India's Foreign Trade
Export-Import Statistics Direction of Foreign Trade
Export-Import Composition EXIM POLICY (2002-2007)
Foreign Trade Policy

OVERVIEW

THE trade initiatives the Indian federal government has taken since it announced the five-year ( 2004-09) foreign trade policy have started paying rich dividend. The sustained high growth rate of merchandise exports at more than 20 percent during the last four years is more than twice the current growth of Gross Domestic Product (GDP). “This has been possible as a result of stable policy framework provided by the Trade Policy and a continuous, conscious & concerted effort by the Government to reduce trade barriers, bring down transaction costs and facilitate a favorable international environment”, said the federal of Commerce & Industry's annual report released recently. After crossing the landmark figure of $ 100 billion in 2005-06, exports surged to $124 billion. During the last few years, the rising competitiveness of some of the sectors like engineering goods (auto parts) and high commodity prices (petroleum and metals) have been the driving force for high sustained growth of exports, the report pointed out. (Source: Press Information Bureau) .

The Annual Report mentions the several benefits that accrue from the Special Economic Zones (SEZs). The SEZ policy aims at generating greater economic activity and employment by providing a stable, transparent and efficient policy framework for establishment and running of SEZs. The main objectives of the SEZ Act are; generation of additional economic activity, promotion of exports of goods and services, promotion of investment from domestic and foreign sources, creation of employment opportunities and, development of infrastructure facilities.

So far, formal approval has been granted to 234 SEZ proposals and in-principle approval to 162 SEZ proposals. Investment of the order of Rs.1,00,000 crore including FDI of $ 5-6 billion is expected by end of December 2007 leading to creation of direct employment of 5 lakh jobs. Out of the 234 formal approvals, notifications have already been issued in respect of 63 SEZs. IN the 63 notified SEZs which have come up after 10th February 2006, investment of Rs.13,435 crore has already been made in less than one year. These SEZs have, so far, provided direct employment to 18457 persons.

With a view to ensuring healthy growth and improved productively in the plantation sector, the Government has initiated a number of measures during the year. A Special Purpose Tea Fund (SPTF) has been set up under the Tea Board for funding replantation and rejuvenation of old tea bushes with the goal of long-term development of tea industry. The proposal is to cover an area of 2.1 lakh hectares for rejuvenation and replantation activities over a period of 15 years. To begin with, the scheme would be implemented till the end of 11th Plan (including the remaining period of 2006-07) with an estimated outlay of Rs.567.10 crore covering an area of 85044 hectares. Under the SPTF, the Government would be providing a subsidy of 25 percent of the cost, the report said.


KAMAL NATH SAYS
'Exports are engines of growth, drivers of employment' 

Over the years, India’s foreign trade has come to occupy a pivotal position in the economic scenario and prosperity of the country. Exports are no longer means of generating dollars, as was the position in the country during our initial phase of development. Now exports are the engines of growth and the drivers of employment generation. While the remarkable growth in exports which we have witnessed in recent years has contributed immensely to the higher rates of economic growth recorded in the country, our imports have helped modernize the Indian industry and built capacities for enhanced production.

When the UPA Government assumed office three years ago, our merchandise exports were US$ 63.84 billion. In the year ending March 2007, the exports surged to US$ 125 billion. This near doubling in three years represents an annual compounded growth of 25% compared to 12.73% in the previous three years. Our exports have become globally competitive and found many new markets. Our export basket is expanding with the addition of new items and this includes many value added petroleum products produced by our oil refineries and petro-chemical complexes. Our exports of machinery, instrumentation and engineering goods grew by 35% last year. We are increasingly exporting automobile components and becoming an international hub for automobile and component making.

With merchandise-imports growing faster than exports of goods, we do have a trade deficit. But, taking into account the export of services, the position improves substantially and the trade gap in goods and services becomes much smaller and more manageable. In fact, I find that our non-oil imports consist significantly of capital goods, raw-materials and other critical inputs which are required for sustaining our industrial growth, particularly the manufacturing process. As the Minister in-charge of the Industry portfolio also, I wouldconsider this as a healthy development, which augurs well for creation of production capacity and employment generation for the future."

