The new foreign trade policy (FTP) lays down a blueprint to integrate India with the global markets and make it a reliable and trusted trade partner. It envisions a roadmap for India to become a developed nation by 2047. Setting an ambitious target of reaching $2 trillion in total exports by 2030, it is a crucial pillar of Prime Minister Narendra Modi’s vision of building a $5 trillion economy. With the international trade landscape undergoing a significant change, it is an opportune moment to make the country a significant partner in world trade with its inclusion in the global value chains.
The FTP also brings out the need for a collaborative partnership with State Governments to build and encourage export promotion at the district level through awareness, capacity building, outreach, and infrastructure upgradation. This will enable trade and industry to realise its true potential. The policy has done away with the sunset clause of five years and opened the policy to be able to match the changing tapestries of global geopolitics, which gives space to amend the policy as and when required. The policy is based on dynamism and decentralisation with district and state-level export initiatives which is a game changer to put India in a leadership position in the global exports map.
It understands the importance of MSMEs in the vision of Amrit Kaal, and the only way India can become one of the top exporting nations is through capacity building of MSMEs which can become a part of the global supply chains. The policy aims to empower MSMEs by providing them with a level playing field to compete with larger players in the global market.
Under the FTP 2023, MSMEs will be provided with various incentives and support to enhance their exports. One of the key benefits is the reduction of compliance costs for exporters. The policy will simplify the export procedures and reduce the time taken for clearance, which will help MSMEs save costs and improve their competitiveness.
A significant benefit of the policy is the inclusion of the Export Credit Guarantee Corporation (ECGC) scheme for small exporters. The scheme will provide credit insurance to exporters and enable them to access credit at lower rates. This will help MSMEs overcome one of the major challenges they face in exporting – lack of access to credit.
Another game changer for MSMEs is the separate chapter on Promoting Cross Border Trade in Digital Economy through e-commerce exports. It aims to promote e-commerce exports by providing MSMEs with access to international e-commerce platforms. As part of the Niryat Bandhu Scheme (NBS) under the new policy, the government has made provisions for the promotion of e-commerce and other emerging channels of exports.
In addition to increasing awareness regarding e-commerce rules and processes, provisions have been made for capacity building and skill development for promoting e-commerce exports under NBS. This will enable them to reach out to a global audience and sell their products directly to customers in foreign markets. The government will also provide support for MSMEs to set up their e-commerce platforms and enhance their digital capabilities.
The FTP 2023 paves the way for establishing e-commerce hubs and related elements such as payment reconciliation, bookkeeping, returns policy, and export entitlements. The e-commerce export hubs (ECEH), as defined in the policy, will act as centres for favourable business infrastructure and will facilitate cross-border e-commerce activities. The operationalisation of Dak Ghar Niryat Kendras, which will work in tandem with FPOs, is another key measure under the policy facilitating cross-border e-commerce exports. These Dak Kendras will be particularly beneficial for artisans/craftsmen, as they will enable them to reach foreign markets.
The consignment-wise cap on e-commerce exports through courier has also been raised from Rs 5 lakh to Rs 10 lakh. This, while a step in the right direction, is being seen as a barrier for SME exporters in high-value sectors such as electronics and jewellery.
In addition to these measures, the policy also aims to enhance the competitiveness of MSMEs by providing them with access to modern technology and innovation. The government will set up technology centres and incubators to help MSMEs upgrade their skills and adopt modern technologies. The policy also aims to promote research and development in MSMEs by providing them with funding and support.
Overall, the FTP 2023 is a step in the right direction for empowering MSMEs, especially those engaged in e-commerce exports. The policy will provide them with the necessary support and incentives to compete effectively in the global market. However, what is missing is a concrete roadmap as to how this will be achieved, especially with regard to logistics and compliance, which are pain points for smaller sellers.
The need to develop long-term capabilities is paramount and pre-existing examples of e-commerce exports can be referred to for this. This FTP is a visionary policy, and with the right implementation and enablement, MSMEs can play a significant role in driving India’s exports and economic growth in the years to come.
https://timesofindia.indiatimes.com/blogs/toi-edit-page/foreign-trade-policy-2023-boosting-msmes-for-a-2-trillion-export-target/
