Unveiling Foreign Trade Policy 2023

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On Friday, the Ministry of Commerce unveiled the long-awaited foreign trade policy (FTP) and also broke the tradition of five-year policy duration to adopt a ong-term focus. The ministry said there is no end date for the policy and it will be updated as needed. In addition, the new policy moves from incentives to statutory and entitlement-based regimes. The benefits of FTP also extend to e-commerce exports, which are estimated to grow to $200-300 billion by 2030. The salient features are:

The limit for export by courier will be raised from Rs 5,000 to Rs 10,000 per shipment.

The new FTP also aims to make the Indian Rupee a global currency and enable international trade settlements in local currencies. The total exports are expected to reach $770 billion in FY2023. The policy aims to boost e-commerce exports, which is expected to grow to $200-300 billion by 2023.

A pardon program has also been introduced for one-time payment for default on export commitments. In addition, Faridabad, Moradabad, Mirzapur and Varanasi have been declared export cities.

The takeaways from the policy are:

FTP will help with policy continuity and a responsive framework

Approach of FTP: From Incentive to Remission

Introduces scheme for remission of taxes, duties and govt levies on export goods

Digitisation of applications related to FTP

Automatic system-based approval of FTP applications

Pilot introduced for processing of applications for advance authorisation in a single day

Promotes trading in Indian Rupee

Introduces system for merchant trade

Dairy sector exempted from maintaining average export obligation * Battery electric vehicles, green hydrogen & vertical farming equipment eligible for minimum obligation under Export Promotion Capital Goods (EPCG) scheme

Special advance authorization scheme for apparel & clothing sector - Provides all FTP benefits to e-commerce exports

Export value limit through courier service increased from Rs 5 lakh to Rs 10 lakh for each consignment

Focus on working with states & districts

Aims at export streamlining of dual use items under SCOMET policy

Introductions of amnesty scheme for one-time settlement of default in export obligation through EPCG authorisation holders and advance authorisation

FTP to be responsive and dynamic to the evolving trade scenario

Planned restructuring of Commerce Department to make it future-ready

The new policy will also cut charges for small and medium-sized businesses and automate trade approvals to provide some government-backed benefits.