The Ministry of Commerce and Industry (“Ministry”) notified the Foreign Trade Policy 2023 (“FTP 2023”) on 31st March 2023 which came into effect on 1st April 2023. FTP 2023 seeks to promote ease of doing business for exporters and improve the business environment in the country. Unlike its predecessors, the FTP 2023 is a dynamic policy with a long-term focus that will be revised as and when required. The 2023 policy is based on four pillars:
- Incentive to Remission,
- Export Promotion through Collaboration – Exporters, States, Districts, and Indian Missions,
- Ease of Doing Business, reduction in transaction cost, and e-initiatives,
- Emerging Areas – E-commerce Developing Districts as Export Hubs.
The Key Features of the FTP 2023 are discussed below:
- Facilitation of E-commerce Exports – The FTP 2023 extends several benefits and seeks to promote e-commerce exports in India through various schemes such as the Niryat Bandhu Scheme (“NBS”) under which the DGFT shall conduct outreach activities/workshops in partnership with Custom Authorities, Department Post, Industry Partners, Knowledge Partners for the promotion of exports. Capacity-building and skill-development activities may also be undertaken by the NBS. Additionally, the FTP creates E-commerce Export Hubs (“ECEHs”) which would offer favorable business infrastructure and facilities for e-commerce export activities. Furthermore, Dak Niryat Kendras will be operationalized across the country to aid cross-border e-commerce to help artisans, weavers, and craftsmen MSMEs in the land-locked regions to reach international markets.
- Process Re-Engineering and Automation – To promote ease of doing business, the FTP 2023 has implemented a common digital platform for issuance, renewal, amendment, and related processes pertaining to Registration Cum Membership Certificate (“RCMC”)/Registration Certificate. Additionally, the DGFT has created a platform for the issuance of Preferential and Non-Preferential Certificates of Origin (“e-CoO”). Furthermore, Unique Document identification (“UDIN”) and a QR Code will be placed on each e-CoO for validation and authentication by agencies. The FTP 2023 also introduces various IT initiatives to create a paperless and contactless environment for availing benefits under the export promotion scheme which inter alia include DGFT Trade Facilitation mobile application, facility to verify the documents/certificates issued through the DGFT portal, automated processing in online environments, etc.
- Facilitation under Export Promotion of Capital Goods (“EPCG”) Scheme – The EPCG Scheme which allows the import of capital goods at zero customs duty for export production has been further rationalized to include within its scope all types of Battery Electric Vehicles (“BEV”). Therefore, BEVs will qualify for lower export obligations. Furthermore, Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been included as an additional scheme that allows benefits to be claimed under the Common Service Provider (“CSP”) Scheme.
- Merchanting Trade – According to the press release related to the FTP 2023, merchanting trade of prohibited as well as restricted items under FTP 2023 will now be possible. Merchanting Trade refers to the shipment of goods from one foreign country to another foreign country without such goods touching Indian ports, but it involves an Indian intermediary. However, merchanting trade will be subject to the intermediary’s adherence to the RBI Guidelines and will not apply to items under the CITEs and Special Chemicals, Organisms, Materials, Equipment and Technologies (“SCOMET”)
- Streamlining SCOMET Policy – The SCOMET policy highlights India’s commitment to export control in line with its international obligations under various export control regimes. These regimes aim to regulate trade in sensitive and dual-use items, including software and technology, to prevent their proliferation and ensure their responsible use. Recent policy changes have been introduced to streamline the licensing of certain SCOMET items, such as general authorizations for their export. This move aims to make the export of SCOMET items globally competitive while still adhering to India’s international commitments. Such changes also seek to simplify policies to facilitate the export of high-end goods and technologies, such as UAV/drones, cryogenic tanks, and certain chemicals.
- Export from Districts – The objective of the FTP is to collaborate with state governments and advance the Export Hubs initiative at the district level. The goal is to promote exports and enhance the growth of local trade. To achieve this, there will be a State Export Promotion Committee and a District Export Promotion Committee at the state and district levels, respectively, which will work to identify products and services that are suitable for export and address concerns at the district level. Each district will have its own export action plan, outlining its unique approach to promoting the export of identified products and services. Furthermore, Faridabad, Mirzapur, Moradabad, and Varanasi have been designated as Towns of Export Excellence (“TEE”) in addition to the already existing thirty-nine towns. These towns will be able to avail Common Service Provider (“CSP”) benefits under the EPCG Scheme.
The FTP adopts strategies that are imperative for the growth of a country in the 21st century. It is a dynamic document that seeks to promote India’s export and boost its expansion. The perpetual validity of the FTP provides scope for policy advocacy which will allow amendment of the policy as and when required. The focus of the FTP 2023 is on promoting ease of doing business which is sought to be implemented through various schemes and building an infrastructure that will allow for promotion of exports in India.
FTP 2023 Press Release – https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572
Handbook of Procedures 2023 – https://content.dgft.gov.in/Website/dgftprod/e1cb52ea-0c3a-4c2a-8cd7-dd992e9bdc98/HBP_2023.pdf
DGFT FTP 2023 – https://www.dgft.gov.in/CP/?opt=ft-policy