Key highlights of the Foreign Trade Policy, 2023

Union Minister of Commerce and Industry has launched the Foreign Trade Policy 2023.

Foreign Trade Policy, 2023

• The policy is dynamic and open-ended to accommodate the emerging needs of the time.
• It aims to promote India’s overall exports, which have already crossed US$ 750 Billion.
• The key approach to the policy is based on these 4 pillars:

1. Incentive to Remission,
2. Export promotion through collaboration – Exporters, States, Districts, Indian Missions,
3. Ease of doing business, reduction in transaction cost, and e-initiatives and
4. Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) Policy

Overview of the FTP, 2023 FTP to provide policy continuity and a responsive frameworkApproach of FTP: From Incentive to RemissionIntroduces a scheme for the remission of duties, taxes, and govt levies on export goodsDigitisation of applications for FTPAutomatic system-based approval of FTP applicationsPilot introduced for cutting processing of applications related to advanced authorization to 1 dayNorms for recognition as Star Trading Houses easedPromotes trade in Indian RupeeIntroduces provisions for merchanting tradeDairy sector to be exempted from maintaining average export obligation * Battery electric vehicles; vertical farming equipment & green hydrogen eligible for reduced obligation under Export Promotion Capital Goods (EPCG) schemeSpecial advance authorization scheme extended for the apparel & clothing sectorExtends all FTP benefits to e-commerce exportsValue limit for exports through courier service increased from Rs 5 lakh to Rs 10 lakh per consignmentFocus on engaging with states & districts through Districts as Export Hubs initiativeAims at streamlining export of dual-use items under SCOMET policyIntroduces amnesty scheme for one-time settlement of default in export obligation by advance authorization and EPCG authorization holdersFTP to be dynamic and responsive to the emerging trade scenarioRestructuring of the Department of Commerce on the anvil to make it future-ready

Key highlights

(1) Process Re-Engineering and Automation

• The policy emphasizes export promotion and development, moving away from an incentive regime to a regime that is facilitating, based on technology interface and principles of collaboration.
• Reduction in fee structures and IT-based schemes will make it easier for MSMEs and others to access export benefits.
• Duty exemption schemes for export production will now be implemented through Regional Offices in a rule-based IT system environment, eliminating the need for a manual interface.

(2) Towns of Export Excellence

• Four new towns have been designated as Towns of Export Excellence (TEE) in addition to the existing 39 towns.
• The TEEs will have priority access to export promotion funds under the Market Access Initiative (MAI) Scheme.
• It will be able to avail of Common Service Provider (CSP) benefits for export fulfillment under the EPCG Scheme.

(3) Recognition of Exporters

• Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavor basis.
• 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals.

(4) Promoting Export from the Districts

• The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative.
• This would promote exports at the district level and accelerate the development of the grassroots trade ecosystem.

(5) Streamlining SCOMET Policy

• India is placing more emphasis on the “export control” regime.
• A robust export control system in India would provide access to dual-use High-end goods and technologies to Indian exporters while facilitating exports of controlled items/technologies under SCOMET from India.

(6) Facilitating E-Commerce Exports

• Various estimates suggest e-commerce export potential in the range of $200 to $300 billion by 2030.
• FTP 2023 outlines the intent and roadmap for establishing e-commerce hubs and related elements such as payment reconciliation, bookkeeping, returns policy, and export entitlements.
• As a starting point, the consignment-wise cap on E-Commerce exports through courier has been raised from ₹5Lakh to ₹10 Lakh in the FTP 2023.

(7) Facilitation under the Export Promotion of Capital Goods (EPCG) Scheme

The government has made several changes to the Foreign Trade Policy, including:

• Adding PM MITRA scheme for textile and apparel parks to EPCG’s Common Service Provider Scheme
• Exempting the dairy sector from maintaining Average Export Obligation
• Adding green technologies such as BEVs, vertical farming equipment, and rainwater harvesting to EPCG’s reduced Export Obligation requirement.

