Categories
Economics

Highlights of the 2023 Foreign Trade Policy

The Union Minister of Commerce and Industry has announced the start of the Foreign Trade Policy 2023.

Foreign Trade Policy, 2023

  • To accommodate the changing needs of the period, the policy is dynamic and open-ended.
  • It seeks to increase India’s total exports, which have already surpassed US$750 billion.
  • The policy’s main approach is built on four pillars:
  • Export marketing through cooperation – Exporters, States, Districts, Indian Missions, etc.
  • Ease of doing business, lower transaction costs, e-initiatives, and Emerging Markets – Electronic commerce Creating Export Hubs and Simplifying SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) Policy

Key highlights

(1) Process Re-Engineering and Automation

  • The policy emphasises export growth and development, shifting from an incentive regime to a facilitating regime founded on technology interface and collaboration principles.
  • Fee reductions and IT-based schemes will make it simpler for MSMEs and others to gain access to export benefits.
  • Duty exemption schemes for export production will now be applied via Regional Offices in a rule-based IT system setting, removing the need for manual interface.

(2) Towns of Export Excellence

  • In addition to the existing 39 towns, four additional towns have been designated as Towns of Export Excellence (TEE).
  • TEEs will be given first preference for export promotion funds under the Market Access Initiative (MAI) Scheme.
  • Under the EPCG Scheme, it will be able to obtain Common Service Provider (CSP) advantages for export fulfilment.

(3) Recognition of Exporters

  • Exporter firms with’status’ based on export success will now be best-effort partners in capacity-building initiatives.
  • Individuals with 2-star or higher status would be urged to provide trade-related training based on a model curriculum to interested individuals.

(4) Promoting Export from the Districts

  • The FTP seeks to forge alliances with state governments and to advance the Districts as Export Hubs (DEH) initiative.
  • This would boost district-level exports and hasten the growth of the grassroots trade ecosystem.

(5) Streamlining SCOMET Policy

  • India is emphasising the system of “export control.”
  • A strong export control mechanism in India would allow Indian exporters access to dual-use high-end goods and technologies while also facilitating exports of controlled items/technologies under SCOMET from India.

(6) Facilitating E-Commerce Exports

  • Various estimates place e-commerce export possibilities between $200 and $300 billion by 2030.
  • FTP 2023 outlines the intent and roadmap for creating e-commerce hubs, as well as related components like payment reconciliation, bookkeeping, returns policy, and export entitlements.
  • As a starting point, the FTP 2023 increased the consignment-wise limit on E-Commerce exports via courier from 5 lakh to 10 lakh.

(7) Facilitation under Export Promotion of Capital Goods (EPCG) Scheme

  • Several changes have been made to the government’s Foreign Trade Policy, including the addition of the PM MITRA plan for textile and apparel parks to EPCG’s Common Service Provider plan.
  • Exempting the dairy industry from the Average Export Obligation
  • Green technologies like BEVs, vertical farming tools, and rainwater harvesting are being added to EPCG’s reduced Export Obligation requirement.

(8) Facilitation under Advance authorization Scheme

  • The Advance Authorization Scheme allows DTA (Domestic Tariff Area) units to obtain duty-free raw materials for the production of export items, and it can be used for both domestic and export production.
  • The Special Advance Authorization Scheme has been extended to the Apparel and Clothing sector to enable the prompt execution of export orders.
  • The Self-Ratification Scheme for Input-Output Norm Fixation has been extended to include holders of 2-star and higher status.

(9) Merchanting trade

  • The FTP 2023 includes provisions for merchanting trade, which enables goods to be shipped from one foreign country to another without passing through Indian ports and using an Indian intermediary.
  • This will be subject to compliance with RBI rules, and it will not apply to goods/items on the CITES and SCOMET lists.
  • This is anticipated to enable Indian entrepreneurs to transform specific locations into major merchanting hubs.

(10) Amnesty Scheme

  • Under the FTP 2023, the government will implement a unique one-time Amnesty Scheme to address default on Export Obligations and provide relief to exporters who have been unable to fulfil their obligations under EPCG and Advance Authorizations.
  • All pending instances of failure to satisfy the Export Obligation (EO) of authorizations can be resolved by paying all customs duties that were exempted in proportion to the unfulfilled Export Obligation.
  • Under this plan, the interest payable is capped at 100% of the exempted duties, with no interest payable on the portion of Additional Customs Duty and Special Additional Customs Duty.
Source: https://taxguru.in/dgft/key-highlights-new-foreign-trade-policy-2023.html
JOIN OUR NEWSLETTER
And get notified everytime we publish a new blog post.