INDIA is in a recovery mode from the hugely impacted global financial meltdown surfaced in mid-September 2008. An advance estimate of the Central Statistical Organization indicates to 7.2 percent GDP growth during the current fiscal year ( 2009-10), though the government expects it may even surpass the CSO estimates. Coupled with this, the industry is sending encouraging feeler to fuel the hope for a better revival of the economy from the onslaught of the meltdown that had impacted among others India's exports like most of other countries around the world. The cumulative growth for the period April-December 2009-10 stands at 8.6 percent.

The growth in GDP during 2009-10, according to CSO advance estimates, is estimated at 7.2 per cent as compared to the growth rate of 6.7 per cent in 2008-09.The growth rate of 7.2 per cent in GDP during 2009-10 has been due to the growth rates of over 5 per cent in the sectors of ‘mining & quarrying’, ‘manufacturing’, ‘electricity, gas and water supply’, ‘construction’, 'trade, hotels, transport and communication', 'financing, insurance, real estate and business services', and 'community, social and personal services.

On industry front, the Quick Estimates of Index of Industrial Production (IIP) with base 1993-94 for the month of December 2009 have been released by the Central Statistical Organisation of the Ministry of Statistics and Programme Implementation. The General Index stands at 331.7, which is 16.8 percent higher as compared to the level in the month of December 2008. The cumulative growth for the period April-December 2009-10 stands at 8.6 percent over the corresponding period of the pervious year. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2009 stand at 206.0, 360.7, and 235.2 respectively, with the corresponding growth rates of 9.5 percent, 18.5 percent and 5.4 percent as compared to December 2008. The cumulative growth during April-December, 2009-10 over the corresponding period of 2008-09 in the three sectors have been 8.5 percent, 9.0 percent and 5.8 percent, respectively, which moved the overall growth in the General Index to 8.6 percent.

India's exports during the first 10 months ( April-December, 2010) of the current fiscal (2009-10) stood at US$ 117.58 billion signifying 20.3 percent decline from US$ 147.56 billion earnings achieved during the comparable period in previous financial year. India’s exports during December, 2009 were valued at US $14606 million (Rs. 68107 crore) which was 9.3 per cent higher in dollar terms (4.8 per cent in Rupee terms) than the level of US $ 13368 million (Rs. 65015 crore) during December, 2008. Cumulative value of exports for the period April- December, 2009 was US $ 117587 million (Rs 563304 crore) as against US $ 147569 million (Rs. 652919 crore) registering a negative growth of 20.3 per cent in Dollar terms and 13.7 per cent in Rupee terms over the same period last year.

India’s imports during December, 2009 were valued at US $ 24753 million (Rs.115420  crore) representing a growth of  27 per cent in dollar terms (22  per cent in Rupee terms)  over the level of imports valued at US $ 19456 million ( Rs. 94625 crore) in December, 2008. Cumulative value of imports for the period April- December 2009 was US $ 193829 million (Rs. 927969 crore) as against US $ 253809 million (Rs. 1126199 crore) registering a negative growth of  23.6 per cent in Dollar terms and 17.6 per cent in Rupee terms over the same period last year.            

Oil imports during December, 2009 were valued at US $ 6536   million which was 42.8  per cent higher than oil imports valued at US $  4578 million in the corresponding period last year.   Oil imports during April- December, 2009 were valued at US$ 56918 million which was 29.8 per cent lower than the oil imports of US $ 81101 million in the corresponding period last year. Non-oil imports during December, 2009 were estimated at US $ 18217 million which was 22.4 per cent higher than non-oil imports of US $ 14879 million in December, 2008. Non-oil imports during April- December, 2009 were valued at US$136911 million which was 20.7 per cent lower than the level of such imports valued at US$ 172708 million in April- December, 2008.                                   

The trade deficit for April- December, 2009 was estimated at US $ 76242 million which was lower than the deficit of US $ 106240 million during April-December, 2008. 

Its ambitious export target of US $ 200 billion for fiscal year 2008-09^* remained unattainable. Country's achievements in the export sector fell short of that target by about US $ 32 billion. The provisional estimates of the Federal ministry of Commerce put exports during FY 2008-09 at US $ 168.70 billion. But for this unexpected global financial crisis, for India US $ 200 billion was an achievable export target taking into account country's vibrant economy just before the crisis surfaced world over. 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. Besides export set back, India's yet another ambitious target of achieving 5 percent share of world trade by 2020 receives a set back, hopefully temporarily. As a means to achieve the US $ 200-billion-target, a slew of innovative steps had been initiated in the Foreign Trade Policy (FTP) 2004-09. But for a country like India having over 1.2 billion population market, the target of achieving 5 percent of world trade by 2020 is still achievable.