(8) Facilitation under the Advance authorization Scheme

• DTA (Domestic Tariff Area) units can access the Advance Authorization Scheme for duty-free import of raw materials for manufacturing export items, and it can be used for domestic and export production.
• The Special Advance Authorization Scheme has been extended to the Apparel and Clothing sector to facilitate prompt execution of export orders.
• The Self-Ratification Scheme for fixation of Input-Output Norms has been extended to 2-star and above status holders.

(9) Merchanting trade

• The FTP 2023 has introduced provisions for merchanting trade, which allows the shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary.
• This will be subject to compliance with RBI guidelines, and it won’t be applicable for goods/items classified in the CITES and SCOMET list.
• This is expected to allow Indian entrepreneurs to convert certain places into major merchanting hubs.

(10) Amnesty Scheme

• The government is introducing a special one-time Amnesty Scheme under the FTP 2023 to address default on Export Obligations and provide relief to exporters who have been unable to meet their obligations under EPCG and Advance Authorizations.
• All pending cases of default in meeting Export Obligation (EO) of authorizations can be regularized on payment of all customs duties that were exempted in proportion to unfulfilled Export Obligation.
• The interest payable is capped at 100% of these exempted duties under this scheme, and no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty.
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Antarctic ice melt will slow global ocean flows

Rapidly melting Antarctic ice is dramatically slowing down the flow of water through the world’s oceans, and could have a disastrous impact on the global climate, the marine food chain, and even the stability of ice shelves, new research has found. The “overturning circulation” of the oceans, driven by the movement of denser water towards the sea floor, helps deliver heat, carbon, oxygen, and vital nutrients around the globe.

What the study found

1. As temperatures rise, freshwater from Antarctica’s melting ice enters the ocean, reducing the salinity and density of the surface water and diminishing that downward flow to the sea’s bottom.
2. While past research has looked at what could happen to similar overturning circulation in the North Atlantic – the mechanism behind the doomsday scenario that would see Europe suffer from an Arctic blast as heat transport falters – less has been done on Antarctic bottom water circulation.
3. Scientists relied on around 35 million computing hours over two years to crank through a variety of models and simulations up to the middle of this century, finding deepwater circulation in the Antarctic could weaken at twice the rate of decline in the North Atlantic.
4. They are massive volumes of water… and they are bits of the ocean that have been stable for a long time.

Disrupting the base of the food chain

1. The effect of meltwater on global ocean circulation has not yet been included in the complex models used by the IPCC to describe future climate change scenarios, but it is going to be considerable, England said.
2. Ocean overturning allows nutrients to rise from the bottom, with the Southern Ocean supporting about three-quarters of global phytoplankton production, the base of the food chain, said a second study co-author.

Leaving more CO2 in the atmosphere

1. The study’s findings also suggest the ocean would not be able to absorb as much carbon dioxide as its upper layers become more stratified, leaving more CO2 in the atmosphere.
2. The study showed that warm water intrusions in the western Antarctican ice shelf would increase, but it did not look at how this might create a feedback effect and generate even more melting.

India for “diversified” lithium exports market

Australia would have a diversified market for its lithium exports and this includes India said Don Farrell, Australia’s Minister for Trade and Tourism. Lithium is a critical metal necessary to make batteries for electric vehicles.

More about the news:

• He was speaking in the context of the U.S. Inflation Reduction Act (IRA) passed in August 2022 which grants major subsidies to electric vehicles produced in the United States.
• The European Union and South Korea have vehemently criticized the IRA because it made electric vehicles imported into the U.S. from their regions uncompetitive.
• Amitabh Kant, India’s G20 Sherpa has also labeled the Act “as the most protectionist in the world.”

