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Statement Activities 2013and14
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1
STATEMENT OF ACTIVITIES
2013-2014
MINISTRY OF COMMERCE & INDUSTRY
DEPARTMENT OF COMMERCE
2
Ministry of Commerce & Industry
Department of Commerce
Table of Contents
Sl.
No.
Contents
1. Overview
2. Role, functions and organisational set up
3. Strategic Initiatives and Priorities
4. Trends in India’s Foreign Trade
5. Critical Achievements
6. Foreign Trade Policy
7. Export Promotion Measures – ASIDE, MAI, MDA, major
initiatives taken by the EPCs
8. Special Economic Zones (SEZs)
9. Commodity Boards, other development authorities and
Trade Facilitation Institutions.
10. Bilateral and Multilateral Negotiations
11. WTO Negotiations
12. Conclusion and Way Ahead
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1. Overview
Past two and a half years saw a slowdown in the global economy but, finally there are
signs that a path towards a sustainable recovery has started. The advanced
economies are gradually recovering after the global financial crisis, growth in
developing and emerging markets is finally picking up, after a flat growth in the first
quarter of 2013-14. Economic activity strengthened in developed economies. The US
is exhibiting modest growth and economies of Europe have also picked up growth
momentum. Expansionary policy in Japan has moved out its economy from
stagnation.
Global Economic Growth
The IMF World Economic Outlook (WEO), released in January 2014, highlights that
global economic activity has picked up during the second half of 2013 with
expectation of further improvement in 2014–15. The outlook has projected world
growth at 3.7% in 2014 and by 3.9% in 2015. It also mentions that recovery in global
economy will be supported by improvement in the advanced economies as final
demand in advanced economies has expanded with higher inventory demand. On the
other hand financial condition in emerging markets has remained tight with equity
prices not fully recovered and some currencies under pressure after US tapering
announcement in May 2013.
The WEO also mentions that downside risks remain in advanced economies where
output gaps have remained large. Growth in emerging market and developing
economies (EMDEs) will be supported by stronger external demand from advanced
economies despite domestic weakness.
The data on advanced world economies shows that growth in United States is
expected to be 2.8 percent in 2014, up from 1.9 percent in 2013 with expansion and
improvement in final domestic demand, reduction in fiscal drag. The forecast for 2015
is marked at 3%. The projection for Euro Area is marked at 1% and 1.4% for 2014
and 2015. With exports further contributing to growth, high debt and financial
fragmentation is expected to affect domestic demand. The annual growth is expected
to remain broadly unchanged for Japan at 1.7% in 2014, before moderating to 1% in
2015.
The growth in EMDEs is expected to increase to 5.1% in 2014 and 5.4% for 2015.
China is projected to grow at the rate of 7.5% and 7.3% for 2014 and 2015. The
growth in China rebounded in second half of 2013 due to improvement in investment.
Growth in India picked up after a favourable monsoon and export growth and is
expected to firm further on stronger structural policies supporting investment. The
projection for India is 5.4% and 6.4% for 2014 and 2015 respectively which is a 0.2%
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and 0.1% increase from earlier projections made in the October 2013 WEO for the
year 2014 and 2015 respectively.
Global trade has reduced from 5.2% in 2011 to 2% in 2012. WTO as per the September
Press release, predicts a growth of 2.5% for 2013 (down from the 3.3% forecast in April), and
4.5% in 2014 (down from 5.0%), but conditions for improved trade are gradually falling into
place. Besides, after the historic Bali accord, WTO and all the member countries are looking
forward to the prospect of yearly increase of world trade amounting to $ 1 trillion per year.
India’s foreign trade can also therefore get a major boost. The developed economies are
expected to grow at the rate 1.2% in 2013 and 1.9% in 2014. The projections for
developing economies are 4.5% in 2013 and 4.9% for 2014.
WTO ranked India as the 19th largest merchandise exporter in the world, with a share
of 1.6% of the global trade and the 10th largest importer with a share of 2.6% of global
imports in 2012 (WTO's International Trade Statistics, 2013). In Commercial Services Trade,
India was the 6th largest exporter with 3.4% share of world market and 7th largest importer
with 3% share of world market.
2. Role, Functions and Organizational set up
The mandate of the Department of Commerce is regulation, development and
promotion of India’s international trade and commerce through formulation of
appropriate international trade & commercial policies and implementation of the
various provisions thereof. The basic role of the Department is to facilitate the
creation of an enabling environment and infrastructure for accelerated growth of
international trade. The Department formulates, implements and monitors the Foreign
Trade Policy (FTP) which provides basic framework of policy and strategy to be
followed for promoting exports and trade. The Trade Policy is periodically reviewed to
incorporate changes necessary to take care of emerging economic scenarios both in
the domestic and international economy. Besides, the Department is also entrusted
with responsibilities relating to multilateral and bilateral commercial relations, Special
Economic Zones, state trading, export promotion and trade facilitation, and
development and regulation of certain export oriented industries and commodities.
The Department is headed by a Secretary who is assisted by an Additional Secretary
& Financial Adviser, four Additional Secretaries, twelve Joint Secretaries and Joint
Secretary level officers and a number of other senior officers. There is large increase
in workload in matters related to the World Trade Organization (WTO), Regional
Trade Agreements (RTAs), Free Trade Agreements (FTAs), Special Economic
Zones (SEZs), Joint Study Groups (JSGs) etc.
The Department is functionally organized into eight Divisions viz. Administration and
General Division, Finance Division, Economic Division, Trade Policy Division, Foreign
Trade Territorial Divisions, State Trading & Infrastructure Division, Supply Division
and Plantation Division.
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There are three Attached Offices, eleven Subordinate Offices, ten Autonomous
Bodies, five Public Sector Undertakings, two Advisory Bodies, fourteen Export
Promotion Councils and six other Organizations, under the administrative control of
the Department.
3. Strategic Initiatives and Priorities
The key strategic initiatives to achieve the aspirations have been formulated on the
basis of the critical assessment of our strengths, weaknesses, opportunities and
challenges facing the Indian economy and the export sector. These are based on a
series of discussions within the Department and consultation with stake holders i.e.
premier industry organizations and Export Promotion Councils and expected trends of
growth in world economy and trade. The important initiatives include –
Diversification of export product basket
Diversification into non-traditional markets and conclusion of ongoing FTA
negotiations and initiating new FTAs
Strengthening export related infrastructure
Enhancing credit flows for exports at lower cost
Reducing Transaction Costs
Diversification of Services exports
Building up a Brand Image of India
Support to Plantation Sector
Protection to sensitive domestic industries
Focus Areas
Traditional sectors like textiles, gems & jewellery and handicrafts have been the
strong areas of our exports. These sectors individually account for only a small
segment in the world trade. Similarly, our share in other important sectors like
chemicals, pharmaceuticals and agricultural products is not significant. The strategy
to boost our capabilities of exports in these sectors would receive the high priority in
any future strategy for export promotion and diversification.
i. Along with product diversification, diversification of markets based on the
changing dynamics of growth in the world economy is equally important to ensure
sustained and accelerated growth of exports. The demand for Indian exports in
the traditional markets of developed west i.e. North America and Europe is
projected to slow down as a result of slowing output expansion in these
economies. The markets in Asia including ASEAN, Africa and Latin America
would be important in the future. These markets would be the focus areas in
Department's strategy for market diversification.
6
ii. Working out conducive trading arrangements with trading partners holds a crucial
place in the entire strategy of export promotion. The efforts towards successful
conclusion of free trade agreements (FTAs) with our important partners would
receive utmost attention.
iii. Developed countries are increasingly resorting to the use of Non-Tariff Measures
(NTMs) to protect their domestic industries. NTMs measures include trade related
procedures, technical regulations, standards, import or export licensing systems
etc. India has adopted a multi-pronged strategy to deal with issues relating to
NTMs and to increase India's market access abroad and will play a proactive role
in addressing the concerns of India's trading community on these measures. On
the import side, efforts will be strengthened to create suitable Sanitary and
Phytosanitary (SPS) measures/ technical regulations on Indian imports in a
phased manner over a period of time depending on the capability of the domestic
sector to comply with the same.
iv. Besides, the concerned Departments/ Ministries/Organizations have been
requested to upgrade their infrastructure and surveillance system at the major
ports and airports to ensure due compliance of India's standards and technical
regulations. In addition wherever our export interest is affected, the Department of
Commerce will continue its efforts for raising three or four issues in every Regular
SPS and TBT Committee Meetings of the WTO to get suitable redressal of our
export concerns.
v. Adequate flow of credit and at reasonable costs is a crucial requirement for the
growth of export sector. The Department in consultation with the Ministry of
Finance would aim to address the financing requirement of the exports sector.
vi. Availability of reliable, disaggregated and timely data on trade of goods and
services is an important input for policy making. One of the major constrains being
faced by policy makers for trade negotiations and policy interventions in respect of
services trade is that disaggregated data at the level required is not available. At
present, RBI is the only source of data available on BOP basis. The Department
plans to coordinate with the concerned agencies like CSO towards putting in place
a system for generating disaggregated data on trade in services (mode-wise and
country-wise) through surveys on the lines of best international practices being
followed by other countries. A pilot project for firming up the methodology for
generating the required data in respect of two sectors i.e. health and tourism has
been planned by the Directorate General of Commercial Intelligence and Services
(DGCI&S).
vii. In respect of data on merchandise trade, the Department aims to substantially
reduce the time lag for release of disaggregated data. The reduction in time lag
would depend to a large extent on the progress of coverage of ports under the
7
EDI. The infrastructure support facilities at DGCI&S, Kolkata is being accordingly
strengthened to take care of the increased number of transactions resulting from
the targeted high growth rate of exports envisaged in the future.
viii. Department of Commerce is the administrative Ministry responsible for production,
distribution and development of the plantation crops i.e. rubber, tea, coffee, spices
and tobacco. Plantation crops have been the traditional exports of India providing
employment to millions of workers. Aging plants resulting in low productivity, low
value addition and volatility of international prices and demand are the major
constraints facing the sector. Increasing production, productivity and profits would
continue to be the cornerstone of the Department's developmental efforts in the
sector. Structural reforms would be another major area of action.
ix. Assistance to States for Development of Export Infrastructure and Allied Activities
(ASIDE) is the flagship scheme of the Department for critical gaps pertaining to
export related infrastructure by providing financial assistance to States and
Central agencies. Due to inadequate availability of resources under the scheme, it
is not possible to take up large projects which by themselves could make a
substantial improvement in the overall infrastructure available for promoting
exports. Getting more funds allocated for the scheme, improving the quality of
output and effective monitoring of the scheme would be the major cornerstone of
the strategy pertaining to the scheme.
x. Directorate General of Foreign Trade (DGFT) is responsible for implementation of
various provisions and schemes under the Foreign Trade Policy and is the main
interface between the Government and the trading community i.e. the importers
and exporters. The main thrust of the organization in future would be to make it
user friendly and digital friendly by undertaking business process engineering. A
comprehensive review of the various export promotion schemes would be
undertaken and the schemes restructured accordingly to make them more
effective.
4. Trends in India's Foreign Trade
India’s merchandise exports reached a level of US $ 300.40 billion during 2012-13
registering a negative growth of 1.82 percent as compared to a growth of 21.83
percent during the previous year. Despite the recent setback faced by India’s export
sector due to global slowdown, merchandise exports still recorded a Compound
Annual Growth Rate (CAGR) of 17.35 per cent from 2004-05 to 2012-13.
