Govt unveils new Foreign Trade Policy: Key highlights

The government on Friday unveiled the Foreign Trade Policy 2023-2028, which aims to boost the country's exports to $2 trillion by 2030. The new Foreign Trade Policy will come into effect from April 1, 2023. The government last introduced the Foreign Trade Policy in 2015, which was extended multiple times due to covid-19 impact on the global economy. 

“Foreign Trade Policy lays down the rules and policies related to exports and imports in India and the aim is to further streamline and regulate the policies in such a manner that India’s overall exports and facilitation of exports is in line with the ease of doing business with other countries,” said Santosh Sarangi, Directorate General of Foreign Trade. He expects India’s export to reach $760-$770 billion in FY2022-23 as against $676 billion in FY2021-22.

The new Foreign Trade Policy will include tax remission, greater trade facilitation through technology, automation, and continuous process re-engineering. The policy also focuses on export promotion through collaboration: exporters, states, districts, and focus on emerging areas – e-commerce exports, developing districts as export hubs, and streamlining SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) policy. The government expects e-commerce exports to reach $200-$300 billion by 2030.

One of the key features of the new Foreign Trade Policy is that rupee payments will be accepted under the FTP scheme. The government said that this will be an effective step towards the internationalisation of the Rupee.

Apart from this, in order to give thrust to cluster-based economic development, the government has introduced four new towns—Faridabad, Moradabad, Mirzapur and Varanasi—as the new towns of export excellence (TEE), in addition to the already existing 39 TEE under the new Foreign Trade Policy.

The policy also recognises districts as export hubs to boost India’s foreign trade by decentralising export promotion. The government also aims for capacity building at the district level under the new Foreign Trade Policy. The government aims to achieve $1 trillion in merchandise sector-specific exports by 2030.

In order to promote ease of doing business, and reduction in transaction costs and e-initiatives, the government has introduced online approvals without a physical interface for exporters. Under this, permission to advance authorization issue will be reduced from 3 to 7 days to 1 day, EPCG (Export Promotion Capital Goods) issuance will be reduced from 3 to 7 days to 1 day, revalidation of the authorization will be reduced from 3 days-1 month to 1 day and extension of export obligation period will be reduced from 3 days-1 month to 1 day.

Under the new Foreign Trade Policy, the government has reduced user charges for MSMEs under advance authorization and EPCG schemes. According to the government, the new charges will benefit 55% to 60% of MSMEs exporters.