India's exports of goods and services have shown a considerable growth since FY 2016 and are set to cross a record $760 billion mark in FY2023, aided by India's Foreign Trade Policy 2015-20, which was extended till Mar 31, 2023 due to Covid and the turbulent geo-political situation. On April 1, 2023, Ministry of Commerce introduced the Foreign Trade Policy 2023, a first of its kind dynamic policy with no end date. This policy sets the stage for Indian Government's ambitious vision to reach the $2 trillion mark in exports by 2030.
The policy marks a shift from an incentive-based regime to a remission-based regime. The policy focuses on three key aspects - 1) ease of doing business 2) export promotion through collaboration and 3) emerging areas such as e-commerce, district level participation and export hubs.
From an ease of doing business perspective, various approvals - advance authorization issuance, EPCG (Export Promotion Capital Goods) issuance, revalidation of authorization and extension of export authorization period - will be automated and digitized, with reduction in process time to just one day. Further, user charges for MSMEs under advance authorization and EPCG scheme have been significantly reduced and pegged at fixed amounts not exceeding INR 5000, and export obligation discharge application filings have been made paperless. Export performance thresholds recognizing exporters as status holders have been rationalized, enabling more exporters to achieve higher status and reduced transaction cost for exports.
As a step towards internationalization of the Rupee, Rupee payments will now be accepted under FTP schemes through special Vostro accounts. Shipment of goods, with some exceptions, from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary, is allowed, subject to compliance with RBI guidelines.
The policy promotes Districts as Exports Hub (DEH) initiative as it decentralizes export promotion and proposes creation of institutional mechanisms at the State and District level to strategize exports (State Export Promotion Committee & District Export Promotion Committee), with outreach programs and intervention to remove infrastructural and logistical impediments. The new FTP recognizes four new Towns of Export Excellence (TEEs) - Faridabad, Moradabad, Mirzapur and Varanasi - in addition to the already existing 39 TEEs. Financial assistance would be provided under a Market Access Incentives scheme to recognized associations of units in the TEEs for export promotion projects such as marketing, capacity building and technological service, visiting trade fairs and exhibitions.
With a view to support e-commerce exports, which are expected to grow to $200-300 bn by 2023, all Foreign Trade Policy benefits have also been extended to e-commerce exports, with special outreach and training activities for small e-commerce exporters, setting up of e-commerce export hubs, and operationalization of Dak Ghar Niryat Kendras throughout the country to facilitate cross-border e-Commerce and enabling for exporters in the hinterland.
The policy also introduces a special Amnesty scheme for one-time settlement of default in export obligation by Advance Authorization and EPCG authorization holders, allowing them to begin with a clean slate. It also streamlines the licensing procedure for export of SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) items.
The policy, which stays nimble in every way by being open to changes, makes exports more inclusive, and paves the way for the next phase in India's export growth as it moves towards a target of $1 trillion of goods exports and $1 trillion of services exports by 2030.
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