India’s economic trajectory is inextricably linked to its global trade performance. Recognizing this, the Ministry of Commerce and Industry unveiled the new Foreign Trade Policy (FTP) 2023 on April 1, 2023. This policy marks a significant shift from an incentive-based regime to one focused on remission of duties and taxes, technology enablement, and collaboration. It aims to boost India’s exports, enhance its manufacturing competitiveness, and deeply integrate the nation into the global value chain. Designed for continuity without an end date, FTP 2023 provides a stable and agile framework crucial for navigating the evolving international trade landscape.
Key Objectives of India’s FTP 2023
The new Foreign Trade Policy is meticulously crafted with several ambitious yet achievable objectives:
- To achieve an ambitious target of $2 trillion in total exports (goods and services combined) by 2030, a substantial leap from current figures.
To move towards a more sustainable and compliant trade regime by transitioning from an incentive-based approach to a remission-based and technology-driven framework, aligning with WTO norms.
To simplify trade processes and procedures, thereby significantly improving the ‘Ease of Doing Business’ for exporters and importers across the country.
To promote the internationalization of the Indian Rupee, positioning it as a currency for global trade settlements and further strengthening India’s economic sovereignty.
To encourage district-level export growth by transforming each district into an export hub, leveraging local strengths and specialized products.
To support emerging sectors like e-commerce exports and green products, fostering innovation and sustainability in India’s trade portfolio.
Pillars and Strategic Approach
The FTP 2023 is built upon four core pillars that guide its implementation and strategic direction:
- Remission of Duties and Taxes on Exported Products (RoDTEP): This pillar focuses on making Indian exports more competitive by ensuring that duties and taxes incurred on input products for exports are refunded. It ensures a level playing field for Indian manufacturers in the international market, making it the cornerstone of the new policy framework.
Promotion of Exports from Districts as Export Hubs (DEH): This initiative aims to foster a strong export ecosystem at the grassroots level. It involves creating district-specific export action plans, identifying potential products and services, and providing necessary infrastructure and support to local entrepreneurs and farmers to expand their global reach.
Ease of Doing Business, Reduction in Transaction Costs, and e-initiatives: This pillar emphasizes streamlining regulatory procedures, minimizing paperwork, and leveraging technology to facilitate smoother and faster trade operations. It includes digitalization of applications, approvals, and customs clearance processes, reducing both time and cost for businesses.
Streamlining SCOMET Policy and Promoting E-commerce Exports: The Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) policy is simplified to facilitate the export of dual-use items while maintaining national security. Additionally, the policy actively promotes e-commerce exports, recognizing its growing potential for MSMEs and direct consumer reach.
Key Policy Initiatives and Changes
FTP 2023 introduces several new initiatives and modifies existing ones to provide a comprehensive support system for exporters:
- Towns of Export Excellence (TEEs): Four new towns have been designated as TEEs in addition to the existing 39. These include Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handlooms and handicrafts, and Varanasi for handlooms and handicrafts. This designation provides priority access to export promotion funds under the Market Access Initiative (MAI) Scheme and helps develop export infrastructure.
Recognition of Exporters: The policy revalidates the ‘Status Holder’ scheme, granting recognized exporters various benefits such as easier customs clearances, self-certification privileges, and preferential treatment in foreign trade promotions. The eligibility criteria for achieving status are rationalized to encourage more exporters.
Streamlining SCOMET Policy: To facilitate the export of high-tech items and dual-use goods, the SCOMET policy has been made more agile and transparent. This encourages innovation and the export of advanced technologies while ensuring compliance with international non-proliferation treaties.
Promoting E-commerce Exports: The consignment value limit for e-commerce exports through postal or courier services is increased to ₹10 lakh from ₹5 lakh. Integration with customs systems and dedicated e-commerce export hubs are planned to simplify procedures for online sellers.
Amnesty Scheme for Export Obligation Defaults: A one-time amnesty scheme is introduced for Export Promotion Capital Goods (EPCG) and Advance Authorization holders who have defaulted on their export obligations. This provides a window for settling past defaults with reduced penalties, offering relief and a fresh start to many businesses.
Green Product Promotion: The policy emphasizes supporting exports of green products and technologies, aligning with India’s commitment to climate change mitigation and sustainable development goals. Specific incentives and facilitations may be offered for such exports.
Internationalization of Rupee: While a long-term goal, the policy aims to lay the groundwork for increased international trade settlements in Indian Rupees, reducing reliance on other currencies and strengthening India’s financial position.
Impact and Significance
The FTP 2023 is expected to have a transformative impact on India’s economy:
- Enhanced Competitiveness: By remitting duties and simplifying processes, Indian products will become more competitive in the global market.
Boost to Manufacturing and Employment: Increased exports will drive domestic manufacturing, creating jobs and fostering economic growth.
Support for MSMEs: E-commerce promotion and district-level initiatives will empower MSMEs to participate actively in international trade.
Technological Upgradation: Focus on e-initiatives will push for greater adoption of technology in trade processes, leading to efficiency gains.
Global Integration: A stable, forward-looking policy will strengthen India’s position in global supply chains and multilateral trade forums.
Frequently Asked Questions (FAQs)
- When was India’s new Foreign Trade Policy (FTP 2023) launched?
India’s new Foreign Trade Policy (FTP 2023) was launched on April 1, 2023. It replaces the FTP 2015-20 and aims for continuity and flexibility without a fixed end date.
- What is the main export target set by FTP 2023?
The main export target set by FTP 2023 is to achieve $2 trillion in total exports (goods and services combined) by the year 2030, significantly boosting India’s global trade presence.
- How does FTP 2023 promote ‘Ease of Doing Business’?
FTP 2023 promotes ‘Ease of Doing Business’ by simplifying trade procedures, reducing transaction costs, and leveraging technology through digitalization of applications and processes for quicker approvals and clearances.
- What is the significance of the ‘Towns of Export Excellence’ (TEE) under the new policy?
TEEs are significant as they get priority access to export promotion funds under the Market Access Initiative Scheme. The policy added four new towns, enhancing focused support for specific product clusters and local industries to boost exports.
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