Extracts from Commerce & Industry minister Kamal Nath’s address at the release of Annual Supplement to the Foreign Trade Policy 2004-09 released on April 19, 2007 )
 

On multilateral trade, throughout the negotiations, India has continued to pursue its national interests across all the areas under the Doha Work Programme. It continued to work constructively with its coalition partners, particularly, the G-20 and the G-33 in the agriculture, NAMA-11 and other developing country groupings including the African Group, ACP countries, CARICOM, and LDCs in order to secure its development imperatives.

The Doha Round, which was launched in November 2001, achieved an important milestone with the Declaration issued at Sixth Ministerial Conference of the WTO held in Hong Kong in December 2005 with WTO members agreeing to establish modalities for negotiating agriculture access and Non-Agricultural market Access (NAMA) and to conclude the negotiations across all areas of the Doha Round by 2006 end. Intensive discussions through January to July 2006 had focused mainly on the triangular issues of domestic support, Agricultural Market Access (AMA) and NAMA. Negotiations under the Doha Round in the WTO have been stalemated primarily over agricultural trade. As the gap remained too wide, the formal meeting of the Trade Negotiating Committee (TNC) held on 24th July 2006 recommended for suspension of the negotiations across the Round as a whole. The WTO General Council at its meeting held on 27th July 2006 supported this recommendation for suspension of the Doha Round negotiations as a whole. A soft resumption of negotiations across the board was agreed on the basis of TNC decision held on 16th November 2006. Full-scale resumption of the negotiations across the board was reported by the negotiations across the board was reported by the Chairman of the TNC in the meeting of the General Council held on 7th February 2007. India has welcomed the soft resumption and the subsequent full-scale resumption of the negotiations.

The 7th India-EU Summit was held in Helsinki in October 2006. The Summit agreed that both sides move towards negotiations for a broad-based Trade and Investment Agreement. The European Commission is currently seeking a mandate from its Council of Ministers for the launch of negotiations for such an Agreement.

During the year, a review of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) was undertaken and fruitful discussions took place for smooth and purposeful implementation of the Agreement. Negotiations for conclusion of the Free Trade Agreement with ASEAN are well underway. Both sides have shown flexibility to conclude the agreement as early as possible and against this backdrop, three meetings of India-ASEAN Trade Negotiating Committee were held during the year. It is hoped to conclude the FTA with ASEAN by July 2007. A Trade and Economic Framework (TEF) Agreement has also been signed with Australia for enhancing bilateral trade and investment on a comprehensive basis.


EXPORTS FOR MORE INCLUSIVE GROWTH*

Working for a more inclusive growth process, I am ensuring that the Foreign Trade Policy becomes a vehicle for faster development of our rural areas and of agriculture, on which over 60% of our people still depend for their livelihood. Exports of agriculture products like spices, fruits and vegetables are growing rapidly at 35 to 40% annually.

Incentivising Agri exports

*Our ‘Vishesh Krishi and Gram Udyog Yojana’ (VKGUY) is being expanded to include coconut oil, soyabean oil, potato flakes, meals and flours, cardamom, food preparations like soups, sauces, pasta & bakery products, artistic wooden furniture, herbal extracts of forest products, malt and minor forest produce, etc.

*I am also introducing a new Scheme for incentivising agro processing with status holders being rewarded with duty credit scrips equal to 10% of the value of agricultural exports, provided they use them for duty redemption on imports of cold storage, pack houses, reefer vans, etc. This would be over and above the benefits available from the existing schemes of Ministries of Agriculture and Food Processing, etc. Benefits under VKGUY would also be given to such EOUs which do not avail direct tax benefits. I lay the highest emphasis on developing agricultural exports to ensure that product diversification improves in Indian agriculture. As we all know, we have widespread subsistence farming which has to move towards producing marketable surpluses, be it for domestic or export markets.

