The Indian government has announced several export promotion measures in the new Foreign Trade Policy 2023. These reforms aim to boost India’s exports by supporting exporters with incentives and easier compliance. Let’s examine the key highlights of the new FTP 2023 export promotion initiatives.
Status Holder Export Thresholds Rationalized
The export performance thresholds for recognition of exporters as Status Holders has been rationalized. The revised thresholds will enable more exporters to achieve higher status levels. This will reduce transaction costs and compliance burdens for Indian exporters.
Revised Status Holder Category Thresholds
i) One Star Exporter: USD 3 million (unchanged)
ii) Two Star Exporter: USD 15 million (reduced from USD 25 million)
iii) Three Star Exporter: USD 50 million (reduced from USD 100 million)
iv) Four Star Exporter: USD 200 million (reduced from USD 500 million)
v) Five Star Exporter: USD 800 million (reduced from USD 2000 million)
Merchanting Trade Reforms
Merchanting trade involving shipment of goods from one foreign country to another, without touching Indian ports, has been allowed. This is subject to RBI guidelines and exclusion of certain controlled items. This reform will boost merchanting activities from India and enable Indian intermediaries to facilitate such third-country trade.
Rupee Payment Allowed Under FTP Schemes
A key reform is the extension of FTP benefits for export proceeds realized in Indian Rupees. Exporters can avail incentives and exemptions against earnings in designated Vostro accounts as per RBI’s 11 July 2022 circular. This is an effective step towards internationalization of the Rupee and boosting exports to Russia, Iran and other countries offering Rupee payment routes.
Four New Towns of Export Excellence
The government has declared four new Towns of Export Excellence (TEEs), based on their export performance. This will enable cluster-based development of these industrial hubs. The four new TEEs are:
i) Faridabad for Apparel Exports
ii) Moradabad for Handicraft Exports
iii) Mirzapur for Handmade Carpet & Dari Exports
iv) Varanasi for Handloom & Handicraft Exports
TEEs avail benefits like easier access to export incentives, promotion funds and common facility centers. This boosts their export competitiveness.
The FTP 2023 export promotion initiatives signal India’s commitment to boosting outbound shipments. The reforms offer exporters more incentives, easier compliance and access to new payment routes.
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