8
Exports
Exports recorded a negative growth of 1.82 per cent during Apr-Mar 2012-13. The
Government has set an export target of US $ 325 billion for 2013-14. The
merchandise exports have reached US $ 230.34 billion in 2013-14(Apr-Dec). Export
target and achievement from 2004-05 to 2012-13 and 2013-14 (Apr-Dec.) is given in
the Chart 4.1 below:
Note: The corresponding target is annual while the achievement pertains to the period Apr.-Dec. 2013-14
Imports
Cumulative value of imports during 2013-14 (Apr-Dec.) was US $ 340.38 billion as
against US $ 364.24 billion during the corresponding period of the previous year
registering a negative growth of 6.55 per cent in dollar terms. Oil imports were valued
at US $ 124.96 billion during 2013-14 (Apr-Dec) which was 2.57 per cent higher than
oil imports valued at US $ 121.83 billion in the corresponding period of previous year.
Non-oil imports were valued at US $ 215.42 billion during 2013-14 (Apr-Dec.) which
was 11.13 per cent lower than non-oil imports of US $ 242.41 billion in previous year.
Trade Balance
The Trade deficit in 2013-14 (Apr-Dec) was estimated at US $110.04 billion which
was lower than the deficit of US $ 146.83 billion during 2012-13 (Apr-Dec.).
Performance of Exports, Imports and Balance of Trade during 2004-05 to 2013-14
9
(April-Dec.) is given in the table A below:
Table A : Trade Data for period 2004-05 to 2013-14 (Apr-Dec)
(Values in Rs crores)
Sl.
No Year Exports %Growth Imports %Growth
Trade
Balance
1 2004-2005 3,75,340 27.94 5,01,065 39.53 -1,25,725
2 2005-2006 4,56,418 21.6 6,60,409 31.8 -2,03,991
3 2006-2007 5,71,779 25.28 8,40,506 27.27 -2,68,727
4 2007-2008 6,55,864 14.71 10,12,312 20.44 -3,56,448
5 2008-2009 8,40,755 28.19 13,74,436 35.77 -5,33,680
6 2009-2010 8,45,534 0.57 13,63,736 -0.78 -5,18,202
7 2010-2011 11,42,922 35.17 16,83,467 23.45 -5,40,545
8 2011-2012 14,65,959 28.26 23,45,463 39.32 -8,79,504
9 2012-2013 16,34,319 11.48 26,69,162 13.8 -10,34,843
10 2012-13 (Apr-Dec)
Press Release
11,84,749
19,83,941
-7,99,192
11 2013-14 (Apr-Dec)
Press Release
13,86,496 17.03 20,36,568 2.65 -6,50,072
Data Source: DGCIS, Kolkata
(Values in US $ Millions)
Sl.
No Year Exports %Growth Imports %Growth
Trade
Balance
1 2004-2005 83,536 30.85 1,11,517 42.7 -27,981
2 2005-2006 1,03,091 23.41 1,49,166 33.76 -46,075
3 2006-2007 1,26,414 22.62 1,85,735 24.52 -59,321
4 2007-2008 1,63,132 29.05 2,51,654 35.49 -88,522
5 2008-2009 1,85,295 13.59 3,03,696 20.68 -1,18,401
6 2009-2010 1,78,751 -3.53 2,88,373 -5.05 -1,09,621
7 2010-2011 2,51,136 40.49 3,69,769 28.23 -1,18,633
8 2011-2012 3,05,964 21.83 4,89,319 32.33 -1,83,356
9 2012-2013 3,00,401 -1.82 4,90,737 0.29 -1,90,336
10 2012-13 (Apr-Dec)
Press Release
2,17,415
3,64,242
-1,46,827
11 2013-14 (Apr-Dec)
Press Release
2,30,336 5.94 3,40,378 -6.55 -1,10,042
Data Source: DGCIS,
10
Exports by Principal Commodities
Exports of the top five commodities in US dollar terms during the period 2013-14
(April-November) have a share of 50.66 per cent mainly due to significant contribution
in the exports of Petroleum (Crude & Products), Gems & Jewellery, Transport
Equipments, Machinery and Instruments and Drugs, Pharmaceuticals & Fine
Chemicals.
The share of top five Principal Commodity Groups in India’s total exports during
2013-14 (April-November) is given at Chart 4.3 below:
11
The export performance (in terms of growth, values taken in million terms) of
top five commodities during 2013-14 (April-November) vis-a-vis the corresponding
period of the previous year is shown in Chart 4.4.
Imports by Principal Commodities
Imports of the top five commodities in US dollar terms during the period 2013-14
(April-November) have a share of 61.27 per cent mainly due to significant imports of
Petroleum (Crude & Products), Electronic Goods, Gold, Machinery except electrical
and electronic and Pearls, precious and semi-precious stones.
The share of top five Principal Commodity in India’s total imports during 2013-14
(April– November) is given at Chart 4.5 below:
12
The import performance by growth of top five Principal commodities during 2013-14
(April– November) vis-a-vis the corresponding period of the previous year is shown at
Chart 4.6.
Direction of India’s Foreign Trade
Share of major destinations of India’s Exports and sources of Imports during 2013-14
(April– November) are given in Chart 4.7 and 4.8 respectively.
During the period 2013-14 (April– November), the share of Asia comprising of East
Asia, ASEAN, West Asia, Other West Asia, North East Asia and South Asia
accounted for 49.61 per cent of India’s total exports. The share of Europe and
America in India’s exports stood at 18.44 per cent and 17.47 per cent respectively of
13
which EU countries (27) comprises 16.38 per cent. During the period, USA (12.92 per
cent) has been the most important country of export destination followed by UAE
(9.83 per cent), Singapore (4.67 percent), China P RP (4.44 per cent) and Hong Kong
(4.12 per cent).
Asia accounted for 61.30 per cent of India’s total imports during the period followed
by Europe (15.62 per cent) and America (12.46 per cent). Among individual countries
the share of China P RP stood highest at (11.39 per cent) followed by Saudi Arabia
(8.05 per cent), UAE (6.76 per cent), USA (5.00 per cent) and Switzerland (4.7 per
cent).
5. Critical Achievements
A New Expanded Duty Free Tariff Preference (DFTP) Scheme for Least
Developed Countries (LDCs)
One of the elements of the Hong-Kong Ministerial Declaration of December 2005 was
to extend Duty Free Quota Free (DFQF) access to the Least Developed Countries
(LDCs).India was the first developing country to extend this facility to Least
Developed Countries (LDCs). India’s Duty Free Tariff preference (DFTP) Scheme for
LDCs came into effect in August, 2008 with 85% of India’s total tariff lines made duty
free, 9% tariff lines enjoying a Margin of Preference ranging from 10% to 100% and
only 6% of total tariff lines retained in the Exclusion List with no duty preferences, for
the exports from LDCs.
This year, the Cabinet has approved increase in coverage as well as simplification of
the Scheme, in line with both the Hong Kong Ministerial Mandate as well as requests
from several LDCs ((like Tanzania, Uganda and Ethiopia) for additional product
coverage under the duty free list to cover products of their export interest and
simplification of the Rules of Origin procedures.
14
Under the new expanded DFTP Scheme, India would be granting duty free access on
96.4% of the total tariff lines, thereby retaining only about 3.6% of lines in the
Exclusion and Positive Lists. Items in the Positive List would be provided a Margin of
Preference (MOP) ranging from 10% to 60%, while items in the Exclusion List will
have no duty preferences, taking due care of India’s domestic sensitivities in these
lines.
The new and expanded DFTP Scheme would provide improved market access to the
28 beneficiary countries as well as to the new entrants, the Republic of Yemen and
Haiti being some of them. Overall, this initiative by India would strengthen the
country’s position in the WTO on issues relating to LDCs and is expected to send a
strong signal to major developed countries which are yet to comply with the Hong
Kong Ministerial Mandate to adopt similar measures.
Recent development in the World Trade Organisation (WTO) negotiations
The Doha Round of negotiations is continuing in the WTO since the year 2001. After
protracted negotiations yielding little results for almost a decade, consensus was
reached to negotiate a small package consisting of Trade Facilitation, some elements
of agriculture and development/LDC issues for an early outcome in the Ninth
Ministerial Conference of the WTO to be held in December 2013 in Bali, Indonesia.
The Ninth Ministerial Conference of the WTO was held in Bali, Indonesia from 3 to 7
December 2013. During the conference in Bali, intense discussions were held on
the Bali package which was approved by the Ministers taking into account the
concerns of the Members. The Bali outcome consists of an agreement on Trade
Facilitation and Ministerial decisions on some elements of agriculture and
development/LDC issues.
In the area of agriculture, which is very important for the developing countries, the
proposal submitted by G-33, a group of developing countries in the WTO relates to
updating the rules concerning public stockholding for food security. The Ministers
approved an interim mechanism, until a permanent solution is found to enable the
developing countries meet this policy objective subject to some notification and
transparency provisions. The interim mechanism stipulates that WTO Members will
not challenge the compliance of a developing member with obligations under the
WTO Agreement on Agriculture in relation to support provided for traditional staple
food crops in pursuance of public stockholding programmes for food security
purposes, if they are consistent with the existing rules. The decision also agrees that
an agreement for a permanent solution of the issue of public stockholding for food
security purposes for adoption by the 11th Ministerial Conference.
The agreement on trade facilitation in the Ministerial Meeting is aimed at simplifying
customs procedures by reducing costs and improving their speed and efficiency. It
will be a legally binding agreement. The objectives are: to speed up customs
procedures; make trade easier, faster and cheaper; provide clarity, efficiency and
15
transparency; reduce bureaucracy and corruption, and use technological advances. It
also has provisions on goods in transit, an issue particularly of interest to landlocked
countries seeking to trade through ports in neighbouring countries.
Other Achievements
India has always stood for an open, equitable, predictable, non-discriminatory and
rule based international trading system. Recognizing that Regional Trading
Agreements (RTAs) would continue to feature permanently in world trade, India has
engaged with its trading partners / blocs with the intention of expanding its export
market since early part of the previous decade and began concluding, in principle
agreements to move, in some cases, towards Comprehensive Economic Cooperation
Agreements (CECA) which covers FTA in goods (i.e. having a zero customs duty
regime within a fixed time frame on items covering substantial trade and a relatively
small negative list of sensitive items on which no or limited duty concessions are
available), services, investment and identified areas of economic cooperation. As of
November, 2013, India concluded 10 Free Trade Agreements, 5 limited scope
Preferential Trade Agreements and is in the process of negotiating / expanding 18
more Agreements.
The Plantation Sector comprising of tea, spices and rubber is important to India’s
economy given the livelihood concerns of a large number of people employed in the
industry. Tea and Spices are the brand ambassadors of `India’. This has been a
remarkable year for India in terms of taking the lead at international commodity
bodies in pursuing the producers’ interests in the tea, spices and coffee sectors. The
Union Cabinet has approved India’s joining the International Tea Producers Forum as
a founder member. India has been elected as the Chair of International Coffee
Organization Council, India has also succeeded in forming a Codex Committee on
Spices and Culinary Herbs (CCSCH) by Codex Alimentarius Commission, which
would harmonize quality parameters for spices, across the globe and help our
exports. These are significant steps in achieving a commanding place in world trade
in these sectors and thereby protect the interests of lakh of growers.