Why Australia not critical of IRAbut wants diversification:

• It is because one of the clauses of the Act required that at least 40% of all the ‘critical minerals’ (which includes lithium) that go into making electric batteries must come from countries with a Free Trade Agreement with the United States.
• It doesn’t want all of those critical minerals gathered up and headed to the United States.
• Australia is the world’s biggest exporter of lithium with most of it going to China, which dominates the lithium-ion battery production market.
• Australia was looking to diversify away from a single market and this opened opportunities for India. India is building an electric vehicles industry and Australia would like to be part of it.

Indo-Australia cooperation:

• Access to critical minerals is increasingly an area of cooperation between the two countries. Australia’s Minister for Resources and India’s Minister for Mines signed an agreement earlier this month to invest $3 million each to investigate the prospects of Indian investments into two lithium- and three cobalt-prospecting projects in Australia.
• Under ‘Critical Minerals Investment Partnership’ Australia wants to ensure and build secure chains for friends and partners, like-minded democracies around the world, and even better when it involves a close neighbor like India.
• While exports of coal to India and iron ore to China continue to be major planks of Australia’s trade relationships, its commitments to be net zero (zero net carbon emissions) by 2050 and cut the share of coal in electricity generation from the existing 70% to 18% by 2030, means that coal mines are increasingly falling out favor and greater priority being accorded towards mines that yield minerals useful in making batteries.
• Australia-based Sicona which works in battery technologies, is setting up a plant in Chennai along with an as-yet-unnamed Indian company to make improved lithium-ion batteries.

 

 India’s solar push and waste management challenge

In the last few years, there has been a concerted push from policymakers and thought leaders in India to transition to a circular economy, among other things too, to enable effective waste management. For example, the Ministry of Environment, Forests, and Climate Change’s revised electronic waste (e-waste) management Rules in 2022 brought solar photovoltaic cells, panels, and modules under its ambit.

More about the news:

The Green Credit Programme under the Environmental Protection Act, announced in the 2022-2023 Union Budget, aimed to promote green growth and sustainable practices.

About India’s solar photovoltaic:

• India’s solar photovoltaic installations are dominated by crystalline silicon (c-Si) technology. A typical photovoltaic panel is made up of 93% of c-Si modules and 7% of cadmium telluride (CdTe) thin film modules.
• A c-Si module mainly consists of a glass sheet, an aluminum frame, an encapsulant, a back sheet, copper wires, and silicon wafers.
• The metals used to manufacture c-Si modules are silver, tin, and lead. The CdTe thin-film module is made of glass, encapsulant, and compound semiconductors.

What is photovoltaic waste?

• India stands fourth in solar photovoltaic deployment. India’s solar power installed capacity had reached nearly 62 GW by November 2022.
• According to a 2016 report by the International Renewable Energy Agency, India could generate 50,000-3, 25,000 tonnes of cumulative photovoltaic waste by 2030 and more than 4 million tonnes by 2050.
• In fact, India is expected to become one of the top five leading photovoltaic waste producers globally by 2045-2050.

About the waste recycling or recovery:

• According to a 2021 report, approximately 50% of total materials can be recovered through such waste management and recycling processes.
• India’s challenge is the growing informal handling of photovoltaic waste. Only about 20%of the waste is recovered in general; the rest is treated informally.
• The waste often accumulates in landfills. Landfill disposal in turn causes acidification, leaching of toxic metals (such as lead and cadmium) into the soil, and contaminates the local water.
• Gradual incineration of the panel encapsulant also releases sulfur dioxide, hydrogen fluoride, and hydrogen cyanide into the atmosphere.

Challenges ahead:

• India needs to surmount significant challenges – in the collection, storage, recycling, and repurposing of photovoltaic waste.
• The growing number (and sizes) of India’s landfills is a sign of misinformation about and ignorance of appropriate disposal practices among multiple actors and institutions across the supply chain, including producers, owners, consumers, and waste disposal facilities.
• The market to repurpose or reuse recycled photovoltaic waste is minuscule in India because of a lack of suitable incentives and schemes in which businesses can invest.