New Foreign Trade Policy 2023

Introduction

The Foreign Trade Policy 2023 was recently launched by Union Minister of Commerce and Industry Shri Piyush Goyal. The policy has undergone extensive stakeholder consultations and aims to address the needs of the trade.

About Indian exports

• India's overall exports, including services and merchandise exports, have already surpassed US$ 750 billion and are projected to exceed US$ 760 billion this year.
• The value of India's exports in the financial year 2021-22 witnessed a growth of about 41% to reach 400 billion dollars compared to the pandemic-hit year of 2020-21.

Background of the policy

• The Foreign Trade Policy (2023) is a dynamic policy document that builds upon successful schemes and adapts to changing trade requirements.
• The FTP 2015-20 underwent revisions based on emerging situations, even without the announcement of a new FTP, emphasizing a responsive approach and incorporating feedback from the trade and industry.
• Going forward, revisions to the FTP will be made as necessary, while continuous efforts will be made to streamline processes, update the policy, and ensure compliance with WTO rules.

Aims and objectives of the new policy

• The FTP 2023 focuses on process re-engineering and automation to improve the ease of doing business for exporters.
• It aims to increase exports and strengthen India's position in the global value chain.
• The policy is based on four pillars: incentive to remission, export promotion through collaboration, ease of doing business, and emerging areas like e-commerce and SCOMET policy.

Key highlights of the policy

• Process Re-Engineering and Automation: The new policy emphasizes export promotion through automated IT systems and collaboration, moving away from an incentive regime.
• Towns of Export Excellence: Four new towns have been designated as Towns of Export Excellence, which will have priority access to export promotion funds and other benefits.
• Recognition of Exporters: Exporter firms recognized with 'status' based on export performance will contribute to capacity-building initiatives by providing trade-related training.
• Promoting export from the districts: The policy aims to build partnerships with state governments and promote exports at the district level through institutional mechanisms.
• Streamlining SCOMET Policy: The export control regime is being strengthened to implement international treaties and agreements.
• Facilitating E-Commerce Exports: The policy outlines plan for establishing e-commerce hubs and raising the cap on consignment-wise e-commerce exports.
• Merchanting trade: Provisions for merchanting trade have been introduced to develop India as a merchanting trade hub.

Current Export Schemes and Changes 

(A) Facilitation under the Export Promotion of Capital Goods (EPCG) Scheme

• The EPCG Scheme is being further rationalized and includes new schemes and products eligible for benefits.
• The PM MITRA scheme and exemptions for the dairy sector and green technology products have been added.

(B) Facilitation under the Advance Authorization Scheme

• Provisions have been added to facilitate export orders in the Apparel and Clothing sector and extend benefits to status holders.

Possible positive outcomes of the scheme

• Supporting MSMEs to grow: The policy facilitates easy access to export benefits, reducing fee structures and implementing IT-based schemes.
• Creating new export centres: The addition of new towns for export excellence is expected to boost the exports of specific industries.
• Educating exporters: The recognition norms have been re-calibrated, enabling more firms to achieve higher ratings and better branding opportunities.
• Providing access to dual-use high-end goods and technologies: A robust export control system will benefit Indian exporters.
• Growth of GIFT city: Certain places like GIFT city can become major merchanting hubs.
• Reduce litigation burden: The amnesty scheme aims to provide relief to exporters by addressing default on export obligations.

Limitation of NFT Policy

• The policy falls short in offering more targeted measures and a well-defined road map to meet the 2030 export target.

Conclusion

• With India's modest share in global trade, there is ample room for improvement.
• The Foreign Trade Policy 2023, along with additional measures, can enhance trade performance and help achieve the ambitious $2 trillion export target by 2030.
• Monitoring policy implementation and addressing potential challenges are vital to fully benefit businesses.