BTL 757 - Foreign Trade Policy 2023-28

 

The Banking Tutor’s Lessons

BTL 757                                                                          24-02-2025

Foreign Trade Policy (FTP) 2023-28

 

The Foreign Trade Policy (FTP) also known as The EXIM Policy is regulated by the Foreign Trade Development and Regulation Act, 1992.

 

In 2004, the EXIM Policy was renamed the Foreign Trade Policy to provide a comprehensive approach to foreign trade in India.

 

The DGFT (Directorate General of Foreign Trade) is the governing body concerning the Foreign Trade Policy.  

 

The Foreign Trade Policy contains guidelines governing the imports and exports of products and services in and out of India.

 

EXIM Policy’s primary objective is to regulate and develop foreign trade by facilitating imports into and exports from India.

 

The Foreign Trade Development and Regulation Act, 1992, provides for the Indian government to announce the Foreign Trade Policy every five years.

 

Each Foreign Trade Policy announced by the Indian Government is valid for five years, and they can amend, enhance or add new provisions to the policy every year on 31 March, taking effect from 1 April.

The Ministry of Finance, in collaboration with the DGFT, its network of regional offices and the Union Minister of Commerce and Industry, announces amendments or changes to the Foreign Trade Policy of India.

 

The Ministry of Commerce announced the recent FTP, which came into effect on 1 April 2023. FTP 2023-2028 seeks to make India an export hub and to integrate India further into global value chains. It creates an enabling ecosystem for exporters, which aligns with India’s vision of becoming ‘Atmanirbhar’.

 

Objectives of Foreign Trade Policy

 

To increase growth in exports and imports in India.

 

To stimulate long-term economic growth by expanding access to components, intermediates, essential raw materials, consumables and capital goods.

 

To improve agriculture service and industry competitiveness, create new employment opportunities and encourage attaining internationally accepted quality standards.

 

To supply high-quality goods and services at an affordable cost.

 

To encourage economic expansion by providing access to necessary raw materials, capital goods, installations, consumables, intermediate products and essential elements for expanding production and providing services.

To improve the technological productivity and potency of Indian agriculture, services and companies, thus enhancing competitive power while creating employment possibilities, and to accomplish globally acknowledged quality norms.

 

To supply consumers with fine-condition services and goods at globally competitive rates.

 

Features of Foreign Trade Policy

 

The features of Foreign Trade Policy 2023, effective from 1 April 2023 to 31 March 2028, are as follows:

 

Process Re-Engineering and Automation

 

The FTP emphasises export development and promotion based on technology interface and principles of collaboration, moving away from an incentive regime to a facilitating regime. The ongoing schemes like EPCG, Advance Authorisation, etc., under the FTP 2015-20 will be continued considering their effectiveness along with technology 2enablement and substantial process re-engineering for facilitating the exporters.

 

Towns of Export Excellence

 

Four new towns, i.e. Mirzapur, Faridabad, Varanasi, and Moradabad, are designated as Towns of Export Excellence (TEE) along with the existing 39 towns.

The TEEs have priority access to export promotion funds under the MAI (Market Access Initiative) scheme. The TEES can avail of the Common Service Provider (CSP) benefits under the EPCG scheme for export fulfilment, which boosts the exports of handicrafts, handlooms, and carpets.

 

Recognition of Exporters

 

Exporter firms that are recognised based on export performance can be partners in capacity-building initiatives on a best-endeavour basis. Two-star and above status holders are encouraged to give trade-related training to interested individuals based on a model curriculum.

 

Promoting Export from the Districts

 

The FTP aims to build partnerships with State Governments and take forward the DEH (Districts as Export Hubs) initiative for promoting district-level exports and accelerating the development of the grassroots trade ecosystem.

 

Streamlining SCOMET Policy

 

There is a broader outreach and understanding of the SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) among stakeholders. The FTP is being made more robust to implement international agreements and treaties entered into by India. A robust export control system would provide access to dual-use high-end technologies and goods to Indian exporters while facilitating exports of controlled technologies or items under SCOMET from India.

Facilitating e-Commerce Exports

 

FTP outlines the roadmap for establishing e-commerce hubs and related matters, such as bookkeeping, returns policy, payment reconciliation and export entitlements.

 

Rationalisation of the Export Promotion of Capital Goods (EPCG) Scheme

 

The EPCG scheme, which allows capital goods imports at zero customs duty for export productions, are being further rationalised. PM MITRA (Prime Minister Mega Integrated Textile Region and Apparel Parks) scheme is added as an additional scheme to claim benefits under the CSP (Common Service Provider) scheme of EPCG.

 

Dairy Sector Exempted from Maintaining Average Export Obligation

 

Dairy sectors are exempted from maintaining the average export obligation to support them in upgrading technology. Vertical farming equipment, Battery Electric Vehicles (BEV) of all types, rainwater harvesting systems and rainwater filters, wastewater treatment and recycling, and green hydrogen are added to green technology products and are eligible for reduced export obligation requirements under the EPCG scheme.

 

Merchanting Trade

 

Under the FTP, merchanting trade of prohibited and restricted items is possible. Merchanting trade involves the shipment of goods from a foreign country to another foreign country without touching Indian ports by involving an Indian intermediary. However, it will be subject to compliance with the RBI guidelines.

This will allow Indian entrepreneurs to convert places like GIFT City into major merchanting hubs, like certain places in Singapore, Dubai and Hong Kong.

 

Amnesty Scheme

 

The government introduced a special one-time Amnesty scheme under the FTP 2023 to address export obligation defaults. This scheme provides relief to exporters who are not able to meet their obligations under the EPCG and Advance Authorisation scheme and are burdened by interest costs and high duty associated with pending cases. The interest payable is capped at 100% of the exempted duties. 

 

Facilitation Under the Advance Authorisation Scheme

 

The advance authorisation scheme provides duty-free raw material imports for manufacturing export items and is similar to the EOU and SEZ schemes.

 

Importance of FTP

 

It emphasises trade facilitation through digitisation and technology, promotes e-commerce, and facilitates exports..

 

It plays a significant role in accelerating the economic flow of trade activities from a country to India by making the Indian economy globally oriented.

 

It plays a critical role in expanding global market opportunities.

 

It helps to increase the gross domestic product of India.

 

It facilitates the flow of the economy from a country to India and increases foreign exchange in India.

 

It aids in facilitating liberalisation and free trade and improves the overall market for domestic consumers.

 

It plays a role in supplying quality goods at cost-effective prices to domestic consumers and diversifying the market.

 

Sekhar Pariti

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