Indian rupee set to be a global currency under new FTP

On 31 March, India unveiled its Foreign Trade Policy (FTP) 2023, which aims to boost the country’s exports to $2 trillion by 2030. The new policy has moved away from incentives to a remission and entitlement-based regime. The FTP no longer has a five-year period clause and will be updated as and when needed.

Four new Towns of Export Excellence (TEE) have been identified in addition to the 39 existing TEEs. The FTP benefits have been extended to e-commerce exports, which are estimated to grow to $200-300 billion by 2030. The value limit for exports through courier services has been increased from Rs 5 lakh to Rs 10 lakh per consignment.

The new FTP also seeks to make the Indian rupee a global currency and allow international trade settlement in the domestic currency. The DGFT has further stated that the FTP 2023 is dynamic and responsive to the emerging trade scenario.

What is a Foreign Trade Policy?

The Foreign Trade Policy is a comprehensive framework aimed at increasing exports of goods and services, generating employment and increasing value addition in the country. The policy focuses on supporting both the manufacturing and services sectors, with a special emphasis on improving the ease of doing business.

Established by the Directorate General of Foreign Trade (DGFT), the governing body for the promotion and facilitation of exports and imports under the Ministry of Commerce and Industry, the policy emphasises on adopting a twin strategy of promoting traditional and sunrise sectors of exports including services.

Benefits of the New FTP

The new FTP seeks to make Indian exports more competitive in the international market. It aims to achieve this by providing incentives to exporters based on their performance, rather than providing them with upfront benefits. This is expected to incentivize exporters to focus on quality and competitiveness.

The extension of FTP benefits to e-commerce exports and the increase in the value limit for exports through courier services is expected to boost exports in these sectors. The identification of new TEEs is also expected to provide a boost to the export sector in those areas.

The new Foreign Trade Policy 2023 is a dynamic and responsive policy that aims to boost Indian exports to $2 trillion by 2030. With its focus on promoting both traditional and sunrise sectors of exports and improving the ease of doing business, the policy is expected to provide a boost to the Indian economy.

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