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:

1.

Export through Original Equipment Manufacturers (OEMs) for their global sourcing requirements

2.

Export to Tier I manufacturers as part of their international supply chain

3.

Direct exports to after-market

4.

Focussing on auto sector in some SEZs and automobile component centres

5.

Promoting electronics hardware sector in three ways-- hardware-software combination; Integrating local and export production; and  massive investments.

6.

Development of India as an off-shore production base for electronic components/equipment required for multinational components (MNCs) through clusterisation and low duties

7.

SEZ model for IT hardware

8.

Promoting exports of instruments and repaired products through SEZs etc.

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

1. Forging strategic alliances with producers of roughs and retailers of jewellery;
2. To build up India as a grading/trading centre for processed diamonds
3. Forward integration into gem stone jewellery;
4. Moving towards exports of jewelleries etc.

CHEMICALS & ALLIED

1.  Setting up of Comprehensive Chemicals Estates (CCEs)
2.  Enhancing awareness of Indian herbal products 
3.  Focusing on branded generic pharmaceuticals products  out of patent regime
4.  Boosting up exports of cement by lowering input costs

AGRICULTURE & ALLIED

1.

Establishing Agri. Export Zones

2.

Establishing a supply chain management

3.

Export certification programme for basmati rice

4.

Cold chain system

5.

Innovative packaging for floriculture exports

6.

Packhouses/value-added centres for mangoes

7.

Market oriented approach for tea

8.

Shift in focus from  bulk tea exports to value-added packaged tea exports

9.

Focus on export of value added forms of natural rubber and export of rubber wood

10.

Judicious mix of strategies relating to Arabica coffee vis-a-vis Robusta depending on market preference

11.

Promoting use of better handling techniques on fishing vessels and adoption of food safety and quality system in the case of marine exports.


LEATHER & LEATHER MANUFACTURES

1. A relook at existing policy for tanning sector
2. Encouraging alliances with overseas exporters in the case of leather garments
3. Bringing the leather complexes under SEZs schemes
4. Encouraging FDI in key sectors like footwear components, tanning and designing
5. Focussing on items in high demand in the case of leather footwear and new items like upholestery
6. Modernisation in footwear components . etc


OTHER ITEMS

1. Setting up toy cities and special focus in SEZs for toys
2. Fresh investments in sports goods and manufacture of non-traditional sports goods
3. Focus on China for iron ore exports
4. Lowering costs for exports of minerals and ores. etc.


Imports of 300 sensitive items (April-December, 2001)

With the opening up of economy and gradual lifting of restrictions from imported items, Indian federal government  is closely monitoring the import flows. The Indian government has identified 300 sensitive items. According to the latest available report of the federal Commerce ministry, imports of those 300 sensitive items were up 6.7 percent in the first nine months (April-December, 2001) at Rs 8364 crore from Rs 7843 crore a year ago. The groupwise import picture shows that edible oil, cotton & silk, spices, rubber and marble and granite registered a higher growth year-on basis, while imports of items under the commodity group of  foodgrains, fruits & vegetables and milk&milk products were on the decline during this nine-month period.

The statistical analysis of import of 300 sensitive items reveals that import of edible oil during this period was up 7.43 percent. Significantly, crude soyabean and palm oil imports were up but refined soya and palm oil imports were down reflecting better utilisation of indigenous processing capacity. Import of sunflower oil - both crude and refined- declined compared with previous year's.

Country wise import pictures show that there were lower imports from Malaysia, Guinea Bisu, Ivory Coast, Russia, China, Ghana etc. On the other hand, imports from USA, Brazil, Argentina, Greece, Paraguay, Tanzania, Iran, Switzerland, Zimbabwe, Uzbekistan were up.

Import of Sensitive Items *
(In Rs crore)

COMMODITY GROUP    No. of Tariff lines April-December,2000 April-December,2001  
Milk & Milk Products 22 40.42 8.81
Fruits & Vegetables 48 1305.50 732.86
Poultry 13 0.03 0.25
Tea & Coffee 32 27.84 28.12
Spices 35 128.57 214.85
Food Grains 12 28.43 8.20
Edible Oil 27 4636.77 4981.43
Alcoholic Beverages 8 21.70 19.93
Rubber 11 27.32 100.10
Cotton & Silk 6 1449.47 2114.46
Marble & Granite 14 7.39 19.32
Automobiles 32 55.93 49.74
Products of concern to SSI (umbrella, locks, toys, writing instruments, tiles, glassware etc.) 20 86.24 79.82
Others (wheat flour, sugar, cigarette & salt) 20 27.19 11.15
TOTAL 300 7842.80 8364.0

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

CHRONOLOGY OF INDIA’S REMOVAL OF QUANTITATIVE RESTRICTIONS

Total number of tariff lines as on April1, 1996

10202

Tariff lines free as on April 1, 1996

6161

Tariff lines freed for import during 1996-97

488

1997-98

391

Tariff lines freed preferentially for imports from SAARC countries with effect from August 1, 1998

1429

1998-99

894

1999-2000

714

2000-01

715

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

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