Enlarging Focus Product & Focus Market Schemes

*Buoyed with the success achieved by the Focus Product Scheme (FPS), I am not only enlarging the items included under it, but also increasing the allocation for it by more than 50% from the existing level of Rs.650 crores to Rs.1000 crores.  Mica and its variants, barley, oats, soyabean, cigar/cheroots, bovine fats and copra are being included under it. Also, 16 new countries including 10 CIS countries are being included under the Focus Market Scheme (FMS).

Thrust on Handloom, Handicrafts, Cottage and Tiny Industries

*Our handloom and handicraft industries will receive a special focus in this year’s Trade Policy, and the new initiative will provide for tools, machinery and equipment for handicrafts within the present duty-free entitlement ceiling. This would allow these rural-based activities to modernize and scale up operations to meet the market challenges. Also, exemption from duty is being granted on the machinery and equipment needed for effluent treatment plants required by handloom and handicraft industries. In a similar measure to further support the cottage and the tiny industrial sector, the export obligation period under EPCG Scheme for them is being increased from 8 to 12 years.

*By enlarging and better funding, the VKGUY, FPS, FMS, handloom and handicrafts and the cottage and tiny sectors, our endeavour is to reach out to the over 650 million people who live in the rural areas and whose lives have not been really touched by the process of industrial and services led growth we are currently witnessing. I am of the firm conviction that if our growth has to be sustainable over time, it should not remain urban-centric or be confined to only a few cities and their peripheral areas.

SECTOR-SPECIFIC INITIATIVES

Gems & Jewellery

*Sectors like gems and jewellery, which are in the forefront of our export efforts, are being given greater attention in the New Policy. Tools, machinery and equipment needed by it would be covered within the present duty-free entitlement limit and keeping in view the increase in global prices of precious metals, the duty-free entitlement for consumables for export of rhodium plated finished silver jewellery has been increased to 3% of FOB value of exports. To ensure quality and competitiveness of our diamond exporters, we have included the testing facility at Dubai in our approved list of Certifying Agencies.

Export of Services exempted from Service Tax

*With a view to facilitating the export of services from India, all the services rendered abroad and charged on exports from India would henceforth be exempted from payment of service tax. This was a long pending demand of our exporting community and I am happy to be able to accede to it. Similarly, service tax on services rendered in India, but utilized by exports would be exempted or remitted. A remission mechanism, where exemption is not available, is being put in place in consultation with Department of Revenue.

*India’s IT sector had so far led the Business Process Outsourcing (BPO) boom and made India one of the leading players in export of services. With increasing competition in the BPO sector emerging from China, East European countries and others, we need to evolve new avenues for exports of services. Knowledge Process Outsourcing (KPO) and Engineering Process Outsourcing (EPO) are fast emerging as the new areas of opportunity. The current global EPO market is estimated at 2 to 3 per cent of the total global expenditure and is likely to become 5 per cent by 2010 and 9 to 10 per cent by 2015. Given our comparative advantage in manpower, skills and design capabilities, we should aspire to capture 20 to 25 per cent of the global market share. Several initiatives in this regard would need to be taken, both at the Central and State Government levels.

GENERAL EXPORT PROMOTION SCHEMES

*Though the DEPB (Duty Entitlement Pass Book) Scheme stands extended for another year upto 31.3.2008, I am aware of the need to have a new scheme in its place by next year. I hope that all stakeholders particularly Export Promotion Councils and Commodity Boards would give their views to DGFT regarding the new scheme latest by May 31, 2007.

*Realising the growing potential of India to export high-tech items, an Export Promotion Scheme for them is being launched under which a duty credit of 10% of incremental export growth would be given as an incentive. The list of eligible products is being drawn up in consultation with the concerned scientific Ministries.

*We have also been able to meet another pending demand of the exporters, who would now become eligible for reimbursement of cost of duty on Fuel and Special Additional Duty (SAD).

