India's Foreign Trade Policy 2023

For­eign Trade Pol­icy 2023 High­lights#

a. Trade Facil­i­ta­tion and Ease of Doing Busi­ness#

• National Com­mit­tee on Trade Facil­i­ta­tion (NCTF): India has rat­i­fied the World Trade Orga­ni­za­tion’s Trade Facil­i­ta­tion Agree­ment (TFA) in April 2016. To facil­i­tate coor­di­na­tion and imple­men­ta­tion of the TFA pro­vi­sions, an inter-min­is­te­r­ial body i.e. the National Com­mit­tee on Trade Facil­i­ta­tion (NCTF) has been con­sti­tuted.
• DGFT as a facil­i­ta­tor of exports/imports: DGFT has the com­mit­ment to func­tion as a facil­i­ta­tor of exports and imports. The focus is on good gov­er­nance, which depends on effi­cient, trans­par­ent and account­able deliv­ery sys­tems.
• Export of per­ish­able agri­cul­tural prod­ucts: To reduce trans­ac­tion and han­dling costs, a sin­gle win­dow sys­tem to facil­i­tate the export of per­ish­able agri­cul­tural pro­duce is being facil­i­tated through the Agri­cul­tural and Processed Food Prod­ucts Export Devel­op­ment Author­ity (APEDA).
• Niryat Bandhu: As a hand-hold­ing scheme for new export/import entre­pre­neurs, DGFT is imple­ment­ing the Niryat Bandhu Scheme for men­tor­ing new and poten­tial exporters on the intri­ca­cies of for­eign trade.
• Online facil­ity for e-Cer­tifi­cate of Ori­gin (e-CoO): DGFT has cre­ated a com­mon dig­i­tal plat­form for the issue of Pref­er­en­tial and Non-Pref­er­en­tial Cer­tifi­cate of Ori­gin (e-CoO) by des­ig­nated agen­cies.

b. Gen­eral Pro­vi­sions regard­ing Imports and Exports#

• Author­ity to spec­ify pro­ce­dures: DGFT
• Importer-Exporter Code (IEC): An IEC is a 10-char­ac­ter alpha-numeric num­ber allot­ted to an entity (firm/com­pany/LLP, etc.) and is manda­tory for under­tak­ing any export/import activ­i­ties.

c. Devel­op­ing dis­tricts as export hubs#

• 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 a grass­roots trade ecosys­tem.

d. Duty Exemp­tion/Remis­sion Schemes#

• Duty Exemp­tion Schemes. The Duty Exemp­tion schemes con­sist of the fol­low­ing: Advance Autho­ri­sa­tion (AA) (which will include Advance Autho­ri­sa­tion for Annual Require­ment) & the Duty-Free Import Autho­ri­sa­tion (DFIA).
• Duty Remis­sion Scheme. Duty Draw­back (DBK) Scheme, admin­is­tered by the Depart­ment of Rev­enue.
• Scheme for Rebate on State and Cen­tral Taxes and Levies (RoSCTL), as noti­fied by the Min­istry of Tex­tiles.
• Schemes for Remis­sion of Duties and Taxes on Exported Prod­ucts (RoDTEP), noti­fied by the Depart­ment of Com­merce and admin­is­tered by the Depart­ment of Rev­enue.
• Duty-Free Import Autho­ri­sa­tion Scheme (DFIA):
  • Duty-Free Import Autho­ri­sa­tion is issued to allow duty-free import of inputs. In addi­tion, the import of oil and cat­a­lyst which is con­sumed/utilised in the process of pro­duc­tion of export prod­ucts may also be allowed.
  • Import of Tyres under the DFIA scheme is not allowed.

e. Export Pro­mo­tion Cap­i­tal Goods Scheme (EPCG)#

• Facil­i­ta­tion under the Export Pro­mo­tion of Cap­i­tal Goods (EPCG) Scheme:
  • The EPCG Scheme, which allows the import of cap­i­tal goods at zero cus­toms duty for export pro­duc­tion, is being fur­ther ratio­nal­ized. Some key changes being added are:
    • The PM MITRA scheme has been added as an addi­tional scheme eli­gi­ble to claim ben­e­fits under the CSP (Com­mon Ser­vice Provider) Scheme of the Export Pro­mo­tion Cap­i­tal Goods Scheme (EPCG).
    • Bat­tery Elec­tric Vehi­cles (BEV) of all types, Ver­ti­cal Farm­ing equip­ment, Waste­water Treat­ment and Recy­cling, Rain­wa­ter har­vest­ing sys­tem and Rain­wa­ter Fil­ters, and Green Hydro­gen are added to Green Tech­nol­ogy prod­ucts – will now be eli­gi­ble for reduced Export Oblig­a­tion require­ment under EPCG Scheme.
• Amnesty Scheme:
  • Amnesty Scheme under the FTP 2023 to address default on Export Oblig­a­tions.
  • This will pro­vide relief to exporters who have been unable to meet their oblig­a­tions under EPCG and Advance Autho­riza­tions, and who are bur­dened by high duty and inter­est costs asso­ci­ated with pend­ing cases.

f. Export Ori­ented Units (EOUs), Elec­tron­ics Hard­ware Tech­nol­ogy Parks (EHTPs), Soft­ware Tech­nol­ogy Parks (STPs) and Bio-Tech­nol­ogy Parks (BTPs)#

