New Trade Policy 2023

New Trade Policy 2023

Context:

• Recently, Commerce minister announced the new Foreign Trade Policy 2023, which is expected to boost exports amid slowing global trade.

• The new foreign trade policy has highlighted the vision to take India’s goods and services exports to $2 trillion by 2030.
• The new FTP comes into effect from April 1, 2023.
• The new foreign trade policy will mark a move from incentives to remission.
• It will focus on export promotion through collaboration with exporters, states, districts, and Indian Missions.
• It will promote ease of doing business and focus on emerging areas like e-commerce and export hubs.
• The DGFT added that though the new policy was expected to be in place until 2028, there will be no end date to the new foreign trade policy, it will be updated as and when required.

Key Features of the policy:

• The government reiterated sector-specific targets to achieve the goal of $1 trillion merchandise exports and $1 trillion services exports by 2030.
• Under the new policy, Faridabad, Moradabad, Mirzapur and Varanasi have been declared as towns of export excellence for apparels, handicrafts, handmade carpet and dari, and handloom and handicraft categories, respectively.
• These are in addition to the existing 39 towns under the category.
• Changes for trade settlement in Rupee introduced in FTP for grant of export benefits, DGFT said.
• The DGFT said that the FTP 2023 will encourage e-commerce export, which is expected to grow to $200-300 billion by 2023.
• Foreign Trade Policy 2023-28 has introduced an amnesty scheme for one-time settlement of default in export obligation.
• Under the new policy, the dairy sector has been exempted from maintaining average export obligation.
• A special advance authorisation scheme has been extended to apparel, and clothing.
• Under the new policy, the value limit for exports through courier services increased to Rs 10 lakh from Rs 5 lakh per consignment.
• The ministry also rationalised the export performance threshold for recognition of exporters through status holders.
• This will enable more beneficiaries to achieve higher recognition and reduce transaction costs for exports.
• FTP 2023 will encourage e-commerce exports, which is expected to grow to $200-300 billion by 2023.
• Under the new FTP 2023, designated zone with warehousing facility will be created.
• These will be designed to help e-commerce aggregators for easy stocking, customs clearance and returns processing.
• Processing facility to be allowed for last mile activities such as labelling, testing, repackaging etc.
• FTP 2023 is also aimed at streamlining the SCOMET policy, which covers special chemicals, organisms, materials, equipment and technologies.
• The policy for the export of dual -use items under the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) has been consolidated in one place for ease of understanding and compliance by the industry.

Sectors that will benefit from the new FTP:

• PM Mega Integrated Textile Region and Apparel Parks additional scheme to claim benefits under CSP.
• The dairy sector gets benefits and will be exempted from maintaining the average export obligation.
• Battery electric vehicles, vertical farming equipment are added to the green technology product.
• Wastewater treatment and recycling, rainwater harvesting system added to green technology products.
• Rainwater filters and green hydrogen added to green technology products.
• Green technology products eligible for reduced export obligation requirement under the EPCG scheme.

What does the FTP offer to MSMEs?

• 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.

What does the policy say about e­commerce exports?

• The policy is upbeat about e­commerce exports with the government assuming a potential annual export of $200­300 billion by 2030 from about $5­10 billion at present.
• All FTP benefits are to be extended to e­commerce exports. In a major concession, the value limit for exports through courier service has been doubled to ₹10 lakh per consignment.
• The FTP also announced the creation of designated zones with warehousing facilities to help e­commerce aggregators with easy stocking, customs clearance, and returns processing.

With India’s target to become USD 5 trillion economy, the exports need support. With the new foreign trade policy the exports will get the support that they require. The proper and timely implementation of the policy will give a huge push to the sector.

Syllabus: Mains; GS III – Indian Economy

SOURCE: Business Today