To sustain and accelerate the growth rate of engineering exports, the Department of
Commerce has launched a strategic brand promotion of engineering goods in
coordination with IBEF and EEPC. Since the Engineering Sector is having a large
span of products, covering under more than 30 panels, based on the core strengths
in the initial phase, machine tools and Pump and Valves sector have been identified.
Formal launching of their campaign is expected to be done in January, 2014.
Increasing competence of Indian pharma in the global market place especially the
fact that India is emerging as `pharmacy of the world’ and reliable supplier of
authentic, quality, safe and affordable drugs, resulted in a malign campaign by certain
vested interests to brand generic medicines of India as sub-standard, spurious / fake.
It was in this context that Department of Commerce took the initiative of proposing
technological solutions for tracing and tracking the `Made in India’ drugs in the global
market. Extensive consultations were held with the industry, concerned departments
and it was decided that trace and track features need to be incorporated on all
16
medicinal products being manufactured and exported from India as a measure to
build better image and credibility of Indian pharma products.
Services Conclave for Promoting Services Export From India:
Services Sector has emerged as a prominent sector in terms of its contribution to
national income, trade flows and FDI inflows. Recognizing the importance of services
exports for the country, a Services Conclave was organized by the Department of
Commerce in partnership with Confederation of Indian Industry (CII), Federation of
Indian Export Organizations (FIEO), Centre for WTO Studies (CWTOS) and Services
Export Promotion Council (SEPC), on 12 and 13 November, 2013 to explore
opportunities and challenges in promoting services exports. It was inaugurated by the
Union Minister of Commerce & Industry, Shri Anand Sharma. The conclave brought
together experts, academics, industry practitioners as well as government
representatives on the same platform.
The main purpose of the Services Conclave was to discuss issues and bottlenecks
hindering exports of services from India. It deliberated on a roadmap for augmenting
exports of various services so as not only to diversify India’s services exports but also
to position India as a key player in world services trade. The primary aim of the
Conclave was to address issues relating to the challenges and opportunities of
services sector exports for India especially in the specific sectors of logistics,
professional services (Architectural services, Accountancy, Management Consultancy
services), IT/ITeS, Telecom services, Tourism, Health and Medical services and
Creativity and Entertainment services.
Based on the outcome of the Services Conclave, the concerned Ministries are being
pursued to prepare a strategy and initiate action accordingly. A Task Force of industry
and government is also planned to be set up to specifically look into issues of
Services export.
6. Foreign Trade Policy
During 2013, there were following major developments in the Foreign Trade Policy
(2009-14):
Public Notices issued : three Chapter Offices of Federation of Indian Export
Organizations (FIEO) were added in Appendix-2 of Handbook of Procedures-Volume
1 (Appendices and Aayat Niryat Forms), 2009-2014. The validity of zero duty EPCG
authorization was amended from 9 months to 18 months w.e.f. 18.04.2013 by
amending Para 2.12 of HBP Vol. I. The earlier dispensation of transfer/sale of
imported weapons (firearms) by shooters was also liberalised by amending Para
2.43.2 of HBP Vol. I. Visvesvaraya Trade Promotion Centre (VTPC), Bangalore and
its two branches at Dharwad and Mysore were enlisted for issuing Certificate of
Origin (Non-Preferential) under Appendix.
17
Notifications Issued: notification was issued to bring in more clarity to the
import policy for various categories of second hand goods. Used Rails, including cut
rails of all lengths, were notified to be classified under Chapter 73 of ITC(HS) with
the import policy made ‘free’ subject to Pre-Inspection Condition for these items.
Import policy of cars manufactured prior to 1st January, 1950 was revised from
‘restricted’ to ‘free’ for actual users; Two new Customs Ports( ICD, Faridabad and
Ennore Port) were added to the list of 10 existing ports for importing new vehicles;
Import of items containing Ozone Depleting Substances (ODS) has been restricted
and non-ODS items have been made free; prescribed standard of EPA & DHA
content in Fish Body Oil (Refined) was revised to ‘Not less than 5% by weight’
without any upper limit; minimum price for import of Areca Nuts has been enhanced
from Rs. 75/- to Rs. 110/- per Kilogram while minimum price for import of Cashew
Kernel (broken) and Cashew Kernel (whole) has been fixed to Rs. 288/-per Kg. and
Rs 400/-per Kg. respectively; requirements of Sanitary Import Permit issued by Deptt.
of Animal Husbandry have been incorporated under relevant Chapters of ITC(HS),
2012; Prohibition on import of milk and milk products from China was extended for
one more year, i.e., till 23.6.2014. The need for authorization for import of electrical
energy was done away with and exemption was granted to the Import of steel and
steel products for major industrial/infrastructure projects from the applicability of Steel
and Steel Products (Quality Control) Second Order, 2012. Import of Ammonium
Nitrate of certain specification would now require prior permission from Chief
Controller of Explosives. Human Embryo has been classified under ITC (HS) Code
0511 99 99 and its import has been made free subject to NOC from ICMR.
An enabling provision has been made by amending Paragraph 2.35 (b) to allow
export of goods imported against payment in freely convertible currency where export
proceeds will be realised in Rupees subject to at least 15% value addition.
Subsequently, Iran was notified as a country for which benefits could be availed as in
modified Para 2.35 (b). The Para 2.38 of FTP, 2009-14 has been amended to
prohibit re-export of defective parts/spares imported exclusively for undertaking root
cause analysis, testing and evaluation purpose by the companies/firms and original
equipment manufacturers. Para 2.17A FTP has been harmonised with Section 47 of
SEZ Rules, 2006 to provide for sale of waste or scrap from SEZ to DTA without an
authorization. Also Para 9.28 of FTP has been amended to include Limited Liability
Partnerships in the definition of Group Company.
Department of Commerce and Department of Electronics and Information Technology
(DeitY) notified the Electronics Hardware Technology Park (EHTP) and the Software
Technology Park (STP) schemes in 1992 and 1994 respectively and both these
schemes were notified as 100% EOU Schemes under the Exim policy of the Ministry
of Commerce and Industry. IMSC in its meeting held on 5th July, 2012 resolved that
the STP and EHPT schemes need to be revamped in order to give a push to IT /
ITES and ESDM sectors. Accordingly, the IMSC constituted a Sub-Group comprising
18
of the members Dr. Omkar Rai, DG, STPI, Shri Manoj K. Arora, ADG, DGEP and Dr.
L.B. Singhal, ADG, DGFT to review the two schemes and suggest changes that are
required to revamp the same. Based on the discussions and the inputs provided by
the industry, the Sub-Group has made a number of suggestions for revamping the
STP and EHPT schemes. In April, 2013 Sub-Group of the Inter-Ministerial Standing
Committee has submitted their report on revision of the STP and EHPT Schemes.
The report in this regard is under consideration with DeitY.
“Deemed Exports” refer to those transactions in which goods supplied do not leave
country, and payment for such supplies is received either in Indian Rupees or in free
foreign exchange. Deemed Exports Scheme is for encouraging import substitution
and mainly covers such supply of goods which are otherwise allowed at Zero custom
duty. Detailed policy provisions for deemed exports are given in Chapter 6 of the
Foreign Trade Policy. The detailed procedure to implement these policy provisions is
given in Chapter 8 of the Handbook of Procedure. On the issues pertaining to these
schemes representations/references are received from different quarters i.e. Regional
Authorities of DGFT, Development Commissioners, Trade & Industry etc.
Clarification on the same are given by the DGFT. In addition to this, as and when
required, necessary changes are carried out in the policies/procedure which are
uploaded on DGFT website through Notification/Public Notice/Circular etc.
Based upon the inputs / suggestions received from the Apex Chambers of Commerce
& Industries, FIEO, EPCs & internal deliberations, the provisions of deemed exports
were re-written and notified on 05.06.2012. These provisions have been aligned with
the corresponding customs notification. The clarifications issued by the Policy
Interpretation Committee have been incorporated. The benefits available for deemed
exports under different categories have been consolidated in a tabulated form, under
para 8.4 of FTP. Policy Circular No.15 dated 21.02.2013 has been issued clarifying
benefits for supplies against ARO / Invalidation. Similarly, Policy Circular No.16 dated
15.03.2013 has been issued making it clear that where ab-initio exemption of duties
is available, no refund of TED will be provided. Notification No.4 dated 18.04.2013
has been issued incorporating the changes made under paras 8.3 & 8.4 of FTP.
Policy Circular No.9 dated 30.10.2013 has been issued clarifying the applicability of
duty drawback as per col ‘B’ of All Industry Rate and requirement of certificate
regarding CENVAT declaration as contained in the Public Notice No. 35 dated
01.03.2011.
The Hon’ble Minister of Commerce & Industry had made following announcement
to the Foreign Trade Policy on 18.4.2013:-
One new country Norway has been added under Focus Market Scheme and
one new country Venezuela have been added under Special Focus Market
Scheme.
19
Approx. 126 new products added for duty credit @2% or 5% of FOB value of
exports which included Engineering, Electronics, Chemicals, Pharma and
Textiles etc.
Around 47 new products and 2 new countries have been added under Market
Linked Focus Product Scheme. MLFPS has been extended till 31st March
2014 for export to USA and EU in respect of items falling in Chapter 61 and
Chapter 62 (textiles and clothing).
Incremental Exports Incentivisation Scheme (IEIS) has been extended for the
year 2013-14. 53 Latin American and African countries have been added in the
list w.e.f. 1.4.2013.
Scrips of FPS, FMS & VKGUY can now be used for payment of Service Tax.
Chapter 3 scrips can also be used for payment of composition fee, application
fee and value-wise shortfall in Export obligation.
SFIS scrips can be utilised for purchase of Motor Vehicles.It can be used for
manufacturing sector business of the service provider.
Now under SFIS scheme calculation is based on Net Foreign Exchange
earned .
2 new towns have been declared as Towns of Export Excellence (TEE). These
are Gurgaon (Textiles) and Morbi (Ceramic Tiles & Sanitaryware).
The Rupee Export Credit Interest rate Subvention Scheme was available to
certain labour intensive sectors like Handicrafts, Carpets, Handlooms, SMEs,
Readymade Garments, Processed Agriculture Products, Toys, Sport Goods.
Now interest subvention scheme has been extended to 101 tariff line of
Engineering sector and 6 tariff line of Chapter 63 of ITC HS( textiles madeup).
The validity of Scheme has also been extended to 31st March 2014. The rate
of Interest Subvention has been increased from 2% to 3% w.e.f. 01.08.2013.
Other Major Announcement
Approx. 160 new products including 153 hi tech products added for duty credit
@2% of FOB value of exports on 10.07.2013 (effective from 15.08.2013).
Entitlement goods imported or procured under SFIS scheme can be
alienated on completion of 3 years from the date of import / procurement.
All Garments covered under Chapter 61 and Chapter 62 of ITC HS
Classification of Export and Import Items have been extended the benefit of
duty credit scrip @2% of FOB value of exports to USA and EU from 1.4.2011
till 31.3.2012. This benefit has now been extended till 31st March 2014.
Incremental Exports Incentivisation Scheme (IEIS) has been extended for the
year 2013-14.
