India's Medium Term  (2002-07) Export Strategy

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Though India's Export-Import Policy covers the period 1997-2002, it is customary for the government to make amendments to it every year. Each year's amendment marks a further step in the liberalisation process.

Chronology of India's removal of Quantitative Restrictions

To boost up exports and create a more export-friendly  environment, India has announced a five-year (2002-07) medium-term export strategy for the manufacturing sector. New export strategy highlights  15 key macro policy issues. India  has registered 21 percent export growth in 2000-01 and the manufacturing sector's share significantly has gone up to 83 percent from 76 percent in 1999-2000. According to the country's federal Commerce and Industry minister Murasoli Maran, the new export strategy is based on experiences gathered through earlier strategies, changing global trade scenario and comparative advantages that India enjoys over others. Indian federal  government strongly feels that if the new export strategy is implemented properly, country's  share in global trade may go up to 1 percent by 2006-07 or US$ 80.48 billion from 0.67 percent in fiscal 2000-01. The target could be achieved only if country's export growth is maintained at compound  rate of  11.9 percent. According to latest available figures of  the Director General of Foreign Trade (DGFT), India's total imports of 300 sensitive items during the first nine months (April-December, 2001) of the current fiscal year (2001-02) registered positive growth of 6.7 percent.

To closely monitor the implementation of the new  export policy, an institutional mechanism is being set up. An Action Committee under the federal Commerce secretary with the Economic Adviser as the nodal officer, shall ensure that resources are committed to achieve goals and provide the dynamic track against which progress can be measured. Among others, the Action Committee  will have  a core group of senior officers , representatives of major export promotion bodies and representatives from academia. The Action Committee will be aided by a Market Intelligence Unit (MIU).    

India's federal  Commerce ministry has identified  220  items to bring under special focus. These have been selected after detailed study of markets of major importing countries including US, EU and Japan. The identified items have been categorised under seven sectors, namely, engineering, electronic and electrical, textiles, gems and jewelleries, chemicals and allied products, leather and footwear, agriculture and allied sectors.

Following are the key macro policy issues focused in the new  export strategy:

• Policy for price competitiveness by maintaining appropriate Real Effective Exchange Rate of the Rupee at appropriate level, adopting a common nomenclature at 8-digit level for tariffs and balancing  overall tariffs by protecting sensitive items likely to be affected by removal of quantitative restriction (QRs).

• An effective and responsive trade defence mechanism to provide protection against unfair trade practices.

• WTO compatible policies by providing non-actionable subsidies  and supporting agriculture sector.

• Continually evaluating FDI policy framework and procedural packages to promote exports as is being done now.

• Effective tax rebate schemes to help exporters, which include transparent  and comprehensive  schemes of reimbursement, comprehensive VAT system at every level, rebating services tax besides lower customs and excise duties for major inputs needed for exports which can minimise the need for duty drawback.

• Reducing transaction costs by EDI system and digital signatures, procedural simplifications, increasing  accountability of export processing personnel, etc.

• Developing export infrastructure by identifying and prioritising  specific infrastructure projects within SEZ crucial for export enhancement and including export infrastructure as part of the EXIM  Policy.

• Forging Strategic Free Trade Agreements after analysing the complementarity between partner countries.

• More flexibility in Labour policy by re-examining the role of the government  in the labour markets.

• An Export Credit strategy in a WTO compatible  way and enhancing bank credit for export sector in general and Agro-exports in particular.

• Enhancing export responsibility of state governments to play a proactive role in facilitating better environment  for export production by widening  and deepening the scheme already taken up for export assistance to states.

• Developing SSI export industry by a well-formulated  package offering support to SSI sector.

• Continuation of the policy related to Special Economic Zones (SEZs) and adding new features like port-based SEZs, single window clearances, providing offshore banking facilities, etc.

• Significant expansion of Market Assistance Programmes currently in vogue and effective internal dissemination of information.

• Based on the experience of Focus LAC, giving a regional focus  to other areas like Africa.

• Need to formulate a separate Export strategy for Services sector. 

Sectorwise  Export Strategy

Indian federal government has identified 220 items falling under seven categories. To boost up exports of those items, sector-wise strategies have been drawn up. The sectorwise list includes Engineering/Electronic/Electrical and allied; Textiles; Gems & Jewellery ; Chemicals and Allied products; Agriculture and Allied products; Leather and Leather manufactures; and Other items.

ENGINEERING/ELECTRONIC/ELECTRICAL

• Support for SMEs to modernise

• Accreditation of testing laboratories in India by overseas agencies

• Research and Development

• Other measures to effectively  counter NTBs in the form of TBT conditions

• Brand Promotion

• Warehousing facilities in overseas markets etc.

Three-pronged export marketing strategy for automobile component exports:

TEXTILES

1. Increased investments in key areas;
2. Infrastructure development by setting up 'Apparel Parks';
3. Textiles Centres Infrastructure Development Schemes;
4. Brand Promotion; and
5. Market Assistance schemes

GEMS AND JEWELLERY

* Provisional Estimate
Source : Director General of Foreign Trade, Federal Ministry of Commerce, Govt. of India

Source: India’s Federal Commerce minister’s Exim Policy (2001-02) speech delivered on March 31, 2000.

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