India is a developing country and its GDP is growing at around average 7-8% annually. As per Economic Survey 2023, the projected GDP growth rate is 6.5% and the nominal GDP of India is expected to be $3.5 trillion by 2023. The growth could be faster if exports pick up. Why is it so? Because, we are dependent more on imports despite having potential to manufacture and fulfil our requirements. There could be so many reasons behind it. Political instability, lack of promotion, poor infrastructure and complicated process of doing export business are some of them due to which India is still not able to touch that heights where we should be.
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Export is very important for country’s growth and that’s where we are lacking. In FY23, overall export (merchandise + services) was $760 billion and $676 billion in FY22. To boost the exports in our country, Ministry of Commerce and Industry, Government of India has come up a new Foreign Trade Policy (FTP) 2023 with aim to achieve the target of $2 trillion exports by 2030. It was launched on Mar 31, 2023 and became effective from Apr 1, 2023. The policy has no end date like previous one which was only for five years period. It will be dynamic and revised subsequently by incorporating feedback received from trade and industry as and when required.
Mainly, it has following four pillars on the basis which it will work.
1) From Incentive to Remission
2) Export Promotion through Collaboration
3) Ease of doing Business
4) Emerging Areas
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It is a pragmatic policy which is likely to be helpful for the exporting community. It would provide many benefits to exporters. Firstly, the focus is on reducing the complication and smoothening the application process through digitization and automation with the help of technology, it will accelerate the process and speed up the business. Simultaneously, transaction cost will also reduce. The entire life cycle of authorization shall become paperless.
Apart from this, export performance threshold for recognition of exporters has been rationalized that will enable more exporters to achieve higher status and reduced transaction cost. Also, merchanting activities from India will get some boost from the policy. Merchanting trade involves shipment of goods from one foreign country to another foreign country without touching the Indian ports.
The effective step towards internationalization of Rupee which is likely to be turning point for Indian exporters. FTP benefits extended for rupee realizations through special Vostro accounts set up as per RBI circular issued on 11 July 2022. This step could reduce forex reserve pressure of RBI and promote Rupee as a global currency. Moreover, 4 new Towns of Export Excellence (TEE) – Faridabad, Moradabad, Mirzapur, and Varanasi- were declared in addition to the already existing 39 TEE. Also, so many steps were taken to boost manufacturing in the country, benefits were extended to E-Commerce too. The value limit through courier services increased to Rs 10 Lakh per consignment from Rs 5 Lakh. Other than that, various initiatives were taken for engaging districts and making them as export hubs. On the other hand, streamlining of SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) policy and introducing Amnesty scheme (for one time settlement of default in export obligation) were also important aspects of FTP 2023.
All the above steps and launched schemes would really helpful if implemented properly. International settlement of trade in Rupee is one of the greatest move towards becoming a global leader. In my opinion, it would be really helpful in increasing active participation of exporters and boosting exports in the country. Other sectors who are involve in exporting business like, manufacturing, logistics and IT would also get benefit from this. Their earnings may grow which will likely reflect in stock prices. Tax collections are also expected to grow if exporters make good money. Overall, it is pragmatic approach to strengthen the economy amid global uncertainties.