*I am also increasing the limit for duty free import of samples from Rs.60,000 to Rs.75,000.

Import of spares, tools, spare refractories for all the existing imported plant and machinery would also be now allowed under Export Promotion Capital Goods (EPCG) Scheme. This should allow the manufacturers to replace and more optimally utilize their machinery imported earlier.

*I am now doing away with the present restrictive requirement of block-wise fulfillment of export obligations. This should not only reduce transaction cost and paper work, but also minimise the effect of cyclical fluctuations in international markets. I am further directing that wherever more than one concurrent EPCG authorization has been issued, the fresh EPCG authorization would build upon the last required average export obligation only, notwithstanding the actual achievements of the previous year. This way better performance would not be penalized. Additionally, we are providing for waiving the outstanding export obligations, where force majeure and other unforeseen circumstances have prevented the fulfillment of the export obligations.

*Developers and co-developers of SEZs would be notified for benefits for duty neutralization under DEPB, DFIA (Duty Free Import Authorization) and Advanced Authorization Schemes. Supplies of accessories, such as buttons and hangers by EOUs to DTA units will be counted for net foreign exchange calculations, if these items are exported along with export product from DTA. With effect from 1st April 2006, interest would be given on delays on effecting refund on terminal excise duty, duty draw back on deemed exports and refund of CST on supplies to EOUs. This would be similar to the facilities being given on delays in customs and income tax refunds by the respective departments.

REDUCING TRANSACTION COSTS & DELAYS

*I am fully aware that trade transaction costs in India tend to be high and can erode our competitiveness. If we have to continue to grow through the trade route, it is of utmost importance that we streamline our procedure and processes and adopt global best practices, including in port handling, customs clearances, and transportation arrangements. To start with, the following measures are being introduced to reduce the transaction costs:

  • Verification of documents under various export promotion schemes would done in the same manner as under DEPB, which has now been online for quite some time. Second verification by the customs authorities under EPCG and advanced authorization scheme would be resorted to only on random basis.

  • Installation certificate on imported capital goods can now be obtained from a Chartered Engineer instead instead of only from an Excise official.

  • The length of the existing ‘Aayat Niryat Form’ has also been reduced substantially.

  • The word ‘manufacturing’ is being clearly defined in the new Income Tax Code to ensure greater predictability and stability in determining direct tax liability of domestic manufacturers.

TRADE POLICY & FOREIGN DIRECT INVESTMENT

*I must mention here about the robust growth in our Foreign Direct Investment.  A liberal Trade Policy has a direct effect on FDI flows and the two are closely inter-related.  The year 2006-07 has seen our FDI equity inflow go up to almost US$ 16 billion from US$ 5.5 billion in the previous year – almost tripling of the inflows in one year.  The last three years of our Government has seen a staggering 725% increase in FDI inflows – up from US$ 2.22 billion in 2003-04 to US$ 16 billion in 2006-07!  In line with the international practice of including the retained earnings reinvested, our FDI touches US$ 19 billion in 2006-07, constituting 2.3% of our GDP. This is about 6.8% of the gross capital formation or gross investment in the economy.  I am sure, you would agree, that this is quantum jump compared to only 0.5% of GDP and about 1.5% of gross investment three years ago.  The directional flow of FDI into manufacturing and export of goods and services is contributing immensely to our export efforts.

Special Economic Zones (SEZs)

*Our SEZs are also receiving considerable foreign investments and becoming instruments of employment generation and export promotion.  92 SEZs have been notified till date and 50 of these are at various stages of implementation. Over 18,000 direct jobs have already been created and it is expected that as many as 1.5 million jobs would be created in the SEZs already approved.

*I would like to conclude by recalling the long way we have come in developing our export capabilities and enhancing our global competitiveness. Till the early 90’s, our focus was on import substitution measures and minimizing the trade gap. Since then we have crossed many milestones to emerge as a major trading nation with over one-third of our GDP coming from foreign trade. In this background, merchandise export target of US$ 160 billion is being set for the current year 2007-08 and US$ 200 billion for 2008-09. This upward revision in our goal – up from US$ 150 billion envisaged earlier – should not be too difficult to attain, given our strong economic fundamentals, the entrepreneurship of our exporting community and the collective resolve of government and trade & industry.

