Foreign Trade Policy 2023: $2 Trillion in Exports and Process Improvements

Foreign Trade Policy 2023 focuses on transitioning from an incentive-based to a tax-remission-based system, improving the ease of doing business, promoting exports through collaborations, and focusing on emerging markets. It plans to export $2 trillion in goods and services by 2030, up from $900 billion previously. 

Foreign Trade Policy 2023

Reducing Friction Points:

  • Automatic permission decisions will streamline processes and reduce bureaucratic barriers for companies.
  • Reduced processing times for authorization revalidation (expected to be reduced to one day), extension of export obligation periods, advance authorizations, and EPCG issuances will speed up export operations.
  • Lowering MSMEs’ application fees will provide financial relief while encouraging more small businesses to engage in global trade.

Supporting Export Growth:

  • Facilitating e-commerce exports will enable Indian businesses to tap into the growing global e-commerce market, estimated to reach $6.07 trillion by 2024.
  • By broadening the scope of RODTEP, more exporters will profit from tax breaks, increasing competitiveness.
  • Manufacturing expansion, especially in labour-intensive sectors, will create more jobs and increase export potential.
  • Rationalizing exporter recognition thresholds will make it simpler for businesses to be recognised and incentivized for their export performance.
  • Merchanting trade change will boost service exports while lowering transaction costs.
  • Promoting the use of the rupee in international trade can help reduce exchange rate risks and boost trade with currency-restricted countries.
  • Amnesty for a Limited Time: The amnesty scheme seeks to resolve trade disputes more quickly, clear pending cases, and improve the general trade environment. 

Additional Measures

  • Import tariff reductions will make raw materials and intermediate products more affordable, boosting domestic manufacturing and export competitiveness.
  • Competitive Indian goods and services: Maintaining a competitive exchange rate will make Indian goods and services more affordable in worldwide markets.
  • FTA’s: Signing broader and deeper free trade agreements can help Indian exporters enter new markets and draw foreign investment.

@the end

The Foreign Trade Policy 2023 is being released at a time of global uncertainty, but given India’s tiny share of global trade (around 1.8% in merchandise exports and 4% in services), there is plenty of room for growth. The new policy, along with other measures, has the potential to improve the country’s trade performance and help it meet its ambitious $2 trillion export goal by 2030. However, for businesses to completely reap the benefits, it is critical to monitor policy implementation and address possible challenges.

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