This could mean that products such as wheat or red sanders, which are on the prohibited list, can still be traded, as long as the origin is not from India. While there is no prohibition on such transactions, there were limitations due to the absence of any guidelines from the Directorate General of Foreign Trade (DGFT).
The Foreign Trade Policy had earlier provided that these transactions could only take place based on DGFT guidelines. As a result, banks were not honouring these payments, citing the absence of norms.
With DGFT now putting in place the rules in the latest Foreign Trade Policy, the government is hoping that at least the large trading houses which have links with players in other countries would get into the space and not just meet the requirement of products but also ensure that their trade ties are not hampered by the export curbs that government periodically puts in place to check any price surge in the domestic market.
A trader can, for instance, now pick up wheat from Turkey and sell in Morocco without having to get it to India. Several traders have complained they are unable to get business due to repeated export policy flip flops.
Besides, the commerce department is hoping that some of the large traders, who currently operate out of Singapore or Dubai, may decide to set up shop in GIFT city to take advantage of the norms, while also ensuring that they are able to cater to the needs of the Indian market.