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Inclusive Aspects of Foreign Trade Policy 2023
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Get Started ->In global trade, understanding the rules is half the game. For businesses in India, this means getting to know the Foreign Trade Policy (FTP), which guides all export-import activities. The EXIM Policy, officially known as the Foreign Trade Policy, is regulated by the Foreign Trade Development and Regulation Act, 1992.
It’s the playbook that governs how India interacts with global markets, ensuring that trade is smooth, efficient, and aligned with the nation’s economic goals.
The Directorate General of Foreign Trade (DGFT) oversees this policy, making it the key authority for importers and exporters in India.
What is Foreign Trade Policy in India?
The EXIM (Export-Import) Policy lays out guidelines for controlling the import and export of goods and services to and from India.
Its primary goal is to regulate and develop foreign trade, making it easier for businesses to import products and services from abroad and access international markets for their exports.
Regulated by Law:
The Foreign Trade Development and Regulation Act 1992 empowers the Indian government to announce the EXIM Policy every five years. While each policy is valid for five years, it can be amended annually on 31 March to take effect from 1 April. This allows the government to adapt to new global trade conditions and opportunities.
The Role of DGFT:
The DGFT collaborates with the Ministry of Finance and the Union Minister of Commerce and Industry to make necessary amendments, ensuring the policy remains relevant to changing economic and trade landscapes.
From EXIM to FTP:
In 2004, the EXIM Policy was renamed the Foreign Trade Policy (FTP) to provide a more comprehensive approach to India’s international trade.
The latest FTP 2023-2028 aims to transform India into a major export hub, integrating the country more deeply into global value chains. This policy supports India’s vision of becoming ‘Atmanirbhar’ (self-reliant) by creating a conducive environment for exporters.
Also Read: Decoding the Customs Act 1962: A Comprehensive Guide
Objectives of Foreign Trade Policy
Clear objectives drive India's Foreign Trade Policy (FTP) to support economic growth and trade efficiency. Here’s what it aims to achieve:
1. Boost Growth in Exports and Imports:
The policy seeks to stimulate long-term economic growth by making it easier for businesses to access key resources like components, raw materials, capital goods, and consumables. This facilitates seamless production and service delivery.
2. Enhance Competitiveness:
A key goal of the FTP is to improve the competitiveness of India’s agriculture, services, and industrial sectors. Promoting internationally accepted quality standards ensures that Indian products meet global benchmarks, making them more attractive to international buyers.
3. Create Employment Opportunities:
The EXIM Policy also focuses on creating new employment opportunities by encouraging sectors with potential export growth. By expanding access to global markets, the policy supports job creation across diverse industries, from agriculture to manufacturing.
4. Encourage Economic Expansion:
The policy provides businesses with access to essential raw materials and capital goods. This access is crucial for expanding production capabilities and offering globally competitive services at affordable rates.
5. Promote Technological Advancements:
By encouraging the adoption of advanced technologies and modern production methods, the FTP aims to boost the productivity and efficiency of Indian companies. This makes them more competitive in the global market while maintaining high-quality standards.
Align with Global Standards:
The FTP ensures that Indian businesses are aligned with global trade norms. This means maintaining compliance with trade regulations, essential for smooth customs clearance, logistics management, and reducing regulatory bottlenecks.
Also Read: Navigating GST on Export of Services: A Practical Guide for Indian Businesses
Foreign Trade Policy, India 2023: A New Chapter for Export Growth
Adaptation is the key to success in global trade. India’s Foreign Trade Policy (FTP) 2023 embraces this principle by offering a flexible and forward-looking approach to export and import activities.
It builds on time-tested schemes while introducing new measures to support India’s vision of becoming a global export hub.
The EXIM Policy 2023, which focuses on ease of doing business and emerging opportunities, is set to shape the future of international trade for Indian businesses.
Image Source: PIB
Key Pillars of the Foreign Trade Policy 2023
The Foreign Trade Policy 2023 is built on four fundamental pillars that aim to boost exports and create a more efficient trading environment:
1. Incentive to Remission:
- The policy shifts from direct incentives to a remission-based approach, ensuring that exporters are reimbursed for duties and taxes paid on inputs, making their products more competitive globally.
- This shift encourages businesses to adopt a sustainable export model, reducing reliance on direct subsidies.
2. Export Promotion Through Collaboration:
- The FTP 2023 emphasises partnerships between exporters, States, Districts, and Indian Missions to expand India’s reach in global markets.
- By fostering collaboration at every level, the policy aims to transform districts into export hubs, unlocking potential in previously untapped regions.
3. Ease of Doing Business:
- To minimise bottlenecks, the policy focuses on process re-engineering and automation, reducing the transaction costs for exporters.
- Initiatives like online systems for export documentation and streamlined customs processes make it easier for businesses to manage their import and export operations.
4. Emerging Areas: E-Commerce and SCOMET:
- With a growing emphasis on e-commerce exports, the policy supports digital entrepreneurs by providing a framework for online trade.
- It also addresses the export of dual-use high-end technology items under the SCOMET policy, ensuring India remains a leader in traditional and emerging trade sectors.
