01 Apr 2023: UPSC Exam Comprehensive News Analysis

C. GS 3 Related

Category: ECONOMY

1. New foreign trade policy

Syllabus: Mobilisation of Resources

Mains: Key Features of New Foreign Trade Policy

Context: Union government unveils new foreign trade policy.

Introduction:

• The Union Commerce, Industry and Textiles Ministry unveiled a new foreign trade policy on March 31, 2023.
• The new policy will replace the existing policy that had been in place since 2015. The new policy will begin from 2023-24 and aims to almost triple India’s goods and services exports to $2 trillion by 2030, from an estimated $760 billion in 2022-23.
  • The previous foreign trade policy for 2015-2020 had targeted exports of $900 billion by 2020. This target was extended along with the policy for three years till March 2023. 
• India’s exports were $435 billion in 2015-16 and have grown nearly 75% to an estimated $760 billion in 2022-23.
• The new policy will have no sunset date and will be tweaked based on the emerging world trade scenario and industry feedback. 

Key Provisions:

• The key approach to the policy is based on 4 pillars: (i) Incentive to Remission,  (ii) Export promotion through collaboration – Exporters, States, Districts, Indian Missions, (iii) Ease of doing business, reduction in transaction cost and e-initiatives and (iv) Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) policy.
• Process Re-Engineering and Automation
  • The FTP 2023 aims at process re-engineering and automation to facilitate ease of doing business for exporters. 
  • Ongoing schemes like Advance Authorisation, EPCG, etc. will be continued along with substantial process re-engineering and technology enablement for facilitating the exporters. 
  • FTP 2023 codifies implementation mechanisms in a paperless, online environment, building on earlier ‘ease of doing business’ initiatives. 
• Towns of Export Excellence
  • Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, 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. 
    • This is expected to boost the exports of handlooms, handicrafts, and carpets.
• Promoting export from the districts
  • The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative to promote exports at the district level and accelerate the development of a grassroots trade ecosystem. 
  • Efforts to identify export-worthy products & services and resolve concerns at the district level will be made through the State Export Promotion Committee and District Export Promotion Committee at the State and District level, respectively.
• Streamlining SCOMET Policy
  • More emphasis on the “export control” regime for better integration with export control regime countries. 
  • 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.
• 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. 
  • The consignment-wise cap on E-Commerce exports through courier has been raised from ₹5 Lakh to ₹10 Lakh in the FTP 2023.
  • Integration of Courier and Postal exports with ICEGATE will enable exporters to claim benefits under FTP. 
• Facilitation under the Export Promotion of Capital Goods (EPCG) Scheme
  • The EPCG Scheme, which allows the import of capital goods at zero customs duty for export production, is being further rationalised. Some key changes being added are:
    • The PM MITRA scheme has been added as an additional scheme eligible to claim benefits under the CSP (Common Service Provider) Scheme of Export Promotion Capital Goods Scheme (EPCG).
    • Battery Electric Vehicles (BEV) of all types, Vertical Farming equipment, Wastewater Treatment and Recycling, Rainwater harvesting system and Rainwater Filters, and Green Hydrogen are added to Green Technology products – will now be eligible for reduced Export Obligation requirements under EPCG Scheme
• Merchanting trade
  • Merchanting trade involves the shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary. 
  • Merchanting trade of restricted and prohibited items under the export policy is made possible by the new FTP.
  • This will be subject to compliance with RBI guidelines, and won’t be applicable for goods/items classified in the CITES and SCOMET list.
    • This will aid in developing certain cities like GIFT city, etc. into major merchanting hubs as seen in places like Dubai, Singapore and Hong Kong, in future.
• Amnesty Scheme
  • In line with the “Vivaad se Vishwaas” initiative, the government is introducing a special one-time Amnesty Scheme under the FTP 2023 to address default on export obligations.
  • This will provide relief to exporters who have been unable to meet their obligations under EPCG and Advance Authorizations, and who are burdened by high duty and interest costs associated with pending cases.
  • All pending cases of the default in meeting the Export Obligation (EO) of authorizations mentioned can be regularised 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. However, no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty.

Nut Graf: Union government has unveiled a new foreign trade policy that moves away from providing incentives to exporters, but lowers a few costs for smaller firms and promises swifter clearances, along with a one-time amnesty scheme for export obligation defaults.

F. Prelims Facts

1. One Indian Audit & Accounts Department One System (OIOS)

Syllabus: GS02-Polity

Prelims: Comptroller and Auditor General of India 

Context: Activation of the One Indian Audit & Accounts Department One System (OIOS).

Key Details:

• The Comptroller and Auditor General of India (CAG), Girish Chandra Murmu, on March 31, 2023, announced the full activation of the One Indian Audit & Accounts Department One System (OIOS).
• It is a web-enabled IT application with support for multiple languages, offline functionality and a mobile app, for the complete digitalisation of the audit process from April 1, 2023.
• It was first envisaged in late 2019-early 2020.
• It is the primary system of record for the entire chain of audit activities, from audit planning and design through audit execution to issue and follow-up of inspection reports to processing and finalisation of the CAG’s audit reports and follow-up. 
  • It covers all types of audit – compliance, financial and performance.
• All audit work across India will become paperless and will only be carried out digitally from April 1, 2023.
  • The only exception would be the Defence Audit offices as it requires more time because of security issues. 
• About 90 audit reports are prepared through CAG’s 130 offices across India and approved every year for submission to Parliament, state legislature or union territory legislature, containing findings on government business transacted during the preceding financial year (or earlier years).
• This will ensure accountability along with accuracy in the audit process.