India’s New Foreign Trade Policy 2023 in Effect from April 1: Key Points
duonghanhnguyen 2-04-2023, 05:34

India’s Foreign Trade Policy (FTP) 2023 will be dynamic and open to consultative feedback with a target of US$2 trillion exports by 2030. New export hubs have been announced as well as measures targeting the e-commerce, dairy, and apparel and clothing sectors, among others. The new FTP also seeks the internationalization of domestic currency, and will facilitate global trade payments in rupees.

In a departure from tradition, India’s Foreign Trade Policy (FTP) 2023 will not have a five-year target date. The policy will instead be long-term and dynamic, as the government will make amendments as necessary.

The goal is to reach US$2 trillion exports by 2030 by shifting from an incentives to remission and entitlement-based regime.

India is expected to end the fiscal year 2022-23 with a total of US$760-770 billion worth exports, an improvement over the FY 2022 figure of US$676 billion. This was achieved despite various global headwinds that have disrupted supply chains, slowed export demand, and put pressure on trade shipments.

The Foreign Trade Policy (2015-20) will remain effective until March 31, 2023, with its last extension announced in September 2022. The policy had been extended multiple times due to exigencies caused by the COVID pandemic and concerns of trade and industry stakeholders. Accordingly several amendments and ad hoc revisions had been made.

According to the Director General of Foreign Trade (DGFT), Santosh Sarangi, under FTP 2023, a consultative mechanism to address trade concerns will be added to ensure rolling feedback. Sarangi elaborated that if certain sectors felt neglected by the new policy, they would now have recourse.

The Foreign Trade Policy 2023 will achieve better export promotion by fostering partnerships between exporters, states, districts, and Indian Missions. The policy will prioritize enhancing the ease of doing business and targets emerging sectors, such as e-commerce and export hubs.

Under FTP 2023, the towns of Faridabad, Moradabad, Mirzapur, and Varanasi have been newly designated as Towns of Export Excellence (TEE) for apparel, handicrafts, handmade carpets and dari, and handloom and handicraft products, respectively. These additions expand the TEE list to 43 towns.

Also, the dairy sector will be exempted from maintaining average export obligations under the new policy.

Further, the special advance authorization scheme has been extended to apparel and clothing. Under the Advance Authorization Scheme, inputs required for manufacturing export products can be imported duty-free. The quantity of input allowed for a given product is based on specific norms defined for that export product by the DGFT, which considers the wastage generated in the manufacturing process. Eligible beneficiaries of the Advance Authorization Scheme include manufacturer exporters or merchant exporters affiliated with supporting manufacturer(s).

FTP benefits have been extended to e-commerce exports to boost their growth to US$200-300 billion by 2030. The value limit for exports through courier service has been raised – from INR 500,000 (US$6081.65) to INR 1 million (US$12,163.30) per consignment. (US$1=INR 82.21.)

The new FTP aims to boost the internationalization of trade in rupees by allowing international trade settlement in India’s currency.

Overall, these changes seek to optimize India’s foreign trade capabilities.

Source: India Briefing