Context: Ministry of Commerce has unveiled a New Trade Policy, 2023.
About Foreign Trade Policy (FTP):
- It is a set of rules and procedures for facilitating imports into, augmenting exports from India and creating favourable balance of payment position.
- Department of Commerce looks in formulation and monitoring of FTP.
- Powers to formulate a FTP policy or EXIM policy lies under the Foreign Trade Development and Regulation Act, 1992.
- Director General of Foreign Trade implements FTP
Foreign Trade Policy – 2015-2020:
- Increase India’s exports of merchandise and services to USD 900 billion by 2019-20
- Raise India’s share in world exports from 2% to 3.5%.
- Stable and sustainable policy environment
- Export Promotion Mission for India;
- Diversification of India’s export basket
- Achieve global competitiveness
- Better integration with major regions and countries,
- Provide boost to Make in India initiative;
- To rationalize imports
- Reduce the trade imbalance.
- FTP 2015-20 introduces two new schemes, namely ‘Merchandise Exports from India Scheme (MEIS)’ for export of specified goods to specified markets and ‘Services Exports from India Scheme (SEIS)’ for increasing exports of notified services.
- Duty credit scrips issued under MEIS and SEIS and the goods imported against these scrips are fully transferable.
- For grant of rewards under MEIS, the countries have been categorized into 3 Groups, whereas the rates of rewards under MEIS range from 2 per cent to 5 per cent. Under SEIS the selected Services would be rewarded at the rates of 3 per cent and 5 per cent.
- Measures have been adopted to nudge procurement of capital goods from indigenous manufacturers under the EPCG scheme by reducing specific export obligation to 75per cent of the normal export obligation.
- Measures have been taken to give a boost to exports of defense and hi-tech items.
- E-Commerce exports of handloom products, books/periodicals, leather footwear, toys and customised fashion garments through courier or foreign post office would also be able to get benefit of MEIS (for values up to INR 25,000).
- Manufacturers, who are also status holders, will now be able to self-certify their manufactured goods in phases, as originating from India with a view to qualifying for preferential treatment under various forms of bilateral and regional trade agreements. This ‘Approved Exporter System’ will help manufacturer exporters considerably in getting fast access to international markets.
- A number of steps have been taken for encouraging manufacturing and exports under 100 per cent EOU/EHTP/STPI/BTP Schemes. The steps include a fast track clearance facility for these units, permitting them to share infrastructure facilities, permitting inter unit transfer of goods and services, permitting them to set up warehouses near the port of export and to use duty free equipment for training purposes.
- 108 MSME clusters have been identified for focused interventions to boost exports. Accordingly, ‘Niryat Bandhu Scheme’ has been galvanised and repositioned to achieve the objectives of ‘Skill India’.
- Trade facilitation and enhancing the ease of doing business are the other major focus areas in this new FTP. One of the major objective of new FTP is to move towards paperless working in 24×7 environment.
Why do we need a new Trade policy?
- Policy of 2015 is old now and has been on extension for two years.
- New sectors are making their mark: E-commerce, IT, mobile apps etc.
- India’s export growth has not been very promising (missed last targets)
- India’s trade deficit is ever widening.
- Poor diversification of exports with respect to destinations and composition.
- Poor performance of Free Trade agreements signed with partner nations.
- New policies and schemes are not in line with Policy of 2015: Development of Enterprise and Service Hubs (DESH) Bill, One District One Product, etc.
- Previous policy missed on the skill development with respect to external sector.
- India needs to take advantage of Transition goods and network goods.
New Trade Policy 2023:
Target: to take India’s exports to 2 trillion dollars by 2030.
4 pillars of FTP 2023: Incentive to Remission, Export promotion through collaboration, Ease of doing business and Emerging Areas.
1. Process Re-Engineering and Automation: The policy emphasizes export promotion and development, moving away from an incentive regime to a regime which is facilitating, based on technology interface and principles of collaboration.
2. Towns of Export Excellence: Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, have been designated as Towns of Export Excellence (TEE) in addition to the existing 39 towns. The TEEs will have priority access to export promotion funds under the Market Access Initiative scheme and will be able to avail Common Service Provider (CSP) benefits for export fulfilment under the EPCG Scheme. This addition is expected to boost the exports of handlooms, handicrafts, and carpets.
3. Recognition of Exporters: Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavor basis. Similar to the ‘each one teach one’ initiative, 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals.
4. Promoting export from the districts: The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative to promote exports at the district level and accelerate the development of grassroots trade ecosystem. Efforts to identify export worthy products & services and resolve concerns at the district level will be made through an institutional mechanism – State Export Promotion Committee and District Export Promotion Committee at the State and District level, respectively.
5. Streamlining SCOMET Policy: A robust export control system in India would provide access of dual-use High end goods and technologies to Indian exporters while facilitating exports of controlled items/technologies under SCOMET from India.
6. Facilitating E-Commerce Exports: FTP 2023 outlines the intent and roadmap for establishing e-commerce hubs and related elements such as payment reconciliation, book-keeping, returns policy, and export entitlements. As a starting point, the consignment wise cap on E-Commerce exports through courier has been raised from ₹5Lakh to ₹10 Lakh in the FTP 2023. Depending on the feedback of exporters, this cap will be further revised or eventually removed. Extensive outreach and training activities will be taken up to build capacity of artisans, weavers, garment manufacturers, gems and jewellery designers to onboard them on E-Commerce platforms and facilitate higher exports.
7. Facilitation under Advance authorization Scheme: Special Advance Authorisation Scheme extended to export of Apparel and Clothing sector under para 4.07 of HBP on self-declaration basis to facilitate prompt execution of export orders – Norms would be fixed within fixed timeframe. Benefits of Self-Ratification Scheme for fixation of Input-Output Norms extended to 2 star and above status holders in addition to Authorised Economic Operators at present.
8. Merchanting trade: FTP 2023 has introduced provisions for merchanting trade. Merchanting trade of restricted and prohibited items under export policy would now be possible. Merchanting trade involves shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary.
9. Amnesty Scheme: government is strongly committed to reducing litigation and fostering trust-based relationships to help alleviate the issues faced by exporters. In line with “Vivaad se Vishwaas” initiative, which sought to settle tax disputes amicably, the government is introducing a special one-time Amnesty Scheme under the FTP 2023 to address default on Export Obligations. All pending cases of the default in meeting Export Obligation (EO) of authorizations mentioned can be regularized on payment of all customs duties that were exempted in proportion to unfulfilled Export Obligation.
To watch in-depth analysis on New Foreign Trade Policy 2023, watch the Daily New Simplified dated 01, April 2023. Follow the link given below: