IT’S a Grand Leap Forward for India clocking  23.02 percent growth in exports to stand at over $155 billion in fiscal 2007-08. India’s total economic engagement with the world today, as pointed out by country’s Commerce Minister Kamal Nath, stands at US $ 525 billion including trade in services, which reflects India’s growing significance in international trade. India’s total merchandise trade (both exports and imports) will be about US $ 400 billion during 2007-08, accounting for nearly 1.5 percent of world trade. If trade in services is added, India’s commercial engagement with the world would be to the tune of US $ 525 billion.

India’s first ever long term Foreign Trade Policy (2004-09) is considered as a  roadmap for the development of country’s foreign trade. India’s Foreign Trade Policy initiatives in the last four years has resulted in increased trade activity and has generated additional employment of 13.6 million. Exports are not just about earning foreign exchange, but about boosting manufacturing sector, creating large scale economic activities and generating employment opportunities. The new Foreign Trade Policy (2004-09) has more than doubled India’s exports in four years. The country’s exports in 2007-08 has exceeded US $ 155 billion from US $ 63 billion in 2004, registering a cumulative annual growth rate (CAGR) of 23 percent, year on year, way ahead of the average growth rate of international trade, country’s Commerce and Industry minister Kamal Nath while releasing the Annual Supplement to Foreign Trade Policy on April 11, 2008.
 
India achieved the marked growth in exports despite appreciation of rupee, high interest rates, spiraling oil prices, slow down in major trade markets, and withdrawal of some GSP benefits to India by other countries. India should achieve 5 percent share of world trade by 2020. “As a means to achieve this, an export target of US $ 200 billion has been set for 2008-09”, the minister said. A slew of innovative steps in the final annual supplement to FTP 2004-09 have been initiated. These include extension of DEPB scheme till May 2009; interest at 6 percent for delayed refunds; reduction of customs duty payable under EPCG scheme from 5 percent to 3 percent; lowering of average export obligation under EPCG scheme; extension of income tax exemption to 100 percent EOUs beyond 2009; additional duty-free credit of 2.5 percent under VKGUY; additional credit of 5 percent for sports and goods industries under Focus Product Scheme; special focus initiative for IT sector; ensuring zero-rating of exports as far as domestic taxes are concerned; enhanced incentive of 2.5 percent under Focus Product Scheme; addition of 10 more countries in the Focus Market Scheme; inclusion of IT and ITES and R&D in natural sciences under the Industrial Park Scheme; establishment of EPC for Telecom; extension of re-import of branded jewellery to one year.

The transaction costs for exporters in India are very high. To minimize the impact,  certain additional measures have been taken up such as bringing of Advance Authorization Scheme and EPCG Scheme under the EDI from 1st July, 2008; treating of all EDI ports as single port where there is no requirement of TRA under the Advanced Authorisation Scheme; payment of duty under EPCG scheme through debit of duty credit from 1st January 2009; reduction of application fee for duty credit scrips and EPCG authorization from Rs.5 per thousand to Rs.2 per thousand; reduction of application fee for importer and exporter code from Rs.1000 to Rs.250; reduction of fee for supplementary claims from 10 percent to 2 percent.

A Joint Task Force (JTF) is being set up to plan an integrated strategy to tackle these issues. The JTF comprising of representatives of the federal and state governments, local bodies, industry and exporters will evolve a detailed action plan to achieve this objective. The JTF will look at (1) development of world-class infrastructure to facilitate trade involving an investment of over $ 800 billion; (2) measures to ensure trade facilitation through EDI to match world-class standards; (3) development of global manufacturing hubs in selected sectors such as auto-components, gems & jewellery, textiles, petro-products etc.; (4) development of global services hubs in IT , KPO, industrial design, R&D and product testing; (5) development of a chain of sector-specific skill-development institutes; and (6) encouraging e-commerce through e-governance.

The Indian government views Special Economic Zones (SEZs) as vehicles of industrialization and employment generation. Underling that SEZs currently provide employment to more than 2.8 lakh people and the projected exports from SEZs would reach Rs.1,25,000 crore by this year, the Minister emphasized the validity of the basic policy relating to SEZs. 

In his speech at General Debate of the UNCTAD XII Ministerial Conference held at Accra (Ghana) recently, Indian Commerce and Industry minister said that India is willing to strengthen trade and investment linkages with its trading partners through its knowledge advantage, its pool of skilled resources, its young population, its potential of being a manufacturing hub and a base for high-end R&D. India’s regional and inter-regional trading agreements, partnerships and economic ties with other countries of the South also form an important element in India’s development diplomacy. “To further promote the South-South trade, we are committed to work towards exploring the full potential of the GSTP. We are looking forward for a successful conclusion of the third round of negotiations which takes into account the views of all its members”, the he said. 

India recognizes that for the LDCs, especially those in the Africa region need market access for ensuring the development dimensions of international trade.  The government’s decision to implement a Duty Free Tariff Preference Scheme for all the LDCs on a non-reciprocal basis is a pointer to that. On 85 percent of the total items India will be bringing India’s duties duties to zero in a time frame of five years and on additional 9 percent  items there will be fixed tariff preferences. This Scheme is effective from1st May, 2008.

On the multilateral trade front “The Doha Development Agenda is one of the most ambitious attempts at ensuring that the issue of development is firmly at the core of the multilateral trading system. The fundamental principles of the multilateral trading system, namely, non-discrimination, predictability, stability and transparency are fully supportive of development. Since development issues lie at the heart of the current Round of Negotiations, the key to the Negotiations, therefore, should be, firstly, to ensure that this Round delivers for development and secondly, helps developing countries to integrate into the world trading system and take advantage of opportunities since many developing countries also need assistance in building up their capacity to make use of multilateral trade liberalization. Given the present interface that exists between national development strategies and international process and disciplines, we firmly believe that there is a need for creating an international enabling environment that is conducive to the growth of developing countries in a manner that best suits their circumstances and national priorities. Therefore, within the framework of international disciplines, each country must have the policy space to choose what is most appropriate for its circumstances and for the overall welfare of its people” Indian Commerce and Industry minister said adding that FDI policies in India have been further liberalized and many new sectors have been opened recently and added that infrastructure sector in India is an opportunity for investment.

EXPORTS (including re-exports)  

Exports during March, 2008 were valued at US $ 16282.79 million which was 26.59 per cent higher than the level of US $ 12862.40 million during March, 2007. In rupee terms, exports touched Rs. 65710.71 crore, which was 16.04 per cent higher than the value of exports during March, 2007. Cumulative value of exports for the period April- March, 2008 was US$ 155512.49 million (Rs. 625471.22 crore) as against US$ 126413.99 million (Rs. 571779 crore) registering a growth of 23.02 per cent in Dollar terms and 9.39 per cent in Rupee terms over the same period last year. 

IMPORTS 
Imports during March, 2008 were valued at US $23174.94 million representing an increase of 35.24 per cent over the level of imports valued at US $ 17136.46 million in March, 2007. In Rupee terms, imports increased by 23.96 per cent. Cumulative value of imports for the period April- March, 2008 was US$ 235910.73 million (Rs. 949133.82 crore) as against US$ 185735.17 million (Rs. 840506 crore) registering a growth of 27.01 per cent in Dollar terms and 12.92 per cent in Rupee terms over the same period last year. 

CRUDE OIL AND NON-OIL IMPORTS:   
Oil imports during March, 2008 were valued at US $ 8633.14 million which was 76.6 per cent higher than oil imports valued at US $ 4888.47 million in the corresponding period last year.  Oil imports during April- March, 2008 were valued at US$ 77033.57 million which was 35.28 per cent higher than the oil imports of US$ 56945.25 million in the corresponding period last year. 

Non-oil imports during March, 2008 were estimated at US $ 14541.79 million which was 18.73 per cent higher than non-oil imports of US$ 12247.99 million in March, 2007. Non-oil imports during April- March, 2008 were valued at US$ 158877.15 million which was 23.36 per cent higher than the level of such imports valued at US$ 128789.74 million in April- March, 2007. 

TRADE BALANCE 
The trade deficit for April- March, 2008 was estimated at US $ 80398.24 million which was higher than the deficit at US $ 59321.18 million during April- March, 2007.

India's Foreign Trade (2007-08)
(In US$ million)