• Units under­tak­ing to export their entire pro­duc­tion of goods and ser­vices (except per­mis­si­ble sales in the Domes­tic Tar­iff Area), may be set up under the Export Ori­ented Unit (EOU) Scheme, Elec­tron­ics Hard­ware Tech­nol­ogy Park (EHTP) Scheme, Soft­ware Tech­nol­ogy Park(STP) Scheme or Bio-Tech­nol­ogy Park (BTP) Scheme for man­u­fac­ture of goods.
• The objec­tives of these schemes are to pro­mote exports, enhance for­eign exchange earn­ings, attract invest­ment for export pro­duc­tion and employ­ment gen­er­a­tion.
• Facil­i­ta­tion under Advance Autho­riza­tion Scheme:
  • Advance Autho­ri­sa­tion Scheme accessed by DTA (Domes­tic tar­iff area) units pro­vides duty-free import of raw mate­ri­als for man­u­fac­tur­ing export items and is placed at a sim­i­lar foot­ing to EOU and SEZ Scheme.

g. Qual­ity Com­plaints and Trade Dis­putes#

• Com­plaints/Dis­putes between two or more Indian enti­ties are not cov­ered under this mech­a­nism. Sim­i­larly, com­plaints/dis­putes between two or more for­eign enti­ties are also not cov­ered.
• Mech­a­nism for han­dling Com­plaints/Dis­putes:
  • Com­mit­tee on Qual­ity Com­plaints and Trade Dis­putes (CQCTD): It will be con­sti­tuted in the Regional Author­i­ties (RAs) of DGFT.
  • Com­po­si­tion of the CQCTD: The CQCTD would be con­sti­tuted under the Chair­per­son­ship of the Head of Office.
  • Func­tions of CQCTD: The Com­mit­tee (CQCTD) will be respon­si­ble for enquir­ing and inves­ti­gat­ing all qual­ity-related com­plaints and other trade-related com­plaints falling under the juris­dic­tion of the respec­tive RAs.

h. Pro­mot­ing Cross-bor­der Trade in Dig­i­tal Econ­omy#

• Facil­i­tat­ing E-Com­merce Exports:
  • FTP 2023 out­lines the intent and roadmap for estab­lish­ing e-com­merce hubs and related ele­ments such as pay­ment rec­on­cil­i­a­tion, book­keep­ing, returns pol­icy, and export enti­tle­ments.
  • The con­sign­ment-wise cap on E-Com­merce exports through courier has been raised from ₹5 Lakh to ₹10 Lakh in the FTP 2023.
  • Dak Ghar Niryat Kendras shall be oper­a­tionalised through­out the coun­try to work in a hub-and-spoke model with For­eign Post Offices (FPOs) to facil­i­tate cross-bor­der e-Com­merce and to enable arti­sans, weavers, crafts­men, MSMEs in the hin­ter­land.
  • Inte­gra­tion of Courier and Postal exports with ICE­GATE will enable exporters to claim ben­e­fits under FTP.

i. SCOMET: Spe­cial Chem­i­cals, Organ­isms, Mate­ri­als, Equip­ment And Tech­nolo­gies#

• Stream­lin­ing SCOMET Pol­icy:
  • More empha­sis on the “export con­trol” regime for bet­ter inte­gra­tion with export con­trol regime coun­tries.
  • A robust export con­trol sys­tem in India would pro­vide access to dual-use high-end goods and tech­nolo­gies to Indian exporters while facil­i­tat­ing exports of con­trolled items/tech­nolo­gies under SCOMET from India.

Impact of New For­eign Trade Pol­icy 2023 on Export#

• FTP 2023 has some pro­vi­sions that will specif­i­cally help MSMEs.
  • It has reduced the thresh­old of min­i­mum exports required for the recog­ni­tion of exporters as sta­tus hold­ers.
  • Now, many smaller exporters can achieve higher sta­tus and avail of ben­e­fits that will reduce trans­ac­tion costs. User charges have also been reduced for MSMEs under the pop­u­lar Advance Autho­ri­sa­tion and EPCG schemes and all charges have been brought within ₹5,000. It will boost MSME exports.
• Ini­tia­tives such as dis­tricts as export hubs and the pro­mo­tion of e-com­merce exports have the poten­tial of trans­lat­ing into more exports.
• The FTP has also tried to make life eas­ier for exporters and traders, specif­i­cally MSMEs, in a num­ber of ways. Mea­sures have been announced to improve the ease of doing busi­ness through a reduc­tion in trans­ac­tion costs and e-ini­tia­tives.
• Since fis­cal incen­tives are out of the reck­on­ing because of WTO restric­tions, FTP 2023 focuses on the con­tin­u­a­tion of duty remis­sion schemes that are WTO com­pli­ant. That the FTP does not come with an end date is of great com­fort to the indus­try.
• No uncer­tainty regard­ing the con­tin­u­a­tion of input duty remis­sions schemes.
• RoDTEP and RoSCTL, and timely pay­ments by the gov­ern­ment, will help exporters do their busi­ness with more con­fi­dence.
• Amnesty Scheme under the FTP 2023 will address default on Export Oblig­a­tions and boost exports.

Key terms#

For­eign Trade Pol­icy (FTP)

For­eign Trade Pol­icy is the prime pol­icy that lays down sim­ple and trans­par­ent pro­ce­dures which are easy to com­ply with and admin­is­ter for effi­cient man­age­ment of for­eign trade in India.

Com­mon ques­tions#

Why do we need a for­eign trade pol­icy?#

A for­eign trade pol­icy gives exporters and importers clear, sta­ble rules and incen­tives, so that trade serves the coun­try's needs. It is essen­tially the frame­work of guide­lines for imports and exports.