CHAPTER 01 - LEGAL FRAMEWORK AND TRADE FACILITATION:
The Foreign Trade Policy (FTP) 2023 in India is governed by the Foreign Trade (Development & Regulation) Act, 1992, and came into effect on April 1, 2023. Under this policy framework, the government has the authority to amend provisions in the interest of the public. The Directorate General of Foreign Trade (DGFT) plays a pivotal role in facilitating exports and imports and ensures good governance, transparency, and accountability in trade-related matters.
Key aspects of the policy include the recognition of "Status Holders" based on their export performance, providing them with privileges like self-declaration for authorizations and exemptions from bank guarantees. Additionally, manufacturers who are Status Holders can self-certify their goods as originating from India, which aids in qualifying for preferential treatment under international trade agreement
The policy emphasizes skilling and mentorship obligations for Status Holders to contribute to the development of the trade ecosystem. It also establishes an inter-ministerial committee to address trade-related grievances of micro, small, and medium-sized enterprises (MSMEs) with policy implications. DGFT has a Citizen's Charter that outlines timeframes for service delivery.
Overall, FTP 2023 is designed to enhance trade facilitation, reduce bureaucratic hurdles, and promote ease of doing business for exporters and importers in India, ultimately contributing to the growth of foreign trade in the country.
CHAPTER 02 - GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS:
The 2023 Foreign Trade Policy of India explains important laws and regulations in the chapter on general requirements controlling the import and export of goods and services.
According to the Indian Trade Classification (Harmonized System) [ITC (HS)], imports and exports are typically "Free" unless specifically stated as "Prohibited," "Restricted," or "Exclusive trading through State Trading Enterprises (STEs)." The DGFT website contains a list of these objects. The ITC (HS) is a system that uses codes to categorize products for import and export. The World Customs Organization's worldwide Harmonized System is in line with it, while India still uses an 8-digit system. Schedules I and II of ITC (HS) include information on import/export regulations.
Except where exempted, imports must adhere to domestic laws, rules, and standards. Some exportable commodities may also be excluded from domestic requirements if they are used to make exportable goods. All export and import operations require an Importer-Exporter Code (IEC), which is often the same as the Permanent Account Number (PAN). IEC updates and applications are completed online, and deactivation may result from non-compliance.
Invoices, bills of lading, and shipping bills are examples of required paperwork for export/import. Trade restrictions are permitted under the policy for a variety of reasons, including public health, national security, and legal duties. The policy states that DGFT has the right to reject authorizations and that they are not a right. Penalties may be imposed for violations, and businesses may be added to the Denied Entity List (DEL). The chapter also discusses trade embargoes on certain nations and organizations, including Somalia, Iran, DPRK, Iraq, ISIL, and Al Qaida.
CHAPTER 03 - DEVELOPING DISTRICTS AS EXPORT HUBS:
By identifying goods and services with export potential in each district, removing barriers to exporting these goods/services, and assisting regional exporters and manufacturers in expanding their businesses and locating global customers, this initiative aims to turn districts all over India into export hubs. This initiative intends to encourage exports, strengthen the district-level manufacturing and service sectors, and give MSMEs, farmers, and small businesses the tools they need to take advantage of export prospects on international markets. It stands for a decentralized and targeted strategy to promote district-led export growth while building self-sufficiency and self-reliance by giving district-produced goods and services a worldwide marketplace.
The creation of District Export Promotion Committees (DEPCs) led by local district officials, the creation of District Export Action Plans (DEAPs) outlining growth strategies for exports, the establishment of State/UT Export Promotion Committees, and the designation of nodal DGFT Regional Authorities for district-specific activities are important parts of this initiative. Monitoring progress and disseminating information would be made easier with the use of an online monitoring site. Each district will host export promotion activities, such as training, workshops, and outreach occasions.
In order to ensure a comprehensive approach to export promotion, the DEAPs will identify goods and services with export potential, describe essential changes, and address infrastructural and logistical needs. To support these activities, government funding and scheme convergence will be given priority.
The overall objectives of this effort are to boost exports, foster economic growth at the district level, and support AtmaNirbhar Bharat, Vocal for Local, and Make in India.
CHAPTER 04 - DUTY EXEMPTION REMISSION SCHEMES:
Under Chapter 4 of the Foreign Trade Policy 2023, various schemes are outlined to facilitate duty-free imports of inputs for export production. These schemes include:
The Duty Exemption/Remission Schemes outlined in the Foreign Trade Policy 2023 aim to promote exports and provide relief from duties and taxes. These schemes include the Advance Authorization, Duty Free Import Authorization (DFIA), and more.
The DFIA Scheme allows duty-free imports of inputs, excluding tires. A minimum 20% value addition is required. DFIA validity is 12 months, and it can be issued for each SION, with separate applications needed for EDI and non-EDI ports.