Other initiatives of DGFT
The Directorate General of Foreign Trade’s electronic Bank Realization
Certificate (e-BRC) project has won the first prize in the 2013 eASIA Award
under Trade Facilitation category as announced by Asia Pacific Council for
Trade Facilitation and Electronic Business (AFACT) in Ho Chi Minh City,
20
Vietnam on November 29, 2013. The eASIA Award, held every two years,
aims at promoting the achievement of AFACT member countries/economies in
the development of trade facilitation, electronic business policies and activities,
and initiatives for bridging digital divide in the Asia Pacific Region. eBRC has
also won the award in 48th Annual Convention of Computer Society of India
held on 14th December,2013.
Second Task Force on Transaction Costs has been constituted on April 18,
2013 under chair of DGFT and with members from concerned administrative
ministries and Trade and Industry bodies. The task force members are visiting
port and other points of contact of exporters with a view to find solutions to
reduce transaction costs.
“Niryat Bandhu” as a strategic initiatives started during the 12th Five Year
Plan(2012-17).
In pursuance of Para 2.51 of Foreign Trade Policy, a ‘Niryat Bandhu’ Scheme
for mentoring first generation entrepreneurs has been approved for
implementation during 12th Five Year Plan (2013-14 to 2017-18). The Niryat
Bandhu would primarily mentor interested individuals in the area of
international business. Such hand-holding by officers of DGFT would help the
new exporters/importers by leveraging the knowledge base of officers and by
providing timely and appropriate guidance.
Following are the key objectives and targets of the scheme:
To provide mentorship and develop a class of new business entrepreneurs
who would carry out foreign trade.
To bring more entrepreneurs into the field of international trade.
To train about 1000 persons annually. It is expected that many of the new
entrepreneurs would start in the field of international trade.
Capacity building of officers. This will also make them impart the role of
Niryat Bandhu in more productive way.
To begin with Rs. 1.00 crore has been sanctioned for 2013-14 against the
total estimated outlay of Rs. 23.23 crore for the 12th Five Year Plan. The
Scheme and its outlay have been approved by the Planning Commission/
Standing Finance Committee.
7. Export Promotion Measures – ASIDE, MAI, MDA, major initiatives taken
by EPCs.
The Department implements the following export promotion measures at micro level
to embark upon the short term and long term problems faced by the trade and
industry related to external sector :-
a) Assistance to States for Developing Export Infrastructure and Allied
Activities (ASIDE) Scheme
The ASIDE scheme was launched by the Department of Commerce on 13.3.2002, in
pursuance of the EXIM Policy announcement in March, 2000, for the purpose of
21
creation of export infrastructure by optimizing the utilization of resources to achieve
the objectives of export growth through a coordinated effort of the Central
Government and the States.
Funds allocated under ASIDE scheme are disbursed directly to a Nodal Agency
nominated by the State Government where it is kept in a separate financial account-
head of Nodal Agency.
The Government has spent Rs. 2,050 Crore and Rs 3,048 Crore under ASIDE
scheme during the 10th Five Year Plan (2002-2007) and the 11th Five Year Plan
(2007-2012) respectively. During current financial year (2013-14), a budget of Rs.
800 crore (BE) has been allocated under ASIDE scheme. Details of funds released
under ASIDE from 2008-09 to 2013-14 to various States, the North Eastern Region
and the Central Sector is indicated below:-
(Rs. in Crore)
Year Total
Outlay
Sanction/Release to
States (including
N.E.R.)
Sanction / Release in
the Central Sector
Total sanction
release under
ASIDE scheme
2008-09 570.00 437.84 131.40 569.24
2009-10 570.00 433.93 136.07 570.00
2010-11 662.98 530.00 132.98 662.98
2011-12 707.16 560.32 116.62 676.94
2012-13 655.50 524.73 130.77 655.50
2013-14* 800.00 523.58 104.65 628.23
*As on 28.11.2013
b) Infrastructure
In order to resolve the infrastructural constraints being faced by exporters/ importers,
Department of commerce has been taking up the matter with Ministry of Shipping,
Ministry of Road Transport and Highways, Department of Revenue, Ministry of Civil
Aviation, Ministry of Railways etc.
The following steps have been taken by Department for trade infrastructure
development and trade facilitation:-
Inter Ministerial Committee (IMC):
Single Window Clearance for the proposals for setting up of Inland Container
Depots/Container Freight Stations (ICDs/CFSs) is given through an Inter-Ministerial
Committee (IMC) functioning since 1992 under the Chairmanship of Additional
Secretary (Infrastructure Division), Department of Commerce. So far, 280 Letters of
Intent have been issued out of which 188 are functional and 92 are under
implementation.
In the year 2013-14 (i.e. upto 06.11. 2013), two IMC meetings have been held, in
which 10 proposals for issue of Letter of Intent (LOI) and 8 cases of extension of LOI
have been approved. ‘In-principle’ approval for setting up an ICD was granted to one
company and 2 cases of extension of ‘in-principle approval’ were approved. The
next meeting of IMC this year is scheduled on 13.12.2013.
22
c) Market Access Initiative (MAI) Scheme
The Market Access Initiative (MAI) Scheme is a Plan scheme formulated to act as a
catalyst to promote India’s exports on a sustained basis, based upon ‘focus product’
and ‘focus market’ concept. Under the scheme, assistance is extended to the
Departments of Central Government and organizations of Central/ State
Governments, Export Promotion Councils, Registered Trade Promotion
organizations, Commodity Boards, recognized Apex Trade Bodies and Recognized
Industrial Clusters and individual Exporters (only for product registration and testing
charges for engineering/Pharmaceuticals products abroad).
Year-wise status of MAI allocation/release is as under:- (Rs. in Crore)
Year Outlay Expenditure
2009-10 64.00 64.99
2010-11 110.00 110.00
2011-12 150.00 150.00
2012-13 125.00 125.00
2013-14 179.99 152.00*
*Upto 10th December 2013.
d) Marketing Development Assistance (MDA) Scheme
To facilitate various measures being undertaken to stimulate and diversify the
country’s export trade, Marketing Development Assistance (MDA) Scheme is under
operation. The Scheme supports the following activities:
Assist exporters for their participation in approved EPC/Trade Promotion
Organization led export promotion events abroad.
Assist Export Promotion Council (EPCs) to undertake export promotion activities for
their product(s) and commodities.
Assist approved organization/trade bodies in undertaking exclusive nonrecurring
innovative activities connected with export promotion efforts for their members.
Assist Focus export promotion programmes in specific regions abroad like FOCUS
(LAC), Focus (AFRICA), Focus (CIS) and Focus (ASEAN +2) Programmes.
Year wise status of MDA Releases/Allocation
(Rs. in Crore)
Year Outlay Expenditure
2009-10 53.00 53.00
2010-11 56.00 56.00
2011-12 50.00 50.00
2012-13 39.49 39.49
2013-14 49.99 34.99*
*Upto 10th December 2013.
23
e) Export Credit Guarantee Corporation of India Ltd. (ECGC)
The Export Credit Guarantee Corporation of India Ltd. (ECGC), Mumbai has the
primary objective of supporting the country's exports by extending credit insurance
facilities to Indian exporters and commercial banks.
The Export Credit Insurance Policies issued by the Corporation to Exporters provide
insurance cover against commercial and political risks for shipments made on short-
term / long-term credit. The total value of business covered under short term policies
schemes amounted Rs.1,26,100 crores as against Rs 1,19,621 crores in 2011-12
recording a growth of 5.41%.
The total premium collected from all the schemes of the Corporation during the year
amounted to Rs 1,157.25 crores as compared to Rs 1004.83 crores in 2011-12,
registering a growth of 15.16%.
The Corporation has declared and paid a dividend of Rs 60.00 crore for the year
2012-13 as compared to Rs 54.00 crore paid for the previous year.
f) National Export Insurance Account (NEIA)
The National Exports Insurance Account (NEIA) was set up in 2006. A sum of Rs 916
crores has been funded by the Government of India (GoI) till FY 2012-13. The total
fund of NEIA as on 31.03.2013 is Rs 1,433 crores constituting corpus, premium, fees
and interest accrued.
The objectives of NEIA is to promote export from India, which may not take place but
for the support of a credit risk insurance cover which the ECGC is not in a position to
provide because of its own underwriting capacity constraints. The NEIA is maintained
and operated by NEIA Trust, a Public Trust set up jointly by the Department of
Commerce and ECGC.
g) India Brand Equity Foundation (IBEF)
India Brand Equity Foundation (IBEF) is a Trust established by the Department of
Commerce, Ministry of Commerce and Industry, Government of India. IBEF’s primary
objective is to promote and create international awareness of the Made in India label
in markets overseas and to facilitate the dissemination of knowledge of Indian
products and services. Towards this objective, IBEF works closely with stakeholders
across government and industry.
During 2013-14, IBEF successfully consolidated the global Brand India Pharma
campaign in its second phase, creating resonance in international media with its
preferred positioning as the Pharmacy of the World. Under the aegis of the
Department of Commerce, IBEF has also been engaged in conceptualising a brand
promotion strategy for select engineering segments and specific commodities like tea,
coffee and spices.
h) Federation of Indian Export Organisations (FIEO)
The Federation was set up in 1965 under the aegis of Ministry of Commerce, as an
Apex Body of Export Promotion Organisations and institutions. The main objective of
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FIEO is to render an integrated package of services to various organizations
connected with export promotion. It functions as a primary servicing agency to
provide integrated assistance to its over 16,000 members comprising professional
exporting firms holding recognition status granted by the Government, consultancy
firms and service providers.
FIEO has been designated as Registering Authority for status holder exporting firms,
other exporters dealing in multi-products. The Federation organizes Seminars, Open
House Meets, Interactive Sessions, Awareness Programmes, Training Programmes
and arranges participation in various exhibitions in India and abroad. Besides, FIEO
provides e-platform to buyer/sellers through huge network of members and non-
members, and also organizes India Shows, Trade Fairs and Exhibitions across the
globe, particularly in untapped countries. FIEO has signed over 75 MOUs with
leading chambers across the globe to provide commercial information and marketing
support to its members.
i) e-TRADE Project
The project eTRADE aims to facilitate Export and Import led clearances in online
environment, integrating international standards and best practices. This is a
community project covering trade regulatory and facilitating agencies like Customs,
Directorate General of Foreign Trade (DGFT), Sea Ports, Airports, ICDs/CFSs,
Exporters, Importers, Agents and Banks. The project facilitates electronic delivery of
services like document filing/clearances; e-Payments integration etc.
The electronic bank realization certificate (eBRC) system has been operationalised
by the DGFT. eBRC standardizes the process of reporting and collection of BRC
data. It also facilitates monitoring and facilitation of exports related foreign exchange
transactions. The eBRC project has won eASIA Award in Trade Facilitation category
given by Asia Pacific Council for Trade Facilitation (AFACT) at the ceremony held at
Ho Chi Minh City, Vietnam.
The Centralized Port Community System (PCS) a single window interface has
already been operationalised at 19 seaports. The agreement has been made with
Gujarat Maritime Board (GMB) and integration of four seaports of Gujarat with PCS
has been started. Other seaports are also pursued for integration.
The Central Server system of Customs has been rolled out at 120 locations. The
message exchange for critical messages is operational with community partners like
Airports, seaports through Ports community system(PCS), Container Corporation of
India (CONCOR) and other major ICDs/CFSs.
The Risk Management System (RMS 3.1) for imports under central server
environment is already operational and RMS for exports has also been launched.
RMS for export is being rolled out at various locations in phased manner. E-
Payments have been integrated by DGFT, Customs, Seaports through PCS and
other community partners.
