In a decisive move to boost the country’s exports to USD 2 trillion by 2030, the Government on Friday unveiled an ambitious and much-awaited Foreign Trade Policy (FTP) 2023.
The policy aims at shifting the gears of trade from incentives based system to promoting exports from the grassroots. The policy comes timely when India’s overall exports, including services and merchandise exports, have already crossed USD 750 billion and is expected to cross US$ 760 billion this year, as pointed out by Commerce & Industry Minister Piyush Goyal.
“Every opportunity for export must be captured and utilised effectively. In the next 5 months during India’s G20 presidency there should be a massive concentrated outreach with the world both sector-wise and country-wise,” Goyal said launching the FTP. According to Santosh Sarangi, Director General of Foreign Trade (DGFT), India is likely to end this fiscal year with total exports of USD 760-770 billion as against USD 676 billion in 2021-22. The last five-year policy came into force on April 1, 2015. However, it was extended several times in the wake of coronavirus outbreak and subsequent disruptions in economic activities globally. The last extension was given in September 2022 till March 31, 2023.
Breaking new ground on the FTP, the Commerce Ministry has ushered in a ‹long term› focus rather than a five-year approach keeping the door open for updation as and when necessary. Further, the new policy will be shifting from incentives to a remission and entitlement-based regime to make the process dynamic, pointed out Sarangi.
“There is no end date to ensure when we have feedback, we will keep changing this document and update it. If there is a sector which feels this FTP does not have anything for them, don›t feel disappointed,» added Sarangi. In this context, the FTP has introduced a scheme for remission of duties, taxes and govt levies on export goods. The Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) and Remission of State and Central Taxes and Levies (RoSCTL) has been notified, allowing remission of the taxes paid on the notified goods exported.
ASSOCHAM Secretary General Deepak Sood feels this would allow both the industry and the policy makers to stay nimble. “A new thinking is clearly visible in the foreign trade policy that shifts focus from incentives to remissions so that we don›t end up exporting taxes and levies. The change in approach would make a huge difference in making Indian exports competitive in the world market,” said Sood.
For Federation of Indian Export Organisations President A Sakthivel, the FTP has rightly emphasised on ease of doing business with reduction in transaction cost and e-initiatives. “Online approvals with physical interface, reduction in user charges for MSMEs under AA and EPCG, E-certificate of origin, paperless filing of export obligation discharge applications will not only reduce the transaction time and cost for the exporters but will also help them in timely discharge of the export contract, says Sakthivel.
As part of focus on e commerce, the FTP benefits have been extended to such exports, the value limit for exports through courier service has been increased from Rs 5 lakh to Rs 10 lakh per consignment and guidelines are being formulated in consultation with other ministries to facilitate further exports under e-commerce.
In a major step to boost manufacturing, battery electric vehicles, vertical farming equipment and green hydrogen have been made eligible for reduced obligation under Export Promotion Capital Goods (EPCG) scheme. Moreover, dairy sector will be exempt from maintaining average export obligation to support dairy sector to upgrade the technology.
Special advance authorization scheme has also been extended for apparel and clothing sector to facilitate prompt execution of export orders. “License fees have been lowered for MSMEs and the export turnover has been lowered for 5-star export house,” points out Naren Goenka, Chairman of Apparel Export Promotion Council. “Such steps will go a long way in boosting India’s exports. In addition, PM MITRA scheme has been added as an additional scheme eligible to claim benefits under common service provider scheme of EPCG which will help the parks.
To promote exports, four new Towns of Export Excellence (TEE) — Faridabad, Moradabad, Mirzapur and Varanasi — are being declared in addition to the already existing 39 towns of export excellence which will give thrust to cluster based economic development. This decentralized approach will help the growth of exports in the rural belts of the country, thereby creating a large number of jobs, pointed out Colin Shah, MD, Kama Jewellery.
The hike in the value limit for exports through couriers will help boost international trade. The. One of the key priorities of this government is to boost exports that are closely linked to MSMEs, manufacturing, and the economy at large,”
In another pathbreaking measure, the FTP has introduced merchanding trade reform which opens huge opportunities for the trading community. Now, a person sitting in India can buy in one country and ship to the other country.
According to Engineering Exports Promotion Council India Chairman Arun Kumar Garodia, the FTP is pragmatic and positive and this step will promote exports of both merchandise and services in a big way as well as help MSMEs become part of the global value chain.