Context: The union government recently unveiled a new Foreign Trade Policy (FTP) 2023-28.
Background: Foreign Trade Policy (FTP) 2015-20
- FTP 2015-20 which was to end on 31.3.2020 was extended due to COVID pandemic and volatile geo-political scenario till 31.03.2023.
- Performance: India has reach record high Export Performance in Merchandise and Services Exports during this period.
- India’s Merchandise and Services exports is expected to cross record USD 760 Billion in FY2022-23.
About the New Foreign Trade Policy (FTP) 2023-28
- It is a policy document based on continuity of time-tested schemes facilitating exports as well as a document which is nimble and responsive to the requirements of trade.
- Principles: The policy is based on principles of ‘trust’ and ‘partnership’ with exporters.
- Goal: 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.
- Open ended: FTP 2023-28 is dynamic and has no end date and will be updated as and when needed.
- Four key pillars of the new FTP 2023-28:
- A shift from incentives to tax remission
- Trade facilitation through technology, automation, and continuous process re-engineering
- Export promotion through collaboration: Exporters, States, Districts
- Focus on Emerging Areas – E-Commerce Exports, Developing Districts as Export Hubs, Streamlining SCOMET policy etc.
Key highlights of the New Foreign Trade Policy (FTP) 2023-28
Ease of Doing Business
- Online approvals without physical interface: Automatic approval of various permissions under Foreign Trade Policy based on process simplification and technology implementation.
- Reduction in processing time and immediate approval of applications under automatic route for exporters.
- E-Certificate of Origin: Revamp of the e-Certificate of Origin (CoO) platform proposed- to provide for self-certification of CoOs as well as automatic approval of CoOs, where feasible.
- Initiatives for electronic exchange of CoO data with partner countries envisaged.
- Paperless filing of export obligation discharge applications: All authorisation redemption applications to be paperless. With this, the entire lifecycle of the authorization shall become paperless.
Export Promotion Initiatives
- Recognition of Exporters: Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavour basis.
- 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals.
- Towns of Export Excellence (TEE): Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, have been designated as TEE in addition to the existing 39 towns.
- The TEEs will have priority access to export promotion funds under the Market Access Initiative (MAI) scheme.
- The MAI Scheme was launched in 2013 to support the Indian exporters in penetrating and expanding their exports to foreign markets by providing financial assistance for various export promotion activities.
- Promoting Export from the Districts: The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative.
- This would promote exports at the district level and accelerate the development of the grassroots trade ecosystem.
- Rupee payment to be accepted under FTP Schemes: FTP benefits extended for rupee realisations through special Vostro accounts setup as per RBI circular issued on 11 July 2022.
- This is an effective step towards internationalisation of Rupee.
- Facilitation for E-Commerce exports: All FTP benefits will be extended to e-Commerce exports.
- Various estimates suggest India’s e-commerce export potential in the range of $200 to $300 billion by 2030.
- Dak Niryat facilitation: Dak Ghar Niryat Kendras shall be operationalised throughout the country to work in a hub-and-spoke model with Foreign Post Offices (FPOs) to facilitate cross-border e-Commerce and to enable artisans, weavers, craftsmen, MSMEs in the hinterland and land-locked regions to reach international markets.
- E-Commerce Export Hubs: Designated hubs with warehousing facility to be notified, to help e-commerce aggregators for easy stocking, customs clearance and returns processing.
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 (Special Chemicals, Organisms, Materials, Equipment and Technologies) among stakeholders.
- Government is strongly committed to reducing litigation and fostering trust-based relationships to help alleviate the issues faced by exporters.
- In line with “Vivaad se Vishwaas” initiative, which sought to settle tax disputes amicably, the government is introducing a special one-time Amnesty Scheme under the FTP 2023 to address default on Export Obligations.
- This scheme is intended to provide relief to exporters who have been unable to meet their obligations under EPCG and Advance Authorizations.