FOREIGN TRADE POLICY (FTP) 2023

 The new Foreign Trade policy announced by Commerce Minister target $2 trillion in goods and services exports by 2030 from $ 760 billion in 2022-23.FTP 2023 is being announced to provide the policy continuity and a responsive framework.Subsequent revision (s) in the FTP shall be done as and when required without any  specific date. a focus on boosting e-commerce exports at least 10% of the total goods and services exports. The new policy shifts from an "incentive based regime "to a regime of "remission and entitled based regime " making it compliant with World Trade Organisation (WTO) rules.Greater FTP focuses on making districts export hubs.ease of doing business, and a one time special  amnesty scheme for default in export obligations.It focuses on lowering costs costs for smaller firms also by offering swifter clearances. Policy allows for adjustment based on world trade industry feedback in addition to export promotionE initiatives like encouraging international trade settlement in Indian rupee. 

Apart from shifting from traditional incentives to tax remission the new FTP approach provides greater trade facilitation through technology, automation, and continous process re- engineering. Export promotion through collaboration between exporters states and districts are required. Focus on emerging areas like E-commerce exports, developing districts as export hubs  streamlining SCOMET policy. Majo salient features of FTP 2023 are 1.Ease of doing business, reduction in transaction costs and E - initiatives. Online automatic approvals without without physical interface Automatic approval of various permissions under FTP based on process simplification and technology implementation. Reduction in processing time and immediate approval of applications under automatic route for exporters. The policy also offers reduction in user charges for Micro Small and Medium Enterprises (MSMES) under Advance Authorization (AA) and Export Promotion Capital Goods EPCG schemes which will benefit 55-60% of MSME exporters.Revamp of the e- certificate of origin platform is proposed along with envisaged initiatives for electronic exchange of data with partner countries.Paperless filing of export obligation discharge applications are also introduced. Merchandise trade involving shipment of goods from one foreign country to another foreign country without touching our Indian ports, involving an Indian intermediary is allowed subject to compliance with RBI guidelines except for items in the CITES and SOMET list. Internationalisation of rupee is encouraged by accepting rupee payment under FTP schemes.FTP benefits extended for rupee realizations through special Vostro Accounts setup as per RBI circular dated 11 July 2022.Four new towns of export excellence(TEE)namely Faridabad(apparel)Moradabad(Handicrafts)Mirzapur(Handmade Carpet and Dari)Varanasl(Handloom And Handicrafts)are declared in addition to the already existing 39 towns of export excellence to give thrust to cluster based economic development. Preparation of District Export Action Plans (DEAPs) outlining the action plan to promote identified products and services which make states and Districts meaningful stake holders and active participants.Export promotion outreach programs in districts to focus on branding, packaging, design and marketing of identified products and services will be encouraged. In a green push new FTP provides electric vehicles, vertical farming equipment, waste water treatment, rain water harvesting systems, and green hydrogen eligibility for reduced export obligation requirement under EPCG scheme.Above all infrastructure and logistics development intervention to address infrastructure and logistics bottlenecks impending exports are being addressed on a priority basis

.Briefly the main highlights of FTP 2023 is to identify 100 districts to develop as Export hubs, focus on both goods and services trade and cover multiple products and service amnesty scheme for exporters to cut disputes and export obligation under EPCG scheme, to promote green products, Digitalisation and faster processing of applications and trade settlement in rupee and making rupee a global currency. It may be noted here that unlike previous FTPs there is no end - date to FTP 2023 so as to make it updated as and when required.  Most importantly the policy approach is to move away from an incentive based regime to a remission of of taxes regime which exporters and commentators largely appreciated. The ease of doing business by digitising applications, reducing time lines for processing applications, lowering transactions costs and about 55% to 60% benefits to MSMEs due to various schemes are a marked departure from earlier policies. E commerce exports are set to grow to$200-300 billion from $ 2.5 billion now. E-commerce exports require paradigm shift tailored to leverage the tremendous opportunities that lies ahead of India. Development of appropriate regulatory ecosystem which is supportive of the digital economy and technology driven exports is a positive move in the right direction .Increase in value limit for exports now announced through courier service to ₹10 lakhs per consignment from ₹5 lakhs is bound to increase exports. Although services exports are doing well merchandise exports are lagging far behind for which more concerted efforts are required primarily because of their higher employment generation potential. More proactive targets in E-commerce MSMEs women entrepreneurs and crafts men are to be encouraged with appropriate backups. Simplification of procedures, Digitalisation,rationalization and transparency are also attempted. Even Though internationalisation of rupee and trade in Indian rupee is a good intention its realisation depend on not only existing geopolitical economic conditions but also our macroeconomic fundamentals including income output and employment growth and price and balance of payment stability.