* Annual Supplement (2007) to the Foreign Trade Policy 2004-09

India’s cumulative value of exports for first nine months of the current fiscal year (April- December, 2008) stood at $ 131990 million (Rs.585594 crore) as against $ 112737 million (Rs. 454997) registering a growth of 17.1 per cent in terms of Dollar and 28.7 per cent in terms of Rupee over the same period last year. Exports during December, 2008 were valued at $ 12690 million which was 1.1 per cent lower than the level of $ 12825 million during December, 2007. In terms of rupee, exports touched Rs. 61715 crore, which was 22 per cent higher than the value of exports during December, 2007.

India’s Imports during December, 2008 were valued at $ 20256 million representing an increase of 8.8 per cent over the level of imports valued at $ 18610 million in December, 2007. In terms of Rupee, imports increased by 34.2 per cent. Cumulative value of imports for the period April- December, 2008 was $ 225809 million (Rs. 1003947 crore) as against $ 171718 million (Rs. 693445 crore) registering a growth of 31.5 per cent in terms of Dollar and 44.8 per cent in terms of Rupee over the same period last year.

Oil imports during December, 2008 were valued at $ 4712 million which was 30.9 per cent lower than oil imports valued at $ 6824 million in the corresponding period last year. Oil imports during April- December, 2008 were valued at $ 78827 million which was 44.8 per cent higher than the oil imports of $ 54421 million in the corresponding period last year.

Non-oil imports during December, 2008 were estimated at $ 15544 million which was 31.9 per cent higher than non-oil imports of $ 11786 million in December, 2007. Non-oil imports during April- December, 2008 were valued at $ 146982 million which was 25.3 per cent higher than the level of such imports valued at $ 117297 million in April- December, 2007.

The trade deficit for April- December, 2008 was estimated at $ 93819 million which was higher than the deficit at $ 58981 million during April- December, 2007. (Source: Federal ministry of Commerce, Government of India)


India's Merchandise Exports and Imports

(April to December 2008)

In $ Million In Rs Crore

EXPORTS

EXPORTS

2007-08

112737 2007-08 454997

2008-09*

131990 2008-09* 585594

GROWTH (percent)

17.1 GROWTH (percent) 28.7

IMPORTS

IMPORTS

2007-08

171718 2007-08 693445

2008-09*

225809 2008-09* 1003947

GROWTH (percent)

31.5 GROWTH (percent) 44.8

TRADE BALANCE

TRADE BALANCE

2007-08

-58981 2007-08  -238448

2008-09*

-93819 2008-09*  -418353
*   Provisional 

SOURCE
:   Federal Ministry of Commerce, Government of India

The Annual Supplement (2006) introduced two new schemes to give a push to employment generation, particularly in semi-urban and rural areas – a key objective of the Foreign Trade Policy. These 2 schemes are: the “Focus Product Scheme” to give a thrust to the manufacture and export of certain industrial products which could generate large employment per unit of investment compared to other products; and the “Focus Market Scheme” to penetrate markets to which India’s exports were comparatively low and which Indian exporters had perhaps been neglecting due to high freight costs and undeveloped networks but which were markets of the future.

The Focus Product Scheme would allow duty-credit facility at 2.5 percent of the FOB value of exports on 50 percent of the export turnover of notified products, such as value added fish and leather products, stationery items, fireworks, sports goods and toys, and handloom & handicraft items. The Focus Market Scheme, on the other hand, allows duty credit facility at 2.5 percent of the FOB value of exports of all products to the notified countries. The scrip and the items imported against it for both these schemes would be freely transferable. These two Schemes has replaced the Target Plus Scheme.

