Foreign Trade Policy 2023 - Andees Consulting

After extending the existing Foreign Trade Policy 2015-20 for the last 3 years initially due to Covid pandemic and then because of the volatile geo-political scenario, a NEW Foreign Trade Policy 2023 was announced today at Vanijya Bhawan, New Delhi. Actually, there is not much New in the policy and as the key highlights themselves suggest it is being announced to provide the policy continuity. The Commerce Secretary announced that the Foreign Trade Policy would now not be linked to any date and the subsequent revisions shall be done as and when required. The policy document was not available on the DGFT website till about 5 pm today (31.03.2023). The most prominent amongst the highlights of the new policy are:

Amnesty scheme for Default in Export Obligation: This would help Advance Authorization and EPCG Authorization holders who have not been able to fulfil their EOs to regularize their cases by paying the duty saved with interest where maximum interest is capped at 100% of such duty. A special benefit in the scheme is that no interest is payable on the portion of Additional Custom Duty and Special Additional Custom Duty which will substantially reduce the interest liability. The scheme is valid till 30.09.2023. Strangely however the online module to register the licenses has still not started after two weeks of Public Notice, neither has any customs notification is issued on the matter.
Merchanting trade made more free. : Merchanting trade provisions of RBI required the 3rd country traders to deal in only those items which are free as per the India’s Foreign Trade Policy even though the goods are not touching the Indian shores at all. Thus restricted and prohibited items were not allowed to be traded. The new Foreign Trade Policy has recognized this unnecessary restriction and now allows such merchanting trade without any restrictions except for CITES and SCOMET. Andees played a very active role in identifying this problem, and bringing it to the notice of the Government and followed it up till the end. RBI’s master direction however has still not been amended, but is expected to be corrected soon.
Substantial reduction in the application fee for Advance authorizations and EPCG schemes for MSMEs: The maximum fee MSMEs would now have to pay is only Rs. 5,000/- as against the earlier Rs. 1,00,000/-.
A thrust on E-commerce exports: All Foreign Trade Policy benefits would now be extended to e-commerce exports. Necessary changes in the IT system, regulatory updates, training and handholding would be taken up.
Districts as export hub initiative: Government is trying to actively partner States and Districts in export promotion. The State and District export promotion committees would create institutional mechanisms at the local level to strategize exports, identification of potential products and services and preparation of export action plans.

All other key highlights announced are the ones that have already been undertaken in the last few years of Digitization, Ease of Doing Business and Rupee Trade Initiatives.

The Commerce Secretary, Shri Sunil Barthwal emphasizes on the 5Ds which have been instrumental in designing the new Foreign Trade Policy:

Duration: Foreign Trade Policy is no longer bound by any date or duration.
Dynamics: Foreign Trade Policy will keep evolving with responding to the dynamic world trade scenario.
De-centralization: Foreign Trade Policy is now being taken to States and District level to formulate strategies and plans.
Direction: Foreign Trade Policy aims to give directions to the huge potential of merchanting and service exports.
Disaster Proof: Foreign Trade Policy aims to provide disaster proofing to the country’s facing foreign exchange crises by offering them trade in Rupees

The Commerce Minister, Shri Piyush Goyal highlighted the fact that after the Prime Minister took the initiative on exports on 6th August 2021, and addressed all the stakeholders including Indian missions abroad, the exports have increased substantially in the last 2 years and may surpass 765 billion USD. He emphasised that we are very much on the path to 2 trillion USD exports till 2030 and exhorted Industry leaders to take up the challenge, and promised the Industry that necessary changes will keep happening.

There are several more aspects that are still not taken care of like:

Simplification of Duty Exemption Scheme, which needs substantial details of inputs, quantity, codes, specification of both import and export items at the time of application itself.
Very high charges for EO extension of EPCG

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ABOUT ANDEES: Andees is a professional consulting and execution firm on all matters related to Export-Import Policy, Procedures, Licenses and Incentives. Andees has served more than 1000 clients since its inception in 1997, and have handled and successfully solved several highly complicated jobs reducing substantial liabilities in their Export-Import businesses. Andees has an online process oriented system to execute jobs and offers online client Dashboards to monitor progress on their matters. To know more about our services please visit our website at www.andees.com