Central Idea

• Foreign Trade Policy 2023 focuses on shifting from an incentive to a tax remission-based regime, improving the ease of doing business, promoting exports through collaborations, and targeting emerging areas. It aims to achieve $2 trillion in export of goods and services by 2030, up from the previous $900 billion target.

Foreign Trade Policy 2023

1. Reducing Friction Points:

• Automatic approvals for various permissions will streamline processes and reduce bureaucratic hurdles for businesses.
• Reduced processing times for revalidation of authorizations (expected to be brought down to one day), extension of export obligation periods, advance authorizations, and EPCG issuances will expedite export activities.
• Lowered application fees for MSMEs will provide financial relief and encourage more small businesses to participate in global trade.

2. Supporting Export Growth:

• Facilitating e-commerce exports will enable Indian businesses to tap into the growing global e-commerce market, estimated to reach $6.07 trillion by 2024.
• Widening the basket covered under RODTEP will ensure more exporters benefit from tax remission, increasing competitiveness.
• Boosting manufacturing, particularly in labor-intensive sectors, will create more jobs and enhance the export potential.
• Rationalizing thresholds for exporter recognition will make it easier for businesses to be acknowledged and incentivized for their export performance.
• Merchanting trade reform will promote services exports and reduce transaction costs.
• Promoting the use of the rupee in international trade can help reduce exchange rate risks and increase trade with countries facing currency restrictions.

3. One-time Amnesty Scheme: The amnesty scheme aims at faster resolution of trade disputes, clearing pending cases, and improving the overall trade environment.

Supplemental Measures

• Boost to domestic manufacturing: Lowering import tariffs will make raw materials and intermediate goods more affordable, boosting domestic manufacturing and export competitiveness.
• Competitive Indian goods and services: Ensuring a competitive exchange rate will enhance the affordability of Indian goods and services in global markets.
• FTA’s: Signing broader and deeper free trade agreements can open new markets for Indian exporters and attract foreign investments.

Conclusion

• The Foreign Trade Policy 2023 comes at a time of global uncertainty, but with India’s small share in global trade (around 1.8% in merchandise exports and roughly 4% in services), there is significant room for improvement. The new policy, along with additional measures, can enhance the country’s trade performance and achieve the ambitious $2 trillion export target by 2030. However, it is crucial to monitor the policy’s implementation and address potential challenges for businesses to fully reap the benefits.