In order to take the benefits of foreign trade further to rural areas, the Krishi Vishesh Upaj Yojana was being expanded to include village and cottage industries and was being renamed as the Vishi Krishi Upaj Aur Gram Udyog Yojana. Thus, it had been decided to incentivise export of village and cottage industry products by awarding a duty-free scrip at the rate of 5% of FOB value of exports under the expanded scheme.

The incidence of unrebated Service Tax and Fringe Benefit Tax on exports would be factored in the various duty neutralisation and remission schemes, adding that details of this were being worked out and would be announced separately.

In order to promote services exports which account for 52% of India’s GDP, and provide jobs to a large number of urban educated youth, a number of features were being added in the Served from India Scheme to promote services exports. “The Scheme will now allow transfer of both the scrip and the imported input to the Group Service Company, whereas earlier transfer of imported material only was allowed”, the minister said.

A slew of measures has been initiated to exploit India’s potential to become an international hub for gems & jewellery. The measures include allowing import of precious metal scrap and used jewellery for melting, refining and re-export of jewellery; and reduction in value-addition norm on export of gold and silver jewellery from 7 percent to 4.5 percent in view of the increase of gold & silver prices in the international market in recent years which had made the present value-addition norms unrealistic. “The diamond trade, which was concentrated in Antwerp, is moving out – to Dubai, to Tel Aviv. I want Mumbai be right up there, and not lose out to its fellow Asian cities. This Supplement now introduces a number of measures for facilitating export of value added products catering to changing needs of the market and facilitating easier product movement across the borders and allowing import of precious metal scrap for refining, ” the minister maintained.

In order to help India emerge as a hub of auto components, import of new vehicles by auto component manufacturers for R&D purposes would now be allowed without homologation (i.e. testing for fitness on Indian roads required for import of new models of cars) so as to give the sector easier access to latest technologies.

In order to tap the business opportunity in supplies of stores (food, beverages and other supplies) and refueling of long distance flights, it has been decided to treat such supplies on an equal footing with other exports, making them eligible for benefits under various export promotion schemes. This would enable India to offer competitive fuel prices and attract mid-route stops of international flights. Currently, most airlines replenish supplies or refuel at Thailand, Malaysia or Singapore since these supplies were not treated as exports in India.

Further, the salient features of the Advance Licensing Scheme (which allows imports of inputs before exports) and Duty Free Replenishment Certificate (which allows transfer of import entitlements) have been clubbed to launch a new scheme called “Duty Free Import Authorisation Scheme”. The rationale is that export production requires use of many inputs in small quantities as per the standard input-output norms, and though such inputs were allowed to be imported duty-free under the Advance Licence Scheme, exporters generally were not importing such items because of lack of economies of scale and were forced to source them locally at a higher price. The new scheme addresses the issue by offering the facility to import the required inputs before exports and allows the transfer of scrip once the export obligation is complete. The scheme is made effective from May 1, 2006. Simultaneously, the DFRC scheme would be phased out and shall be available only for exports effected upto 30th April, 2006.

The Supplement introduces certain flexibilities in the conditions relating to maintenance of average export performance under the Export Promotion Capital Goods (EPCG) scheme as in a number of situations exporters were finding it difficult to maintain average export performance and undertake additional export obligations either because of sickness or international market dynamics or technology changes. Further, as an export facilitation measure, it has been decided to extend the period of export obligation fulfillment by a further period of two years based on certain condition.

As a trade facilitative measure, it has been decided that interest on delayed payment of refunds would be paid by the government to ensure accountability and cut delays. Further, fast track clearance procedures are put in place for units of Export Oriented Units (EOUs) having turnover of Rs.15 crore.

To simplify procedures relating to international trade and putting in place an exporter friendly regime for obtaining import authorizations and disbursement of export linked incentives, number of steps have been taken. A web based online system of filing import & export applications is functional. Requests for obtaining authorizations relating to Advance Licence, EPCG Licence and DEPB are to be filed on the DGFT website with a digital signature and payment of licence fee through the Electronic Fund Transfer mode. No manual applications and supporting documents are required to be submitted. All EDI applications are processed within one working day. We propose to take more EDI initiatives in the next six months to take the process further”.


