How does the foreign trade policy hope to achieve the targeted export of $2 trillion by 2030? Is this achievable?

The $2 trillion target for exports set for 2030 endorsed by FTP 2023 comprises $1 trillion of goods exports and $1 trillion of services exports.

Set against the FY23 projection of combined goods and services exports of about $770 billion, the $2 trillion seems stiff but not impossible to meet. However, while services exports have shown commendable resilience to the ongoing global turmoil caused by the Russia-Ukraine war and the slowdown in major Western economies, goods exports have not done too well. Goods export in FY23 is likely to overshoot last year’s $422 billion by a small margin but that is largely due to the healthy performance in the first four months of the fiscal.

FTP 2023, therefore, has been announced at the right time to lend much-needed support to exporters. Since fiscal incentives are out of the reckoning because of WTO restrictions, FTP 2023, focuses on the continuation of duty remission schemes, that are WTO compliant.

The fact that the FTP does not come with an end date is of great comfort to the industry. No uncertainty regarding the continuation of input duty remissions schemes, such as the RoDTEP and RoSCTL, and timely payments by the government, will help exporters do their business with more confidence.

Also read: Govt reinforces the amendment of provisions of the Exporter Importer Code

The FTP has also tried to make life easier for exporters and traders, specifically MSMEs, in a number of ways. Measures have been announced to improve the ease of doing business through a reduction in transaction costs and e-initiatives. MSMEs have been the focus of the policy, as they should be, and many facilitative steps are directed towards the sector. Initiatives, such as districts as export hubs and the promotion of e-commerce exports, also have the potential of translating into more exports. Some steps have also been taken to supplement the government’s efforts in promoting manufacturing in textiles, dairy, and agriculture.

If the government stays vigilant and updates the FTP, responding to the needs of exporters, it could play an important role in helping meet the $2 trillion export target.

What are towns of export excellence. Which new towns have been added to the existing list?

Towns producing goods of ₹750 crore or more can be recognised as Towns of Export Excellence (TEE) based on the potential for growth in exports. However, for the handloom, handicraft, agriculture and fisheries sectors, the threshold limit is ₹150 crore. FTP benefits provided to recognised associations of units in the TEEs include financial assistance under Market Access Initiative (MAI) scheme, on priority basis, for export promotion projects for marketing, capacity building, and technological services. Additionally, Common Service Providers (CSP) certified by the DGFT in the TEEs are entitled for authorisation under Export Promotion Capital Goods (EPCG) Scheme. TEEs, of course, also get the benefit of global recognition and brand credibility.

There were already 39 such TEEs in the country and four new have been added to the list in FTP 23. These include Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handmade carpets, and Varanasi for handloom and handicrafts.

What does the policy say about e-commerce exports?

The policy is upbeat about e-commerce exports with the government assuming a potential of annual exports growing to about $200-300 billion by 2030 from about $5-10 billion at present.

All FTP benefits are to be extended to e-commerce exports. An inter-ministerial committee comprising officials from the Department of Revenue, Department of Post, and the DGFT has been set up to come up with appropriate guidelines to increase e-commerce exports. It has been decided that the necessary enablements of IT systems will be completed in six months.

Also read: Govt proposes FTP benefits, dedicated zones to boost e-commerce exports

In a major concession, the value limit for exports through courier service has been doubled to ₹10 lakhs per consignment.

Necessary enablement of IT systems in Department of Commerce, Post, and CBIC to be completed in six months.

The FTP also announced the creation of designated zones with warehousing facilities to help e-commerce aggregators with easy stocking, customs clearance, and returns processing.

How does the policy intend to given an impetus to rupee settlement of international trade?

In July last year, the RBI allowed invoicing and payments for international trade in the Indian rupee. The move is aimed at helping India save foreign exchange, get past banking curbs to trade with countries under sanction, and gradually enable the rupee to gain the status of an international currency.

In November 2022, changes were introduced in the previous FTP for the grant of export benefits and fulfilment of export obligation for export realisations in rupee as per RBI guidelines so that those who trade in rupees instead of foreign currencies do not lose out. FTP 23 also endorses those changes.

Also read: India, Malaysia can now trade in Indian rupee

What does the FTP offer to MSMEs?

FTP 2023 has some provisions that will specifically help MSMEs. It has reduced the threshold of minimum exports required for the recognition of exporters as Status Holders. Now many smaller exporters can achieve higher status and avail benefits that will reduce transaction costs.

User charges have also been reduced for MSMEs under the popular Advance Authorisations and EPCG scheme and all charges have been brought within ₹5,000.

How will the provisions on merchanting trade help exporters?

FTP 2023 has allowed Indian intermediaries to carry out merchanting trade involving the shipment of goods from one foreign country to another without touching Indian ports. This will make possible merchanting trade of restricted and prohibited items. Exporters are optimistic that the policy will help them retain their export markets even when domestic restrictions apply on exports of certain items as they could then source them from another country and ship them to their buyers.

What are the other takeaways from the policy?

Measures, such as a special one-time Amnesty Scheme for default in export obligations, streamlining of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) licensing procedure, adding PM MITRA scheme to the list eligible to claim benefits of CSP and EPCG schemes, focussing on promoting districts as export hubs and introducing steps to get more online approvals, and paperless filings to reduce physical interface, are also important features of FTP 2023.

Also read: PM MITRA: Seven states selected to develop mega textile parks