Foreign Trade Policy...Govt eyes US$200bn exports by FY11

Union Commerce Minister Anand Sharma announced the Foreign Trade Policy for the period between August 2009 to March 2014. He said that the Government is aiming to achieve an export target of US$200bn by the end of fiscal year 2010-11. This will represent an increase of 15% over the export of fiscal year 2009-10. India's exports reached US$168bn in the fiscal year 2008-09 from US$63bn in FY04 and is expected to remain flat in the year ending March 2010. Sharma also said that the Centre aims to double global merchandize trade in five years and double the share in worldwide trade by 2020. India's share of global merchandise trade was 0.83% in 2003. It rose to 1.45% in 2008 as per WTO estimates. He said that export growth should reach 25% by the end of March 2014. India's share of global commercial services export was 1.4% in 2003. It rose to 2.8% in 2008. India’s total share in goods and services trade was 0.92% in 2003. It increased to 1.64% in 2008.

The Government would extend tax refunds to exporters and explore new markets in Africa and Latin America to bolster overseas trade, Sharma said while unveiling the Foreign Trade Policy in New Delhi. "The immediate objective of this policy is to arrest and reverse the declining trend of exports and to provide additional support, especially to those sectors which have been hit badly by recession in the developed world.," Sharma said.

The policy, coming in the backdrop of a 30% contraction in exports in the last 10 months, identified 26 new markets for trade that would be eligible for sops. These include 16 in Latin America and 10 in Asia and Oceania. At present, India's exports are highly concentrated in Europe (36%) and the US (18%) and Japan (16%) and these are the worst hit by the biggest financial crisis since the 1930s. "We have taken a conscious view to expand and diversify our export markets, especially in the emerging markets of Africa, Latin America, Oceania and CIS countries," the Commerce & Industry Minister said. The Government would offset disadvantages that exporters may face in these new markets, he added.

The policy also sought to help gems and jewellery sector, one of the worst hit, by allowing duty drawback on exports. Handloom and handicrafts would be helped under the Market Development Scheme, while the government also announced the continuation of the DEPB scheme till December 2010. In the short term, the relief measures include providing dollar credit to exporters that will be overseen by a high level committee, comprising Finance Secretary, Commerce Secretary and the Indian Banks Association. To insulate the small and medium scale exporters who are unable to seek expensive legal help for foreign markets, a Directorate of Trade Remedy Measures would be set up. The policy continues with the interest subsidy for exporters of 2% for pre-shipment credit and income tax exemption to 100% Export Oriented Units (EOUs) for till the end of next fiscal.

The Commerce Minister said that infrastructure and industry sectors showed some signs of recovery in exports in June, but added that it was still difficult to take a call on the nature of the recovery in the global economy. The Indian economy has not been affected as badly as many other economies by last year's financial meltdown, Sharma said. Much of the sharp fall in Indian merchandise exports was due to contraction in external demand, especially in the big markets such as the US and Europe, he added. The slew of fiscal as well as monetary measures announced by the Government and the RBI since October 2008 have managed to mitigate the fallout from the global economic downturn, the Commerce Minister said. The global economic downturn had pushed the country’s export growth into the negative territory in October last year. This was followed by imports registering a decline in January.