25
j) Important Initiatives by Export Promotion Councils
(i) Gem & Jewellery Export Promotion Council (GJEPC)
The Gem & Jewellery Export Promotion Council, the apex trade body of the Indian
gems and jewellery industry has completed more than 45 years of its existence. It has
approximately 5300 members. The gems & jewellery manufacturing sector is India’s
leading foreign exchange earning sector. Exports of gems and jewellery from India
during the fiscal year 2012-2013 registered a performance of US$ 43768.39 million.
This sector contributes to about 14.57% of the country's total merchandise exports
estimated at US$ 300400.68 million. It consists of a large number of SME units,
employing skilled and semi skilled labour, almost entirely in the unorganized sector.
(ii) Electronics and Computer Software Export Promotion Council (ESC)
Electronics and Computer Software Export Promotion Council (ESC) is mandated to
promote India’s exports of Electronics, Telecom, Computer Software and IT Enabled
Services. ESC offers a varied set of services to its members for accelerating exports.
Some of the services of ESC are as follows:
Facilitates participation in Global Trade Shows/Expositions and Conferences.
Undertakes Market Research/Studies and publicity Campaigns in overseas
markets.
ESC facilitates business interface between Indian and foreign companies through
Buyers – Seller Meets, and locates new business partners for Indian electronics,
computer software and IT companies.
For facilitating foreign trade, ESC provides on-line facility for Data Search.
During the year 2012-13, export of Electronics Hardware and Software reached to a
level of US$ 83.14 billion as compared to US$ 76.90 billion in 2011-12.
During the period April 2013 to September 2013, Export of Electronics Hardware is
estimated to be US$ 3800 million and Software Export is estimated to have reached
US$ 40.79 billion.
(iii) Council for Leather Exports (CLE)
The Leather Industry holds a prominent place in the Indian economy. This sector is
known for its consistency in high export earnings and it is among the top ten foreign
exchange earners for the country.
With an annual turnover of about US$10 billion, the export of leather and leather
products increased manifold over the past decades and touched US$ 4.99 billion in
2012-13, recording a cumulative annual growth rate of about 8.54% (5 years). The
leather industry is an employment intensive sector, providing job to about 2.5 million
people, mostly from the weaker sections of the society. Women employment is
predominant in leather products sector with about 30% share.
26
The major markets for Indian Leather & Leather Products are Germany with a share
of 12.60%, UK 11.96%, USA 10.51%, Hong Kong 8.82%, Italy 8.77%, France 6.39%,
Spain 5.34%, Netherlands 3.79%, China 2.48%, Belgium 1.86%, UAE.2.53%,
Australia 1.48%. These 12 countries together accounts for nearly 76.53% of India’s
total leather& leather products export.
The Government had identified Leather Sector as a Focus Sector in its Foreign
Trade Policy in view of its immense potential for export growth prospects and
employment generation. With the implementation of various industrial developmental
programmes as well as export promotional activities; and keeping in view the past
performance, and industry’s inherent strengths of skilled manpower, innovative
technology, increasing industry compliance to international environmental standards,
and dedicated support of the allied industries, the Indian leather industry aims to
augment the production, thereby enhance export to US$ 14 bn mark by 2016-17, and
resultantly create additional employment opportunities.
(iv) Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion
Council (CHEMEXCIL)
CHEMEXCIL implements a lot of export promotional activities which included
participation in Exhibitions/Buyer Seller Meets held/organized abroad and in India,
conducting of Educative Seminars like Skill Development Programme, Open House
Meets with DGFT in various regions, Building up of Indian Chemical inventory,
Registration of Substances of firms in European Countries( i.e. REACH), etc.
The export performance of the items covered under the purview of CHEMEXCIL
during the period 2012-13 has been 13855 million as compared to 11270 million of
the corresponding period last year, registering an increase of 22.9%.
The export performance of CHEMEXCIL’s items during the period April 2013 to
September, 2013 has been 6396 million as compared to 5893 million of the
corresponding period last year registering an increase of 8.5%.
Chemical Inventory - CHEMEXCIL has prepared a model chemical inventory of
4600 substances with available data from DGCI&S, substances pre-registered under
REACH, Public Liability Insurance Act, and substances in CHEMEXCIL’s Directory. A
Chemical Inventory Committee has been established comprising of about 40
members representing multinationals, small, medium and large Indian chemical
companies, representatives of industry associations, chemical consultants, exporters,
etc. For highly technical discussions and drafting the legislative text, a core
committee established of about 19 persons, who are actually involved in Product
Stewardship or EHS activities. Further work on the financial/Budget part of the
inventory is being followed up with the Ministry of Commerce & Industry and the
Ministry of Chemicals & Fertilizers, Government of India.
27
(v) The Plastics Export Promotion Council (PLEXCONCIL)
The Plastics Export Promotion Council has been participating in International Trade
fairs and organising Buyer – Seller Meets (BSMs) round the globe and Reverse
Buyer – Seller Meets(RBSMs) in India.
Plastic raw materials constitute about 38% of the total plastic exports with a negative
growth of 3.62% in 2012–13. The growth registered by value – added items was
about 2.7% which is encouraging given the adverse economic scenario in respect of
our major trading partners the EU and USA. Most value – added items exhibited
encouraging growth rates. Growth in exports in the current financial year has been
encouraging and total exports from the plastics sector is expected to exceed US$
7.50 billion in 2013-14.
(vi) Chemicals and Allied Products Export Promotion Council (CAPEXIL)
CAPEXIL is a Multi Product Export Promotion Council and it has sixteen
different group of products subdivided broadly under Mineral and Non-Mineral Sectors.
Export Performance
Year 2009-10 2010-11 2011-12 2012-13* Performance during 2013-14 (Apr-July)
Target Exports 2013-14
Export (US$) Mn)
13,134.8
16,418.4 15,630.7 13,159.4 4837.7 4442.3 14,237.6
Growth 25% -4.80% -15.81% -8.17%
*Provisional
During the current financial year (i.e. 2013-14) from Apr-Jul 2013, CAPEXIL has
reported a decrease in exports as compared to corresponding period of Apr-Jul
2012 by 8.18%.
The dip in exports is largely attributable to the Mineral segment i.e. Bulk
Minerals and Ores, where the fall was a staggering 37.27 per cent to 808.67 million
during Apr-Jul 2013 from 1289.23 million in the corresponding period of the
previous year i.e. Apr-Jul 2012.
The Non-Mineral segment, however, continued to show growth, registering a nearly
2.43 per cent increase to 2590.01 million during Apr-Jul 2013 from 2528.64
million in the comparable period of the previous year.
The Export Performance for Apr-Jul 2013 has been to the tune of 4442.29 million
against 4837.72 million in the same corresponding period i.e. Apr-Jul 2012.
28
(vii) Shellac and Forest Products Export Promotion Council (SHEFEXIL)
Export Performance of Products of SHEFEXIL
(US $ mn )
Performance during 2012-13 Projected
Export
2013-14
Commodity
Name 2009-10
2010-
11
2011-
12
2012-
13
Apr-Jul,
2012
Apr-Jul,
2013
Growth
(%)
1
NTFPs &
their variants 561.2 715.4 953.5 1309.7 431.2 412.8 -4.3 1497.8
2 Guar Gum 239.2 621.3 3354.8 3901.4 2333.1 1015.3 -56.5 4486.6
3
Sesame
seeds 315.3 484.0 554.0 528.2 203.8 197.6 -3.1 607.4
4 Niger seeds 5.1 9.1 24.8 16.5 5.7 5.0 -12.0 18.0
TOTAL 1120.7 1829.7 4887.1 5755.8 2973.9 1630.7 -45.2 6609.9
(viii) Sports Goods Export Promotion Council (SGEPC)
Sports Goods Export Promotion Council (SGEPC) is working for the promotion of
India’s exports of sports goods and toys. The Council was founded in 1958 and it
represents all the leading manufacturers and exporters of sports goods and toys in
India.
Exports of sports goods and toys for the year 2012-13 is US$ 206.57 million. The top
items of exports during 2012-13 were inflatable Balls, Cricket Bats, General Exercise
Equipments, Sports Nets and Protective Equipment for Cricket. The contribution of
top 5 items in the total export of sports goods from this sector was 54%.The top three
countries of export are UK, Australia and USA.
Sports Goods & Toys continue to be focus products under Foreign Trade Policy. The
MDA and MAI schemes given by the government continue to encourage exporters to
reach unchartered territories and ceiling for amount reimbursement to exporters has
also been enhanced. Moreover, both the Sports Goods & Toys sector are eligible for
duty credit scrip of 7% under Focus Product scheme. Few essential items for
manufacturing of Sports goods are also available under duty free import scheme,
which allows duty free import of these inputs up to 3% of FOB value of exports.
During 2012-13, five items were added in the list and now there are 21 items in the
list.
(ix) Engineering Export Promotion Council (EEPC India)
The EEPC INDIA is a nodal organisation for exports promotion of engineering goods,
projects and services from India. Over the last five decades, it has grown to be the
largest Export Promotion Council, with membership strength of nearly 13,000 Indian
firms, covering the entire spectrum of engineering industry consisting of large
Corporate Houses, Small and Medium Enterprises and Trading & Manufacturing
Companies.
29
During the last five years, engineering exports achieved a Compound Annual Growth
Rate (CAGR) of 12%. India’s exports of engineering goods grew at 25.2% (CAGR)
during 2000-01 to 2007-08. In 2008-09, the growth moderated to 18.7% and in 2009-
10 it declined by 19.6% because of global recession, with its share in total exports
falling to 18.2%. Engineering exports touched US $ 49.8 billion in 2010-11 recording
growth of over 50% over 2009-10 and further to 58.22 in 2011-12 with a growth rate
of 16.88% from 2010-11. Over the years, the scenario has completely changed and
as of date, about 34% of the total engineering exports are made to developed
countries.
(x) Services Export Promotion Council (SEPC),
The Services Export Promotion Council (SEPC), is an apex trade body set up by this
Department to facilitate service exporters of India. It has been serving as a platform of
interaction between service exporters and policy makers and has been instrumental
in promoting the efforts of Indian services exports. The Council acquired a strong
membership base of more than 1900 members from the 14 service sectors which are
under its purview.
The services sector of India contributes more than 60% to the country’s gross
domestic product (GDP). It has emerged as a prominent sector in terms of its
contribution to national and states' incomes, trade flows, FDI inflows and
employment. Services exports expanded at 2.35% to US $ 145.67 billion in 2012-13
compared to a contraction of 1.03% in merchandise exports to US $ 306.58 billion. In
2013-14 till September, the export of Commercial Services from India has been of a
value of US $ 75.53 Billion which is almost 11% higher as compared to the
corresponding period during the last financial year.
During the year 2013-14, SEPC constituted Core Groups for Healthcare Services and
for Hotel and Tourism related Services to drive sector specific agenda in exploring the
key potential markets.
(xi) Pharmaceutical Export Promotion Council (PHARMEXCIL
Indian Pharma, a highly knowledge based industry, is growing steadily and playing a
major role in the Indian economy. India’s Pharmaceuticals manufacturing picked up
momentum in 1970’s from Various Drug Policies of the government favouring the
domestic manufacturing sector where indigenous technology was emphasized.
India plays a major role in supply of API’s, and drug intermediates, at global level.
India exports bulk drugs to approximately over 190 countries / colonies, and to 62 of
them, the export of Bulk Drugs / Intermediates is over US $ 10 Million per annum (for
each country).