Also Read: Unpacking India's Foreign Trade Policy 2024: Impact and Opportunities
Key Features of Foreign Trade Policy 2023: Transforming India's Trade Landscape
"Success in trade is no longer just about access; it's about innovation." India’s Foreign Trade Policy (FTP) 2023 aims to redefine the country's global trade approach by embracing digital transformation, fostering local exporters, and ensuring easy access to export benefits.
Let’s dive into the key features that set this policy apart.
1. Process Re-Engineering and Automation: Simplifying Trade Procedures
In the digital transformation era, the Foreign Trade Policy 2023 is committed to making trade easier through process re-engineering and automation. Exporters can now enjoy a more streamlined approach with minimal manual intervention.
Here’s what this means:
1. Technology-Driven Facilitation:
The new policy emphasises a shift from direct incentives to a system that leverages automated IT systems and risk management frameworks for approvals. This shift enables a more facilitating environment for exporters, encouraging a technology-first mindset.
2. Continued Success of Key Schemes:
Building on the effectiveness of schemes like Advance Authorisation and Export Promotion Capital Goods (EPCG) under the FTP 2015-20, these initiatives will continue but with significant upgrades. Expect a paperless, online environment, making it simpler to access export benefits.
3. Rule-Based IT Systems:
The duty exemption schemes will now be managed through regional offices using a rule-based IT system, reducing the need for physical paperwork. Over FY23-24, processes for issuing, re-validating, and extending these authorisations will be automated, offering faster turnaround times for exporters.
4. Focus on MSMEs:
With reduced fee structures and IT-based schemes, Micro, Small, and Medium Enterprises (MSMEs) will find it easier to access benefits, positioning them for global growth.
Also Read: Import and Export Services: Basic guidelines and Procedures
2. Towns of Export Excellence: Spotlight on Regional Growth
To boost India's export potential, the FTP 2023 has designated four new Towns of Export Excellence (TEEs)—Faridabad, Mirzapur, Moradabad, and Varanasi. Here’s how this initiative benefits local exporters:
1. Priority Access to Funds:
Under the Market Access Initiative (MAI) scheme, these towns will have priority access to export promotion funds, giving local businesses the resources they need to expand.
2. Common Service Provider (CSP) Benefits:
TEEs can avail of CSP benefits under the EPCG Scheme, making accessing shared infrastructure for export activities easier. This is particularly beneficial for regions known for handlooms, handicrafts, and carpets, allowing them to compete more effectively in the global market.
3. Recognition of Exporters: Building a Skilled Workforce
The Foreign Trade Policy 2023 also aims to recognise and empower exporters through new initiatives:
1. Status Holder Scheme:
Exporters with a track record of high performance will be granted status recognition, making them partners in capacity-building efforts.
Think of it as an “each one teach one” initiative—2-star and above status holders are encouraged to train new exporters, building a talent pool that supports India’s goal of a $5 trillion economy by 2030.
2. Easier Status Recognition:
The policy has recalibrated the norms, making it easier for firms to achieve 4-star and 5-star status. This recognition brings branding opportunities and opens doors to additional benefits.
Also Read: Functional Import and Export Solutions
4. Promoting Export from the Districts: Grassroots Empowerment
The Districts as Export Hubs (DEH) initiative is a cornerstone of the FTP 2023, aiming to bring export growth to the grassroots level:
1. State and District Collaboration:
The policy fosters partnerships with State governments to identify export-worthy products and resolve challenges at the local level. This collaboration is facilitated through State and District Export Promotion Committees.
2. District-Specific Action Plans:
Each district will have a tailored export action plan to promote local products and services. This means every district can contribute to boosting India's global trade footprint.
5. Streamlining SCOMET Policy: Balancing Control with Opportunity
As India strengthens its ties with global trade control regimes, it has emphasised export control more. This is particularly important for dual-use goods with both commercial and military applications.
The SCOMET Policy (Special Chemicals, Organisms, Materials, Equipment, and Technologies) is more robust and aligns with international treaties and agreements.
Why it Matters:
A well-regulated export control regime gives Indian exporters access to high-end, dual-use technologies while ensuring compliance with global norms. This means businesses can safely export-controlled items, tapping into lucrative international markets without risking non-compliance.
Wider Outreach:
FTP 2023 promotes greater awareness of SCOMET among exporters, ensuring they understand this segment's complexities and opportunities. This outreach helps businesses adapt quickly and meet international standards.
Also Read: Understanding the Latest Changes in India's Foreign Trade Policy
6. Facilitating E-Commerce Exports: Unlocking a $300 Billion Opportunity
The world of e-commerce exports is growing rapidly, and India's Foreign Trade Policy 2023 is here to seize this momentum. Unlike traditional trade, e-commerce requires tailored solutions to address its unique challenges.
1. Policy Interventions:
The policy sets the stage for e-commerce hubs, focusing on elements like payment reconciliation, bookkeeping, and export entitlements to simplify the process for digital exporters.
