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On Friday, India launched a new Foreign Trade Policy (FTP) that will be effective from April 1 and aims to achieve $2 trillion in goods and services exports by 2030. The policy does not have a sunset clause, and government officials stated it would be dynamic and responsive to the rapidly changing global markets. The new trade policy is an extension of the government's ongoing efforts to boost exports.
Consultative Approach to Resolve Issues of Trade and Industry
The policy will adopt a consultative approach to resolve issues of trade and industry with the participation of states and districts in promoting grassroots exports. The government aims to increase exports without relying on subsidies, leveraging its strengths to achieve higher goals.
Focus on Merchandise and Service Exports
The Commerce and Industry Minister, Piyush Goyal, expressed confidence that India is all set to cross $760 billion in goods and services exports in 2022-23. He stated that India needs to focus on merchandise exports to keep pace with fast-growing service exports. The new FTP 2023 will focus on new sectors, such as e-commerce, which has the potential to grow to $200-300 billion by 2030. The government may soon frame guidelines in consultation with all stakeholders to facilitate exports through e-commerce.
Duty-Free Imports and Raw Materials
The new FTP 2023 will continue duty-free imports of inputs and raw materials from overseas suppliers through advance authorisation. It will streamline special chemicals, organisms, materials, equipment, and technologies (SCOMET) in one place for ease of understanding and compliance by the industry. The SCOMET policy emphasizes India's export control in line with its international commitments under various export control regimes.
Ease of Doing Business & Rationalisation of Export Performance Threshold
The new FTP 2023 has focused on the ease of doing business through paperless regulation and rule-based automatic approval systems. It has rationalised the export performance threshold to enable more beneficiaries to achieve higher recognition and reduce transaction costs for exports. For example, the qualifying criterion for a five-star exporter has been reduced from $2 billion to $800 million.
Towns of Export Excellence
FTP 2023 announced four new Towns of Export Excellence (TEE) – Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handmade carpets, and Varanasi for handloom and handicrafts – which are in addition to the already existing 39 towns of export excellence. The facility helps in global recognition, provides financial assistance for marketing, and offers a common service provider (CSP) facility that helps increase the entire cluster's competitiveness by enabling the common use of capital goods for exports. The policy recommends restructuring the Department of Commerce to make it future-ready.