The new Foreign Trade Policy (FTP) is in line with the fundamental goal of the economic policy regime, which is to do away with incentives and move towards a system that is more cost- and procedurally-friendly for exporters. According to the government, the key approach to the policy is based on four pillars: incentives for remission; export promotion through cooperation between exporters, states, districts, and Indian missions; ease of doing business, a decrease in transaction costs, and e-initiatives; and emerging areas as e-commerce developing districts as export hubs, and streamlining SCOMET policy. The term “special chemicals, organisms, materials, equipment, and technologies” is abbreviated as “SCOMET.”
“We will attain $2 trillion in exports by 2030,” said Commerce and Industry Minister Piyush Goyal in announcing the proposal. “But it shouldn't be that product exports are outpaced by services exports.” The government is right to focus on this issue because merchandise exports are lagging. They were $405.94 billion in the first 11 months of 2022–2023, an increase of 7.55 percent above $377.43 billion in the same period of 2021–22. In contrast, services exports increased by 24.56% from $227.58 billion in April 2021 to February 2022 to $296.94 billion in April 2022 to February 2023. This is not shocking considering India's manufacturing shortcomings; despite the fact that economic reforms have been underway for more than three decades, they have yet to reach the bottom of the pyramid.
This explains why states, districts, ease of doing business, lower transaction costs, and e-initiatives are given more attention in FTP.
An official press release stated that FTP 2023 is based on the continuation of tried-and-true methods for easing exports and that it is a document that is flexible and attentive to the needs of commerce. By highlighting the modifications made after FTP 2015-20's first release, the release emphasises its responsiveness and nimbleness. That may be the case, but the issue is that, as the most recent data indicate, this did little to improve merchandise exports. The success of service exports is largely attributable to the fact that business owners in this industry rarely deal with government representatives.
For instance, the boiler inspector doesn't bother an IT company. The fact that FTP 2023 is open-ended is a crucial component. It would be updated “as and when appropriate,” Director General of Foreign Trade Santosh Kumar Sarangi stated to the media. A one-time amnesty programme that allows exporters to start over and close any old outstanding authorizations is another feature. Additionally, he added, “The new policy takes the strategy of switching from an incentive-based system to a remission of taxes regime.” The implementation of a policy determines its effectiveness, just as eating the custard proves that it is good or not. If the FTP 2023's excellent intentions are put into practise, the $2 trillion export goal can be reached.