Brand Pharma Mission was launched by India in March 2012. The momentum is
being carried forward in 2013-14 also and CPhI Frankfurt was selected as the
important event of the year for branding campaign.
Trace and track features for the time being based on GS1 global standards was
decided to be mandated in 2011 as these are widely used all across the globe in
tracing and tracking various products. Bar code or digital mass serialisation/unique
30
numbers with GS1 global standards was mandated on all drugs consignments
exported from India.
(xii) Telecom Equipment & Services Export Promotion Council
Telecom Equipment & Services Export Promotion Council (TEPC) as a Council plays
a critical role in furtherance of Telecom Exports from the Country and assists its
member companies in easy facilitation of their respective exports. The Council caters
to the complete Telecom Ecosystem including Telecom Hardware Manufacturers,
Telecom Service Providers, Telecom Software Vendors and Consultants. TEPC’s
vision is to make India a globally competitive, telecom manufacturing and services
hub for driving telecom exports. TEPC works closely with the government as well as
the industry to create a vibrant eco-system of telecom manufacturing in India.
Telecom Equipment export has been consistently rising since 2009-10 and have
increased from Rs 135000 million in 2009-10 to Rs. 210000 million in 2012-13 and
Rs. 102970 million till September, 2013.
8. Special Economic Zones (SEZs)
India was one of the first in Asia to recognize the effectiveness of the Export
Processing Zone (EPZ) model in promoting exports. A revised Special Economic
Zones (SEZs) Policy was announced in April 2000. This policy intended to make
SEZs an engine for economic growth supported by quality infrastructure
complemented by an attractive fiscal package, both at the Centre and the State level,
with a user-friendly regulations framework.
In order to impart stability to SEZ regime and to achieve generation of greater
economic activity and employment through the establishment of SEZs, a
comprehensive Special Economic Zones Act, 2005, was introduced.
The main objectives of the SEZ Act are:-
a) generation of additional economic activity
b) promotion of exports of goods and services
c) promotion of investment from domestic and foreign sources
d) creation of employment opportunities
e) development of infrastructure facilities
Approvals have been granted for setting up 574 SEZs out of which 391 have been
notified. Out of the total employment provided to 11,56,677 persons in SEZs as a
whole 10,21,973 persons is incremental employment generated after February, 2006
when the SEZ Act has come into force. This is apart from millions of man days of
employment generated by the developers for infrastructure activities. Physical exports
from the SEZs has increased from Rs.3,64,478 crore in 2011-12 to Rs.4,76,159 crore
in 2012-13, registering a growth of 31%. There has been overall growth of export of
1,985% over past eight years (2005-06 to 2012-13). The total physical exports from
SEZs as on 30th September, 2013 i.e. in the second quarter of the current financial
year 2013-14, has been to the tune of Rs. 2,46,646 crore approximately, registering
a growth of 3% over the exports of corresponding period of the previous financial
year. The total investment in SEZs till 30th September, 2013 is Rs.2,81,134 crore
31
approximately, including Rs.2,59,329 crore in the newly notified SEZs set up after
SEZ Act, 2005. 100% FDI is allowed in SEZs through automatic route.
Exports from the operational SEZs are as under:
(in Rs. crore)
Years Exports Growth over previous year
2005-2006 22,840 -
2006-2007 34,615 52%
2007-2008 66,638 93%
2008-2009 99,689 50%
2009-2010 2,20,711 121%
2010-2011 3,15,868 43.11%
2011-2012 3,64,478 15.39%
2012-2013 4,76,159 31%
2013-2014 2,46,646 (as on 30.9.2013) 3%
A total of 175 SEZs are exporting at present. Out of this 97 are IT/ITES, 20 Multi
product and 58 other sector specific SEZs. There are a total of 3,769 units setup in
the SEZs.
Impact of the scheme: The SEZ scheme has generated tremendous response
amongst the investors, both in India and abroad. In addition to foreign exchange
earning, infrastructure development, SEZs have also created a significant local area
impact in terms of employment, social life, human development facilities etc.
The Act provides for setting up of Single Window Clearance Mechanism for speedy
implementation of SEZ Projects. State Governments are also encouraged to enact
their SEZ Act to provide friendly environment to investors. SEZ rules and procedures
are reviewed from time to time to facilitate speedy implementation of SEZ projects.
Comprehensive guidelines have been issued regarding energy conservation in SEZs.
SEZ Policy and Operational Framework Reform Initiative: A comprehensive
analytical assessment of the performance of the sector has been carried out which
has highlighted the need that certain aspects of the SEZ Policy and Operational
framework require a re-look.
In this regard a draft discussion paper to facilitate stakeholder consultation on
‘Potential reform of the SEZ Policy and Operating Framework’ had been prepared
and was hosted on the department’s website. After wide consultations with a detailed
proposal – ‘SEZ Policy and Operational Framework Reform Initiative’ has been
notified on 12th August, 2013. Highlights of measures are as under:-
Minimum Land Area requirement has been reduced by half, for Multi-product SEZ
from 1000 hectares to 500 hectares and for Sector-specific SEZ from existing 100
hectares to 50 hectares.
To provide greater flexibility in utilizing land tracts falling between 50-450 hectares,
it has been decided to introduce a Graded Scale for Minimum Land Criteria which
would permit a SEZ an additional sector for each contiguous 50 hectare parcel of
32
land. This will also bring about more efficient use of the infrastructure facilities created
in such an SEZ.
Further flexibility to set up additional units in a sector specific SEZ is being provided
by introducing Sectoral broad-banding to encompass similar / related areas under the
same sector.
The existing policy allows for parcels of land with pre-existing structures not in
commercial use to be considered as vacant land for the purpose of notifying an SEZ,
it has now been decided that additions to such pre-existing structures and activities
being undertaken after notification would be eligible for duty benefits similar to any
other activity in the SEZ.
In order to encourage agro-based industries in SEZ, a new sector specific SEZ
named ‘agro-based food processing’ sector with a minimum land area requirement of
10Ha. has been introduced.
IT Exports constitute a very significant part of India’s exports and IT SEZs have a
major contribution in it. Exports from IT SEZs during financial year 2012-13 have
exceeded Rs. 1.40 lakh crore registering a growth of over 70% over the previous
year’s exports. We have specifically addressed issues to boost growth of this very
important sector and also to give a fillip to employment and growth in Tier-II and Tier-
III cities.
The present requirement of 10 hectares of minimum land area has been done away
with. Now there would be no minimum land requirement for setting up an IT/ITES
SEZ. Only the minimum built up area criteria would be required to be met by the SEZ
developers.
The minimum built up area requirement has also been considerably relaxed with the
requirement of one lakh square meters to be applicable for the 7 major cities viz:
Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangalore, Pune and Kolkata. For the
other Category B cities 50,000 square meters and for remaining cities only 25,000
square meters built up area norm will be applicable.
The present SEZ Framework does not include an Exit Policy for the units and
feedback was that this was perceived as a great disadvantage. It has now been
decided to permit transfer of ownership of SEZ units, including sale.
9. COMMODITY BOARDS AND OTHER DEVELOPMENT AUTHORITIES
AND TRADE FACILITATION INSTITUTIONS
(i) TEA
India is the largest producer and consumer of black tea in the world. Tea is grown in
15 States in India. On average 20% of the total production is exported and balance
80% is consumed within the country.
Production
During 2013-14 (Apr-Sep), the estimated production stands at 778.51 M.Kgs., as
against 733.64 M.Kgs of corresponding period, thereby an increase of 44.87 M.Kgs
(6.12%).
Exports: During 2012-13 the exports increased by 2 M.Kgs. Because of higher unit
price, the total value of exports during 2012-13 was also higher than the previous
33
year by Rs. 701 crore. Total foreign exchange earned during 2012-13 was US$ 736
Mn as against US$ 690 Mn of corresponding period. The average unit price of
exports during 2012-13 was also higher by Rs. 31 compared to the corresponding
period.
During 2012-13, improvement in the exports took place with respect to countries such
as Russia, Germany, UAE, Iran and Egypt (ARE). Improved market share of exports
is seen in UAE (19.17%), Iran (69.50%), Egypt (47.03%) over the corresponding
period.
Scheduled Caste Sub-Plan: For the current financial year a sum of Rs.10 Cr has
been earmarked for extending assistance to SC small tea growers. The expenditure
incurred upto to December 2013 add upto Rs 1.26 crore.
Intellectual Property Rights (IPR) activities: Tea Board has continued its
objectives to protect and preserve its various tea names and logos as India’s
treasured geographical indications and icons of India’s cultural and collective
heritage. The Tea Board continued to challenge, by way of
opposition/invalidation/cancellation actions, legal notices, court actions and domain
name cancellations instances of attempted registrations and misuse of these tea
names and logos both at the domestic and international level. A noteworthy highlight
of the year has been to make the largest importer of India tea – M/s Orimi Trade in
the world as the valid licensee of our Assam marks in Russia.
(ii) COFFEE
Production: The post blossom crop estimates for 2013-14 has been placed at
3,47,000 MT consisting of 1,11,000 MT of Arabica and 2,36,000 MT of Robusta as
compared to the 2012-13 final crop estimates of 3,18,200 MT comprising of 98,600
MT of Arabica and 2,19,600 MT of Robusta.
Export of Coffee: The total quantity of coffee exported from India during 2012-13
including re-exported coffee after value addition was 299030 Metric Tonnes. The top
five export destinations for Indian Coffee are Italy, Germany, Russian Federation,
Belgium and Slovenia, which accounted for about 53% of our total coffee exports.
The value realization out of coffee exports during 2012-13 was Rs. 4548.29 crores.
The provisional coffee exports for 2013-14 covering the period April – October 2013
are 179151 Metric Tone valued at Rs.2712.82 crores, as against the export target of
2,56,000 MTs for 2013-14. As per the trend, we may reach the export target by the
end of the year.
Debt Relief Package – 2010: The Government sanctioned the Coffee Debt Relief
Package – 2010 for the debt ridden small coffee growers with a total implication of
Rs. 241.00 Crores. As against the targeted 74,929 small growers, 1,20,025 small
growers were benefited by the scheme with the Govt. share of relief of Rs.241.00
Crores. In the 2nd phase, Government sanctioned and released additional funds of
Rs.58.00 Crores. Out of which Rs.52.45 crores of Govt. share of liability has been
reimbursed towards settlement of pending/supplementary claims benefiting 15,258
small coffees growers till the end of March 2013, Thus the total amount reimbursed
so far is Rs.293.45 crores benefiting 1,35,283 small growers
34
(iii) RUBBER
India occupies first position in terms of average yield per hectare of natural rubber
(NR) among the major producing countries. This achievement is despite the
constraints caused by sub-optimal agro-climatic conditions prevailing in the country’s
rubber growing regions as against optimum conditions prevailing in other major
producing countries.
Export: Volume of India’s export of NR improved to 30,594 tonne during 2012-13
from the previous year’s 27,145 tonne. Higher international prices in May 2012 and
from the beginning of December 2012 to mid-March 2013 made exports attractive. In
terms of value, NR exports from India fell 8.5% to US$ 86.12 million from US$ 94.07
million earned in the previous year.
The country exported 3,975 tonne of NR during April to October 2013 as against
8,611 tonne exported during the same period in the previous year.
