FTP 2023: The Legal Framework, and FTP Against HBP

FTP 2023 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Every earlier foreign trade policy ran for a fixed five years and lapsed. FTP 2023 has no expiry — it came into force on 1 April 2023 and "shall continue to be in operation unless otherwise specified or amended." That single change is what makes it, in the Government's own description, a "dynamic and open-ended policy."

The Central Government formulates the FTP under section 5 of the Foreign Trade (Development & Regulation) Act, 1992, by notification in the Official Gazette. FTP 2023 was notified by Notification No. 1/2023 dated 31.03.2023 and came into force on 1 April 2023. The DGFT notifies the Handbook of Procedures by Public Notice — Public Notice No. 01/2023 dated 01.04.2023. Where the two conflict, "FTP prevails over Procedure… Procedure cannot override the policy."

The five statutes behind the policy

Note how the work is divided. The FT(D&R) Act authorises the policy; the Customs Acts collect the duty and classify the goods; FEMA governs whether the money came back. A scheme benefit can fail on any of the three — an exporter who satisfies DGFT on the policy may still lose the benefit under FEMA for non-realisation.

FTP against HBP: four points of difference

The reason is hierarchical, not merely conventional. The HBP draws its authority from the FTP, which draws its authority from the statute. A procedure that contradicts the policy is a subordinate instrument exceeding its parent, and is to that extent ineffective.

Both share the same chapter structure, which makes cross-reference straightforward — "Chapter of HBP: Same as FTP."

And the procedures live in three documents: (a) the Handbook of Procedures; (b) Appendices & Aayat Niryat Forms (AANF); and (c) Standard Input Output Norms (SION) — notified "for an exporter/importer, or any Licensing/Regional Authority, or any other authority such as Customs."

The ten chapters of FTP 2023

• Chapter 1 — Legal framework and trade facilitation
• Chapter 2 — General provisions regarding imports and exports
• Chapter 3 — Developing Districts as Hubs
• Chapter 4 — Duty Exemption Remission Schemes
• Chapter 5 — Export Promotion Capital Goods (EPCG) Scheme
• Chapter 6 — EOUs, EHTPs, STPs and BTPs
• Chapter 7 — Deemed Exports
• Chapter 8 — Quality complaints and trade disputes
• Chapter 9 — Promoting Cross Border Trade In Digital Economy
• Chapter 10 — SCOMET

Chapters 3 and 9 are the structural additions of 2023 — districts as export hubs, and digital-economy trade — reflecting the policy's stated "Emerging Areas (e-Commerce, developing districts as exports hubs)."

What FTP 2023 changed

The policy's own list of what is new:

• Online approvals without physical interface;
• Recognition of new towns through the Towns of Export Excellence Scheme and exporters through the Status Holder Scheme;
• Streamlining Advance Authorization and EPCG schemes;
• Reduced fee structures and IT-based schemes for MSMEs;
• Four new towns designated as Towns of Export Excellence;
• Courier-based e-Commerce exports raised from ₹5 lakh to ₹10 lakh;
• PM MITRA scheme added as eligible for CSP and EPCG benefits;
• Self-certified Certificate of Origin with automatic approval;
• Paperless filing of the Export Obligation Discharge Certificate;
• Rupee payment to be accepted under FTP schemes.

The reduced user charges for Advance Authorisation and EPCG:

And the Status Holder thresholds were cut sharply, in USD million:

Three of the five thresholds were more than halved — a deliberate widening of the status-holder base. Status Holder scheme →

Amendments run prospectively

"Whenever, Government brings out a policy change by way of amendment, the change will be applicable prospectively (from the date of Notification) unless otherwise provided for."

And transactions straddling the change follow the old policy. "All exports and imports made up to 31.03.2023 shall, accordingly, be governed by the relevant FTP, unless otherwise specified."

What is free, and what is not

"Exports and Imports shall be 'Free' except when regulated by way of 'Prohibition', 'Restriction' or 'Exclusive trading through State Trading Enterprises (STEs)' as laid down in ITC (HS)."

And a second layer sits behind that. "there are some items which are 'Free' for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force."