Actual user requirements must be met for these authorizations, and the imported products may include required spares. Benefits from drawbacks are provided for duty-paid imported or domestic inputs. The policy also details pre-import regulations, minimum value addition percentages, and value addition criteria for certain goods. It describes input accounting and the exclusion of specific imports.
Overall, these programs encourage value addition during the manufacturing process and provide duty-free input imports in order to increase exports.
CHAPTER 05 - EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME:
The Export Promotion Capital Goods (EPCG) Scheme in India aims to promote the import of capital goods to enhance manufacturing competitiveness and product quality. Capital goods, including machinery, computer systems, and related items, can be imported at zero customs duty under this scheme. However, the importer must fulfill an Export Obligation (EO) equivalent to 6 times the saved duties, taxes, and cess on capital goods within 6 years.
The scheme applies to manufacturer exporters, merchant exporters, and service providers, including Common Service Providers (CSPs) in designated areas. There are conditions for indigenous sourcing of capital goods, and benefits for domestic suppliers and manufacturers. Export obligations can be met through direct exports, deemed exports, and specific export schemes.
Incentives for early EO fulfilment and reduced EO requirements are available for certain categories like Green Technology Products and units in North East Region and UTs of Jammu & Kashmir and Ladakh. However, some sectors like handicrafts, handlooms, agriculture, and more are exempt from maintaining average export obligations.
Authorizations issued before December 5, 2017, are governed by the policies of their respective periods. This scheme is designed to boost India's manufacturing sector and exports by facilitating the import of essential capital goods while ensuring export commitments are met.
CHAPTER 06 - EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs):
The Electronics Hardware Technology Park (EHTP), Software Technology Park (STP), and Bio-Technology Park (BTP) schemes, as well as the Export Oriented Unit (EOU) program, all encourage Indian units to export their full output of products and services. These programs seek to increase exports, draw in investors, and create jobs. A wide range of products and services, with a few restrictions like gold jewelry, are exportable using EOUs. In some circumstances, they may also import products, including capital goods, and get raw materials for export manufacture. Sales of completed goods, rejects, waste, and byproducts inside the DTA (Domestic Tariff Area) are permitted under certain restrictions. There are requirements based on NFE (Net Foreign Exchange Earnings), and some goods contribute to NFE fulfillment.
Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs), and Bio-Technology Parks (BTPs) in India are eligible for a number of perks and privileges under the Foreign Trade Policy 2023. The Domestic Tariff Area (DTA) is a source of supplies that they may use to produce exports that qualify for Chapter 7 incentives. Suppliers of precious stones from DTA to EOUs may request replenishment authorizations. EOUs are eligible to a number of benefits, including Central Sales Tax refund and exemption from Central Excise Duty on specific items. They may also carry out inter-unit transfers, outsource work, and sell unused supplies and capital items. Once their responsibilities have been met, EOUs have the option to leave the program or, if qualified, convert. Additionally allowed are personal delivery of products, participation in exhibitions, and export and import through mail or courier.
CHAPTER 07 - DEEMED EXPORTS:
When appropriate and as defined by the government, the Foreign Trade Policy (FTP) aims to encourage "Make in India" programs and assist indigenous producers. Certain advantages are available for transactions that are deemed exports, which are those in which the commodities stay inside the nation and the currency of exchange is free foreign currency or Indian rupees.
The provision of manufactured products (e.g., against an EPCG Authorization, EOU, or capital goods) and the supply of main/subcontractors (e.g., for projects sponsored by international organizations, the United Nations, or nuclear power projects) are examples of considered exports. The Advance Authorization, Deemed Export Drawback, and reimbursement of terminal excise duty on excisable commodities are benefits for deemed exports.
Direct delivery to approved entities, no third-party suppliers, and payment in accordance are requirements for these advantages. Steel suppliers that meet specific requirements may also qualify for duty drawback. Cement, steel, and gasoline deliveries to particular organizations are eligible for advantages associated with deemed exports.
Benefits that are refunded late are subject to a 6% annual interest obligation. To review claims and stop erroneous payments, a risk management and internal audit system is in place. In addition to recovering funds, penalties are applied to misrepresentations. In general, the FTP tries to encourage particular kinds of transactions within India and assist domestic manufacturing.
CHAPTER 08 - QUALITY COMPLAINTS AND TRADE DISPUTES:
This document's major goal is to underline how crucial it is for the nation to present a favorable image overseas in order to support exports and preserve strong relationships with international customers while resolving grievances and business conflicts peacefully. It describes a procedure to address these problems, although it excludes conflicts between Indian or foreign corporations.
