Indian exports achieved a key milestone when it crossed the psychological barrier of USD 100 billion in 2006 with a growth rate of 24% and over 13% of total gross domestic product (GDP) valued at USD 800 billion compared to 6% in 1990-91. Government officials are confident that the nation will meet export target of USD 125 billion this fiscal year ending March 31. Commerce and Industry Minister Kamal Nath had revealed that from April 2006 to November 2006, exports grew at 29% to USD 80 billion.
India’s trade policy as projected in the Annual Supplement of the Foreign Trade Policy states that employment generation in the export sector must be achieved meaning that high-value imports using large capital outlays are less important than labor intensive projects. To this end, the government highlighted several initiatives it kicked off in 2006:
1. To encourage investments in labor intensive sectors such as fish and leather
products, stationery items, fireworks, sports goods and toys, and handloom &
handicraft items, the government introduced the Focus Product and Focus Market
Scheme allowing duty credit facility at 2.5% of the value of exports of specific
products and notified countries.
2. The government expanded the Vishesh Krishi Upaj Yojana to include village and cottage industries and launched a new initiative called the Vishi Krishi Upaj Aur Gram Udyog Yojana to provide 5% duty-free scrip on exports.
3. There was a concerted push for gem and jewelry making and creation of an
automotive hub by allowing easier product movement across the borders and
allowing import of precious metal scrap for refining.
A ministry sponsored study conducted by Research & Information Systems for Developing Countries these measures have increased incremental direct employment for 1.48 million people bringing the total employment generated by export sector to 9 million. India wants to export over USD 150 million by 2008-09 and generate 13.6 million new jobs. However, the study has not shown where and at what levels this achievement is. We do not know if these artisans, management, low-end laborers, or house-hold help jobs.
India also participated in the 7th India-European Union Summit in Helsinki in October 2006 and both partners agreed to commence negotiations for a broad-based Bilateral Trade and Investment Agreement. There is no information from either party on the scale or timetable for such an agreement.
India also activity initiated conversations with neighboring nations on Regional Trade Agreements while implementing the South Asian Free Trade Area (SAFTA). Specifically, it has started conversations with South Korea on a Comprehensive Economic Partnership Agreement (CPEA). Rightfully, India continues to be guarded against expanding the list of products allowed from China through the Nathu La pass in Sikkim. Opened last year, India allows 15 items from China and Beijing allows 29 items from India. New Delhi fears that China will use the Nathu La pass to get faster and easier access to the Bangladesh market and therefore compromise its trade with that country. Currently, the value of trade through this Rs. 8.86 lakh (USD 19,200) exported and Rs. 10.61 lakh (USD 23,000) and the whole measure remains a symbolic gesture of goodwill.