Thursday, March 28, 2024
HomePoliticsFocus on rupee trade, e-commerce exports: Key highlights of Foreign Trade Policy...

Focus on rupee trade, e-commerce exports: Key highlights of Foreign Trade Policy 2023

New Delhi: The new Foreign Trade Policy (FTP), released by the Modi government Friday after a gap of three years, focuses on e-commerce exports and promotion of rupee trade with a vision to take India’s goods and services exports to $2 trillion by 2030. Also, contrary to the practice of announcing 5-year policies, this one will have no end date.

The new FTP, which comes into effect on 1 April, replaces the earlier FTP (2015-2020). The reason for the delay in the new policy was due to the Covid pandemic and recent geopolitical issues, explained government officials while releasing the new document.

The policy comes at a time when globally costs of food, fuel and fertiliser are rising brought on by the Ukraine war, and some Western economies are attempting to fend off recessionary trends.

However, Director General of Foreign Trade (DGFT) Santosh Sarangi, while presenting the new policy, said “Our exporters should be able to leverage exports in spite of the slow global trade outlook.” 

Total exports in merchandise and services is expected to cross $770 billion by the end of this fiscal compared to $676 billion in 2021-22, he added.

Industry heads from sectors that constitute India’s main export basket expressed optimism about the new policy.

“Making FTP real-time is a great move and the emphasis on e-commerce will boost our exports,” Sabyasachi Ray, Executive Director of The Gem & Jewellery Export Promotion Council of India, told ThePrint. 

“Since gems and jewellery is a cluster-based manufacture and export sector, the decentralising of exports in districts will further develop our clusters and boost overall growth from the sector.”

In a statement, Naren Goenka, Chairman of Apparel Export Promotion Council, praised the  the FTP’s reduction in licence fees for Micro, Small and Medium Enterprises (MSMEs) and extension of the Special Advance Authorisation Scheme for the apparel and clothing sector.

ThePrint explains the main takeaways of FTP 2023.


Also Read: ‘Similar or higher’ goods exports likely for India in FY 2023-24: Director General of Foreign Trade


Rupee trade & ‘disaster proofing’

The new FTP proposes reduced licence fees for MSMEs, provisions for merchanting trade, extensions of existing incentive schemes and more. 

However, a key factor is its focus on rupee trade, given the context of the Ukraine war which has highlighted the need for trade settlements in currencies other than the US dollar for certain nations. 

For example, India is undertaking rupee-ruble trade with Russia, as the latter has faced a barrage of sanctions from the West over the Ukraine war. Apart from Russia, the RBI has also allowed India to trade with banks of 17 other countries like Germany, Guyana, Israel, New Zealand, Oman, Sri Lanka and the United Kingdom.

Without naming countries, Commerce Secretary Sunil Barthwal said through rupee-trade, India can provide “disaster proofing” for certain nations.

“If there are countries where there are currency failures or they have dollar shortages, we are willing to trade in rupee with them which will not only take the exports forward but also disaster proof those countries. We are playing the same role as multilateral agencies used to play earlier,” he said, presenting the FTP Friday. 

Section 2.52 of the new policy says overseas rupee payments can only be carried out using special Vostro accounts as mandated by the Reserve Bank of India (RBI).

E-commerce exports, digitisation of processes

The new FTP lays emphasis on e-commerce export facilitation. According to Sarangi, India’s e-commerce export can grow up to $200-300 billion by 2030. 

Along with this, it calls digitisation and streamlining of various procedures for exporters. These include e-certification of origin for goods and online approval for issuance, revalidation or extension of licences.

“To supplement FTA negotiation efforts, we are issuing both preferential as well as non-preferential e-certificates of origin,” he added.

Rules of origin are critical for FTAs, as they are used to determine if products are eligible for duty-free or reduced duties.

Shift from incentives to remission-based regime

The previous FTP, introduced in 2015, ran into trouble with international trade organisations. For example, the two umbrella schemes it introduced for export subsidies — Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS) — had to be scrapped due to pushback from the US at the World Trade Organisation. 

In January 2021, the Refund of Duties and Taxes on Exported Products (RoDTEP) scheme replaced the MEIS and there was no such replacement for service exporters.

Unlike the previous policy which focused on subsidies, the new FTP shifts towards a remission-based regime for exporters. “The policy proposes to shift from an incentives-based regime to a remission and entitlement-based one,” Sarangi explained.

This means that unlike subsidies which work like exemptions, remission schemes enable exporters to get back duties on inputs used in exported goods.

Anupriya Patel, Minister of State for Commerce and Industry, remarked that India has witnessed decades of “policy uncertainty which has impacted its economic performance”. 

This makes it all the more essential to have a policy which is dynamic, responds to changing global situations, is open to amendments and provides certainty to exporters and importers, she added.

(Edited by Geethalakshmi Ramanathan)


Also Read: India’s service exports hit all-time high of $273.6 bn in 2022. Outlook is rosy too


Source: The Print

RELATED ARTICLES
- Advertisment -

Most Popular

Recent Comments