ITC (HS) — the Indian Trade Classification (Harmonised System) — codes goods at 2, 4, 6 and 8 digits, aligned to the WCO's six-digit system with India maintaining an eight-digit classification. "The Import Policy is listed in Schedule 1 of ITC (HS) and the Export Policy in Schedule 2." Unless stated otherwise, the Import Policy applies to new goods only; second-hand goods are governed by Para 2.31 of the FTP.

Restricted goods may be traded "only in accordance with an Authorisation Permission or in accordance with the Procedures prescribed in a Notification / Public Notice."

And the Actual User condition applies to authorised imports: "if such imports necessitate an authorization, only the Actual User is permitted to import such goods unless the Actual User condition is specifically waived by the DGFT."

QCOs, and where the FTP relaxes them

Quality Control Orders are "mandatory standards notified under the BIS Act, 2016. Once notified, import of those goods is restricted unless they carry BIS certification (ISI/CRS mark)." And "from a Customs law angle, non-compliance makes such goods prohibited under Section 11 of the Customs Act."

Chapter 2 carves out three conditional exemptions, all confined to export production:

Advance Authorisation. Inputs may be imported without QCO compliance only where they are a pre-import condition and exclusively used for export production; the exemption must be specifically endorsed on the AA. Unused inputs and finished goods containing them cannot be sold in DTA even after regularization, and must be destroyed under GST/Customs supervision or re-exported, attracting MFN duty, interest and a 10% CIF composition fee. No clubbing is permitted, the exemption is for physical exports only, and it is not available for DFIA. The standard EO period applies, "except for textiles and chemicals (180-day EO period)."

EOUs. Same exclusive-export-production condition; no DTA clearance; an undertaking to Customs and the Development Commissioner; physical exports only.

SEZs. As for EOUs, with the undertaking given to the Development Commissioner.

The mandatory documents

For export: (1) Bill of Lading / Airway Bill / Lorry Receipt / Railway Receipt / Postal Receipt; (2) Commercial Invoice and Packing List; (3) Shipping Bill / Bill of Export / Postal Bill of Export.

For import: (1) Bill of Lading / Airway Bill / Lorry Receipt / Railway Receipt / Postal Receipt in the form of CN-22 or CN-23, as applicable; (2) Commercial Invoice and Packing List; (3) Bill of Entry.

Separate commercial invoice and packing list are also accepted, and regulatory authorities may seek additional documents for restricted goods or where NOCs or product-specific compliances apply.

Key takeaways

• FTP 2023 is made under section 5 of the FT(D&R) Act, 1992, notified by Notification No. 1/2023 dated 31.03.2023, in force from 1 April 2023, and has no expiry date.
• The HBP is issued by the DGFT by Public Notice — PN No. 01/2023 — and cannot override the FTP.
• Procedures live in three documents: HBP, Appendices & ANFs, and SION.
• Amendments operate prospectively from the date of notification.
• Trade is free except where prohibited, restricted, or reserved for STEs under ITC (HS) — Schedule 1 imports, Schedule 2 exports.
• QCOs under the BIS Act, 2016 restrict imports; AA, EOU and SEZ carve-outs apply only to export production, and unused inputs must be destroyed or re-exported.
• Status Holder thresholds were cut — Three Star from 100 to 50, Four Star from 500 to 200, Five Star from 2000 to 800 USD million.
• Courier e-commerce export limit raised to ₹10 lakh; self-certified Certificate of Origin introduced.

Read next

• IEC, RCMC and the DGFT–Customs–RBI Interlinking
• Advance Authorisation: Inputs, SION and Minimum Value Addition
• Status Holder Scheme: Thresholds, Privileges and Double Weightage

Disclaimer: Positions stated as on 5 September 2026, based on section 5 of the Foreign Trade (Development & Regulation) Act, 1992, DGFT Notification No. 1/2023 dated 31 March 2023, Public Notice No. 01/2023 dated 1 April 2023, the ITC (HS) Classification, the BIS Act, 2016 and section 11 of the Customs Act, 1962, as reproduced in the ICAI Handbook on Foreign Trade Policy – Incentives, Schemes & Related FAQs (November 2025, 2nd Edition).