What does India’s Foreign Trade Policy 2023 contains for you?
India’s overall exports, including services and merchandise exports, has already crossed US$ 750 Billion and is expected to cross US$ 760 Billion this year. However, share of India’s exports is just 30% in the global trade. This highlights the need to have a proper vision map to boost the exports.
India’s new Foreign Trade Policy (FTP) announced by Minister of Commerce, Shri. Piyush Goyal, which came into effect from 1st April 2023, seeks to integrate India further into global value chains and to make India an export hub.
The measures include industry-specific targets to reach a goal of $2 trillion in exports of merchandise and services by 2030, said Santosh Kumar Sarangi, head of the directorate-general of foreign trade (DGFT).
The Key Approach to the policy is based on these 4 pillars:
- Incentive to Remission;
- Export promotion through collaboration – Exporters, States, Districts, Indian Missions;
- Ease of doing business, reduction in transaction cost and e-initiatives;
- Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET policy.
Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. The Government of India, Ministry of Commerce and Industry announces Export Import Policy every five years. The export Import Policy (EXIM Policy) is updated every year on the 31st of March and the modifications, improvements and new schemes are effective w.e.f. 1st April of every year.
In light of the COVID-19 pandemic and the “volatile geo-political scenario till 31.03.2023”, the previous Foreign Trade Policy (2015-20) was extended. The new FTP is a shift from an incentive-based approach and creates an enabling ecosystem for exporters, which is a move in line with India’s vision of becoming “Atmanirbhar” (self-reliant).
You have a chance to take and expand your business on global level.
Broadly, the FTP lays great emphasis on trade facilitation through technology and digitisation, seeks to promote e-commerce, and aims to facilitate exports through various schemes and measures. While the FTP generally reflects India’s ambition to become an export hub and increase its share in global value chains, the FTP’s emphasis on e-commerce and ‘Local goes Global’ also highlights the inclusive approach of the current policy.
The policy proposes to create E-Commerce Export Hubs (ECEHs), which would act as a centre for favourable business infrastructure and facilities for cross-border e-commerce activities. These hubs would provide the necessary infrastructure for exports, and also connect to and leverage the services of the nearest logistics hubs.
If you live in or nearby or have business in the selected districts, reach out to the District to get the details.
It proposes to do so by creating District Export Promotion Committees (DEPCs) and creating District Export Action Plans for each district, which can be monitored online.
Identifying export of products/services at the district level and conducting outreach activities, including buyer-seller meets, trade fairs, and workshops, can onboard a greater number of exporters. The process of identifying and prioritising two to three high potential products/services from the districts can also increase competition and innovation.
These interventions at the district level can generate awareness and help small vendors to access bigger markets. While some districts in India are already known for their exports, the new measures will widen the scope of outreach and potentially onboard previously excluded exporters.
Don’t miss out your opportunity to grow your business with TEE especially if you have handicrafts products.
The FTP has declared four new ‘Towns of Export Excellence’ (TEE) with the objective of moving up the value chain and tapping into new markets. There are four new TEEs are in addition to the already existing 39 towns of export excellence. The TEEs will have priority access to export promotion funds under the MAI scheme and will be able to avail Common Service Provider (CSP) benefits for export fulfillment under the Export Promotion capital Goods (EPCG) Scheme.
Be a Recognized Exporter of India!
Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavor basis. Similar to the ‘each one teach one’ initiative, 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals.
Conduct trade & business possibly in Rupees.
The government also intends to encourage the use of the Indian currency in cross-border trade, aided by a new payment settlement framework introduced by the RBI in July 2022. The South Asian nation is prepared to trade in rupees with nations facing a shortage of dollars so as to “disaster-proof” them and effectively boost its exports.
Start your export journey afresh.
FTP 2023 has introduced one time Amnesty Scheme for exporters to close old pending authorizations. The Amnesty scheme shall be available for a limited period, up to September 30, 2023. 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.
All pending cases of the default in meeting Export Obligation (EO) of authorisations mentioned can be regularised on payment of all customs duties that were exempted in proportion to unfulfilled EO. The interest payable is capped at 100 per cent of these exempted duties under this scheme. However, no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty. This is likely to provide relief to exporters as interest burden will come down substantially.
The DGFT vide Policy Circular No. 1/2023 dated April 17, 2023 has issued a procedure for applying for an Amnesty scheme. Click here to get the details.
Improve Ease of Doing Business with Technology cost-efficiently.
One of the key objectives of the FTP 2023 is to process re-engineering and automation to facilitate ease of doing business for exporters. The policy emphasizes the use of automated IT systems with risk management systems for various approvals and codifies implementation mechanisms in a paperless, online environment. The policy also reduces fee structures and IT-based schemes to make it easier for MSMEs and others to access export benefits.
Even though the policy is related to the international trade, it is more closely associated with domestic businesses and environment. Foreign trade and domestic development create a circle of development and are inter-dependent phenomenon. Hence the active participation from local businesses in terms of production and exports will determine the level of success of this FTP 2023.
In the near future, if local businesses leveled up to the global level then it would complete the circle of development, ensuring India’s greater contribution to the global supply-chain.
Ms. Vaibhavi Pingale is a Visiting Faculty of Economics at Gokhale Institute of Politics and Economics, Pune & at Savitribai Phule Pune University. She is pursuing her PhD. She has been actively writing media articles other than academic research.