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Foreign Trade Policy 2023

Foreign Trade Policy 2023

Recently, vide notification no. 01/2023 dated 31^st March 2023, the Foreign Trade Policy 2023 was notified. The newly launched Foreign Trade Policy 2023 is made effective from 1^st April 2023.

Importantly, Foreign Trade Policy (FTP) is basically a set of guidelines, instructions and procedures laid down by the Director General of Foreign Trade for matters relating to the import as well as export of goods in India.

Notably, the Foreign Trade Policy 2023 is based on the following four pillars –

1. Incentive to remission;
2. Export promotion via collaboration – Exporters, Districts, States, Indian Mission;
3. Ease of doing business, reduction in the cost of transportation and e-initiatives;
4. Emerging Area – E- Commerce exports, Streamlining SCOMET policy, Developing Districts as Export Hubs, etc.

Foreign Trade Policy 2023 mainly aims as under –

• Process re-engineering and automation in order to facilitate ease of doing business specifically for exporters;
• Focusing on the emerging areas such as dual use high-end technology items under SCOMET, collaborating with Districts and States mainly for export promotion, facilitating e-commerce exports, etc.

Highlights of Foreign Trade Policy 2023 are taken up and briefed in the current article.

Trade facilitation as well as ease of doing business –

In order to facilitate the coordination and implementation of the provisions of the World Trade Organization’s Trade Facilitation Agreement, an inter-ministerial body ‘National Committee on Trade Facilitation’ has been constituted.

DGFT has a commitment to majorly function as an exports and imports facilitator. The main focus is on good governance, which depends on a transparent, efficient and accountable delivery system.

With a view to reduce transaction as well as handling costs, a single-window system to facilitate the export of perishable agricultural produce is being facilitated via APEDA i.e. Agricultural and Processed Food Products Export Development Authority.

‘Niryat Bandhu Scheme’ will be implemented by DGFT mainly for mentoring potential exporters on the intricacies of foreign trade via training, counselling and outreach programs.

A common digital platform is created by DGFT for –

• Application of issuance, amendment, renewal and relevant processing relating to RCMC (Registration Cum Membership Certificate) or RC (Registration Certificate);
• Issuance of Preferential as well as Non-Preferential Certificate of Origin i.e. e-CoO;
• Handling quality control and trade disputes.

Rationalization of Status Holder Categories –

The export performance threshold for different status holder categories as per Foreign Trade Policy 2023 is tabulated hereunder –

Sr. No.	Status Holder Category	Corresponding export performance threshold in USD Million
1	One State Export House	3
2	Two State Export House	15
3	Three State Export House	50
4	Four State Export House	200
5	Five State Export House	800

Developing districts as export hubs –

The objectives of developing districts as export hubs are to identify the products and services which has export potential in the district; addressing the bottlenecks for exporting such products or services; supporting local exporters as well as manufacturers to scale and find out the potential buyers out of India with an aim to promote exports, manufacturing as well as a service industry in the District.

The major intention for developing districts as export hubs are to bring a greater level of commitment as well as awareness with regard to exports at the district level; build up the capacity to create new exporters and also identify the new markets for the focused products as well as services.

Institutional mechanism i.e. District Export Promotion Council and State/ UT Export Promotion Council will be created at District levels and State/ UT levels for strategizing exports.

Different facilitations –

• Facilitations of E-commerce Exports –

Foreign Trade Policy 2023 outlines the roadmap for establishing e-commerce hubs and other related elements like book keeping, returns policy, payment reconciliation and export entitlements.

It is estimated that e-commerce exports potential range between $200 to $300 billions by 2030.

• Facilitations under the EPCG (Export Promotion of Capital Goods) Scheme –

As known, EPCG enables the import of capital goods at NIL (zero) customs duty for export production. Foreign Trade Policy adds the following key changes to EPCG –

• PM MITRA (Prime Minister Mega Integrated Textile Region and Apparel Parks) Scheme is added as an additional Scheme. The Scheme enables to claim benefits under the Common Service Provider (CSP) Scheme of EPCG.
• Battery Electric Vehicles of all types, Wastewater Treatment & Recycling, Vertical Farming equipment, Rainwater filters and Rainwater harvesting systems and Green Hydrogen are being added to Green Technology Products. The same will not be eligible for a reduction in export obligation requirement under EPCG.
• Dairy sector is to be exempted from maintaining the Average Export Obligation.

• Facilitations under Advance Authorisation Scheme –

As known, Advance Authorisation Scheme accessed by DTA provides for the duty-free import of raw materials for manufacturing export products. Foreign Trade Policy adds the following facilitation provisions –

• Special Advance Authorisation Scheme is extended to the export of Apparel as well as the Clothing sector on the self-declaration basis in order to facilitate easy and prompt execution of export orders.
• Benefit of Self Ratification Scheme for fixation of Input Output Norms is extended to two star and above status holders. The same is in addition to Authorized Economic Operators.

Duty Exemption/ Remission Schemes –

Different duty exemption/ remission schemes are –

1. Duty Exemption Schemes consist of –

• DFIA – Duty Free Import Authorisation;
• AA – Advance Authorisation (including Advance Authorisation for Annual Requirement).

2. Duty Remission Scheme consists of the Duty Drawback Scheme which is administered by the Department of Revenue.
3. RoDTEP – Scheme for Remission of Duties and Taxes on Export Products as being notified by the Department of Commerce, whereas, administered by the Department of Revenue.
4. RoSCTL – Scheme for Rebate on State and Central Taxes and Levies as being notified by the Ministry of Textiles.

Provision relating to ‘Merchanting trade’ –

Foreign Trade Policy 2023 has introduced provisions relating to merchanting trade. ‘Merchanting trade’ involves the shipping of goods from one foreign country to another without touching Indian ports, wherein, it involves an Indian intermediary.

Importantly, merchanting trade of restricted as well as prohibited items under the export policy will now be possible.

Amnesty Scheme –

One-time Amnesty Scheme in introduced under Foreign Trade Policy 2023 in order to address default on export obligations. The Amnesty Scheme is simplified hereunder –

Eligibility under Amnesty Scheme –

Exporters who are unable to meet up the obligations under Advance Authorizations and under EPCG. Due to which the exporters are burdened with high duty and interest with pending cases.

Amnesty available under the Scheme –

Pending cases with regard to default in meeting the Export Obligations can be regularized. Amnesty will be available on payment of –

• All the customs duty that were exempted in relation to unfulfilled Export Obligation.
• Maximum interest amount will be 100% of the exempted duties. However, interest will not be payable on the portion of both Additional Customs Duty as well as Special Additional Customs Duty.