Foreign Trade Policy 2023 Explained
An open-ended policy since 1 April 2023, amended by notification. Here is what it says and where it touches an AD bank.
The Foreign Trade Policy (FTP) 2023 is the Government of India's rulebook for exports and imports of goods and services. It is notified under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, administered by the Directorate General of Foreign Trade (DGFT), and came into force on 1 April 2023.
Unlike its predecessors it has no end date. Para 1.01 says it continues in operation unless otherwise specified or amended, and the government said at launch that revisions would be made as and when required. So "FTP 2023" in October 2026 means the 2023 policy as amended by later DGFT notifications, not a frozen 2023 text.
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The Documents That Make Up the Policy
- Foreign Trade Policy (FTP)
- The policy itself: what is allowed, the export promotion schemes and the conditions attached.
- Handbook of Procedures (HBP)
- DGFT's procedures for applying the policy: forms, documents, timelines. Notified and amended by public notice.
- ITC (HS)
- The item-wise schedules that classify each product's import or export policy as free, restricted, prohibited or through State Trading Enterprises.
- Appendices and ANF forms
- The Aayat Niryat Forms and appendices used for applications under the policy.
The Four Pillars
DGFT framed FTP 2023 around four pillars, with a stated aim of taking India's exports to USD 2 trillion by 2030:
- check_circleIncentive to remission: moving from incentive schemes to remitting taxes and duties already paid, through RoDTEP and RoSCTL, while continuing duty exemption through Advance Authorisation, DFIA and EPCG.
- check_circleExport promotion through collaboration with exporters, states, districts and Indian missions, including Districts as Export Hubs and Towns of Export Excellence.
- check_circleEase of doing business: paperless, online processes, automatic approvals and lower fees for MSMEs.
- check_circleEmerging areas: e-commerce exports, developing districts as export hubs and streamlining the SCOMET (dual-use goods) export control policy.
Changes Announced at Launch (March 2023)
| Area | What changed |
|---|---|
| Policy term | Open-ended policy, revised as needed instead of a five-year cycle. |
| Amnesty scheme | One-time scheme to regularise export obligation defaults under Advance Authorisation and EPCG on payment of exempted duties, with interest capped at 100% of those duties. |
| Towns of Export Excellence | Faridabad, Mirzapur, Moradabad and Varanasi added to the existing 39. |
| Status holders | Export performance thresholds for star ratings re-calibrated so more firms reach the higher tiers. |
| E-commerce | Consignment-wise cap on e-commerce exports by courier raised from ₹5 lakh to ₹10 lakh. |
| Merchanting trade | Merchanting of restricted and prohibited items allowed, subject to RBI guidelines and excluding CITES and SCOMET items. |
| Rupee trade | Export benefits extended to exports invoiced and settled in Indian rupees under RBI's framework. |
Module 6 questions on policy issues for AD banks. No signup.
The Paragraphs an AD Bank Works With
- check_circleIEC (para 2.05): no import or export of goods without an Importer-Exporter Code, which is the entity's PAN, issued by DGFT online.
- check_circleDenomination of export contracts (para 2.52, revised by DGFT Notification 30/2026-27 of 20 August 2026): export contracts and invoices, other than those involving Asian Clearing Union members, may be denominated in foreign currency or Indian rupees, and proceeds may be realised in any foreign currency or in rupees. ACU deals (other than Nepal and Bhutan) follow the currency the ACU sets; Nepal and Bhutan contracts are in rupees or as RBI directs.
- check_circleRupee realisations (para 2.53, revised the same day): exports to countries other than Nepal and Bhutan realised in rupees through banking channels, by credit to rupee accounts of persons resident outside India opened under the FEMA Deposit Regulations, qualify for FTP benefits and export obligation fulfilment at par with foreign currency realisations.
- check_circleNon-realisation (para 2.54): an exporter who fails to realise proceeds within RBI's time limit must return the benefits availed; payment received through insurance cover can still qualify.
- check_circleExport credit agencies (para 2.55): ECGC and EXIM Bank are named as India's ECAs.
- check_circleeBRC and EDPMS (para 1.17): banks report realisations electronically, which DGFT uses to process scheme benefits.
How CCFE Tests This
The syllabus line is "policy issues with specific relevance to AD banks", so questions are rarely about the policy's slogans. They come from where FTP meets FEMA: export advances, extension and write-off of unrealised bills, export claims, the currency of export contracts and IEC. Many answers depend on RBI's rules rather than DGFT's, and the trap is assuming FTP sets realisation periods or write-off limits; those are RBI's. Older material also states that export proceeds must be realised in freely convertible currency, which the August 2026 revision of para 2.52 replaced.
FAQs
When did Foreign Trade Policy 2023 come into force?expand_more
On 1 April 2023. It was announced on 31 March 2023 and has no fixed end date; it stays in operation until amended or replaced.
What are the four pillars of FTP 2023?expand_more
Incentive to remission; export promotion through collaboration with exporters, states, districts and Indian missions; ease of doing business; and emerging areas such as e-commerce, districts as export hubs and SCOMET.
Under which law is the Foreign Trade Policy issued?expand_more
Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Amendments are made under Sections 3 and 5 by notification.
Can export contracts be invoiced in Indian rupees under FTP 2023?expand_more
Yes. As revised in August 2026, para 2.52 allows contracts and invoices (other than ACU cases) in foreign currency or rupees, with proceeds realised in either.
Next steps
- IEC Codearrow_forward
- Rupee Trade & SRVAarrow_forward
- Status Holdersarrow_forward
- Syllabusarrow_forward
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