External Sector & International Institutions

Govt. vows swifter nod for exporters

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:

Goals: 

  • 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%.

Objectives:

  1. Stable and sustainable policy environment 
  2. Export Promotion Mission for India; 
  3. Diversification of India’s export basket 
  4. Achieve global competitiveness 
  5. Better integration with major regions and countries, 
  6. Provide boost to Make in India initiative; 
  7. To rationalize imports 
  8.  Reduce the trade imbalance.

Features:

  • 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 24x7 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.

Provisions:

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:

EU-India: Trade and Technology Council (TTC)

Aim of the TTC

  • The EU-India Trade and Technology Council (TTC) is a high-level coordination platform, which will allow the EU and India to tackle strategic challenges at the nexus of trade, trusted technology and security, and to deepen their bilateral relationship in these fields. It should help ensure political commitments are implemented on the ground.

Why is it Needed?

  • In a rapidly changing geopolitical environment, the EU and India have a common interest in ensuring security, prosperity and sustainable development based on shared values.
  • The TTC will provide the political steer and the necessary structure to coordinate approaches and advance technical work.
  • To lay the groundwork, both sides have agreed to work on critical areas such as connectivity, green technologies and resilient supply chains.

Format:

  • The TTC will be co-chaired on the EU side by the Executive Vice-Presidents (EVP) of the European Commission in charge of digital technology and trade.
  • The TTC will be co-chaired on the Indian side by the Ministers in charge of External Affairs, Commerce & Industry, and Electronics & Information Technology.
  • Both sides will invite other Members of the College/Ministers to contribute to TTC meetings depending on the issues discussed. When issues to be discussed at the TTC fall under the competences of the High Representative/Vice-President the HRVP will participate in the relevant meeting.
  • Meetings of the TTC will take place at least once a year, with the venue alternating between the EU and India. Meetings of the TTC could take place in person or virtually.
  • Ministerial meetings of the TTC will rely on the preparatory work of three working groups:
    • Strategic technologies, digital governance and digital connectivity: the group will work jointly on areas of mutual interest such as digital connectivity, Artificial Intelligence, 5G/6G, high performance and quantum computing, semiconductors, cloud systems, cybersecurity, digital skills and digital platforms.
    • Green & clean energy technologies: this group will focus on green technologies, including investment and standards, with emphasis on research and innovation. Areas to be explored could be clean energy, circular economy, waste management, plastic and litter in the ocean. It will also foster cooperation between EU and Indian incubators, SMEs and start-ups.
    • Trade, investment and resilient value chains: the group will work on the resilience of supply chains and access to critical components, energy, and raw materials. It will also work to resolve identified trade barriers and global trade challenges by promoting cooperation in multilateral fora. It will work towards promotion of international standards and cooperation on addressing global geopolitical challenges.
  • Ministerial meetings of the TTC will take place at least once a year, with the venue alternating between the EU and India. As of today, the three working groups are established and will begin their cooperation. The first EU-India ministerial meeting is planned to be held in spring 2023.

Way Forward:

  • The partnership with India is one of the most important relationships for the upcoming decade and strengthening this partnership, including through the TTC, is a priority. The cooperation in the TTC should focus on key issues of shared strategic importance, including trade, trusted technology and security, notably in respect of challenges posed by rival governance models. In this context, cooperation on research and innovation are important to unlock potential.
  • The EU-India Trade and Technology Council is the second such bilateral forum for the EU and the first one established with any partner for India. It will complement the Digital Partnerships already launched with Asian partners as part of the EU Strategy for Cooperation in the Indo-Pacific.