Govt unveils new Foreign Trade Policy, industry terms policy as pragmatic

New Delhi, Mar 31 (FN Bureau) With focus on facilitating exports in emerging areas such as e-commerce and green energy, boosting local production and ease of doing business, Union Commerce and Industry Minister Piyush Goyal on Friday released the much-awaited Foreign Trade Policy (FTP) 2023. The new foreign trade policy has no end date unlike in the past when FTP was announced for a five year period. The new trade policy has substantially reduced license fees for MSMEs, rationalised export performance threshold for star-rating and provided provisions for merchanting trade. The FTP 2023 will take forward and encourage trade in Indian rupee (INR). The policy also added four more towns — Faridabad, Moradabad, Mirzapur and Varanasi — in the list of Towns of Export Excellence to encourage shipments from these towns. Speaking at the release of the new trade policy, Commerce Minister Goyal exhorted exporters to work a little harder to achieve higher numbers in merchandise exports.

He hoped that India’s goods and services exports would grow at a healthy pace and reach the level of US$ 1 trillion each by 2030. At US$ 405.94 billion, India’s merchandise or goods exports registered 7.55% growth during April-February 2022-23 over the same period last year. Services exports during the same period surged 30.48% year-on-year to US$ 296.94 billion. India’s overall exports (merchandise and services) crossed US$ 750 billion in 2022-23, days ahead of the financial year close. Announcing the milestone, Goyal had said that export of US$ 750 billion has been achieved despite the extremely challenging global economic situation. Amid global economic slowdown, India’s monthly merchandise exports data have shown tepid demand. India’s merchandise exports fell 8.80% year-on-year in February 2023 to US$ 33.88 billion. With global growth projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, India’s merchandise exports are expected to remain under pressure. In a presentation on FTP 2023, Santosh Sarangi, DG, Directorate General of Foreign Trade (DGFT) said that India remains in a relatively sweet spot even as the global economy is facing turmoil.

“Our overall exports last year touched an all-time high of US$ 676 billion. A few days back we had already crossed US$ 750 billion this year. Going by the trends, we are likely to exceed about US$ 765 billion and might reach about US$ 770 billion when the final figures come out for the year,” he said. Sarangi said that FTP 2023 looks at moving from an incentive-based regime to a remission and entitlement based regime where remission is based on the principles of taxes and duties should not be exported and all our exporters should get back whatever taxes and duties they are paying and this is a completely WTO-compliant measure. “There is a greater thrust in FTP 2023 on emerging areas which have huge export potential. E-commerce exports, for example, have a lot of potential. Districts as exports hubs have a lot of potential,” Sarangi said. Welcoming the new trade policy, Federation of Indian Export Organisations (FIEO) President Dr A Sakthivel said that the new Foreign Trade Policy is designed to facilitate greater trade, boost manufacturing, promote exports, further enable ease of doing business and also work towards making Indian Rupee a global currency. “The shift this time has been from incentive-based regime to a remission and entitlement-based regime,” said the industry veteran.

EEPC India Chairman Arun Kumar Garodia termed the new trade policy as pragmatic and positive for the exports sector. “It will promote exports of both merchandise and services in a big way, help MSMEs become part of the global value chain, and make the Indian rupee go global. It is quite encouraging that the government has accepted our suggestion and provided for merchanting trade in the new trade policy. The move opens huge opportunities for the trading community. Now, a person sitting in India can buy in one country and ship to the other country,” he noted. In a welcome move, relief has been provided to exporters who are unable to fulfill their Export Obligation (EO) against the Export Promotion Capital Goods (EPCG) and Advance Authorizations. Industry body Assocham said FTP 2023 will set a stage for exporters to immensely increase India’s share in global trade even as the 2030 target of US$ 2 trillion for exports of goods and services is a confidence-building measure of the dynamic trade policy.