Foreign Trade Policy 2023

The Foreign Trade Policy 2023 is essentially India’s roadmap to expand its presence in global trade while supporting domestic industries, MSMEs, and new sectors.

Target of the Foreign Trade Policy 2023

The most important objective of FTP 2023 is:

Target:
India aims to achieve $2 trillion in exports of goods and services by 2030.

To appreciate the scale of this target:

• India’s exports (goods + services) are currently far below this level.
• Achieving this target would significantly increase India’s share in global trade.
• It will contribute to economic growth, employment generation, and foreign exchange earnings.

Thus, FTP 2023 is designed as a long-term strategic framework rather than just a short-term export policy.

Key Approach of FTP 2023

The policy adopts several strategic approaches to promote exports.

From Incentives to Remission

Earlier export policies mainly relied on direct incentives or subsidies to exporters. However, FTP 2023 shifts towards a remission and entitlement-based regime.

What does this mean?

Instead of giving cash incentives, the government will:

• Refund or reduce duties and taxes paid during production of export goods.
• Remove embedded taxes that make exports expensive.

This approach aligns with WTO rules, because many direct subsidies are not permitted under global trade agreements.

Thus, the idea is:
Instead of rewarding exports directly, reduce the cost of exporting.

Export Promotion through Collaboration

Exports cannot grow through the efforts of exporters alone.

Therefore FTP 2023 emphasizes institutional collaboration among → Exporters, State governments, District administrations and Indian diplomatic missions abroad

This collaboration helps:

• Identify global market opportunities
• Promote Indian products internationally
• Build a supportive export ecosystem

Ease of Doing Business

One of the biggest challenges in exports is complex procedures and documentation.

FTP 2023 focuses on:

• Reducing transaction costs
• Simplifying export procedures
• Automating approvals through IT systems

Automation helps exporters → Apply online, Receive approvals faster and Reduce paperwork

This is particularly beneficial for Micro, Small and Medium Enterprises (MSMEs) which often lack resources to handle complex procedures.

Focus on Emerging Areas

The global trade landscape is rapidly changing. FTP 2023 recognizes new growth areas such as:

• E-commerce exports
• District-level export development
• Improved export control systems

By addressing these areas, the policy prepares India for future trade dynamics.

Major Features of FTP 2023

Let us now examine the major operational features introduced in the policy.

1. Process Re-Engineering and Automation

The policy introduces automated IT systems to streamline export processes.

Objectives

• Faster approvals
• Less paperwork
• Reduced human intervention
• Lower compliance burden

For exporters—especially MSMEs—this means easier access to export benefits and smoother participation in global trade.

2. Towns of Export Excellence (TEE)

FTP 2023 designates four new cities as Towns of Export Excellence → Faridabad, Mirzapur, Moradabad and Varanasi

These towns are known for specialized export products like → Handlooms, Handicrafts, Carpets and Metal products

Benefits

These towns receive priority access to funds under the Market Access Initiative (MAI) Scheme, which supports → Export promotion activities, International trade fairs and Market development

This helps boost exports while creating employment in traditional sectors.

3. Recognition of Exporters

Exporter firms are classified based on export performance.

They receive status recognition, such as:

• 2-Star Export House
• 4-Star Export House
• 5-Star Export House

Why is this important?

Recognized exporters are expected to:

• Mentor new exporters
• Provide training and skill development
• Help build a skilled workforce

This initiative supports India’s goal of building a $5 trillion economy.

4. Districts as Export Hubs (DEH)

A major innovation of FTP 2023 is promoting exports at the district level.

The initiative Districts as Export Hubs (DEH) focuses on:

• Identifying district-specific export products
• Creating district-level export action plans
• Building local export infrastructure

For example:

• Bhadohi → Carpets
• Tiruppur → Knitwear
• Moradabad → Brassware

This approach promotes grassroots economic development.

5. Streamlining SCOMET Policy

The policy strengthens regulation of SCOMET items, which stands for:

Special Chemicals, Organisms, Materials, Equipment and Technologies

These are dual-use items, meaning they can be used for → Civilian purposes, Military or strategic purposes
Therefore, exports of these items must comply with international treaties and export control regimes.

FTP 2023 aligns India’s policy with global standards to ensure responsible trade.

6. Facilitating E-Commerce Exports

Global trade is increasingly shifting toward digital platforms.

FTP 2023 plans to create e-commerce export hubs.

The policy also focuses on improving:

• Payment reconciliation
• Export documentation
• Returns management
• Bookkeeping systems

This allows small businesses to sell globally through platforms like → Amazon, Etsy and Shopify
Thus, digital trade becomes a major export channel.

7. Facilitation under the EPCG Scheme

The Export Promotion Capital Goods (EPCG) Scheme allows exporters to → Import capital goods (machinery, equipment) at zero customs duty.

In return, exporters must meet export obligations, meaning they must export goods worth a certain value.
FTP 2023 rationalizes this scheme to make it more accessible and efficient.

Additional initiatives such as PM MITRA scheme are also linked to this framework to strengthen manufacturing.

8. Promotion of Green Technology Products

FTP 2023 promotes exports of green and sustainable technologies, such as:

• Battery Electric Vehicles (BEVs)
• Vertical farming equipment
• Wastewater treatment systems
• Rainwater harvesting systems
• Green hydrogen technologies

These sectors receive reduced export obligation requirements under the EPCG scheme.

This policy aligns trade with sustainable development goals.

9. Advance Authorization Scheme (AAS)

Under the Advance Authorization Scheme, exporters can import raw materials duty-free if they are used to manufacture export goods.

FTP 2023 extends this scheme to the apparel and clothing sector.

This helps:

• Reduce production costs
• Encourage textile manufacturing
• Boost garment exports

Since textiles are a labour-intensive industry, this also promotes employment.

10. Merchanting Trade

Merchanting trade occurs when:

Goods move from one foreign country to another foreign country without entering India. But the transaction is handled by an Indian intermediary.

Example:

• Goods shipped from Vietnam → Brazil
• Indian company acts as trader and earns profit.

FTP 2023 allows merchanting trade even for certain restricted items under specific rules.

The aim is to develop GIFT City (Gujarat International Finance Tec-City) as a global trading hub similar to → Dubai, Singapore and Hong Kong

11. Amnesty Scheme

FTP 2023 introduces a one-time Amnesty Scheme.  This scheme helps exporters who failed to meet export obligations under → EPCG Scheme and Advance Authorization Scheme

They can regularize their cases by:

• Paying the exempted customs duty
• Paying capped interest (maximum 100% of duty)

The objective is to:

• Reduce litigation
• Resolve old disputes
• Build trust between exporters and government.

Overall Significance of FTP 2023

The policy collectively aims to:

• Increase India’s global export competitiveness
• Simplify export procedures
• Promote MSMEs and local industries
• Encourage digital trade and e-commerce
• Support green technology exports
• Develop district-level export ecosystems

In essence:

FTP 2023 shifts India’s trade policy from incentive-driven exports to ecosystem-driven exports.

The focus is on efficiency, sustainability, and global integration.

✅ UPSC Conceptual Insight

FTP 2023 reflects three major shifts in India’s trade strategy:

1. From subsidy → duty remission
2. From centralized export promotion → district-based export ecosystems
3. From traditional trade → digital and green trade

These shifts align India’s trade framework with WTO norms, global supply chains, and future economic trends.