Introduction
This article aims to identify the significance and changes in the foreign trade policy. The foreign trade policy is a legal document which was Issued by the Central government through the Foreign Trade Development and Regulation Act 1992. It is guiding force for the traders in our country and for trader who want to trade in our country. The purpose of the policy is to enable trade by reducing transaction and transit costs and time. It promotes exports and trade. In the FTP 2015-20, changes were done subsequent to the initial release even without announcement of a new FTP responding dynamically to the emerging situations. Hereafter, the revisions of the FTP were done as and when required. Incorporating feedback from Trade and Industry is continuous to streamline processes and update FTP, from time to time.[1] In light of the COVID-19 pandemic and the “volatile geo-political scenario till 31.03.2023”, the previous Foreign Trade Policy (2015-20) was extended. The new FTP is a shift from an incentive-based approach and creates an enabling ecosystem for exporters, which is a move in line with India’s vision of becoming “Atmanirbhar” (self reliant).[2]
What are the new changes in foreign trade policy?
In 2023, the new foreign trade policy was introduced with devised changes to develop good trade practices in India. Some salient features of the new trade Policy are
- The new FTP empasises in re-engineering and processing to facilitate ease of doing business for exporters.
- It highlights new areas like e-commerce export, combined efforts from States and districts for export promotion and more.[3]
It also enables to consolidate newer towns through its “Towns of export excellence scheme” and exporters through” Status Holder Scheme”. The FTP 2023 is facilitating exports by streamlining the popular Advance Authorization and EPCG schemes, and enabling merchanting trade from India.[4] Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, have been designated as Towns of Export Excellence (TEE) in addition to the existing 39 towns. The TEEs will have priority access to export promotion funds under the MAI scheme and will be able to avail Common Service Provider (CSP) benefits for export fulfillment under the EPCG Scheme. This addition is expected to boost the exports of handlooms, handicrafts, and carpets.[5]
The foreign trade policy underscores the adoption of automated IT systems integrated with risk management protocols for diverse approvals, establishing a streamlined, paperless, and online framework. Additionally, the policy incorporates reduced fee structures and IT-driven initiatives, facilitating convenient access to export benefits for MSMEs and other stakeholders.
The focal point of FTP 2023 lies in bolstering exports from the district level and expediting the growth of the local trade ecosystem. The policy fosters collaborations with state governments and advances the Districts as Export Hubs (DEH) initiative, which entails identifying export-worthy goods and services and addressing issues at the district level. Moreover, the policy aims to formulate tailored export action plans for each district, outlining specific strategies to promote the export of identified products and services.[6]
India is increasingly prioritizing its “export control” system as its collaboration with export control regime countries strengthens. There is now broader awareness and comprehension of SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) among stakeholders, and efforts are being made to fortify the policy regime to effectively adhere to international treaties and agreements that India has entered into. A robust export control system in India would enable Indian exporters to access dual-use high-end goods and technologies, while also facilitating the export of controlled items/technologies under SCOMET from India.
Going digital has been the mantra behind the declared trade facilitation goals. The benefits of moving to digital processes for faster on-border clearance of goods are undisputed. India is a signatory of the World Trade Organization’s multilateral Trade Facilitation Agreement. Over the last few years, it has been working on cutting border red tape and associated costs for exporters by focusing on improving customs clearances and logistics efficiency. Digitalising processes, particularly for documentation and invoicing, have been the key enabler in this regard.[7]
Efficient trade facilitation is crucial for empowering Indian exporters to enhance their productivity and capitalize on the numerous Free Trade Agreements (FTAs) that India has either ratified or is currently negotiating. This focus aligns seamlessly with India’s active involvement in the Indo-Pacific Economic Framework for Prosperity, which aims to streamline trade facilitation through digitalization of cross-border operations, logistics, and transportation processes. To achieve effective trade facilitation, it is imperative to synchronize the digitalization of border procedures with similar efforts within the country. If domestic processes remain cumbersome despite swift online on-border clearances, exporters may encounter challenges. While initiatives announced by the FTP may reduce border clearance costs, high internal procedural expenses could persist. This discrepancy between efficient digitalized trade facilitation at the border and prolonged domestic business procedures might impact Indian exporters’ ability to utilize cross-border digital signatures, establish digital business identities, and engage in cross-border interoperable digital payments.
Conclusion
As India continues to navigate through the challenges presented by the COVID-19 pandemic and the dynamic geopolitical landscape, the new Foreign Trade Policy serves as a strategic tool to harness trade potential and strengthen India’s position in the global market. By embracing digitalization, promoting grassroots trade initiatives, and fostering responsible trade practices, the FTP 2023 sets the course for a more resilient, inclusive, and prosperous trade landscape for Indian exporters. It is imperative for stakeholders to proactively engage with the policy’s provisions, ensuring its successful implementation and reaping the full benefits of India’s evolving trade ecosystem. Through collaborative efforts and continuous adaptability, India can forge a path towards sustainable economic growth and bolster its standing as a prominent player in the global trade arena.
While the FTP 2023 shows promising developments, it also underscores the need for harmonizing digitalization efforts within the country. Bridging the gap between efficient on-border clearances and complex domestic procedures will be crucial to fully leverage the benefits of cross-border digital signatures and digital payments
[1] Available at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572#:~:text=Foreign%20Trade%20Policy%20(2023)%20is,and%20’partnership’%20with%20exporters.
[2] https://www.orfonline.org/expert-speak/inclusive-india-the-foreign-trade-policy-2023/
[3] Foreign Trade Policy-2023; Government of India, Ministry of Commerce and Industry, Department of Commerce, https://www.dgft.gov.in/CP/.
[4] Available at:
https://www.orfonline.org/expert-speak/inclusive-india-the-foreign-trade-policy-2023/
[5] Available at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572#:~:text=Foreign%20Trade%20Policy%20(2023)%20is,and%20’partnership’%20with%20exporters.
[6] available at: https://www.investindia.gov.in/team-india-blogs/indias-foreign-trade-policy-2023-roadmap-boost-exports
[7] Available at : https://www.isas.nus.edu.sg/papers/indias-foreign-trade-policy-2023-new-ideas-and-old-challenges/
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Author: Shubhransi Kumar | 5th year, School of Law, UPES Dehradun
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