Foreign Trade Policy (FTP 2023)

By Vikram Mehta | Updated March 2026

What Is the Foreign Trade Policy?

India's Foreign Trade Policy (FTP) is the comprehensive regulatory framework that governs all import and export activity in the country. The current edition — FTP 2023 — was notified by the Ministry of Commerce and Industry on March 31, 2023, and took effect on April 1, 2023. Unlike its predecessors, FTP 2023 has no fixed expiry date. It is designed as a living document, updated through trade notices and public notices issued by the Directorate General of Foreign Trade (DGFT) as market conditions evolve.

For foreign companies operating in India — whether through a subsidiary, branch office, or joint venture — the FTP determines what can be imported and exported, which duty exemptions are available, and what compliance obligations apply. Understanding the FTP is not optional: it directly impacts manufacturing costs (through duty-free import schemes), export competitiveness (through remission schemes like RoDTEP), and regulatory risk (through licensing requirements for restricted and SCOMET items).

FTP 2023 sets an ambitious target of USD 2 trillion in total exports by 2030 (up from approximately USD 770 billion in FY 2022-23). It shifts from the incentive-heavy approach of earlier policies to a facilitation-based model, emphasizing process automation, reduced transaction costs, and collaborative partnerships with exporters and state governments.

Legal Basis

• Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) — Section 5 empowers the Central Government to formulate and announce the Foreign Trade Policy and make provisions for facilitating and controlling imports and exports.
• FTP 2023 (Notification No. 01/2023 dated March 31, 2023) — The current policy document effective from April 1, 2023, replacing FTP 2015-2020 (which had been extended to March 31, 2023).
• Handbook of Procedures (HBP) 2023 — The operational companion to the FTP, detailing application forms, documentation requirements, and processing timelines for every scheme.
• Amendments (2025) — Paras 1.07A and 1.07B inserted to mandate stakeholder consultation before any future FTP amendments, with a 30-day public comment window.
• ITC (HS) Classification — India's tariff schedule, based on the Harmonized System, classifying all goods as Free, Restricted, or Prohibited for import/export purposes.

FTP 2023: Key Changes from FTP 2015-2020

FTP 2023 represents a structural shift in how India approaches trade policy. The table below highlights the most significant changes:

Key Export Promotion Schemes Under FTP 2023

RoDTEP (Remission of Duties and Taxes on Exported Products)

RoDTEP replaced MEIS (Merchandise Exports from India Scheme) as India's primary export incentive mechanism. Based on the WTO-compliant principle that domestic taxes should not be exported, RoDTEP refunds embedded central, state, and local taxes that are not rebated through any other mechanism (like GST input tax credit or customs duty drawback).

• Format: Credit issued as transferable e-scrips in the exporter's DGFT account
• Rates: Notified product-wise (typically 0.5% to 4.3% of FOB value); extended to chemicals and pharmaceuticals under FTP 2023
• Eligibility: Available to all merchandise exporters with valid IEC; now extended to e-commerce exports

Advance Authorization Scheme

Allows duty-free import of inputs (raw materials, components, intermediates, catalysts, consumables) required for manufacturing export products.

• Authorization validity: 12 months from issue date
• Export obligation period: 18 months from authorization (extended from 12 months for chemical sector)
• FTP 2023 changes: Extended to apparel and clothing sector on self-declaration basis; 2-Star and above Status Holders can self-ratify Input-Output Norms; user charges capped at INR 5,000 for MSMEs

EPCG (Export Promotion Capital Goods) Scheme

Permits import of capital goods at 0% customs duty for use in export production.

• Export obligation: 6x the duty saved, fulfilled within 6 years — 50% in years 1-4, 50% in years 5-6
• FTP 2023 additions: PM MITRA textile parks eligible; dairy sector exempted from average export obligation; green technology products (battery EVs, vertical farming, wastewater treatment, green hydrogen) qualify for reduced obligations
• Processing: Reduced to 1 day through automated IT system (from 3-7 days under FTP 2015-20)

Status Holder Recognition

Exporters who achieve specified export thresholds receive Status Holder certificates, unlocking operational benefits:

Exports of fruits and vegetables (ITC HS Chapters 7 and 8) receive double weightage toward status qualification under FTP 2023.

