Foreign Trade Policy, 2023

What it does

The Foreign Trade Policy is issued by the Central Government under the Foreign Trade (Development and Regulation) Act, 1992, which gives the Government the power to make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. The Policy exercises that power. It is a policy document, but it is made under a statute, and an import or export contrary to it is dealt with under that Act and the Customs Act, 1962.

The Policy has two kinds of content. The first is promotional: schemes that let exporters bring in inputs without paying duty, import capital goods on terms tied to an export obligation, or claim recognition as an exporter of standing. The second is regulatory: the rules on what may be imported or exported freely, what is restricted and needs an authorisation, and what is prohibited. It works with the Handbook of Procedures, which sets out how an application for each authorisation is made and decided.

Who it binds

Importers and exporters, who must hold an importer-exporter code, and anyone who applies for an authorisation or a benefit under a scheme. The Directorate General of Foreign Trade (DGFT) is the authority that issues authorisations under it. The Policy is read with the customs law, the tariff and the goods and services tax, because a benefit under the Policy is realised through those laws.

What has changed, and when

The Policy took effect on 1 April 2023. It is amended by notification of the DGFT as and when needed, and the Handbook of Procedures is amended by public notice, so the Policy as it stands is the original text read with all amendments up to the date in question.

Chapter 10 is the chapter on SCOMET, the Special Chemicals, Organisms, Materials, Equipment and Technologies list. The DGFT issued Notification No. 31/2025-26 on 23 September 2025, which amends Appendix 3, the list of SCOMET items, in Schedule II (Export Policy) of the 2022 export and import classification. Its stated effect is that the list has been updated in line with multilateral export control regimes. It comes into force 30 days from the date of issuance. Chapter 10 now describes Category 7 as certain emerging technologies and related items, previously reserved and now populated.

What turns on it in practice

The Policy matters most where the item or the destination is sensitive. Export of a SCOMET item is permitted against an authorisation unless it is prohibited or specifically exempted, and the DGFT is the licensing authority for Categories 7 and 8. An application is made online on the DGFT portal with an end user certificate in the prescribed form, and the original goes in hard copy to the SCOMET Cell.

The change to the list has a practical effect for a semiconductor fabrication business. Equipment that was once reached only through the general entry in Category 8 now has named entries of its own in Category 7, with software and technology in separate sub-categories. A manufacturer, trader or logistics firm that ships, or re-ships, such tools has to check the list before it does so, and the check is made on the item as described in the entry and not on the commercial name of the machine. The licence question arises on a re-export as well as on a first export, so a buyer that takes delivery in India and sends the goods on is within the control.

For a business that exports or imports in the ordinary way, the Policy matters through the schemes and through the procedure for a licence or authorisation, and the choice among schemes is usually a matter of duty cost and obligation to export. A missed export obligation is a default that the DGFT and the customs authorities can pursue.