caalley logo

The alley for Indian Chartered Accountants

Foreign Trade Policy 2023: One-time settlement of default, e-commerce exports, trade payments in rupee key focus areas

New Delhi, March 31, 2023 

The new foreign trade policy has not put any end date to the trade policy targets, with officials saying the policy will keep getting dynamically updated based on feedback from stakeholders.

An amnesty scheme for one-time settlement of default in export obligation, a push towards e-commerce exports, trade payments in rupee, and merchanting trade norms have been listed among the key focus areas of the government’s new foreign trade policy announced Friday. The government reiterated its $2 trillion target for exports of goods and services by 2030 with a shift from incentives to remission and entitlement-based regime.

The foreign trade policy, which will come into effect from April 1, was unveiled after the previous policy expired three years ago, which was then extended till March 31, 2023, amid the Covid-19 pandemic and geopolitical turmoil globally. The previous foreign trade policy for 2015-2020 had aimed for an export target of $900 billion by 2020 which was extended along with the policy for three years. India is likely to end this fiscal year with total exports of $760-770 billion as against $676 billion in 2021-22.

The new foreign trade policy has not put any end date to the trade policy targets, with officials saying the policy will keep getting dynamically updated based on feedback from stakeholders. Director General of Foreign Trade (DGFT) Santosh Sarangi said the policy will be updated “as and when needed”.

Commerce and Industry Minister Piyush Goyal said that the export target of $2 trillion by 2030 will be met. He also said that industry cannot succeed only on the basis of subsidies or crutches.

Saying that the government is focusing on strengthening the rupee payment system, Commerce Secretary Sunil Barthwal said India is ready to trade in rupees with countries that are facing currency failure or have a dollar shortage.

Schemes of duty exemption such as advance authorisation, and Duty Free Import Authorization (DFIA) will continue. Four new towns of export excellence — Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handmade carpets, and Varanasi for handloom and handicraft — have been declared.

There is also a push toward the inclusion of green energy in foreign trade policy. Battery Electric Vehicles (BEV) of all types, vertical farming equipment, wastewater treatment and recycling, rainwater harvesting system and rainwater filters, and green hydrogen have been added to green technology products and will be now eligible for reduced export obligation requirement under the Export Promotion Capital Goods (EPCG) scheme.

Policy for the export of dual-use items under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) has been consolidated at one place in the trade policy. There will be a focus on simplifying policies to facilitate the export of dual-use high-end goods/technology such as UAVs/drones, cryogenic tanks, certain chemicals, etc.

Under the amnesty scheme for exporters, an online portal will be launched for registration and a six-month window till September 30 will be available to avail of the scheme. It will cover all pending cases of default in the export obligation of authorisations that can be regularised on payment of all customs duties exempted in proportion to unfulfilled export obligations. Maximum interest is capped at 100 percent of such duties exempted, no interest is payable on the portion of additional customs duty and special additional customs duty. Cases under investigation for fraud and diversion are not eligible under this scheme.

Abhishek Jain, Tax Partner, KPMG said, “Continuation of schemes such as Advance Authorisation, EPCG with procedural ease will continue to promote exports from India and foster ease of doing business. Requisite thrust has been provided to emerging sectors including battery vehicles, e-commerce and merchanting trade. Another big item has been the launch of the Amnesty Scheme which should be leveraged by various exporters. Lastly, for sectors/ industries having unresolved expectations/ issues, timely representations should be filed so as to ensure updations in policy.”

[The Indian Express]

Read more on:
Don't miss an update!
Subscribe to our newsletter