International trade is a key driver of the economy of a nation, and for an emerging economy such as India, it is a growth driver. India’s foreign trade policies have come a long way since its economic liberalization in 1991. From a predominantly closed economy, India has evolved as a serious player in foreign trade, with its policies expanding to counter the opportunities and challenges of the 21st century. Let’s examine the way India manages its foreign trade relations and the policies that drive its economy.
India’s FTP 2024 strives to boost exports and further integrate the country into global supply chains. The policy highlights the ease of doing business through digitalization and technology to build a conducive environment for Indian business proprietors.
The FTP 2024 sets forth a blueprint for India as an international trade market and export-based economy, keeping the requirements of the SME segment in mind. The policy intends to enhance India’s foreign trade by streamlining the import and export of products through e-commerce or other means.
India is advancing speedily towards adopting the free trade agreement (FTA) with the four-nation European bloc EFTA—Liechtenstein, Iceland, Switzerland, and Norway, which is targeted for enactment by late 2025.
Overview of Foreign Trade Policy
Foreign trade policy, or FTP, is a series of regulations, rules, and procedures that aim to build an advantageous balance of payments situation by controlling imports and boosting exports. The policy is prepared by the Directorate General of Foreign Trade (DGFT), an agency under the Ministry of Commerce and Industry.
Objectives of Foreign Trade Policy
Here are the primary objectives of foreign trade policy, which strive to improve how India trades with the world:
1. Generating a Supportive Ecosystem
Moving from incentives, India’s foreign trade policy aims to create an environment that upholds businesses, aligning with the principles of ‘Local goes Global’ and ‘Atma Nirbhar Bharat.’
2. Collaborating with State Governments
Identifying the worth of local efforts, the policy promotes partnerships with state governments to encourage exports at the grassroots level.
3. Global Integration of India
The objective of the foreign trade policy is to smoothly link India with global markets and promote India as a reliable trade partner.
4. Readying for the Future
It involves gearing India up to meet future challenges, emphasizing making it one of the leading exporting nations, particularly during the expected ‘Amrit Kaal’ period.
5. Tripling India’s Exports of Goods and Services
The policy intends to propel India’s exports to nearly $2 trillion by 2030, a gigantic jump from the pre-set $760 billion.
Highlights of the Foreign Trade Policy 2023
These are the key foreign trade policy 2023 points, with a focus on incentives for exporters and collaborative export promotion efforts:
- Export Promotion Through Cooperation: The policy assists in identifying the problems and developing strategies for increasing exports. Further, it facilitates coordination among the states, districts, exporters, and Indian missions.
- Emerging Areas: The policy looks to place India as a prominent pharmaceutical, manufacturing, and e-commerce player.
- Incentive to Remission: These advantages comprise duty refunds, the pre-clearance scheme, a growth capital equipment plan, and free trade agreements (FTAs).
- Ease of Doing Business: The policy eases documentation processes and paperwork to make exporting affordable and streamlined for businesses.
Main Features of Foreign Trade Policy 2023
We will interview or study the essential characteristics of the foreign trade policy 2023, throwing light on the major initiatives aimed at enhancing India’s trade ecosystem:
1. Recognition of Exporters
Exporter companies identified based on their performance will be incorporated into capacity-building programs. Further, exporters with 2-star and above status will deliver trade-associated training, promoting India’s skilled workforce for economic growth.
2. Streamlining SCOMET Policy
With an improved knowledge of SCOMET (Special, Chemicals, Organisms, Materials, Equipment, and Technologies) regulations, the policy fortifies compliance with international treaties. This ensures entry to sophisticated goods and technologies for Indian exporters, promoting controlled exports under SCOMET from India.
3. Merchanting Trade
Introducing merchanting trade allows the trade of controlled items without engaging Indian ports, intending to build India as a merchanting trade hub similar to its global counterparts.
4. Promoting E-Commerce Exports
Schemes for e-commerce hubs and streamlined procedures aim to enhance e-commerce exports. Higher caps on courier exports and the development of Dak Niryat Facilitation Centers will help weavers, artisans, and MSMEs access international markets.
5. Towns of Export Excellence
Inaugurating Faridabad, Varanasi, Moradabad, and Mirzapur as Towns of Export Excellence (TEE) alongside prevailing ones intends to boost exports, especially in handicrafts, handlooms, and carpets. These TEEs will get priority entry to export promotion funds and gain from Common Service Provider (CSP) backing under the EPCG Scheme.
6. Support under the EPCG Scheme
The rationalization of the EPCG Scheme comprises exemptions for the dairy sector and decreased liabilities for green technology products. The inclusion of the PM MITRA scheme enlarges the benefits under the EPCG Scheme.
7. Encouraging Export from the Districts
Cooperating with State governments, the policy intends to encourage district-level exports via the Districts as Export Hubs (DEH) initiative. This involves identifying export opportunities and tackling challenges through State and District Export Promotion Committees.
8. Process Automation and Re-Engineering
The foreign trade policy 2023 stresses boosting productivity through computerized IT systems, cutting down on paperwork, and making processes simpler. Repetition of schemes like Advance Authorization and Export Promotion Capital Goods (EPCG) ensures access to export advantages, particularly for MSMEs, with lowered fees and easy procedures.
9. Promotion under the Advance Authorization Scheme (AAS)
The Advance Authorization Scheme provides duty-free imports for producing export goods, with exclusive provisions for the instant execution of export orders. Gains are delivered to 2-star and above status holders.
10. Amnesty Scheme
The one-time Amnesty Scheme caters to defaults on export obligations, alleviating exporters taxed by duty and interest expenses. Normalization of pending cases provides exporters with a new beginning with capped interest payments.
Effect of Foreign Trade Policy on Import
FTP 2023 eases import documentation requirements, lowers processing times through the application of digital technologies, and renders customs clearance more efficient. It also decreases the cargo release time.
However, there are certain exemptions, like banning the import of gifts by courier or post, including those purchased from e-commerce websites, except if these are life-saving medicines or drugs and Rakhi.
The Foreign Trade Policy 2023 provides the framework for expanded trading opportunities. It appreciates invention, collaboration, and easing activities. By enhancing procedures and initiating exclusive advantages, the policy works to raise exporters, accelerate economic growth, and increase India’s global market standing.
Export Promotion
India’s export strategy is based on the following pillars:
- The Production Linked Incentive (PLI) scheme
- Special Economic Zones (SEZs)
- Digital Trade Initiatives
- Regional Trade Agreements
- The Comprehensive Economic Partnership Agreement (CEPA) with the UAE
- ASEAN-India Free Trade Agreement
Final Reflections
FTP furnishes a dynamic roadmap to raise India’s export potential and promote substantial growth in the coming years. This policy allows you to expand your eCommerce exports and seize new opportunities. It makes efficient use of technology, promotes teamwork, and streamlines procedures. You may improve your company’s standing in the global market with FTP’s assistance. In addition to increasing India’s export potential, this can result in success and prosperity for you personally.
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