The Foreign Trade Policy (FTP) 2023-28 has announced several initiatives to promote exports and facilitate trade. These initiatives are aimed at reducing transaction costs and enabling more exporters to achieve higher status. In this article, we will discuss the key highlights of the FTP 2023-28.
Rationalization of Export Performance Thresholds for Recognition of Exporters as Status Holders
One of the major initiatives under the FTP 2023-28 is the rationalization of export performance thresholds for the recognition of exporters as status holders. This initiative will enable more exporters to achieve higher status and reduce transaction costs.
Exporters are recognized as status holders based on their export performance. The FTP 2023-28 has revised the export performance thresholds for recognition of exporters as status holders. The revised thresholds are as follows:
i) One Star Export House:
FOB/FOR value of exports of Rs. 3 crore in any two out of three preceding licensing years.
ii) Two Star Export House:
FOB/FOR value of exports of Rs. 15 crore in any three out of five preceding licensing years.
iii) Three Star Export House:
FOB/FOR value of exports of Rs. 50 crore in any five out of seven preceding licensing years.
iv) Four Star Export House:
FOB/FOR value of exports of Rs. 150 crore in any seven out of ten preceding licensing years.
v) Five Star Export House:
FOB/FOR value of exports of Rs. 500 crore in any ten preceding licensing years.
This initiative will enable more exporters to achieve higher status and avail of benefits such as duty credit scrips, exemption from furnishing of bank guarantees, and access to special economic zones.
Merchanting Trade Involving Shipment of Goods from One Foreign Country to Another Foreign Country
The FTP 2023-28 has allowed merchanting trade involving shipment of goods from one foreign country to another foreign country subject to compliance with RBI guidelines, except for goods/items in the CITES and SCOMET list. Merchanting trade refers to the purchase and sale of goods without taking physical possession of the goods.
This initiative will facilitate the movement of goods across international borders and promote international trade.
Rupee Payment Accepted Under FTP Schemes
Under the FTP 2023-28, rupee payment is accepted under FTP schemes, and FTP benefits are extended for rupee realizations through special Vostro accounts. This initiative will promote the use of rupee payments in international trade and reduce transaction costs.
Four New Towns of Export Excellence Declared
The FTP 2023-28 has declared four new towns of export excellence, adding to the existing 39 towns. Towns of Export Excellence (TEE) are industrial clusters recognized for export performance. The recognition helps clusters maximize their potential and move up the value chain.
The benefits of the TEE scheme include recognition, the Market Access Initiative (MAI) scheme, and the common service provider facility. The TEEs and associated units get financial assistance for export promotion projects, capacity building, and technological services.
Common service providers are entitled to authorization under the Export Promotion Capital Goods (EPCG) scheme. This allows exporters to use infrastructure for the conversion from inputs to final export products without owning it.
In conclusion, the FTP 2023-28 has announced several initiatives to promote exports and facilitate trade. These initiatives will reduce transaction costs and enable more exporters to achieve higher status. The initiatives include the rationalization of export performance thresholds for recognition of exporters as status holders, merchanting trade involving shipment of goods from one foreign country to another foreign country, rupee payment accepted under FTP schemes, and four new towns of export excellence declared.
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