Planning: Annual outlay under Plan in 2013-14 was Rs. 170.01 crore and Non-Plan
budget amounted to Rs 50.00 crore. Plan Review Meetings were held to monitor the
progress in the implementation of Plan Schemes. Plan and Non-Plan expenditure
during April – October 2013 was Rs. 97.17 crore and Rs.32.00 crore respectively.
(iv) SPICES
The Board is headed by a Chairman with its head office at Kochi. Spices Board is
responsible for the development of cardamom industry and export promotion. The
primary function of the Board includes production development of small and large
cardamom, promotion, development and regulation of export of spices.
Export:
Indian spices exports have been able to record strident gains in both volume and
value in rupee terms during 2012-13. It is first time in the history of spices export from
the country, the growth in volume registered all time high of 22%. The total export of
spices during the period has also crossed Rs.10,000.00 crore marks for the first time.
The export had gone up from 470,520 MT valued at Rs.5300.26 crore (US$ 1168.40
million) in 2008-09 to 699,170 MT valued Rs.11171.16 crore (US$ 2040.18 million) in
2012-13. During 2013-14 (April – September), the estimated export of spices is
378,755 MT valued at Rs.6117.83 crore (US$ 1031.11 million) against 314835 MT
valued Rs.4285.74 crore (US$ 787.49 million).
Production: The estimated production of cardamom (small) and cardamom (large) in
India during 2012-13 is 14000 MT and 4145 MT respectively.
Plan Schemes of the Board: The XII Plan scheme / programmes are visualised
with the objective of enhancing spices export from the country by making in-roads
into building processing capacities and capabilities, expansion of markets, increasing
production and productivity of cardamom (small & large), modernising the spice
cultivation and post-harvest operations thereby attracting youths to the spices
cultivation, promoting organic cultivation, addressing food safety concerns of
importing countries, market and productivity driven research, skill development,
transfer of technology etc.
35
(v) THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY
(MPEDA)
The Marine Products Export Development Authority, is mandated for the
development of export of marine products from India.
Export: Exports of Marine Products during the first eight months of 2013-14 (April –
November) was of the value of US $ 3332.46 million as against US $ 2372.36 million
thereby recording of growth of 40.47%. in rupee terms, export were of the order of
Rs. 20220.25 crore (April-November, 2013) as against Rs. 12910.98 crore (April-
November, 2012), recording a growth of 56.61%. However, there has been a decline
in quantity of Marine Products by 0.24% during the above period.
Thrust Areas: To facilitate extending financial assistance for conversion /
construction of Tuna Long Liners and imparting training to crew to develop Tuna
industry, Implementation of Catch Certification scheme for preventing / discouraging
Illegal, Unreported and Unregulated (IUU) fishing. Production through Organic
farming in potential areas for value addition of aquaculture products. Assisting the
setting up of state-of-art processing facilities for Value Added Marine Products meant
for export.
MPEDA is operating a Sea-freight assistance scheme for the promotion of export of
value added marine products by the registered seafood manufacturer exporters. The
scheme also offers assistance for importing of raw materials for further processing
and re-exporting as value added seafood. MPEDA has introduced a voluntary
“LOGO” of quality for promotion of value added consumer products in major markets.
Preliminary inspections are being undertaken to grant LOGO to more units.
Establishing presence of Indian Seafoods in major International markets by co-
branding Indian products with seafood giants abroad.
(vi) TOBACCO BOARD
Tobacco Board was established on 01/01/1976 under the provisions of the Tobacco
Board Act, 1975. The important functions of the Tobacco Board are regulating
the production and curing the Virginia tobacco, propagating information useful to the
growers, dealers and exporters of Virginia tobacco and manufacturers of Virginia
tobacco products, establishment of auction platforms for the sale of Virginia tobacco
and function as auctioneer, maintenance and improvement of existing markets and
development of new markets outside India.
Production- FCV Tobacco: FCV tobacco is cultivated in more than 2.00 lakh
hectares every year. In 2013-14, the area under FCV tobacco is 0.98 lakh hectares in
Karnataka and about 0.95 lakh hectares is planted under tobacco as on 22.11.2013
in the states of Andhra Pradesh and Odisha. The plantations in Andhra Pradesh are
still in progress. 41385 growers in Karnataka and 45230 in Andhra Pradesh are
engaged in FCV tobacco cultivation.
36
FCV tobacco production in India is declining for the last three years from a peak of
323.25 M.kgs., in 2009-10. FCV production in 2013-14 is estimated at 280 M.kgs., up
by about 3% over last year’s production of 270.50 M.kgs. The production of FCV
tobacco in Karnataka is estimated at 110 M.kgs., and that of Andhra Pradesh at 170
M.kgs.
Farm Mechanisation: In order to improvise the farm operations and ridge formations
in the tobacco fields, the Board had organized supply of 105 Bullock Drawn Ridgers
and 447 Tyne Cultivators to growers in Karnataka at subsidized cost.
PVC pipes: The Board with a view to help the growers in the drought prone area
of Andhra Pradesh to go for a life saving irrigation using available waters in the wells /
ponds is supplying PVC pipes at subsidized cost and the same is under progress to
supply 22,000 pipes.
Power Sprayers: The Board with a view to help grower to take up timely plant
protection measures had indented for supply of 375 Power sprayers in Andhra
Pradesh at subsidized cost and the same is under progress. This apart the Board is
contemplating to supply 25 units of Back pack sprayers through NIPHM on
experimental basis.
Export Performance (In - 2012-13): The exports of tobacco and tobacco products
during 2012-13 were 263575 tons valued at Rs.4979.05 crore (914.43 M.US$)
against 240395 tons valued at Rs.4100.30 crore (854.94 M.US$) exported in 2011-
12.
Progress of exports in 2013-14 : During April – October 2013, exports of
unmanufactured Tobacco and Tobacco Products were 156178 tons valued at
Rs.3491.36 crore (586.98 M.US$) against 152938 tons valued at Rs.2759.86 crore
(506.40 M.US$) exported during the corresponding period of last year.
During April – October 13, the unmanufactured tobacco exports were in the order of
139308 tons valued at Rs.2860.04 crore and exports of Tobacco products are in the
order of 16870 tons valued at Rs.631.32 crore. The unmanufactured tobacco exports
had increased marginally by 2% in quantity terms but increased by 27%, and 16% in
rupee and dollar terms respectively compared to the exports made during the same
period of last year. While the exports of unmanufactured tobacco during April –
October 2013 have shown a growth by 4% in quantity terms and an increase by 33%
and 22% in rupee and dollar terms respectively compared to same period last year.
Exports of FCV tobacco during April-October 2013 have shown a growth by 3% in
quantity terms and increase by 34% and 23% in rupee and dollar terms. As far as
exports of tobacco products are concerned, the same have decreased by 12% in
quantity terms but an increase by 4% in rupee terms as compared to the exports
made during the corresponding period of last year.
37
Export Promotion Activities: As a part of export promotion activities, Executive
Director, Tobacco Board had participated in Global Tobacco Networking Forum,
Cape Town, South Africa during 4-8 November 2013.
With a view to promote the exports of tobacco and tobacco products, the Board had
participated in international exhibitions at the following places to show case the Indian
unmanufactured tobacco and tobacco products.
1) The India Show, Dares Salaam, Tanzania during 25 -27 September 2013
2) World Tobacco Europe 2013, Hamburg, Germany during 12-14 November
2013
(vii) The Agricultural and Processed Food Products Export Development Authority
(APEDA)
The Agricultural and Processed Food Products Export Development Authority (APEDA) was
established under the Agricultural and Processed Food Products Export Development
Authority Act passed by the Parliament in December, 1985. APEDA has been entrusted with
the responsibility of export promotion and development of 14 agricultural and processed food
product groups listed in the Schedule to the APEDA Act. In addition to this, APEDA has been
entrusted with the responsibility to monitor the import of sugar as well.
APEDA has been actively engaged in the development of markets besides upgradation of
infrastructure and quality to promote the export of agro products. In its endeavour to promote
agro exports, APEDA provides financial assistance to the registered exporters under its
Schemes for Market Development, Infrastructure Development, Quality Development and
Transport Assistance.
Export Performance: The export of APEDA products for the period April-October’13 is as
below:
Rs. in Lakhs
Product Group Export 2012-13
(April-Oct.)
Export 2013-14
(April-Oct.)
Growth in %
Floriculture & Seeds 47263.61 51178.07 8.28
Fruits & Vegetables 334494.65 440580.91 31.72
Processed Fruits & Vegetable 234189.96 330855.09 41.28
Livestock Products 999162.61 1654005.80 65.54
Other Processed Foods 2222061.63 1477282.16 -33.52
Non-Basmati Rice 769255.60 1037518.82 34.87
Basmati Rice 1005869.46 1554167.38 54.51
Wheat 468106.73 592075.32 26.48
Other Cereals 355842.85 422330.05 18.68
Total 6436247.11 7559993.60 17.46
Source : DGCIS – Principal commodities data April-October, 2013 (Provisional data)
The provisional export data for the period April-October, 2013 shows an overall positive
growth of 17.46% over the same period of previous year.
38
The Government has approved “Agriculture Export Promotion Plan scheme“ for
implementation during the XII plan period at projected outlay of Rs. 1100 crores.
- Scheme for Market Development
- Scheme for Infrastructure Development
- Scheme for Quality Development
- Transport Assistance Scheme
TRADE FACILITATION INSTITUTIONS
(i) Indian Institute of Foreign Trade (IIFT)
The Indian Institute of Foreign Trade (IIFT) was established in 1963 by the
Government of India with the objective to strengthen the country’s external trade
sector through development of human resources and by generating, analyzing and
disseminating data, conducting research and providing consultancy services. Since
then, the Institute has been the pioneer in imparting training in foreign trade
management in the country besides undertaking research and consultancy in various
areas of International Business. It is because of its all round achievements that the
Institute was awarded the status of Deemed University in May 2002 by University
Grants Commission (UGC) and accredited in May 2005 as “A” grade institution by
National Assessment and Accreditation Council (NAAC).
The Institute has emerged as a major Centre of International Business by aligning its
teaching, research and training capabilities with its core vision over the years and by
constantly striving to create academic excellence through its five academic divisions,
namely, Graduate Studies Division (GSD), Research Division (RD), Management
Development Programmes (MDPs) Division, International Collaboration and Capacity
Development (ICCD) Division and International Project Division (IPD). Each Division
caters to competency development in a specific area and contributes to the overall
growth of the Institute.
(ii) Centre For WTO Studies
The activities undertaken by the Centre for WTO Studies seek to achieve three broad
objectives: (i) to assist India’s trade negotiators and policy makers in participating
effectively in the WTO and at the related multilateral trade negotiations; (ii) to
enhance the understanding of key trade issues among stakeholders through outreach
and dissemination activities; and (iii) to develop capacities within India and in other
developing countries for analysing WTO and other trade-related issues through
training programmes.
The Centre organised several stakeholder consultation meetings, which have
provided an opportunity for two-way dialogue between trade negotiators and trade
policy officers on the one hand and stakeholders on the other. The Centre maintains
a comprehensive database of STS and TBT notifications made by WTO members.
The database was updated during 2013-14.
39
(iii) Quality Control and Pre-Shipment Inspection Agency
The major function of the Organisation are inspection & certification of exports for
areas related to health & safety and requirements of importing. In line with the
economic reforms initiated by the Government in early 1990’s, the operation
compulsory quality control & inspection of notified commodities under the Act &
meant for export has been simplified for various categories of exporters. However, in
the post WTO scenario with importing member countries imposing further stringent
requirements of the health & safety, compulsory certification was mandated food
sector.
