New Foreign Trade Policy, 2023 released by the Government

This Tax Alert summarizes the key highlights of New Foreign Trade Policy (FTP), 2023, released by the Minister of Commerce and Industry, Mr. Piyush Goyal on 31 March 2023, and the Handbook of Procedures (HBP), 2023 notified by Directorate General of Foreign Trade (DGFT) on 1 April 2023.

The key highlights of the FTP are:

• There is no end date to the new policy. Subsequent revision(s) shall be done as and when required.
  
• Approvals for various permissions under FTP shall now be online without any physical interface. 
  
• Reduction in user charges for Micro, Small and Medium Enterprises (MSME) under Advance Authorization (AA) and Export Promotion Capital Goods (EPCG) schemes.
  
• Revamp of e-Certificate of Origin (CoO) platform for self-certification of CoOs as well as automatic approval of the same is proposed, where feasible.
  
• Paperless filing of export obligation discharge applications for greater use of technology.
  
• FTP benefits extended for export realizations in INR through special Vostro accounts setup as per RBI Circular.
  
• Common service providers (CSP) in Towns of Export Excellence (TEE) are now entitled for authorization under EPCG schemes.
  
• Facilitation of e-commerce export by extending all FTP benefits to such exports. 
  
• Steps like introduction of Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme have been taken with respect to apparel and clothing sector, etc., to boost domestic manufacturing. 
  
• Introduction of special one-time amnesty scheme for one-time settlement of default in export obligations.
  

Comments

• With no sunset date, the policy appears to be dynamic with long-term focus ensuring certainty and support to export industry in India as well as FDIs. Effective implementation of Policy will be key to its success. 
  
• Automation of processes and paperless filing of applications may aid in ease of doing business objective of the Government. Businesses will need to adapt their systems to such digitized procedure.
  
• Reduction in user charges in case of AA and EPCG schemes for MSMEs is likely to reduce the operational cost and encourage further exports by such enterprises.
  
• While the establishment of e-commerce export hubs may facilitate significant growth in digital cross border trade, industry would expect business friendly procedures and guidelines for success of the government initiative.
  
• Focus on green energy products may result in the EV sector emerging as the flag bearer of the Indian export industry. 
  
• The special one-time amnesty scheme may provide much needed relief to importers who could not fulfil export obligation under AA and EPCG schemes. Reduction in duty and interest payments could have provided further comfort to such authorization holders.