Key sorts of complaints taken into account include complaints about the quality of products, services, or technology that Indian exporters provide to overseas customers, complaints from importers about the quality of foreign suppliers, and complaints about unethical business practices. Both importers and exporters are subject to obligations, which include adhering to quality standards and laws and truthfully identifying products or services in customs paperwork. Penalties may be imposed for violations.
The Foreign Trade (Development and Regulation) Act of 1992 and the Foreign Trade (Regulation) Rules of 1993 provide the legal foundation for measures against ineligible exporters or importers, such as license suspension or cancellation and monetary fines.
'Committee on Quality Complaints and Trade Disputes' (CQCTD) is established under regional authorities of the Directorate General of Foreign Trade (DGFT) to address complaints and disputes. Within three months, this committee looks into and resolves complaints about quality. Conciliatory procedures are used, and harmed parties may separately seek legal redress. Technical evaluations and legal action against negligent Indian companies are examples of corrective procedures. Through Indian Missions overseas, complaints against foreign organizations are handled.
CHAPTER 09 - PROMOTING CROSS BORDER TRADE IN DIGITAL ECONOMY:
The objectives of chapter 9 are providing a framework for cross-border trade of goods and services from India in the digital economy, as well as the promotion of e-Commerce and other growing channels of exports. The terms e-Commerce platform, e-Commerce export logistics provider, and e-Commerce export and import of products and services are defined in this chapter. This chapter also explains that, subject to certain rules, exports and imports by postal service or courier are authorized.
The chapter discusses promoting e-Commerce exports to organisations using a variety of tactics, including outreach and handholding efforts, capacity building, and skill development. It also covers the development of E-Commerce Export Hubs (ECEHs), which serve as a hub for beneficial commercial facilities and cross-border e-Commerce activity. For the purposes of export, the ECEHs will offer storage, packaging, labelling, certification, testing, and other standard facilities. In order to encourage cross-border e-Commerce and help MSMEs in the hinterland and landlocked regions access global markets, the chapter also discusses the operationalization of Dak Niryat Kendras across the nation.
In conclusion, the chapter offers a thorough framework for the promotion of e-Commerce and other newly developing Indian export channels, as well as cross-border commerce of goods and services from India in the digital economy. It covers e-Commerce platforms, e-Commerce export logistics providers, and rules and regulations for exporting products and services via e-Commerce. Additionally, it covers the development of skills, capacity building, and outreach initiatives for e-Commerce export promotion. The operationalization of Dak Niryat Kendras and the development of E-Commerce Export Hubs (ECEHs) are also covered in this chapter.
CHAPTER 10 - SCOMET: SPECIAL CHEMICALS, ORGANISMS, MATERIALS, EQUIPMENT AND TECHNOLOGIES:
This chapter acknowledges that ethical exporters may occasionally disregard the export control requirements of different acts and regulations. In certain situations, DGFT supports voluntary self-disclosure of non-compliance and awareness-raising among exporters to prevent non-compliance incidents. The chapter urges responsible exporters to take the necessary steps to ensure compliance and emphasizes the need of observing export control requirements. The document also emphasizes the negative effects of non-compliance, such as severe legal consequences under the Foreign Trade (Development and Regulation) Act (FTDR) for transgressions of the Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) policy in situations other than voluntarily self-disclosure.
Chapter 10 offers comprehensive details on the numerous laws and rules governing export restrictions in India, such as the FTDR Act, the Weapons of Mass Destruction (WMD) Act, and the Customs Act. Additionally, it offers details on the numerous permits and licenses necessary for the export of restricted goods. The document intends to increase exporters' knowledge of non-compliance and encourage voluntary self-disclosure of non-compliance in order to prevent future occurrences.
CHAPTER 11 - DEFINITIONS:
The meanings of key terminology relating to export policies are provided in depth in this chapter. The definitions are crucial for exporters to comprehend the laws and rules governing exports. A number of words are defined in the text, including "Specified," "Status holder," "Stores," "Supporting Manufacturer," "State Trading Enterprises (STEs)," "Third-party exports," "Transaction Value," and "Wild Animal." According to how they are used in the export policies, these terms are defined in the document. As stated in paragraph 1.25 of the FTP, a "Status holder" is an exporter who has received recognition from a RA for their export performance. Similar to "first-party exports," "third-party exports" are defined as exports made by an exporter or manufacturer on behalf of another exporter. The names of both the manufacturer exporter/manufacturer and third-party exporters should be listed in the export documentation.
Anyone who is active in the export industry and has to grasp the many words and policies related to exports may find the document valuable. The document's definitions are thorough and cover a wide range of topics relating to export laws. The paper also defines words used in relation to services, ships, and spare parts. Readers will find it simple to comprehend the principles and rules pertaining to exports because to the definitions' straightforward and concise presentation. In general, the booklet is a valuable tool for anyone working in the export industry who has to grasp the numerous words and regulations pertaining to exports.