India aims $2T exports, global currency for Rupee in new Foreign Trade Policy

Commerce and Industry Minister Piyush Goyal, unveiled the Foreign Trade Policy (FTP) 2023, highlighting the government’s focus on increasing exports. The objective is to make the Indian Rupee a global currency, incentivise ecommerce exports, and raise India’s shipments to $2 trillion dollars by 2030. 

The approach of Foreign Trade Policy (FTP) 2023 is to move from an 'incentive to remission' based regime; encourage collaboration between exporters, states, districts and Indian Missions; reduce transaction costs; and develop more export hubs.

This fiscal year, India is likely to cross $765 billion in merchandise and services exports, which is a jump of more than 13% from FY22 where total exports recorded $676 billion.

Considering the size of our economy, and our potential manufacturing and service industry base, there is a huge potential for exports to grow, said Goyal adding that at the time when the country is on the mission of Aatmanirbhar Bharat, one of its goals is to also increase its share in the global supply chain and in exports, ‘manifold’. 

Unlike the practice of five-year FTPs, this time the government has come out with a dynamic and responsive trade policy without any end date, and will be updated as per the emerging global scenario.

"We have ensured there is no end date to this policy, it will be updated from time to time," said Director-General of Foreign Trade (DGFT) Santosh Sarangi while briefing media on the salient features of FTP 2023 unveiled by Goyal.

The minister said the Department of Commerce will be making a massive focused outreach to the world, either sectorally or country-wise in the next 4-5 months. The Ministry of External Affairs and Indian Missions abroad will work with the department.

"We have to meet our export targets going forward. We will achieve $2 trillion in exports by 2030, but it should not be that merchandise exports are outperformed by services exports," the minister added.

The FTP aims at the internationalisation of trade in the Indian Rupee. It allows international trade settlement in INR and required changes have been introduced for the grant of export benefits and fulfilment of Export Obligation (EO) for export realisations in the domestic currency as per RBI.

The Foreign Trade Policy 2015-20, which was to end on March 31, 2020, was extended several times due to the pandemic and volatile geopolitical scenario. The last extension was till March 31, 2023 i.e., today.

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Goods and services exports may reach $1T each by 2030: Piyush Goyal

Features of Foreign Trade Policy:

• The FTP provides relief to exporters who are unable to fulfil their Export Obligation (EO) against the Export Promotion Capital Goods (EPCG) scheme and advance authorisations.
• It introduces an amnesty scheme for one-time settlement of default in export obligation by advance authorisation and EPCG authorisation holders.
• As per the scheme, all pending cases of the default in meeting EO can be regularised on payment of customs duties that were exempted and interest at the rate of 100% of the duties exempted.
• The FTP aims to streamline policy for the export of dual-use items under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET), which emphasises on India's export control in line with its international commitments.
• The policy also focuses on simplifying policies to facilitate the export of dual-use, high-end goods/technology such as UAVs/drones, cryogenic tanks, and certain chemicals.
• The FTP 2023 focuses on engaging with states and districts through the districts as export hubs initiative by identification of products and services in each district; institutional mechanism; and preparation of district export action plans, among others.
• The policy specifically extends FTP benefits to ecommerce exports which are estimated to grow to $200 billion-$300 billion by 2030.
• There will be special outreach and training activities for small ecommerce exporters.
• Battery Electric Vehicles (BEV) of all types, vertical farming equipment, wastewater treatment and recycling, rainwater harvesting system and rainwater filters, and green hydrogen have been added to green technology products.
• Special Advance Authorisation scheme has been extended for apparel and clothing sector to facilitate prompt execution of export orders.
• The dairy sector has been exempted from maintaining average EO.
• Faridabad, Moradabad, Mirzapur, and Varanasi have been declared as Towns of Export Excellence (TEE) with an aim to give thrust to cluster-based economic development.
• The policy outlines measures for merchanting trade under which a trader can buy from one country and supplies to another country while based in India.
• The export performance threshold for recognition to exporters through Status Holders has been relaxed. Under the new norms, the threshold for obtaining Star House status has been reduced significantly.
• Digitisation of applications pertaining to FTP and automatic system-based approvals are among the other key initiatives announced in the policy.
• On a pilot basis, the FTP has introduced processing of Advance Authorisation extension/revalidation applications in a single day, which currently takes three days to one month.

The schemes sanctioned under the policy will be honoured for the tenure for which they are sanctioned even if the schemes are foreclosed.

The new FTP will work as a catalyst for the PM's dream of making India a $5 trillion economy, says Pavan Choudary, Chairman, Medical Technology Association of India (MTaI).

"Breaking the tradition, the revised policy focuses on the long term instead of a five-year period. The new policy will pave the way for stakeholder feedback and will keep evolving with world currents," he told SMBStory.

"This approach will further enhance the ease of doing business by reducing transaction costs, implementing WTO-compliant policies, single-window interface, standardisation on prior approvals, and infrastructural upgrade of existing ports, warehouses, quality testing, and certification centres," he further added, saying that these developments will not only encourage domestic players but will also attract overseas investments in India.

(Additional info has been added from PTI to this copy for context.)