2. Increased Export Limits:
The consignment cap for e-commerce exports has been raised from ₹5 lakh to ₹10 lakh, providing more flexibility for exporters to ship higher-value goods. This limit may be adjusted depending on feedback, offering even more growth potential.
3. Integration with ICEGATE:
Including courier and postal exports into ICEGATE enables exporters to claim benefits under the Foreign Trade Policy. This move simplifies accessing export incentives, making it easier for new EXIM entrepreneurs and digital-first businesses.
4. Building Capacity:
The government aims to onboard artisans, weavers, garment manufacturers, and gems and jewellery designers onto e-commerce platforms, enhancing their global reach through training and capacity-building initiatives.
7. Export Promotion Capital Goods (EPCG) Scheme: New Additions for a Greener Future
The EPCG Scheme is a cornerstone of India's trade promotion efforts, allowing businesses to import capital goods at zero customs duty for export production. The FTP 2023 brings new changes to the scheme, making it more inclusive and environmentally friendly.
1. Expanded Eligibility:
The PM MITRA (Prime Minister Mega Integrated Textile Region and Apparel Parks) scheme is now eligible for benefits under the EPCG Scheme, allowing textile manufacturers to easily upgrade their facilities.
2. Support for the Dairy Sector:
To boost the dairy industry, the sector is now exempt from maintaining an average export obligation, allowing it to upgrade technology without the burden of export requirements.
3. Green Technology Focus:
New items like Battery Electric Vehicles (BEV), Vertical Farming Equipment, Wastewater Treatment Systems, and Green Hydrogen products are eligible for reduced export obligation requirements. This move supports India’s goal of sustainable growth.
Also Read: Influential Factors Affecting International Trade Flows
9. Merchanting Trade: Expanding India’s Role in Global Commerce
The Foreign Trade Policy 2023 introduces provisions for merchanting trade, allowing Indian businesses to act as intermediaries in the global market. Here’s how it works:
1. Expanding Scope:
Indian intermediaries can now facilitate goods trade between two foreign countries without the goods ever touching Indian ports. This provision includes restricted and prohibited items, subject to RBI guidelines.
2. GIFT City as a Merchanting Hub:
The vision is to transform locations like GIFT City into merchanting trade hubs similar to Dubai, Singapore, and Hong Kong. This could make India a key player in global trade without traditional constraints.
Also Read: Affordable Export Documentation Services for All Trade Needs
10. Amnesty Scheme: A Fresh Start for Exporters
The Amnesty Scheme under FTP 2023 aims to reduce litigation and relieve exporters facing challenges in meeting their Export Obligations (EO). It’s part of the broader Vivaad se Vishwas initiative, which seeks to resolve disputes amicably.
1. Resolving Old Cases:
Exporters with pending EO defaults can settle their cases by paying the exempted customs duties in proportion to the unmet obligation. The interest payable is capped at 100% of these duties, offering substantial relief.
2. No Interest on Additional Duties:
Exporters are not required to pay interest on Additional Customs Duty and Special Additional Duty, further reducing their burden.
Why It Matters:
This scheme offers exporters a second chance to start fresh, encouraging compliance while allowing them to focus on new opportunities in global trade.
Simplify Global Trade with Pazago: Aligned with FTP 2023
In alignment with India's Foreign Trade Policy (FTP) 2023, which focuses on ease of doing business, digital transformation, and streamlined trade processes, Pazago emerges as the ideal partner for modern businesses.
As a comprehensive EXIM management platform, Pazago simplifies every stage of the export-import process, ensuring that businesses can easily navigate the complexities of global trade. Here’s how Pazago aligns with the key objectives of the FTP 2023:
Why Pazago Fits the FTP 2023 Vision
1. Digital Management & Automation:
- Manage your entire trade process digitally, from procurement to fulfilment.
- Track shipments in real-time across 110+ countries, cutting down turnaround time (TAT) by 50%.
- Centralise communication with Pazago’s Inbox for smooth coordination and reduced paperwork.
2. Streamlined Customs Clearance:
- Simplify customs clearance with digital processes for schemes like Advance Authorization and EPCG.
3. Efficient Payment Solutions:
- Get priority clearance and low forex rates through Pazago’s partnership with JPMC.
- Receive international payments within 3 hours and remove the $10,000 cap, ensuring smooth cash flow.
- Collect payments directly into your existing current account with ease.
4. Proactive Risk Management:
- Identify risks and bottlenecks like supplier delays with automated alerts.
- Plan inventory effectively with instant updates, ensuring smooth operations.
- It helps exporters manage logistical issues before they affect the bottom line.
5. Cost-Effective Logistics & Shipping:
- Track cargo across 180+ shipping companies in real-time.
- Simplify logistics for Ocean Shipping and in-land transportation with trusted carrier partnerships.
- Plan inventory with real-time delay alerts, ensuring timely deliveries.
- Save up to 20% on costs with optimised cross-border logistics.
6. Document Management & Collaboration:
- Easily create, manage, and collaborate on key trade documents like quotations and certificates of origin.
- Streamline document approvals and reviews, reducing the time to finalise crucial paperwork.
- Keep documents secure in structured folders for quick retrieval.
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