centre changed the name of EXIM Policy and called it Foreign Trade Policy (FTP). Consequently, on August 31, 2004, the Commerce and Industry Minister, Mr. Kamal Nath, announced the five year (2004-09) FTP.

The policy aims at doubling India’s percentage share of global merchandise trade to 1.5 per cent by 2009 from 0.7 per cent in 2003, besides serving as an effective tool to generate employment, especially in semi-urban and rural areas.

Exporters of all goods and services, including those from Domestic Tariff Area (DTA), were exempted from service tax. Also exporters with minimum turnover of Rs. 5 crore and a sound track record have been exempted from furnishing bank guarantees in any of the export schemes. So as to reduce their high transaction cost and tax burden.

The Highlights of the India’s Foreign Trade Policy 2004-2009 is discussed below:

1. Strategy: (a) It is for the first time that a comprehensive Foreign Trade Policy is being notified. The Foreign Trade Policy takes an integrated view of the overall development of India’s foreign trade.

(b) The objective of the Foreign Trade Policy is two-fold:

(i) To double India’s percentage share of global merchandise trade by 2009; and

(ii) To act as an effective instrument of economic growth by giving a thrust to employment generation, especially in semi-urban and rural areas.

(c) The key strategies are:

i. Unshackling of controls;

ii. Creating an atmosphere