India on Friday came out with a "dynamic and responsive" foreign trade policy aiming to push rupee trade, increase outward shipments to USD 2 trillion by 2030, and promote e-commerce exports, amid global uncertainties.
The approach of the Foreign Trade Policy (FTP) 2023 is to move from 'incentive to remission' based regime, encourage collaboration between exporters, states, districts and Indian Missions, reduce transaction cost, and develop more export hubs.
India is likely to cross USD 765 billion merchandise and services exports in financial year 2022-23 which ends on Friday and will endeavour to more than double the exports to USD 2 trillion in the next seven years. The total exports stood at USD 676 billion in the previous fiscal year.
Unlike the practice of 5-year FTPs, this time the government has come out with a "dynamic and responsive" trade policy without any end date, and will be updated as per the emerging global scenario, according to the policy.
After releasing the FTP 2023, Commerce and Industry Minister Piyush Goyal said that goods exports have witnessed good growth considering the current global scenario while services exports may see a quantum jump in the current fiscal.
"We have to meet our exports targets going forward," the minister said, adding that "we will need to work a bit
harder" on goods exports.
"It shouldn't be that by 2030, services exports cross USD 1 trillion while you (merchandise exports) lag behind. I
am confident that we will cross USD 2 trillion by 2030," Goyal said.
Further, he said the FTP is dynamic and has been kept open-ended to accommodate the emerging needs of the time.
He stated that the policy had been under discussion for a long time and has been formulated after multiple
Goyal said the Department of Commerce will be making a massive focused outreach to the world, either sectorally or
country-wise, over the next 4-5 months.
The FTP aims at internationalisation of trade in Indian rupee. It allows international trade settlement in INR and required changes have been introduced for grant of export benefits and fulfilment of Export Obligation (EO) for export realisations in the domestic currency as per the Reserve Bank of India (RBI).
"If there are countries where there is currency failure or dollar shortage, we are willing to trade in the rupee with them," Commerce Secretary Sunil Barthwal said.
He also stressed that Indian exporters will have to become globally competitive and need not depend on subsidies.
In the interest of trade and industry and to motivate exporters, the FTP provides relief to exporters who are unable to fulfill their EO against the Export Promotion Capital Goods (EPCG) scheme and Advance Authorisations.
The FTP has also introduced an amnesty scheme for one-time settlement of default in export obligation by Advance
Authorisation and EPCG authorisation holders.
As per the scheme, all pending cases of default in meeting EO can be regularised on payment of customs duties that were exempted and interest at the rate of 100 per cent of the duties exempted.
Apex exporters' body FIEO's President A Sakthivel said the new FTP will facilitate greater trade, boost manufacturing and help in making the rupee a global currency.
Industry chambers CII, FICCI, Assocham, and PHDCCI too opined that the new policy is will help India in increase its share in the global trade.
Industry bodies like EEPC India, Medical Technology Association of India (MTaI), and Confederation of Indian Textile Industry (CITI) said the open-ended policy, which may be updated from time to time, will boost exports.
The FTP aims to streamline policy for export of dual use items under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET).
SCOMET policy emphasises India's export control in line with its international commitments under various export control regimes (Wassenaar arrangement, Australia group and Missile Technology Control Regime) to control trade in sensitive/dual use items/technology.
It also focuses on simplifying policies to facilitate export of dual use high end goods/technology such as UAV/drones, cryogenic tanks, and certain chemicals.
The FTP 2023 focuses on engaging with states and districts through the Districts as Export Hubs initiative by identification of products and services in each district, institutional mechanism, and preparation of district export action plans, among others.
The policy specifically extends FTP benefits to e-commerce exports which are estimated to grow to USD 200-300 billion by 2030.
To streamline e-commerce export facilitation, guidelines are being formulated in consultation with other ministries.
Also, there will be special outreach and training activities for small e-commerce exporters.
Battery Electric Vehicles (BEV) of all types, vertical farming equipment, waste water treatment and recycling, rainwater harvesting system and rainwater filters, and green hydrogen have been added to green technology products, thus making them eligible for reduced Export Obligation requirement under the EPCG scheme.
Another key highlight of the policy is that special Advance Authorisation scheme has been extended for apparel and clothing sector to facilitate prompt execution of export orders.
The dairy sector too has been exempted from maintaining average EO. The move will provide support to the sector to upgrade the technology.
Faridabad, Moradabad, Mirzapur and Varanasi have been declared as Towns of Export Excellence (TEE) with an aim to give thrust to cluster-based economic development. Currently, there are 39 TEEs.
The policy, which comes against the backdrop of global uncertainties, outlines measures for merchanting trade under which a trader can buy from one country and supplies to another country while based in India.
Further, export performance threshold for recognition to exporters through Status Holders has been relaxed. Under the new norms, threshold for obtaining Star House status has been reduced significantly.
Digitisation of applications pertaining to the FTP and automatic system-based approvals are among the other key initiatives announced in the policy.
On a pilot basis, the FTP has introduced processing of Advance Authorisation extension/revalidation applications in a single day, which currently takes three days to one month.
The DGFT said policy changes have been done since 2015 even without announcement of a new FTP.
The schemes sanctioned under the policy will be honoured for the tenure for which they are sanctioned even if the schemes are foreclosed.
The Foreign Trade Policy 2015-20, which was to end on March 31, 2020, was extended several times due to the pandemic and volatile geopolitical scenario. The last extension was till March 31, 2023.