Unveiling Foreign Trade Policy 2023

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 ‘long-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.