Piyush Goyal launches a dynamic FTP 2023, with emphasis on export promotion

Minister for Commerce and Industry, Piyush Goyal, on Friday unveiled India’s new Foreign Trade Policy (FTP) 2023. The policy, which aims to boost the country’s exports to USD 2 trillion by 2030, will shift from incentives to remission and entitlement-based regime. However, this year’s policy has done away with 5 year period clause, and comes with no end date. The ministry plans to update it as and when needed, according to the Director General of Foreign Trade (DGFT) Santosh Sarangi.

The DGFT said that as the financial year ends today, India’s nominal GDP should cross USD 3.5 trillion. With the new FTP 2023 in place, India’s projected GDP growth for the next year i.e. FY23-24 is expected to be around 6.5%. An overview of the growth in exports vis a vis FY22-23 was also provided by the DGFT.

The previous FTP, which has been in operation since FY2020, rationalised many smaller export promotion schemes into two bigger, consolidated umbrella schemes – Merchandise Exports from India Scheme (MEIS) and the Service Exports from India Scheme (SEIS). However, the FTP 2023 has been designed to be completely in sync with WTO prescriptions and workings and the former have been discontinued.

“Considering the size of our economy and our potential, the manufacturing and service industry base, there is a huge potential for exports to grow. At a time when the country is on its ‘Atmanirbhar Bharat’ mission, one of its goals is also to increase India’s share in the global supply chain and in exports, manyfold. The Prime Minister never sets a small goal, it takes leaps and bounds.”

Piyush Goyal,Minister of Commerce and Industry, Minister of Textiles, and Minister of Consumer Affairs, Food and Public Distribution

The DGFT also said that the FTP 2023 takes a change of approach from being incentive based to becoming remission based. It also looks at a more collaborative approach, where exporters, states, districts work together. The MoCI also has focused on improving ease of doing business to reduce transaction cost and enable the exporters with higher technological base.

The FTP 2023 adds Faridabad, Moradabad, Mirzapur and Varanasi to the list of ‘Towns of Export Excellence’, which already has 39 towns listed. This will provide them global recognition and brand credibility. This also entitles these town and the exporters in these towns, to get prioritized approvals under the market access initiative, and will allow some intermediate industries to avail benefits as common service providers under EPCG Scheme.

“The FTP aims to bring stability, continuity and policy certainty for importers and exporters who face various challenges at the global front. Decades of policy uncertainty has impacted India’s economic performance over the years, which makes it essential to have a policy that is dynamic, responds to global changes, and a clear direction and open to amendments as and when required.”

Anupriya Patel, Minister of State for Commerce and Industry of India

According to the DGFT, there has been an increased focus on emerging areas with huge export potential – like e-commerce exports and districts as export hubs. The FTP 2023 benefits have been extended to e-commerce exports, which are estimated to grow to USD 200-300 billion by 2030. The value limit for exports through courier service is being increased from INR 5 lakh to INR 10 lakh per consignment, he said.

The new FTP 2023 also seeks to make the Indian rupee a global currency and allow international trade settlement in the domestic currency. The DGFT said that the overall exports, inclusive of merchandise and services, are likely to touch USD 770 billion in FY23, against USD 676 billion in FY22.

Top takeaways from the policy:

  • FTP 2023 to provide the policy continuity and a responsive framework
  • Approach of FTP 2023: From Incentive to Remission
  • Introduces scheme for remission of duties, taxes and govt levies on export goods
  • Digitisation of applications pertaining to FTP 2023
  • Automatic system-based approval of FTP 2023 applications
  • Pilot introduced for cutting processing of applications related to advance authorisation to 1 day
  • Norms for recognition as Star Trading Houses eased
  • Promotes trade in Indian Rupee
  • Introduces provisions for merchanting trade
  • Dairy sector to be exempted from maintaining average export obligation
  • Battery electric vehicles; vertical farming equipment & green hydrogen eligible for reduced obligation under Export Promotion Capital Goods (EPCG) scheme
  • Special advance authorization scheme extended for apparel & clothing sector
  • Focus on engaging with states & districts through Districts as Export Hubs initiative
  • Aims at streamlining export of dual use items under SCOMET policy
  • Introduces amnesty scheme for one-time settlement of default in export obligation by advance authorisation and EPCG authorisation holders
  • Restructuring of Department of Commerce on the anvil to make it future-ready

More updates coming soon!

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