RESERVE  BANK OF INDIA REPORT

Pattern of exports changing

India's central banking authority, Reserve Bank of India in its Report on Currency and Finance, 2002-03 said that since the initiation of economic reforms, India’s outward orientation has increased considerably. The destination pattern of Indian exports has remarkably changed whereby the importance of developing countries as an export market has considerably increased. There is, however, some concern that India has not been able to fully utilise its potential in international trade. In contrast to the dramatic changes in exports of East Asia, India’s experience has seemingly fallen short of expectation. India’s share in global trade did not rise as impressively and the commodity structure of India’s exports remained almost unchanged until the mid-1990s. Moreover, unlike the East Asian countries where industry has been the major driver of exports growth, the contribution of industrial exports in India has been comparatively low. This could perhaps be attributed to small-scale industry reservations, high transaction costs and inflexible labour laws besides other structural bottlenecks. The linkages between trade and foreign investment in India indicate that FDI has been much less important in driving India’s export growth, except in information technology. The labour cost in India, however, is one of the lowest among its competitor countries. Moreover, given the exports structure of India, the potential for higher exports of manufactures, especially to the developed countries, is high.

It is important to note that despite significant liberalisation of imports with reduction in tariffs, phasing out of quantitative restrictions and allowing bullion imports through the formal channel, the country’s current account deficit has remained modest during the 1990s. Besides, the overall balance of payments has been in surplus for most of the years and consequently the country’s foreign exchange reserves have increased significantly. This suggests that tariff reductions could be carried out faster than envisaged earlier, without posing any significant risk to the balance of payments.

A report Towards an Employment Oriented Export Strategies: Some Explorations prepared by RIS (Research & Information System for Developing Countries) revealed that exports have emerged as an increasingly important source of job creation in the Indian economy. In 2004-05, the export sector is reported to have generated incremental direct employment of 1.4 million (i.e.14.85 lakh) over the previous year, bringing the total employment generated by the export sector in India to 9 million (i.e., 90.06 lakh) jobs, corresponding to exports amounting to nearly US $ 80 billion achieved during the year. This is besides the export-related indirect jobs created through backward linkages and in logistics and related sectors which are estimated to add up to another 6.9 million (i.e. 69.66 lakh) jobs. In all, merchandise export activity seems to sustain nearly sixteen million jobs currently.

Referring to the target of doubling exports to $ 150 bn by 2009-10, the report says that “achievement of this target of exports is likely to generate 136 lakh new jobs (81.57 lakh direct and 54.61 lakh indirect) in the economy in the next five years”. The report further says that If India is able to exploit export opportunities in labour intensive goods and follow labour intensive modes of production, India’s merchandise exports in 2009-10 could reach US $ 165 bn which would generate 21 million (i.e. 210 lakh) new jobs (directly and indirectly). The report identifies the following 12 export sectors as employment intensive: Textiles & garments; Leather goods; Gems & jewellery; Cereal exports; Horticulture exports; Flowers, fruits and vegetables; Dairy products; Processed foods; Toys & sports goods; Pharmaceutical industry; Automobiles and auto components; Consumer electronics and electronic hardware.

India's Merchandise Trade (2005-06)

 

In  $ million

 

In Rs crore

EXPORTS

EXPORTS

2004-05

80672.41

2004-05

361879.16

2005-06

100606.92

2005-06

445657.97

Growth

24.71

Growth

23.15

IMPORTS

IMPORTS

2004-05

106630.51

2004-05

478301.75

2005-06

140237.65

2005-06

620826.68

Growth

31.52

Growth

29.80

TRADE BALANCE

TRADE BALANCE

2004-05

-25958.10

2004-05

-116422.59

2005-06

-39630.73

2005-06

-175168.71

SOURCE:   Federal ministry of Commerce, Government of India

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Updated on February 6, 2009