Foreign Trade Policy 2023

Foreign Trade Policy 2023
 

News: Recently, Ministry of Commerce and Industry launched the Foreign Trade Policy 2023, which will come into effect from April 1, 2023.
 

What is FTP 2023?
 A trade policy is a government policy that affects the number of goods and services a country exports and imports.
 FTP 2023 sets a $2 trillion target for exports of goods and services by 2030 with a shift from incentives to remission and entitlement-based regime.
 

Aim of FTP 2023:
 To enhance the competitiveness of Indian exports in the global market (India’s overall exports are about to reach US $760 billion this year)
 Promote sustainable development of the country’s trade sector
 Make India a leader in specific sectors such as pharmaceuticals, engineering goods, and textiles.
 To promote a digital economy and leverage technology to enhance the competitiveness of Indian exports.
 

Need for new FTP:
 India accounts for miniscule portion of Global trade (its share in global merchandise exports stands at around 1.8%, while that in services is roughly 4%)
 

Key approach of FTP is based on 4 Pillars:
 Incentive to Remission,
 Export promotion through collaboration - Exporters, States, Districts, Indian Missions,
 Ease of doing business, reduction in transaction cost and e-initiatives, and
 Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) policy.
 

Main Features of FTP 2023:
Process Re-engineering and Automation
 The new policy focuses on export promotion and development through automated IT systems for various approvals, making it easier for MSMEs and others to access export benefits.
 This will facilitate participation of MSME’s in global markets.
 

Towns of Export Excellence
 Four new towns (Faridabad, Mirzapur, Moradabad, and Varanasi) have been designated as Towns of Export Excellence (TEE) in addition to the existing 39 towns. The TEEs will have priority access to export promotion funds under the MAI scheme.
 It will 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 capacitybuilding initiatives on a best-endeavor basis.
 Similar to the 'each one teach one' initiative, 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals.
 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.
 

Streamlining SCOMET Policy
 India is placing more emphasis on the 'export control' regime as its integration with export control regime countries strengthens.
 There is a wider outreach and understanding of SCOMET among stakeholders, and 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.
 

Promoting exports from 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 and accelerate the development of the grassroots trade ecosystem.
 It will help in identifying and promoting local products and services.
 

Facilitating E-Commerce Exports
 The FTP 2023 outlines the intent and roadmap for establishing e-commerce hubs and related elements such as payment reconciliation, bookkeeping, returns policy, and export entitlements.
 It will help Indian exporters tap into the potential of e-commerce exports and increase their global reach.
 

Facilitation under the Export Promotion of Capital Goods (EPCG) Scheme
 The EPCG Scheme, which allows the import of capital goods at zero Customs duty for export production, 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 EPCG.
 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 – will now be eligible for reduced Export Obligation requirement under EPCG Scheme
 

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 and is placed at a similar footing to EOU and SEZ Scheme.
 Special Advance Authorisation Scheme extended to export of Apparel and Clothing sector on selfdeclaration 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 Authorized Economic Operators at present.
 

Amnesty Scheme
 Under the amnesty scheme, an online portal will be launched for registration and a six-month window will be available to exporters to avail the scheme.
 The one-time amnesty scheme aims at faster resolution of trade disputes.
 

Merchanting Trade
 Merchanting trade involves the shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary.
 Merchanting trade of restricted and prohibited items under the export policy would now be possible.
 It will help convert financial centres such as GIFT city etc. into major merchanting hubs as seen in places like Dubai, Singapore and Hong Kong.
 

Conclusion
 The new policy needs to be supplemented with other measures to boost the country’s trade performance. These range from lowering import tariffs and ensuring a competitive exchange rate to signing broader and deeper free trade agreements.