The Ministry of Commerce and Industry has launched the Foreign Trade Policy 2023 (FTP 2023), which came into effect on April 1, 2023. The policy replaces the previous Foreign Trade Policy 2015 and contains several key announcements that impact the tech industry. While detailed procedures and implementation guidelines are yet to be released, this article offers an in-depth look at the policy’s most relevant aspects for technology companies and professionals.
Promoting Cross Border Trade in Digital Economy
New Chapter on E-commerce Exports
The FTP 2023 introduces a new chapter focused on promoting the export of goods and services through e-commerce. The policy aims to undertake the following measures:
- Awareness creation: Increasing knowledge about e-commerce export opportunities and regulations.
- Capacity building: Enhancing the ability of businesses to engage in e-commerce exports.
- Skill development: Training individuals in the skills required for successful e-commerce exports.
- E-commerce export hubs: Establishing dedicated infrastructure and facilities for e-commerce exports.
- Strengthening connection with foreign post offices: Improving logistics and delivery systems to support cross-border e-commerce.
This initiative aligns with the recommendations made to the government by NASSCOM on multiple occasions.
Developing Districts as Export Hubs
The policy emphasizes increasing exports at the district level. The following measures will be undertaken to achieve this goal:
- District-level export promotion committees: Establishing committees to address bottlenecks for export growth in individual districts.
- Identification of high-potential products & services: Determining the most promising products and services from each district for export enhancement.
- Implementation of a plan: Developing and executing a strategy to increase exports of identified products and services.
This approach is particularly beneficial for MSMEs seeking to access international markets and expand their reach.
Existing Schemes under FTP 2023
Removal of the Services Exports from India Scheme (SEIS)
The Services Exports from India Scheme (SEIS) has been removed to make India’s foreign trade policy compliant with the World Trade Organisation’s rules. However, there are no significant changes relevant to the tech industry in other existing schemes, such as Advanced Authorisation (AA), Export Promotion Capital Goods (EPCG), Export Oriented Units, and Software Technology Parks.
Amnesty Scheme for Export Obligations Defaults
FTP 2023 introduces a one-time Amnesty Scheme to address defaults on Export Obligations (EO) under the EPCG and AA schemes. This new scheme allows businesses to regularize unfulfilled EOs by paying the pending customs duty and applicable interest, without incurring a penalty.
Consolidation of Export Controls
The policy consolidates provisions governing the export of restricted or prohibited software and technology. This consolidation aims to facilitate easy understanding and compliance by the industry. Furthermore, the policy enables businesses to make voluntary disclosures in case of default in complying with export control provisions. While the detailed rules on this are still pending, it might lead to mitigated corrective action by authorities.