EXIM Policy: Key Features & Impact on India's Foreign Trade

India's Foreign Trade Policy (FTP) 2023-28, announced by the Ministry of Commerce and Industry in April 2023, represents a significant evolution in India's trade policy framework. Unlike previous FTPs (2015-20, extended multiple times due to COVID-19), the FTP 2023-28 adopts a dynamic, continuously updated approach — with provisions for interim revisions in response to changing global trade conditions, rather than waiting for the next policy cycle. This flexibility allows India to respond more quickly to opportunities and challenges in global trade.

The FTP 2023-28 sets an ambitious target: India's merchandise and services exports to reach $2 trillion by 2030 (from approximately $775 billion in FY2024). Achieving this requires not just incremental improvement in existing sectors but breakthrough performance in new areas including semiconductor exports, high-tech manufacturing (under PLI schemes), digital services, and green technology products. The FTP provides the regulatory and incentive framework to support this ambition.

The policy continues and refines the key export promotion schemes that have been central to India's trade policy for decades — EPCG (Export Promotion Capital Goods), Advance Authorization, and the newly introduced RoDTEP scheme — while introducing innovations such as the expanded Towns of Export Excellence program, the Special Advance Authorization Scheme for Apparel and Made-ups, and the Amnesty Scheme for regularizing legacy scheme defaults.

EPCG (Export Promotion Capital Goods): This scheme allows import of capital goods — machinery, equipment, components, spare parts — for use in the manufacture of export products, at zero Basic Customs Duty. In return, the importer must fulfill an Export Obligation (EO) of 6x the CIF value of capital goods imported, within a period of 6 years. EPCG is particularly valuable for capital-intensive manufacturing sectors including textiles, chemicals, food processing, leather, and engineering goods. ISLF manages EPCG licence applications and EO monitoring for over 200 clients.

Advance Authorization (AA): The AA scheme allows duty-free import of inputs — raw materials, components, packaging — that are physically incorporated in the export product. The scheme uses Standard Input-Output Norms (SION) to specify the permitted quantity ratios of inputs per unit of output. For products not covered by SION, self-declared norms are permitted with post-export verification. The AA scheme effectively makes Indian exporters input-cost competitive with manufacturers in lower-tariff jurisdictions.

RoDTEP (Remission of Duties and Taxes on Exported Products): Introduced in January 2021 (replacing MEIS), RoDTEP provides a rate-based remission (in the form of transferable duty credit scrips) for embedded taxes and duties that are borne by exporters but not captured in the GST refund chain — including state-level taxes, fuel costs, electricity duties on inputs, and mandi taxes on agricultural produce. RoDTEP rates are specified HS code-wise in a dedicated rate schedule maintained by the RoDTEP Committee.

Towns of Export Excellence (TEE) are clusters or towns that have achieved high export performance in specific product categories and are recognized by DGFT for additional support — including priority credit under export credit schemes, preferred treatment for infrastructure development, and marketing development fund allocation. New TEEs added under FTP 2023-28 include towns in electronics, chemicals, food processing, and medical devices sectors.

Status Holder recognition is a tiered export performance recognition system: One Star Export House (exports of ₹3 crore), Two Star (₹25 crore), Three Star (₹100 crore), Four Star (₹500 crore), and Five Star (₹2,000 crore) over the previous three financial years. Status Holders receive multiple benefits: self-certification of certificates of origin, exemption from bank guarantee in most DGFT scheme applications, simplified licensing procedures, and priority processing at customs stations.

India's import policy under FTP 2023-28 continues to distinguish between freely importable, restricted, canalised, and prohibited goods. Key restricted import categories include certain agricultural products (to protect domestic farmers), second-hand goods (subject to enhanced conditions), certain chemicals and hazardous waste (subject to MoEFCC clearance), and high-security items (subject to Home Ministry clearance). ISLF advises importers on import policy classification for every new product they intend to source internationally.