Foreign Trade Policy of India 2023: Objectives, Highlights & Impact

The world change­s constantly, and so does India's trade policy to grab chances and me­et needs. The­ foreign trade policy 2023 is part of this change, aiming to up India's game­ globally. This article will explore the key aspects of the new foreign trade policy, discovering its objectives, focus areas, highlights, and benefits.

What is Foreign Trade Policy (FTP) of India?

India's foreign trade­ policy, or FTP, is an essential set of rule­s on how India does business with the­ world. The Directorate Ge­neral of Foreign Trade (DGFT) take­s charge of it. The main goals of India's FTP are to boost exports, create favourable conditions for trade, and support steady economic growth.

Objectives of Foreign Trade Policy

Here are the main objectives of foreign trade policy, which aim to improve how India trades with the world:

Global Integration of India

The goal of the­ foreign trade policy FTP is to combine India with the­ world markets smoothly. It aims to showcase India as a trustworthy trade partne­r globally.

Creating a Supportive Ecosystem

Shifting from incentives, India's foreign trade policy strives to build an environment that supports businesses, in line with the principles of 'Atma Nirbhar Bharat' and 'Local goes Global.'

Preparing for the Future

It's about gearing India up to face future challenges, focusing on making it one of the top exporting nations, especially during the anticipated 'Amrit Kaal' period.

Collaborating with State Governments

Recognising the importance of local efforts, the policy encourages partnerships with state governments to promote exports at the grassroots level.

Tripling India’s Goods and Services Exports

The policy aims to push India's exports up to $2 trillion by 2030. This is a huge jump from the pre­sent $760 billion.

History of Foreign Trade Policy in India

India's foreign trade policy has evolved. Initially, it aimed at self-sufficiency by limiting imports through high tariffs and restrictions. However, reforms in the 1980s and 1990s brought about significant changes, reducing tariffs and opening up to foreign investment. Post-liberalisation, India has continued simplifying trade procedures and focusing on key sectors like IT and manufacturing. Joining regional and global trade agreements has further connected India to the world economy. Recent efforts have focused on making trade easier and boosting India's global trade share, aiming to establish it as a top manufacturing and export destination.

First Foreign Trade Policy of India

Before 1992, India had no foreign trade policy but operated under various laws and regulations. However, the 1992 Export-Import (EXIM) Policy changed this by introducing a comprehensive approach to trade. It reduced tariffs and restrictions, making importing goods easier and attracting foreign investment. The policy also aimed to boost exports by offering incentives and simplifying procedures.

New Foreign Trade Policy Approach

The new foreign trade policy approach changes India's trade strategy. It aims to ensure continuity and responsiveness, with revisions scheduled as needed based on feedback from trade and industry sectors. This new foreign trade policy focuses on tax remission over incentives and emphasises greater trade facilitation through technology and collaboration among exporters, states, and districts. It also targets emerging areas like e-commerce exports and streamlines Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) policies, reflecting a comprehensive approach to India's foreign trade.

Highlights of Foreign Trade Policy 2023

Here are the main foreign trade policy 2023 highlights, focusing on incentives for exporters and collaborative export promotion efforts:

Incentive to Remission

These­ benefits include duty re­funds, the export growth capital equipme­nt plan, the pre-clearance­ scheme, and free trade agreements (FTAs).

Export Promotion through Collaboration

The policy assists in identifying the challenges and devising strategies for increasing exports. Also, it encourages collaboration among the exporters, districts, states and Indian missions outside. 

Ease of Doing Business

The policy simplifies paperwork and documentation processes to make exporting cost-effective and simplified for businesses.

Emerging Areas

The policy seeks to position India as a leading manufacturing, pharmaceutical, and e-commerce player.

Key Features of Foreign Trade Policy 2023

Let's explore the key features of the foreign trade policy 2023, shedding light on significant initiatives aimed at enhancing India's trade ecosystem:

Process Re-Engineering and Automation

The foreign trade policy 2023 prioritises efficiency through automated IT systems, reducing paperwork and streamlining processes. Continuation of schemes like Advance Authorisation and Export Promotion Capital Goods (EPCG) ensures accessibility to export benefits, especially for MSMEs, with reduced fees and simplified procedures.

Towns of Export Excellence

Introducing Faridabad, Mirzapur, Moradabad, and Varanasi as Towns of Export Excellence (TEE) alongside existing ones aims to boost exports, particularly in handlooms, handicrafts, and carpets. These TEEs will receive priority access to export promotion funds and benefit from Common Service Provider (CSP) support under the EPCG Scheme.

Recognition of Exporters

Exporter firms recognised for their performance will engage in capacity-building initiatives. Additionally, exporters with 2-star and above status will impart trade-related training, contributing to India's skilled workforce for economic growth.

Promoting Export from the Districts

Collaborating with State governments, the policy aims to promote district-level exports through the Districts as Export Hubs (DEH) initiative. This involves identifying export opportunities and resolving concerns through State and District Export Promotion Committees.

Streamlining SCOMET Policy

With an enhanced understanding of SCOMET regulations, the policy strengthens compliance with international treaties. This ensures access to advanced goods and technologies for Indian exporters while facilitating controlled exports under SCOMET from India.

Facilitating E-Commerce Exports

Plans for e-commerce hubs and simplified procedures aim to boost e-commerce exports. Increased caps on courier exports and establishing Dak Niryat Facilitation Centers will support artisans, weavers, artisans, and MSMEs in reaching international markets.

Facilitation under the EPCG Scheme

The rationalisation of the EPCG Scheme includes exemptions for the dairy sector and reduced obligations for green technology products. The addition of the PM MITRA scheme expands benefits under the EPCG Scheme.

Facilitation under the Advance Authorisation Scheme (AAS)

The Advance Authorisation Scheme offers duty-free imports for manufacturing export items, with special provisions for prompt execution of export orders. Benefits are extended to 2-star and above status holders.

Merchanting Trade

Introducing merchanting trade enables the trade of restricted items without involving Indian ports, aiming to develop India as a merchanting trade hub akin to its global counterparts.

Amnesty Scheme

The one-time Amnesty Scheme addresses defaults on export obligations, relieving exporters burdened by duty and interest costs. Regularisation of pending cases offers exporters a fresh start with capped interest payments.

Impact of Foreign Trade Policy on Import

FTP 2023 streamlines import documentation requirements, reducing processing times through the use of digital technologies and making customs clearance more efficient. It reduces the cargo release time. 

However, there are certain exceptions, such as prohibiting importing gifts through post or courier, including those purchased from e-commerce portals, unless these are life-saving drugs or medicines and rakhi.

The foreign trade policy 2023 lays the groundwork for increase­d trade chances. It values innovation, te­amwork, and easing tasks. By refining procedure­s and introducing specific benefits, the­ policy's goal is to boost exporters, stir up economic progre­ss, and strengthen India's global marketplace­ stance.