FOREIGN TRADE POLICY 2023

Mitali Nishad,

Deen Dayal Upadhyaya University, Gorakhpur

INTRODUCTION

- Before the introduction of Foreign Trade Policy (FTP) 2023, FTP 2015-20  was functional.

- The tenure of Foreign Trade Policy 2015-20 had been completed on 31st The tenure of Foreign Trade Policy 2015-20 had been completed on 31st March 2020, but - Before the introduction of Foreign Trade Policy (FTP) 2023, FTP 2015- 20 was functional. Due to the COVID-19 scenario, Foreign Trade Policy 2015- 20 has been extended up to 31st March 2023.

- Thus, a new Foreign Trade Policy 2023 was announced on 31st March 2023 by the respected Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, “Shri Piyush Goyal”.

- This Foreign Trade Policy is going to be applicable for an indefinite period and there is no sunset clause in this policy. i.e. will remain in effect until any further notice or amendments.

- The Central Government will amend the Foreign Trade Policy as it seems fit in the public interest, as per power conferred under section- 3 and section- 5 of the Foreign Trade (Development and Regulation) Act, 1992.

- Foreign Trade Policy 2023, based upon the principle of 'Trust and Partnership' in which exporters aim at the process of Re-engineering and Automation.

- This policy aims to increase India's overall exports to USD 2 trillion by 2030.

- It boosts exports, supports steady economic growth, and creates favorable conditions for trade.

BACKGROUND OF FOREIGN TRADE POLICY (FTP 2015-12)

- This policy helps in increasing exports of goods and services, employment generation, and value addition in the country, and by adopting the theme of "Make in India".

- The 2015- 20 policy introduced the 'Special Economic- Zones'.

- It expanded the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS).

- The nomenclature of Export houses was simplified by merging various schemes into a single Merchandise Export from India Scheme (MEIS).

- To resolve the trade disputes between exporters and importers, a new chapter on Quality Complaints and Trade Disputes was introduced.

FOUR PILLAR OF FOREIGN TRADE POLICY 2023

- Incentive to Remission

- Export promotion through collaboration

- Ease of doing business

- Emerging areas

INCENTIVE TO REMISSION (reduction/ cancellation of a debt, duty or penalty)

(A) - Introduction of Duty Remission Scheme:

 Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) and Remission of State and Central Taxes and Levies (RoSCIL) notified with the objective to remit the taxes as paid on the notified goods exported.

(B)- Continuation of Duty Exemption Schemes:

Duty-free input of raw material from an overseas supplier or through a domestic supplier is ensured through the Advance Authorisation (AA)/ Duty-Free Import Authorisation (DFIA) scheme. Technological Upgradation through duty-free import or indigenous sourcing of capital goods under the Export Promotion Capital Goods (EPCG) scheme.

EXPORT PROMOTION THROUGH COLLABORATION

This policy focuses on collaboration between exporters, districts, states, and Indian missions abroad to promote exports. With the help of this collaboration, challenges faced by exporters can be identified and it also uplifts the strategies of exports.

EASE OF DOING BUSINESS

Digitalization of applications pertaining to Foreign Trade Policy :

Export promotion schemes processes for managing the lifecycle of Advance Authorisation (AA) / Export Promotion Capital Goods (EPCG) / Duty-Free Import Authorisation (DFIA) / Import/ Export Licensing made completely paperless and online.

By reducing paperwork and documentation requirements, this policy simplifies the process of export which results in reducing the time and cost of exportation. It makes it easier for exporters to do business.

EMERGING AREAS

High-tech manufacturing, pharmaceuticals, and e-commerce are some emerging areas of export on which the foreign Trade Policy focuses. These sectors having high growth potential, help to position India as a leader. E-commerce developing Districts as Export Hubs and streamlining SCOMET policy.

MAIN FEATURES OF FOREIGN TRADE POLICY 2023

- Target $ 2 Trillion exports by 2030.

- To make the rupee a global currency.

- To make India a Trading Hub.

- Digitalisation and Faster Processing of Application.

- Amnesty Scheme for the shortfall in the export obligation.

- 50% deduction in the threshold for the recognition of Star Trade House.

- It increases revenue through exports and stimulates economic growth. This policy attracts foreign investment by encouraging exports.

- The collaboration with states and districts, facilitates export promotion at the regional level.

- It facilitates the economic growth in a country which increases foreign exchange.

- It improves the overall market for domestic consumers of a country and also aids in facilitating free trade and liberalization.

- Promote sustainable development of the country's trade sector.

TOWNS OF EXPORT EXCELLENCE (TEE)

>Faridabad - Apparel

>Moradabad - Handicrafts

>Mirzapur - Handmade carpets

>Varanasi - Handloom and Handicrafts

Before 2023, the total number of Towns of Export Excellence was 39 but now 4 more Towns of Export Excellence (i.e. Faridabad, Moradabad, Mirzapur, Varanasi) introduced and it has become 43 in number.

Eligibility:

Towns producing goods of Rs.750 crore or more can be recognized as Town of Export Excellence based on potential growth in exports.