Import Regulation Under FTP 2023

Classification of Goods

All goods are classified under the ITC (HS) — India's Harmonized System-based tariff schedule — into three categories:

• Free: No DGFT license required. Most goods fall here post-liberalization. Only customs duty and GST (IGST) apply at the port.
• Restricted: Requires a specific import license or authorization from DGFT before importation. Examples include certain chemicals, second-hand capital goods, arms and ammunition, and specified agricultural products.
• Prohibited: Cannot be imported under any circumstances. Examples include tallow fat, animal rennet, and wild animals under CITES Appendix I.

SCOMET Controls

The SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) list — India's national export control list — restricts the export of dual-use and sensitive items across 8 categories. DGFT updated the SCOMET list in September 2025 to add quantum computing technologies, advanced semiconductors, and additive manufacturing equipment. Foreign companies transferring technology to or from India must verify SCOMET clearance requirements independent of their home country's export control regime.

Special Initiatives Under FTP 2023

Towns of Export Excellence

FTP 2023 designated 4 new Towns of Export Excellence, bringing the total to 43 towns: Faridabad (apparel), Moradabad (handicrafts), Mirzapur (handmade carpets), and Varanasi (handloom and handicraft). Recognised industry associations in these towns receive priority access to the Market Access Initiative (MAI) scheme for international marketing and brand promotion.

Districts as Export Hubs (DEH)

A decentralized export promotion strategy where each district identifies its core exportable products and creates a District Export Action Plan (DEAP). The initiative involves state and district-level committees working with DGFT regional offices on infrastructure, logistics, and testing facilities. This is particularly relevant for foreign companies sourcing raw materials or components from specific Indian regions.

Amnesty Scheme

FTP 2023 introduced a one-time amnesty for exporters with unfulfilled export obligations under old Advance Authorization and EPCG authorizations:

• Payment: Customs duties proportional to unfulfilled obligations
• Interest cap: Maximum 100% of the exempted Basic Customs Duty; zero interest on Additional Customs Duty and Special Additional Customs Duty
• Exclusion: Cases involving fraud or diversion under investigation are not eligible

Internationalization of the Rupee

FTP benefits now extend to export transactions settled in Indian Rupees through special Vostro accounts established per RBI Circular dated July 11, 2022. This facilitates trade with countries under sanctions or with limited USD liquidity, and allows foreign buyers to pay Indian exporters in INR without affecting FTP scheme eligibility.

Merchanting Trade

For the first time, FTP 2023 permits Indian intermediaries to facilitate shipments of goods directly between two foreign countries, without the goods passing through any Indian port. This creates opportunities for foreign companies to use Indian trading houses as intermediaries for regional trade. CITES and SCOMET items are excluded.

How FTP 2023 Affects Foreign Companies Trading with India

• Manufacturing subsidiaries: Foreign companies with Indian manufacturing operations can use Advance Authorization for duty-free raw material imports and EPCG for duty-free capital goods — substantially reducing setup and production costs. A typical 15-22% BCD saving on capital goods under EPCG directly improves project ROI.
• Sourcing from India: Foreign buyers benefit indirectly from Indian exporters' access to RoDTEP refunds, which keep Indian export prices competitive. Understanding which products qualify for RoDTEP helps in price negotiations.
• E-commerce sellers: Foreign-owned Indian entities selling through e-commerce platforms now receive full FTP benefits, including RoDTEP, Advance Authorization, and EPCG. The courier value cap increase to INR 10 lakh per consignment enables higher-value e-commerce shipments.
• Technology companies: SCOMET controls apply independently of home-country export regulations. A US or EU technology company must separately verify Indian SCOMET requirements before transferring controlled items to its Indian subsidiary.
• Compliance burden: Under Section 11 of the FTDR Act, violations carry penalties of up to 5x the value of goods and potential IEC cancellation. Foreign companies should build DGFT compliance into their India supply chain planning from day one.

