This will be interesting news today. Commerce and Industry Minister Anand Sharma has many concerns that he would need to address. Let me put forth some of them
1. Increasing protectionism in the developed world especially wrt primary articles of exports. Does India need to worry?
2. The increasing services exports game...the BoP components of business services that we discussed. Does the new FTP have an agenda for the services sector?
3. Given the fact that India has not been a great export oriented economy, do we look forward to major changes that will make us so?
4. China's economy is set to take a new place in the coming years..does our FTP have to exhibit a China focus?
5. There is news that the FTP may explore Latin American and African markets especially with respect to traditional exports? Do we have competitive advantage?
Will look forward to your responses based on the new Exim Policy being unveiled today (Aug 27, 2009)
Archana
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Anand Sharma ‘s Foreign Trade Policy has been welcomed by the exporters in country. The exports is expected to reach 200 billion $ in 2011 and grow at 15%,as compared to CAGR of 20% growth from 2004-08.The commerce ministry expects the export to grow at the rate of 25% by 2014.
The main goal of the policy is to stop the declining trend of exports and push it for future long growth. To minimize the vulnerability of export sector on developed markets and increase the products exported, exports have been diversified both product wise and geographically.
The Foreign trade policy (2009-14) provides the export sector with needed sops and attention. It has focused on employment generating and growing industries like gems and jewellery, carpets, leather, textile etc.
1. The focus has been extending schemes for exporters like EPCGS(Export Promotion Capital goods Scheme) and DEPB(Duty Entitlement Passbook) till at least 2011.Further,transaction cost have been reduced.
2. Focused Market Scheme Coverage extended to 26 new countries, 16 in Latin America and 10 in Asia-Oceania to diversify the export geographically. At present, India’s exports are highly concentrated in Europe (36%),US(18%) and Japan(16%).
3. There is a move towards making the product more competitive by promoting sops on technology up gradation and incentivizing import of capital goods.
But due to the financial crisis, the exports is at 35.43 bn $ , as forecasted for 2009-10.So is the target of 200 bn $ by 2011 is’nt too ambitious. Are these measures adequate for achieving the desired export growth?
The recently presented Foreign trade policy has been welcomed by the exporters due to the fact the government has provided a well needed support to various sectors via continuing tax breaks, continuation of interest subvention scheme,Infrastructure development, employment support initiative in textiles, leather etc., dollar credit ease,establishing diamond bourses etc.
Also the export target set of $200 bn is quite reasonable as last year 08 the target was not achived with exports remaining at $168 bn(Misquoted figure of $35.43bn).
Though there is an emphasis on trying to double size of exports, emphasis has been rightly laid on finding newer markets with consumption potential, also the duty free capex is being mobilized to achieve economies of scale and reduce costs and not essentially for innovation. One of major points that this policy misses out is on the fact that cost differentiation can be challenged by other countries thereby reducing long run efficiency and sustainibility of exports. Thus there was a need for the policy to provide a sense of direction for establishments to work on newer products which could help in providing the much needed better terms of trade which we desperately lack.
Thus though in the short run(4-5 years) the policy would be able to achieve these forecasted targets but for India to make this its own century we need to fast produce goods and provide such services which are not easily replicable...
The UPA Government has been voted in to serve yet another term, at a time when the entire world is facing an unprecedented economic slow-down. The WTO estimates project a grim forecast that global trade is likely to decline by 9% in volume terms and the IMF estimates project a decline of over 11%. With exports already down close to about 30% this year,(due to a contraction in demand in the traditional markets of our exports.), Balance of Trade is sure to worsen and may be pick up in the later part of this year.In the last five years our exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates.On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years. Although short term objective of this policy seems to arrest declining export and may be suppress the voice in the export related industries for a rescue package. The long term policy objective for the Government is to double India's share in global trade by 2020. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and levies, would be the three pillars, which will support us to achieve this target.
But will just giving adequate confidence really work???A Special thrust needs to be provided to employment intensive sectors which have witnessed job losses in the wake of this recession, especially in the fields of textile, leather, handicrafts, etc.And not to forget the very sensitive Jewellery sector.
The Government seeks to promote Brand India through six or more 'Made in India' shows to be organized across the world every year. This reminds me of "INDIA SHINING CAMPAIGN OF MAJOR POLITICAL PARTY"...I jusT hope it works this time around...
Accordingly, an important element of the Foreign Trade Policy is to help exporters for technological upgradation. Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at zero percent duty.
In order to reduce the transaction cost and institutional bottlenecks, the e-trade project would be implemented in a time bound manner to bring all stake holders on a common platform.
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