The threshold limit is Rs. 150 crore for (TEE) in the Handicraft, Handloom, Agriculture, and Fisheries sectors.

Towns of Export Excellence (TEE) can avail benefits of Foreign Trade Policy as:-

- Financial assistance under the Market Access Initiative (MAI) scheme, on a priority basis for export.

- Entitled to authorisation under the Export Promotion Capital Goods Scheme (EPCG).

EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG)

In the EPCG scheme, capital goods that are imported at zero customs duty for the purpose of export production are being further rationalized. One of the main objectives of the EPCG scheme is to facilitate the import of capital goods for producing quality goods, and services and enhancing India's manufacturing competitiveness.

EPCG scheme allows the importation of capital goods at the stage of pre-production, production, and post-production at zero customs duty. This scheme is not eligible for second-hand capital goods.

Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) Scheme:

This is an additional scheme added in the former scheme which enables to claim of benefits under the CSP (Common Service Provider) scheme of  EPCG.

Battery Electric Vehicle (BEV):

Battery Electric Vehicle of all types, Vertical Farming Equipment, Rainwater Harvesting Systems and Rainwater Filters, Wastewater treatment and Recycling, and Green Hydrogen are added to Green Technology Products which enables for reducing of export obligation requirements under the EPCG scheme.

ADVANCE AUTHORISATION SCHEME (AA)

It is a duty exemption scheme introduced in Chapter- 4 of Foreign Trade Policy that allows duty-free import of raw materials. This scheme was introduced by the government to allow duty-free and tax-free import of raw materials used to manufacture export products. This scheme has been launched with a prime moto of exporting products. With regard to the eligibility both manufacturer exporters and merchant exporters who are tied with supporting manufacturers are eligible to claim the benefits of Advance Authorisation.

STANDARD INPUT-OUTPUT NORMS (SION)

The government has issued (SION) norms for the proper functioning of the scheme. These norms have given an accurate indication of the quantity of raw material allowed to be imported duty-free for manufacturing a single unit of export product.

In order to manufacture the export items, the AAS offers duty-free imports with special provisions for prompt execution of export orders. Benefits are extended to 2- start and above status holders.

AMNESTY SCHEME

This scheme provides relief to exporters who have been unable to make their obligations under the Export Promotion Capital Goods Scheme (EPCG), Advance Authorisations (AA), and who are burdened by high duty and interest costs associated with pending cases.

When an exporter borrows a loan or financial facility from the government for the input of raw materials and capital goods in order to manufacture the products that have to be exported, but later on the exporter is unable to repay that loan then the interest or penalty which has to be charged by the financial institutions will be wave off under this scheme.

The interest payable is capped up to 100% of these exempted duties under this scheme. The scheme is available for a limited period until 30/09/2023.

STREAMLINING SCOMET POLICY

-It is defined under Chapter 10 of the Foreign Trade Policy.

-The policy for exporting dual-use items has been consolidated into one comprehensive document for better understanding and compliance for the industry under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET).

- The SCOMET policy draws attention to India's commitment to export control by aligning with International regimes such as the Wassenaar arrangement, Australia Group, and Missile Technology Control Regime. This ensures the regulation of trade in sensitive and dual-use items and technologies.

- Focus on simplifying policies to facilitate the export of dual-use high-end goods/ technology such as UAV/ Drones, Cryogenic Tanks, certain chemicals, etc.

RECOGNITION OF EXPORTERS

- Same as the "each one teach one" initiative, 2-star and above status holders would be provided with trade-related training based on a model curriculum.

- In order to enable exporting firms to achieve 4 and stars ratings for better branding opportunities in export markets, the status recognition norms have been recalibrated.

- Status provided to the exporter based on export performance.

CONCLUSION

The Foreign Trade Policy 2023, aims at the internationalization of trade in Rupees without any sunset clause as it will be continuously updated as per public interest. It focuses on increasing the exports to $ 2 Trillion by 2030 by using E-Commerce. It develops the districts as Export Hubs along with streamlining the SCOMET policy. Thus, Foreign Trade Policy 2023 (FTP) would help in enhancing the competition of Indian exports in the global market.

REFERENCES

· Annapoorna. (2024, June 19). Foreign Trade Policy of India 2023: Objectives, Highlights & Impact. Cleartax. https://cleartax.in/s/foreign-trade-policy-2023 (last visited June 25,2024)

· Testbook. (2023, August 30). Foreign Trade Policy 2023 - Objectives, Highlights & Impact | UPSC Notes. Testbook. https://testbook.com/ias-preparation/foreign-trade-policy-2023-upsc-notes (last visited June 25,2024)

·Foreign Trade Policy 2023. (n.d.). Drishti IAS. https://www.drishtiias.com/daily-updates/daily-news-analysis/foreign-trade-policy-2023 (last visited June 26,2024)

·Admin. (2023, April 5). Foreign Trade Policy PDF, FTP 2023 announced [UPSC Notes for Economy]. BYJUS. https://byjus.com/free-ias-prep/foreign-trade-policy-2023-upsc-notes/ (last visited June 26,2024)

·Foreign Trade Policy 2023 announced. (n.d.). https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572 (last visited June 26,2024)