Common Mistakes

• Assuming FTP 2023 operates like FTP 2015-2020. The shift from incentive-based schemes (MEIS/SEIS scrips) to remission-based schemes (RoDTEP/RoSCTL) fundamentally changes how export benefits are calculated. Companies still budgeting for the old MEIS rates (2-5% of FOB) may find RoDTEP rates are different (typically 0.5-4.3% and product-specific). Every product line's RoDTEP rate must be individually verified.
• Missing the EPCG export obligation timeline and facing 6x duty payback with 15% interest. The obligation is 6x the duty saved — not 6x the value of imports. A company that imports INR 10 crore of capital goods at 0% duty (saving INR 2.2 crore at 22% BCD) must export INR 13.2 crore within 6 years. Missing this triggers payback of INR 2.2 crore plus compound interest at 15% per annum, which can exceed the original duty saved.
• Not applying for Status Holder recognition despite meeting the threshold. Many foreign-owned Indian exporters cross the USD 3 million (One-Star) or USD 15 million (Two-Star) thresholds without applying. The benefits — self-certification of origin, priority processing, capped user fees at INR 5,000 — are significant operational advantages that go unclaimed, adding unnecessary processing time and costs.
• Treating Indian SCOMET controls as equivalent to home-country export control lists. India's SCOMET list is aligned with multilateral regimes but is not identical to the US EAR, EU Dual-Use Regulation, or UK Strategic Export Controls. Items freely exportable under US EAR may be restricted under Indian SCOMET, and vice versa. After the September 2025 SCOMET update, this gap has widened further with new controls on quantum computing and advanced semiconductors.
• Ignoring the annual IEC update requirement and having shipments blocked at the port. DGFT mandates online confirmation of IEC details between April and June each year. Non-compliance automatically deactivates the IEC, which means customs will not clear imports or process export incentive claims until the IEC is reactivated. Foreign companies with Indian operations must calendar this annually.

Practical Example

ScanTech Electronics A/S, a Danish electronics manufacturer, establishes ScanTech India Pvt Ltd in Chennai as a wholly owned subsidiary to manufacture IoT sensors for export to Southeast Asian markets.

Capital goods import (EPCG): ScanTech India imports SMT (Surface Mount Technology) assembly lines and testing equipment worth INR 12 crore from Denmark. At 15% Basic Customs Duty, the duty saved is INR 1.8 crore. The EPCG export obligation is 6 x INR 1.8 crore = INR 10.8 crore over 6 years (INR 5.4 crore in years 1-4, INR 5.4 crore in years 5-6).

Raw material imports (Advance Authorization): ScanTech India obtains Advance Authorization for duty-free import of semiconductor chips, PCBs, and connectors worth INR 3 crore per quarter. Without this authorization, the customs duty (BCD + IGST) would add approximately INR 60 lakh per quarter to production costs. The export obligation requires all finished goods to be exported within 18 months of each authorization.

Export benefits (RoDTEP): ScanTech India's IoT sensors qualify for RoDTEP at 1.5% of FOB value. With annual exports of INR 20 crore, the RoDTEP credit is INR 30 lakh per year — received as transferable e-scrips that can offset customs duties on future imports or be sold to other importers.

Status Holder (Year 3): After 3 years of cumulative exports exceeding USD 15 million, ScanTech India applies for Two-Star Export House status, gaining self-certification privileges and self-ratification of Input-Output Norms — eliminating the need for Norms Committee approval on future Advance Authorizations.

Total FTP savings over 3 years: INR 1.8 crore (EPCG duty) + INR 7.2 crore (Advance Authorization duty saved) + INR 90 lakh (RoDTEP) = INR 9.9 crore in duty and tax savings, making the India manufacturing operation significantly more competitive than production in Denmark or direct sourcing from China.

Key Takeaways

• FTP 2023 is India's current trade policy — effective from April 1, 2023, with no fixed expiry date, targeting USD 2 trillion in exports by 2030
• The policy shifted from incentive scrips (MEIS/SEIS) to WTO-compliant remission (RoDTEP/RoSCTL) and process facilitation
• Key schemes for foreign manufacturers in India: Advance Authorization (duty-free inputs, 18-month export obligation), EPCG (0% duty on capital goods, 6x export obligation in 6 years), and RoDTEP (0.5-4.3% refund on FOB value)
• Status Holder thresholds were significantly reduced — Two-Star from USD 25 million to USD 15 million, Five-Star from USD 2 billion to USD 800 million
• SCOMET controls were expanded in September 2025 to cover quantum computing and advanced semiconductors — verify independently from home-country export controls
• Mandatory annual IEC update (April-June) is a compliance requirement that foreign companies frequently miss, causing shipment delays

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