India's Trade Overview

INDIA'S TRADE POLICY

FUTURE ROADMAP FOR TRADE POLICY

Considering the extremely dynamic trade environment across the world, India needs to be proactive to make up for lost opportunities and also stay competitive in futuristic sectors. The contours and direction of policy making will play a major role in this regard. Following should be the major focus areas under the roadmap for trade policy to boost exports:

• India needs to graduate from a subsidy-based regime. As it is, the subsidy regime will regularly be challenged under the WTO now that India has breached the threshold of US$ 1,000 per annum of per capita GNI. The government has to shift its attention towards structural reform measures that boost long-term competitiveness.
• R&D should include product development and its value chain, as well so that the same tax benefit is realized by exports sector. Exporters should be incentivized across the value chain – designing, creating, and marketing new products or existing products with new features.
• Incentivising exporters with greater diversification of both product and market.
• Incentivise thrust sectors like furniture and electrical where India has huge competitive advantage to boost exports
• Assistance in setting up the manufacturing plants in foreign countries: Companies want to tap full potential of their foreign factories. They establish and manage their foreign plants to benefit only from tariff and trade concessions, cheap labor, capital subsidies, benefits of trade agreement and reduced logistics costs.
• Interest subvention should be expanded for the entire MSME sector rather than only for export purposes.
• Implementations of new SEZs, Clusters and Mega Trade Parks for specific HS Chapters 84, 87, 88, 90 and 85. These HS chapters comprise products that contribute 70% of global exports, but India has a very small share.

Table 9.1

India’s export share (%) of world’s export of high end HS Chapters India’s export share (%) of world exports of Primary HS Chapters
84 (0.7%) 02 (3.8%)
85 (0.3%) 03 (4.5%)
90 (0.4%) 07 (1.8%)
89 (1%) 08 (1.5%)
87 (1.1%) 09 (6.1%)
  10 (6.7%)
  12 (2%)
  13 (14.3%)
  14 (6.9%)
  17 (3.5%)

• India should seriously consider product-specific MoUs with different economies to foster exports in diverse regions on demand basis, which won’t be daunting like PTAs and FTAs, which India has been reluctant to sign due to the potential challenge of surging imports. Recently for example, India has signed seven sector-specific MoUs with Kenya to escalate exports and opportunities.
• The Niryat Bandhu Scheme is an initiative taken by the Government of India for mentoring first generation entrepreneurs in the field of international trade. While it is a phenomenal initiative, DGFT can expand the domain of training beyond basics like providing information about country specific and product specific export potential, barriers to trade, etc. Besides this, Demo sessions/ Practical tutorials at certification labs/procedure of packaging, labeling, fumigation from methyl bromide, etc should be provided.
• Globally, there is a discernible shift towards exports via the e-commerce route. The government needs to formulate a comprehensive policy regarding cross-border e-commerce and handhold MSMEs in particular on leveraging the benefits of the same.

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