India’s first ever long term FTP was  considered as a roadmap for the development of country’s foreign trade. The policy initiatives in the last four years had resulted in increased trade activity and has generated additional employment of 13.6 million. The new FTP has more than doubled India’s exports in four years. The country’s exports in 2008-09 stood at US$ 168 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. The global financial meltdown halted this growth. India's share of global merchandise trade that was 0.83 percent in 2003 rose to 1.45 percent in 2008 as per WTO estimates. Country's share of global commercial services export was 1.4 percent in 2003; it rose to 2.8 percent in 2008. India’s total share in goods and services trade which was 0.92 percent in 2003 increased to 1.64 percent in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.

Top ten largest trading partners of India (2008-09)                                                          (In Rs, Crore)
Country	Total Trade	Trade Balance
China PRP	163,202	-92,676
USA	155,353	12,254
United Arab Emirates	152,668	-1934
Saudi Arabia	105,602	-64303
Germany	67,602	-19497
Singapore	63,280	2934
UK	50114	524
Hong Kong	50,129	1772
Belgium	41552	-5294
Netherland	33099	19049
Source: Federal Ministry of Commerce, Government of India

India's foreign trade in merchandize goods in fiscal 2008-09 stood at US 455 billion. Exports during this period was up 3.4 percent to total at US $ 168.704 billion over previous fiscal’s US $ 163.132 billion. In Rupee (Indian currency) terms, exports stood at Rs.766935 crore registering an increase of 16.9 percent over previous fiscal’s Rs Rs.655863 crore. Imports in financial year 2008-09 stood at US $ 287.759 billion against US $ 251.654 billion in fiscal 2007-08 registering a growth of 14.3 percent. In Rupee (Indian currency) terms exports registered 29 percent growth in financial year 2008-09 to stand at Rs.1305503 crore compared with Rs.1012312 crore in fiscal 2007-08. Country's trade deficit in fiscal 2008-09, according to provisional estimates of the Federal Ministry of Commerce, stands at US $ 119.055 billion which is significantly higher than the deficit at US $ 88.522 billion registered in fiscal 2007-08.

The short-term objective of India's new five-year Foreign Trade Policy (2009-14) that was announced in August, 2009 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. The government intends to achieve an annual export growth of 15 percent with an annual export target of US$ 200 billion by March 2011 and around 25 percent per annum for the remaining three years ending 2014. The government's objective is to achieve an annual export growth of 15 percent with an annual export target of US$ 200 billion by March 2011. In the remaining three years of the new Foreign Trade Policy (2009-2014), the country should be able to come back on the high export growth path of around 25 percent per annum, hopes country's Commerce and Industry minister Anand Sharma.

By 2014,  India’s exports of goods and services are expected to double. The long term policy objective for the government is to double India’s share in global trade by 2020. In order to meet these objectives, the government would follow a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, enhanced market access across the world and diversification of export markets. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and levies, would be the three pillars, which will support us to achieve this target. Endeavour will be made to see that the Goods and Services Tax rebates all indirect taxes and levies on exports. 

Initiatives are being taken to diversify country's export markets and offset the inherent disadvantage for our exporters in emerging markets of Africa, Latin America, Oceania and CIS countries such as credit risks, higher trade costs etc., through appropriate policy instruments. The government has already endeavored to diversify products and markets through rationalization of incentive schemes including the enhancement of incentive rates which been based on the perceived long term competitive advantage of India in a particular product group and market. New emerging markets have been given a special focus to enable competitive exports. This would of course be contingent upon availability of adequate exportable surplus for a particular product. Additional resources have been made available under the Market Development Assistance Scheme and Market Access Initiative Scheme.

Incentive schemes are being rationalized to identify leading products which would catalyze the next phase of export growth. As part of market expansion policy,India has signed a Comprehensive Economic Partnership Agreement with South Korea which will give enhanced market access to Indian exports. Besides India has also signed a Trade in Goods Agreement with ASEAN which will come in force from January 1, 2010, and will give enhanced market access to several items of Indian exports. These trade agreements are in line with India’s Look East Policy. India has also signed  Preferential Trade Agreement with Mercosur. 

India's Foreign Trade (2008-09)
(In US$ million)