India unveils ‘dynamic’ foreign trade policy, eyes $2 trillion exports by 2030

Markets open higher amid firm global trends

NEW DELHI: India released a “dynamic and responsive” foreign trade strategy on Friday with the aim of increasing exports to USD 2 trillion by 2030, making the rupee a global currency, and encouraging e-commerce exports.
Foreign Trade Policy (FTP) 2023 has the following tack: it shifts from a “incentive to remission” based system; it promotes cooperation between exporters, states, districts, and Indian Missions; it lowers transaction costs; and it creates additional export hubs.
India’s exports of goods and services in the fiscal year 2022–23, which ends on Friday, are probably going to surpass USD 765 billion. The preceding fiscal year’s total exports were USD 676 billion.
In contrast to the usual 5-year FTPs, the government has this time released a flexible and responsive trade policy that will be modified in accordance with the changing international environment.

Director General of Foreign Trade (DGFT) Santosh Sarangi assured the media that the FTP 2023, which was launched by Commerce and Industry Minister Piyush Goyal, had no expiration date and will be revised periodically.
Goyal stated that over the next 4-5 months, the Department of Commerce will conduct a significant, targeted outreach to the world, either sectorally or country-wise. The agency would collaborate with the Ministry of Foreign Affairs and Indian Embassies abroad.

We will reach USD 2 trillion in exports by 2030, but it shouldn’t be that merchandise exports beat services exports, the minister said. “We have to meet our exports targets moving forward,” he added.

According to the DGFT, India’s exports of goods and services in the fiscal year 2022–23, which ends on Friday, are set to surpass USD 765 billion. The overall exports in 2021–22 were USD 676 billion.

The FTP seeks to internationalise Indian Rupee trading. The necessary changes have been made in order to award export benefits and fulfil export obligations (EO) for export realisations in the home currency, in accordance with RBI, and it now permits settlement of international commerce in INR.

Sunil Barthwal, the secretary of commerce, stated that “if there are nations where there is currency failure or dollar scarcity, we are happy to deal in the rupee with them.”

The necessity for Indian exporters to become globally competitive and independent of subsidies was another point he emphasised.

The FTP offers relief to exporters who are unable to complete their Commitments against the Export Promotion Capital Goods (EPCG) scheme and Advance Authorizations in the sake of commerce and industry and to encourage exporters.

It creates a programme for one-time payment of export obligation default by holders of advance authorizations and EPCG authorizations.

According to the plan, all open cases of failure to fulfil EO can be resolved by paying the waived customs charges as well as interest calculated at a rate equal to 100% of the waived duties.

The FTP intends to simplify the Special Chemicals, Organisms, Minerals, Equipment and Technology export regulations (SCOMET).

The SCOMET policy places a strong emphasis on India’s export control in accordance with its obligations under various export control regimes (the Wassenaar arrangement, the Australia group, and the Missile Technology Control Regime) to regulate the trade in sensitive/dual-use products and technology.

It also focuses on streamlining regulations to ease the export of high-end products and technologies with dual uses, like UAVs and drones, cryogenic tanks, and certain chemicals.

By identifying the goods and services offered in each district, establishing institutional frameworks, and creating district export action plans, among other things, the FTP 2023 focuses on interacting with states and districts through the Districts as Export Hubs project.

The programme specifically includes FTP incentives for exports of goods and services through e-commerce, which are anticipated to reach $200–300 billion by 2030.

To streamline e-commerce export facilitation, guidelines are being created in cooperation with other ministries.

There will also be unique outreach and training initiatives for little-known e-commerce exporters.

Green technology products now include battery electric vehicles (BEV) of all varieties, vertical farming tools, waste water treatment and recycling, rainwater harvesting systems and rainwater filters, and green hydrogen, making them eligible for lowered export obligation requirements under the EPCG scheme.

Another noteworthy aspect of the policy is the extension of a special advance authorization programme for the garment and clothing industry in order to speed up the execution of export orders.

The dairy industry is not required to maintain an average EO. The action will help the industry modernise its technologies.
The designation of Faridabad, Moradabad, Mirzapur, and Varanasi as Towns of Export Excellence (TEE) aims to promote cluster-based economic development. There are now 39 TEEs.

The policy provides methods for merchanting trade under which a trader can buy from one country and supply to another country while based in India, against the backdrop of global instabilities.

Moreover, the requirement for recognising exporters through Status Holders based on export performance has been lowered. The bar for achieving Star House designation has been drastically lowered under the new criteria.

Among the other important efforts listed in the policy are the automatic system-based approvals and the digitization of FTP application forms.

The FTP has started processing applications for Advance Authorization extension and revalidation in a single day, as opposed to the previous three to one month process.

The DGFT claimed that even without the publication of a new FTP, policy modifications had been made since 2015.

Even if the schemes are closed, the ones approved under the policy will be honoured for the duration for which they are approved.

The expiration date of the Foreign Trade Strategy 2015–20, which was set for March 31, 2020, was repeatedly postponed because of the pandemic and the unstable geopolitical environment. Until March 31, 2023, was the most recent extension (Friday).