Breaking away from a tradition of a policy lasting five years, the Government recently unveiled the Foreign Trade Policy 2023, which adapts a long-term focus. The key approach to the policy is based on the four pillars: (i) incentive to remission, (ii) export promotion through collaboration – exporters, states, districts and Indian missions, (iii) ease of doing business, reduction in transaction cost and e-initiatives and (iv) Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET policy.
The FTP 2023 aims at process re-engineering and automation to facilitate ease of doing business for exporters. It also focuses on emerging areas like dual-use high-end technology items under SCOMET, facilitating e-commerce export, and collaborating with States and Districts for export promotion.
The new FTP is also introducing a one-time Amnesty Scheme for exporters to close the old pending authorisations and start afresh.
The FTP 2023 encourages recognition of new towns through the “Towns of Export Excellence Scheme” and exporters through the “Status Holder Scheme”. The FTP 2023 is facilitating exports by streamlining the popular Advance Authorisation and EPCG schemes and enabling merchanting trade from India.
To develop India into a merchanting trade hub, the FTP 2023 has introduced provisions for merchanting trade. Merchanting trade of restricted and prohibited items under the export policy would now be possible. Merchanting trade involves the shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary. This will be subject to compliance with RBI guidelines, and won’t be applicable for goods/items classified in the CITES and SCOMET list. In course of time, this will allow Indian entrepreneurs to convert certain places like GIFT city etc. into major merchanting hubs as seen in places like Dubai, Singapore and Hong Kong.
Facilitation under 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 rationalised. Some key changes being added are:
- Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible to claim benefits under CSP (Common Service Provider) Scheme of Export Promotion Capital Goods Scheme(EPCG).
- Dairy sector to be exempted from maintaining Average Export Obligation – to support the dairy sector to upgrade the technology.
- 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 requirements under EPCG Scheme.