Recently, Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles launched the Foreign Trade Policy (FTP) 2023 which came into effect from April 1, 2023.
GS III: Indian Economy
Dimensions of the Article:
- Overview of FTP 2023
- Approach and Goals of FTP 2023
- Highlights of FTP 2023
Overview of FTP 2023
FTP 2023, also known as the Foreign Trade Policy 2023, is a policy document aimed at facilitating exports and improving ease of doing business for exporters. Below are some key points about this policy:
- Continuity of Time-Tested Schemes: The policy document is based on the continuity of the time-tested schemes that have been facilitating exports so far. These schemes have been successful in promoting foreign trade and will continue to be a part of the policy.
- Nimble and Responsive: FTP 2023 is a nimble and responsive document that will cater to the requirements of trade. It is aimed at enhancing the competitiveness of Indian exporters in the global market.
- Trust and Partnership: The policy is based on the principles of trust and partnership with exporters. It aims to establish a strong bond between the government and exporters to promote foreign trade.
- Process Re-engineering: The policy focuses on process re-engineering to improve the efficiency and effectiveness of the export-related processes. This will facilitate ease of doing business for exporters.
- Automation: The policy also aims at automation of various export-related processes to reduce the time and cost involved. This will help in enhancing the competitiveness of Indian exporters.
Approach and Goals of FTP 2023
The Foreign Trade Policy 2023 (FTP 2023) is based on four key pillars, which are:
- Incentive to Remission: The policy provides incentives to exporters through remission of duties and taxes, to promote foreign trade and increase competitiveness.
- Export Promotion through Collaboration: The policy focuses on collaboration between exporters, states, districts, and Indian missions to promote exports and improve market access.
- Ease of Doing Business and E-initiatives: The policy aims at reducing transaction costs and improving ease of doing business for exporters through e-initiatives.
- Emerging Areas: The policy seeks to develop emerging areas such as e-commerce, developing districts as export hubs, and streamlining the Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) policy.
Goals and targets
- The government aims to increase India’s overall exports to USD 2 trillion by 2030, with equal contributions from the merchandise and services sectors.
- To achieve this, the government intends to encourage the use of the Indian currency in cross-border trade, aided by a new payment settlement framework introduced by the RBI in July 2022.
- This move could be particularly advantageous in the case of countries with which India enjoys a trade surplus.
Highlights of FTP 2023
Process Re-Engineering and Automation:
- FTP 2023 emphasizes export promotion and development through technology interface and collaboration.
- Ongoing schemes like Advance Authorisation and EPCG will continue with substantial process re-engineering and technology enablement.
- Implementation of duty exemption schemes for export production will be done through Regional Offices in a rule-based IT system environment.
- Reduction in fee structures and IT-based schemes will make it easier for MSMEs and others to access export benefits.
- All processes under the Advance and EPCG Schemes will be covered in a phased manner.
- Cases identified under risk management framework will be scrutinized manually, while majority of the applicants are expected to be covered under the ‘automatic’ route initially.
Towns of Export Excellence:
- Four new towns, Faridabad, Mirzapur, Moradabad, and Varanasi, have been designated as Towns of Export Excellence (TEE).
- TEEs will have priority access to export promotion funds under the MAI scheme and will be able to avail CSP benefits for export fulfillment under the EPCG Scheme.
- This addition is expected to boost the exports of handlooms, handicrafts, and carpets.
Recognition of Exporters:
- Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavor basis.
- 2-star and above status holders would be encouraged to provide trade-related training to interested individuals based on a model curriculum.
- Status recognition norms have been re-calibrated to enable more exporting firms to achieve 4 and 5-star ratings, leading to better branding opportunities in export markets.
Promoting export from the districts:
- The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative to promote exports at the district level.
- State Export Promotion Committee and District Export Promotion Committee at the State and District level, respectively, will resolve concerns at the district level and identify export-worthy products & services.
- District-specific export action plans to be prepared for each district outlining the district specific strategy to promote export of identified products and services.
Streamlining SCOMET Policy
- India is placing more emphasis on the “export control” regime as its integration with export control regime countries strengthens
- The policy regime is being made more robust to implement international treaties and agreements entered into by India
- A robust export control system in India would provide access of dual-use High end goods and technologies to Indian exporters while facilitating exports of controlled items/technologies under SCOMET from India
Facilitating E-Commerce Exports
- E-commerce exports have a potential of $200 to $300 billion by 2030
- FTP 2023 outlines the roadmap for establishing e-commerce hubs and related elements such as payment reconciliation, book-keeping, returns policy, and export entitlements
- Consignment wise cap on E-Commerce exports through courier has been raised from ₹5Lakh to ₹10 Lakh in the FTP 2023
- Integration of Courier and Postal exports with ICEGATE will enable exporters to claim benefits under FTP
- The comprehensive e-commerce policy addressing the export/import ecosystem would be elaborated soon
- Outreach and training activities will be taken up to build capacity of artisans, weavers, garment manufacturers, gems and jewellery designers to onboard them on E-Commerce platforms and facilitate higher exports
Facilitation under Export Promotion of Capital Goods (EPCG) Scheme
- EPCG Scheme is being further rationalized.
- Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible to claim benefits under CSP(Common Service Provider) Scheme of Export Promotion capital Goods Scheme(EPCG)
- Dairy sector to be exempted from maintaining Average Export Obligation – to support dairy sector to upgrade the technology
- Battery Electric Vehicles (BEV) of all types, Vertical Farming equipment, Wastewater Treatment and Recycling, Rainwater harvesting system and Rainwater Filters, and Green Hydrogen are added to Green Technology products
Facilitation under Advance authorization Scheme
- Advance authorisation Scheme accessed by DTA (Domestic tariff area) units provides duty-free import of raw materials for manufacturing export items
- Special Advance Authorisation Scheme extended to export of Apparel and Clothing sector under para 4.07 of HBP on self-declaration basis to facilitate prompt execution of export orders
- Benefits of Self-Ratification Scheme for fixation of Input-Output Norms extended to 2 star and above status holders in addition to Authorised Economic Operators at present.
- Merchanting trade of restricted and prohibited items under export policy is now allowed.
- Merchanting trade involves the shipment of goods from one foreign country to another foreign country without touching Indian ports, with the involvement of an Indian intermediary.
- Compliance with RBI guidelines is mandatory for merchanting trade.
- Goods/items classified in the CITES and SCOMET list are not eligible for merchanting trade.
- Indian entrepreneurs can leverage this opportunity to develop places like GIFT city into major merchanting hubs, as seen in Dubai, Singapore, and Hong Kong.
- The scheme is intended to provide relief to exporters burdened by high duty and interest costs associated with pending cases of default on Export Obligations (EO) under EPCG and Advance Authorizations.
- All pending cases of default in meeting Export Obligation (EO) of authorizations can be regularized on payment of all customs duties that were exempted in proportion to unfulfilled Export Obligation.
- The interest payable is capped at 100% of these exempted duties under this scheme.
- No interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty, providing significant relief to exporters.
- The amnesty scheme aims to give exporters a fresh start and an opportunity to come into compliance, aligning with the “Vivaad se Vishwaas” initiative to settle tax disputes amicably.
-Source: The Hindu, Indian Express, PIB