India’s Foreign Trade Policy, 2023 (FTP 2023) became effective on 1 April 2023 replacing the policy for 2015-2020 that had been extended through 31 March 2023 as a result of the COVID-19 pandemic and ongoing geo-political situation (for prior coverage, see the article in the June 2021 issue of Indirect Tax News).
According to the press release issued by the Ministry of Commerce and Industry, the FTP 2023 is pragmatic and futuristic and is expected to play a critical role in facilitating India's transition to an advanced developed economy. It shifts focus from incentives to a “remission and entitlement-based” regime to remain compliant with WTO guidelines and focuses on greater trade facilitation through technology and automation. The FTP 2023 also targets process re-engineering and automation to make it easier for exporters to do business, as well as emerging areas such as dual-use high end technology items, facilitating e-commerce and collaborating with states and districts for the promotion of exports. (For a comprehensive analysis of the FTP 2023, see the alert prepared by BDO in India.)
Some highlights of FTP 2023 are as follows:
- The FTP 2023 will be in effect indefinitely and will be updated on an as needed basis rather than revisited every five years.
- The process for the issuance of authorisations to exporters will be simplified and automated to make it easier for exporters to do business and reduce transaction costs. Application fees for authorisations will be reduced for micro and small and medium-sized enterprises.
- The process of redemption of authorisations issued under Advance Authorisation / Export Promotion of Capital Goods schemes after the fulfilment of export obligations will be simplified through an online process and will be paperless.
- A targeted focus on e-commerce includes plans for e-commerce export hubs, along with a range of facilities and benefits.
- New “Towns of Export Excellence,” i.e., specific industrial clusters that achieve recognition based on export performance of specified product categories, will be established.
- A one-time amnesty scheme that was announced separately allows exporters to regularise their export compliance gaps.
Gunjan Prabhakaran
BDO in India
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