The Ministry of Commerce and Industry (“Ministry”) vide notification no. 1/2023 dated March 31st, 2023, had announced the Foreign Trade Policy 2023 (“FT Policy”) effective from April 1st, 2023. The new FT Policy has been introduced with a vision to increase exports manifold by taking into account the size of the Indian economy and manufacturing and service sector base.
The key approach to the FT Policy is based on 4 (four) pillars namely: (i) Incentive to remission; (ii) Export promotion through collaboration- exporters, states, districts, Indian missions; (iii) Ease of doing business, reduction in transaction cost and e-initiatives; and (iv) Emerging areas- e-commerce developing districts as export hubs and streamlining Special Chemicals, Organisms, Materials, Equipment, and Technologies (“SCOMET”) policy.
The following are some of the key provisions being introduced by the Ministry under the FT Policy 2023:
One of the primary objectives of the FT policy is to promote exports at the district level and accelerate the development of grassroots trade ecosystem thereby, making districts as export hubs. To identify export worthy products and services and resolve concerns at the district level, institutional mechanism consisting of State Export Promotion Committee and District Export Promotion Committee will be formulated.
The FT Policy provides the framework outlining the intent and the roadmap in order to establish e-commerce hubs and elements pertaining to book-keeping, payment reconciliation, export entitlements, and returns policy. At the outset, the consignment wise cap on e-commerce exports by way of courier has been raised from INR 5 Lakh (Indian Rupees Five Lakh) to INR 10 Lakh (Indian Rupees Ten Lakh) which will be revised or removed basis the feedback of exporters. Furthermore, Integration of Courier and Postal exports along with Indian Customs Electronic Data Interchange Gateway (“ICEGATE”) will enable the exporters to claim benefits under FT Policy.
The government aims at reducing litigation and foster trust-based relationship in order to resolve the issues faced by the exporters. Furthermore, in line with “Vivaad se Vishwas” initiative, which work towards resolving the tax disputes amicably, the government is introducing a special one-time Amnesty Scheme under the FT Policy to address default on export obligations.
The primary objective of the scheme is to provide relief not only to such exporters who are not able to meet their obligations under the Export Promotion Capital Goods (“EPCG”) scheme and Advance Authorizations but also to those exporters who are burdened by high duty and interest costs associated with pending cases. Such pending cases can be regularized upon the payment of all customs duties that were exempted in proportion to unfulfilled export obligation. Under this scheme, the interest payable is capped at 100% of these exempted duties however, no interest is payable on the portion of additional customs duty and special additional customs duty thereby, providing immense relief to the exporters in terms of interest burden.
The FT Policy 2023 provides a legal framework for promoting cross-border trade in digital economy with the help of e-commerce platforms and other emerging channels of exports thereby, making India the export hub and allowing the country to grow manifold. Further, the FT Policy 2023 has been formulated with an objective to not only increase the rate of exports but also to get more deeply involved in the global value chain thus, facilitating the ease of doing business for the exporters.
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