Foreign Trade Policy 2023

• The Foreign Trade Policy (FTP) 2023 was recently introduced by the Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution, and Textiles. It takes effect on April 1, 2023.

About

• The new strategy, which replaces the previous one that had been in effect since 2015 and takes effect in 2023–2024, intends to virtually triple India's exports of products and services from an anticipated $760 billion in 2022–2024 to $2 trillion by 2030.
• The Old Policy allowed for a 75% increase in exports, from $435 billion in 2015–16 to $760 billion in 2022–23.
• India's global market share in goods and services exports is extremely low, and the government wants to increase it to 7% to 10%.
• The goal of the policy, which is founded on the ideas of partnership and trust with exporters, is process automation and re-engineering to make it easier for exporters to conduct business.

The Key Approach is built upon four pillars:

• the Incentive to Remission, Export Promotion through Collaboration - Exporters, States, Districts, Indian Missions, Ease of Doing Business, Reduction in Transaction Cost and E-Initiatives, and
• Emerging Areas - E-Commerce Developing Districts as Export Hubs, and Simplifying Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) Policy.

Provision

• The new policy won't have an expiration date and will be adjusted in response to comments from the sector and the changing global trade environment. Although the policy will be perpetual, the schemes it will sanction will have a deadline.
• There are no significant new policies that permit the import of capital goods subject to specific export obligations, with the exception of a one-time pardon under the existing Advance Authorisation and Export Promotion Capital Goods (EPCG) programmes.
• A new prospective export market called "merchanting trade" has been made possible by the Policy.
• In the merchanting trade, a middleman from India is used to transfer products from one foreign country to another without ever entering Indian ports. This will also permit the export of prohibited products.
• Process Re-Engineering and Automation: The strategy places an emphasis on export development and promotion, shifting from an incentive regime to a regime that is facilitating, based on technological interface and collaborative principles.
• It will be simpler for MSMEs and others to receive export benefits thanks to reduced fee structures and IT-based programmes.
• Regional Offices will now administer duty exemption programmes for export production in a rule-based IT system environment, doing away with the requirement for manual interface.

Towns of Export Excellence (TEE):

• Together with the 39 already designated towns, four additional towns—Faridabad, Mirzapur, Moradabad, and Varanasi—have been given TEE status
• Developing Partnerships with State Governments and Moving Forward with the Districts as Export Hubs Initiative: The FTP aims to develop partnerships with State governments and move forward with the Districts as Export Hubs (DEH) initiative to promote exports at the district level and expedite the growth of the grassroots trade ecosystem.
• Via an institutional system, the State Export Promotion Committee and District Export Promotion Committee at the State and District levels, respectively, will work to identify export-worthy goods and services and address issues at the district level.
• For each district, district-specific export action plans defining the district-specific strategy to encourage export of designated goods and services must be produced.

Goals and Objectives:

• By 2030, the government wants to double the value of all exports from India to USD 2 trillion, with equal contributions from the goods and services sectors.

• The RBI's new payment settlement structure, which it announced in July 2022, will help the government promote the use of the Indian rupee in international trade.

• With nations with which India has a trade surplus, this might be especially helpful.

Challanges

• Due to the extensive documentation requirements, the export process in India takes longer than in many other nations. For each step of the shipping procedure, Indian exporters are required to prepare a substantial number of paperwork.

• Planning ahead is also necessary due to the fact that certification authorities are not always on duty or open on weekends in Indian ports.

• India's weakest link is its inadequate infrastructure. India received a score of 68.1 in the 2019 ranking of 100 nations by data company Statista based on the quality of their infrastructure. In order to put this into perspective, top-ranked Singapore scored 95.4, while Bolivia, which is currently in last place, got 57.1, lagging by about 10 points behind India.

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