Foreign Trade Policy 2023 in detail- Part 2
In continuation of part-1 of the article on Foreign Trade policy 2023, we will see other elements in detail:
Process re-engineering and automation:
FTP 2023 focusses on substantial process engineering and technology enablement for facilitating the exporters. It sets out implementation mechanisms for a paperless, online enivironment in addition to existing ease of business initiatives.
- All Processes wrt duty exemption schemes ie Issuance, revalidation and EO extension shall undergo substantial process engineering and will be implemented through regional offices via rule based IT technological environment.
- Special cases identified through risk management mechanism alone shall be scrutinized manually and most other applicants shall be covered under automatic route, unless required otherwise.
- Reduction in fee structures and IT based schemes will smoothen access to export benefits for MSMEs & similar firms.
FTP 2023 has introduced provisions for merchanting trade.
a. Merchanting trade of items that were earlier either restricted or prohibited would now be possible.
b. But, it shall be subject to regulations by RBI and shall not applicable for goods classified under CITES & SCOMET list.
What is merchanting trade?
Merchanting
trade involves shipment of goods from one foreign country to another foreign country involving Indian intermediary, without touching Indian ports(Domestic Tariff Area) and the goods not undergoing any transformation.
This initiative will help in developing & converting places like Gujarat's GIFT city into merchanting hub.
Changes to EPCG scheme:
EPCG scheme is further rationalised and key elements among those changes are:
a. Dairy sector exempted from maintaining annual average export obligation.
b. PM Mitra (textile region and apparel parks) scheme added to the list of schemes eligible to claim Common service provider benefit under EPCG scheme.
c. Following products will be added to green technology products and shall be eligible for reduced Export obligation requirement, under epcg scheme:
- Battery operated electric vehicles
- vertical farming equipment
- waste water treatment and recycling equipment
- rainwater harvesting & filter
- Green hydrogen
Based on interactions with industry and EPCs, revisions to provisions have been made in the new FTP which includes:
a. Special advance authorisation scheme is extended to apparel and clothing exports, on self declaration basis, to facilitate the prompt execution of export orders.
b. Self ratification scheme for input-output norms fixation extended to 2 star and above status holders.
Amnesty scheme:
Inline with the tax dispute resolution scheme-Vivaad se Vishwas,
a. Special one-time Amnesty scheme is introduced under FTP 2023, to support exporters in getting their tax disputes resolved amicably.
b. Aimed at providing relief to exporters, who have pending cases against them cases due to their inability to meet export obligations under EPCG and Advance authorisation.
c. Folllowing relief intended to provide exporters with chance to start afresh and streamline their compliances going further.
- Regularisation of pending cases, on payment of all customs duties that were exempted earlier, in proportion to the unfulfilled export obligation.
- Penal Interest to be capped at 100% of exempted duties under this scheme.
- No interest is payable on ACD and Spl ACD, which will bring down interest burden considerably.
Conclusion:
The initiatives under Foreign trade policy 2023 ranging from from rationalisation & re-engineering of existing provisions to support automation, development of grass root level trade eco-system, capacity and talent pool building, promoting less explored segments like e-commerce and merchanting trade hubs etc are expected to strengthen India's position in global value chain and contribute towards achieving PM's vision of 2 trillion dollar exports target by 2030.