India’s exports
have been on a high growth trajectory throughout the year 2002.
In fact, the country’s export growth during the first half of
the current fiscal (April-September 2002) touched 19% and what
is particularly noteworthy is that against the export target of
12% set for the whose fiscal year, the growth of India’s exports
during the first 8 months (April-November 2002) has been over
15%. Thus, the double-digit export growth momentum was sustained
throughout the year 2002.
The new Export-Import
(EXIM) Policy unveiled by the government on March 31, 2002 for
the five-year span zeroed in on export market diversification
as one of its policy planks with special focus on hitherto untapped
regions like sub-Saharan Africa and the Commonwealth of Independent
States (CIS). The Policy contained several far-reaching components
to take India’s exports on a steady growth trajectory. These
include, among others, removal of all import curbs or quantitative
restrictions (QRs), save a few sensitive items reserved for exports
through state trading enterprises, a farm-to-port approach for
exports of agricultural products, special thrust on cottage sectors
and handicrafts and beefed up Assistance to States for Infrastructural
Development for Exports (ASIDE).
Agri Export Zones
(AEZs) which were introduced in the previous year Exim Policy
had really taken off by now with an aggregate outlay of Rs.
1025 crore being forecast during the next three to five years
in the 40 AEZs sanctioned in as many as 17 States. What is of
significance is that the private investment in these zones over
the last one year was of the order of Rs. 95 crore while total
exports from these zones during the period October 2001 to October
2002 fetched Rs. 148.43 crore. It is to be noted that the products
covered by the AEZs include pineapples, gherkins, litchis, mangoes,
vegetables, potatoes, apples, onion, garlic, basmati rice, walnut,
besides non-traditional ones like ginger, turmeric, orchids and
cherry pepper. Alongside the sprouting of these AEZs, modern perishable
cargo handling facility and auction centres for flowers have also
been coming up, giving a decisive push to exports of these items
from India.
Yet another milestone
in 2002 made by the authorities in their consistent quest for
pushing export products of heritage value was the enhancement
of export capabilities of the small scale sector, which accounts
for about 50 per cent of the country’s exports. These capabilities
were strengthened through a programme for "Special Focus on Cottage
Sector and Handicrafts" including promotion of cotton sector exports
under Khadi & Village Industries commission, access to funds
from Market Access Initiative (MAI) for units in the handicrafts
sector and benefits of export house status at a lower average
export performance. Analogous spurs would be extended to industrial
cluster towns with export potential like Tirupur (hosiery), Panipat
(woollen blankets) and Ludhiana (woolen knitwear).
As the country
has realised that successful export effort lays in fostering exclusive
export enclaves such as Special Economic Zones (SEZs) modelled
after the ones in China, though not at that gigantic scale, the
Exim Policy unveiled additional incentives to SEZs. These
include, inter-alia, income tax concessions, exemption from Central
Sales Tax (CST) on supplies from Domestic Tariff Area (DTA), drawback/duty
entitlement passbook (DEPB) to DTA suppliers, freedom to make
overseas investment and carry out commodity hedging. For the first
time, Overseas Banking Units (OBUs), free from such obligations
like credit reserve ratio and statutory liquidity ratio, would
be set up in SEZs to provide access to external finance at international
rates. This was followed up by a post-Budget announcement by which
100 per cent deduction of export profit was allowed to all SEZs
starting production on or after April 1, 2002 for a period of
five years and thereafter at 50 per cent for the next two years.
The export performance of SEZs or units in Export Processing
Zones (EPZs) during the period April to November 2002 was Rs.
5380.97 crore, as compared to Rs. 4936.42 crore in the comparable
months of 2001.
Alongside specific
spurs to traditional export items like gems & jewellery, exports
of agri & allied product, additional fillip to SEZs, the
Exim Policy also accorded impetus to the hardware sector as the
Electronic Hardware Technology Park (EHTP) scheme was modified
to enable the sector to avail of the zero duty regime under the
Information Technology Agreement (ITA-I).
Apart from these
specific booster measures, the government also rationalised
and simplified procedures in respect of various export promotion
schemes with a view to cutting down unwanted hassles and minimise
the interface between the bureaucrats who administer these schemes
and the genuine exporters with a view to bringing down the transaction
cost to industry and trade tangibly. The 2002-03 Union Budget
too take due care of exporters and major changes in this policy
include reduction in the peak rate of customs duty from 35 per
cent to 30 per cent and the customs duty on dairy products was
hiked to the WTO bound rate of 40 per cent.
In order to provide
a level playing field for domestic industry and exporters who
are faced with cheap imports threatening their viability, the
Designated Authority in the Anti-Dumping & Allied Duties
was proactive, providing the much-needed breather to domestic
industry by its dispassionate and logical probe into dumping,
establishing linkage between dumping and injury.
The year 2002 also
saw finalisation of the report of the Committee on the Operational
Modalities of the Rs. 500 crore Price Stabilisation Fund
for Commodities as the government was seriously concerned
over the problems plaguing growers of coffee, tea, rubber and
tobacco due to prevalent poor prices for these commodities. The
scheme to be operational for ten years would commence from April
2003 and would seek to effect price stabilisation for each of
the commodities without resorting to the costly practice of procurement
operations.
The Medium Term
Export Strategy (MTES) was announced by the government in January
2002. The strategy aimed at augmenting the country’s share
in world trade to one per cent by 2006-07 from the extant of 0.67
per cent which implies doubling exports from the present level.
The MTES incorporates product (as many as 220 commodities) and
market identification for exports and indicative sector-wise strategies
for identified potential sectors.
In the post-Doha
developments, India continues to play a proactive role by taking
active part in all negotiations for which modalities have
to be firmed up before March 31, 2003 and final negotiations to
be sealed by 2005. On the General Agreement on Trade in Services
(GATS), India continues to focus on seeking enhanced market access
for developing countries in future negotiations. India has time
and again urged that the Work Programme on Implementation Issues
should be given the highest priority. Greater attention needs
to be devoted to issues about Sanitary & Phyto-sanitary standards
and technical barriers to trade so as to fully realise gains in
agricultural trade liberalisation. India also stuck to its contention
that the trade-related intellectual property rights (TRIPs) agenda
should reflect the concerns of developing world. India’s viewpoints
on all these issues were forcibly articulated at the mini-ministerial
held in Sydney, Australia, in the middle of November, 2002.