Exports certification is carried out through its field organisation (EIA), and is based on
a system approach to include GHP/GMP/HACCP and also tailored to meet the
requirements of the importing countries.
Export Inspection Council of India (EIC)
The Export Inspection Agencies (EIAs) located at Mumbai, Kolkata, Kochi, Delhi and
Chennai with a network of 29 sub offices backed by the state of art, NABL accredited
laboratories.
EIC has diversified, expanded and increased its spectrum of activities – all aimed to
encourage, develop, sustain and boost export of food commodities.
Pre-shipment Inspection and certification based on consignment wise inspection
(CWI) to ensure quality of Export commodities.
Approval of processing units based on Food safety Management system to ensure
Quality and safety of food items meant for export as per importing countries
Issuance of Certificate of Origin (CoO) under various Preferential Tariff Schemes/
Bilateral arrangements such as GSP, GSTP, APTA, SAFTA, ISFTA, CEPA, CEKA,
IMPTA, PTA with Chile, India Afghanistan FTA (IAFTA), SAPTA, CECA, and Thailand
FTA etc.
Collaboration with FSSAI for Laboratory testing services and testing samples of
imported food items and inspection of domestic establishments.
Training and capacity building of industry and other stake holders in areas of Quality
and Food safety Management system.
Monitoring TBT Notification by WTO members’ countries and their impact on India’s
Trade.
Export Certification: EIC operates mandatory certification through its field
organization, Export Inspection Agencies(EIAs), for notified food The EIAs also
continue to certify other notified products such as basmati rice, black pepper etc and
non-notified products on voluntary basis. EIC/ EIAs are authorized to issue health
certificate, Non GMO, Authenticity certification etc.
E certification has also been made live from March 2013 for export of fishery products
to China & Russian Federation and for Animal Casing for EU only.
Certificates of Origin: EIC/EIAs continued to issue Certificates of Origin under
various preferential tariff schemes. As on date, EIC / EIAs are issuing preferential
certificates of origin under the following 15 schemes.
40
iv) Footwear Design & Development Institute (FDDI)
Footwear Design & Development Institute is a premier leather products, footwear,
fashion, design and retail institution in the world & has been playing a pioneering role
in enhancing the competency and performance of the industries globally.
The Institute, having Pan-India presence with eight well designed campuses at Noida,
Fursatganj, Chennai, Kolkata, Rohtak, Chhindwara, Jodhpur and Guna is providing
trained human resource to the industry.
FDDI provided training to workers and artisans involved in the manufacturing of
footwear in SME's and village clusters under the `Support to Artisan' Programme
where it trained more than 22000 artisans from Rae Bareli and neighbouring districts
in the State of Uttar Pradesh, Jaipur, Alwar, Jodhpur and neighbouring districts in the
State of Rajasthan and Patiala and neighbouring districts in the State of Punjab,
Mumbai and Kolkata in the State of Maharashtra & West Bengal respectively under
the 12th Five Year Plan.
The scope of the training programme included up-gradation of the present skill and
induction of latest technology to the artisans to bring 360 degree intervention in the
area of technology improvement, effective use of material, tools & techniques for
different operation of Footwear Making, Trust Building and SHG Formation,
Establishment of Centralized Resource Centers (CRC's), Process Product & Design
Development and Development of Market Linkages.
Implementation of Placement Linked Skill Development Programme (PLSDP):
In order to overcome the acute shortage of trained manpower in the leather &
footwear industry and to provide gainful employment to the unemployed youth,
Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce &
Industry, Government of India launched Placement Linked Skill Development
Programme (PLSDP). FDDI was also nominated as one of the main implementing
agency for this job.
FDDI established six full-fledged Operator’s Training Centres at Agra, Kanpur, Rae
Bareli, Bahadurgarh, Kolkata and Ranipet having state-of-the art- machinery in
Cutting and Closing operations. At these centres, unemployed youths belonging from
the economically weaker section of the society are being selected, trained & provided
assistance to get employment in the footwear industry at the shop floor level
operations.
The PLSDP is being conducted on a continuous basis & FDDI has trained 74087
fresh & unemployed youths. Out of the total trainees, 47.05% belong to the SC
community, 0.98% belong to ST community, 28.46% to the OBC community & rest
23.49% to General Category. Out of the total trainees 15.87% (11760) trainees are
females.
41
10. Bilateral & Multilateral Negotiations
I. Details of India’s FTAs
(i) FTAs already signed and operational
S.
No.
Name of the Agreement
and the participating
countries
Date of Signing Date of Implementation
1. India - Bhutan Agreement
on Trade, Commerce and
Transit
17.01.1972
(revised on 28.07.2006)
(Agreement is renewed, from
time to time, by mutual
consent to such changes and
modifications as may be
agreed upon between the two
countries)
29.07.2006
2. Revised Indo-Nepal Treaty
of Trade
06.12.1991
(Revised on 27.10.2009)
(The Treaty is amended/
modified by mutual consent
of the contracting parties and
the present Treaty is valid till
26.10.2016)
27.10.2009
3. India - Sri Lanka FTA 28.12.1998 01.03.2000
4. Agreement on South
Asian Free Trade Area
(SAFTA) (India, Pakistan,
Nepal, Sri Lanka,
Bangladesh, Bhutan and
the Maldives)
Afghanistan became
Eighth Member of SAARC
from April, 2007 and the
provisions of Trade
Liberalization Programme
(TLP) are applicable to
Afghanistan w.e.f.
07.08.2011).
04.01. 2004 01.01.2006
5. India - Thailand FTA -
Early Harvest Scheme
(EHS)
01.09.2004 01.09.2004
6. India - Singapore
Comprehensive Economic
Cooperation Agreement
(CECA)
29.06.2005 01.08.2005
7. India - South Korea
Comprehensive Economic
Partnership Agreement
(CEPA)
07.08. 2009 01.01.2010
42
8. India – ASEAN Trade in
Goods Agreement (Brunei,
Cambodia, Indonesia,
Laos, Malaysia, Myanmar,
Philippines, Singapore,
Thailand and Vietnam)
13.08.2009 1st January 2010 in respect
of India and Malaysia,
Singapore, Thailand.
1st June 2010 in respect of
India and Vietnam.
1st September 2010 in
respect of India and
Myanmar.
1st October 2010 in respect of
India and Indonesia.
1st November in respect of
India and Brunei.
24 January 2011 in respect of
India and Laos.
1st June 2011 in respect of
India and the Philippines.
1st August, 2011 in respect of
India and Cambodia.
9. India - Japan
Comprehensive Economic
Partnership Agreement
16.02.2011 01.08.2011
10. India - Malaysia
Comprehensive Economic
Cooperation Agreement
18.02.2011 01.07. 2011
(ii) Preferential Trade Agreement (PTAs) already signed and operational
S.
No.
Name of the Agreement and the
participating countries
Date of Signing Date of
Implementation
1 Asia Pacific Trade Agreement
(APTA) (Bangladesh, China, India,
Lao PDR, Republic of Korea, and
Sri Lanka)
July, 1975
(revised Agreement
signed on 02.11.2005
01.11.1976
2 Global System of Trade Preferences
(G S T P)
(Algeria, Argentina, Bangladesh,
Benin, Bolivia, Brazil, Cameroon,
Chile, Colombia, Cuba, Democratic
People's Republic of Korea, Ecuador,
Egypt, Ghana, Guinea, Guyana, India,
Indonesia, Iran, Iraq, Libya, Malaysia,
Mexico, Morocco, Mozambique,
Myanmar, Nicaragua, Nigeria,
Pakistan, Peru, Philippines, Republic
of Korea, Romania, Singapore, Sri
Lanka, Sudan, Thailand, Trinidad and
Tobago, Tunisia, Tanzania,
April, 1988 April,1989
43
Venezuela, Viet Nam, Yugoslavia,
Zimbabwe)
3 India - Afghanistan 06.03.2003 May, 2003
(The Agreement
would remain in
force till either party
gives to the other, a
notice for its
termination).
4 India - MERCOSUR 25.01.2004 01.06.2009
5 India - Chile 08.03. 2006 August, 2007
(iii) FTAs under negotiation:
S. No. Name of the Agreement Status
1. India - EU BTIA
(Austria, Belgium,
Bulgaria, Cyprus, Czech
Republic, Denmark,
Estonia Finland, France,
Germany, Greece,
Hungary, Ireland, Italy,
Latvia, Lithuania,
Luxembourg, Malta,
Netherlands, Poland,
Portugal, Romania,
Slovakia, Slovenia, Spain,
Sweden, United Kingdom)
Negotiations commenced in June 2007 in the areas of
Goods, Services, Investment, Sanitary and Phyto-
sanitary Measures, Technical Barriers to Trade, Trade
Facilitation and Customs Cooperation, Competition, IPR
& GIs. Etc.
Fifteen rounds of negotiations and a number of inter-
sessional and Chief Negotiator level meetings have
been held till date. A Ministerial review meeting
between Hon’ble Commerce & Industry Minister and
EU’s Trade Commissioner was held on 15th April, 2013
at Brussels.
2. India - ASEAN CECA -
Services and Investment
Agreement
(Brunei, Cambodia,
Indonesia, Laos, Malaysia,
Myanmar, Philippines,
Singapore, Thailand and
Vietnam)
Conclusion of negotiations on Agreement on Services
and Investment was announced at the ASEAN-India
Commemorative Summit on 20 December, 2012.
3. India – Sri Lanka CEPA No discussion is currently taking place on India-Sri Lanka
CEPA.
4. India - Thailand CECA Early Harvest Scheme on 82 items implemented. So
far 28 rounds of India-Thailand Trade Negotiation
committee (ITTNC) meetings have been held. The last
round was held on 6-7 November, 2013 in New Delhi.
5. India - Mauritius CECPA Ten rounds of negotiations on India-Mauritius CECPA have
been held between the two sides so far. The last round of
negotiation was held between India and Mauritius on 23–24
44
October, 2006. However, CECPA negotiations have been
formally put on hold as decided by the Government of India.
6. India EFTA BTIA (Iceland,
Norway, Liechtenstein and
Switzerland)
A meeting of Chief Negotiators, of both sides was held
in Geneva on 18th September, 2013 under the India-
EFTA BTIA Negotiations. Twelve rounds of negotiations
have been held so far. The 12th Round was held from
14-25th October, 2013 with both sides having covered
substantial ground. The 13th and final round is
scheduled for 25-29th November, 2013. Ahead of the
final round meetings on various tracks are being held
almost on daily basis.
7. India - New Zealand
FTA/CECA
The inaugural round of FTA/CECA negotiations was held in
April, 2010 in New Delhi. So far nine rounds of negotiations
have been held. The ninth round of negotiations was held in
Wellington, New Zealand on 29-30th July, 2013 followed by
intersessional discussion held on 9-10th December, 2013 in
New Delhi.
8. India – Israel FTA Seven rounds of negotiations on India-Israel FTA have been
held so far. The seventh round was held during 25-27 June,
2013 in New Delhi". Eighth round of negotiations is scheduled
to be held in Israel from 24-26 November, 2013.
9. India - Singapore CECA Second review of India-Singapore CECA was launched in
May, 2010. Meeting at the Chief Negotiator level (CS) was
held on 1-2 November, 2012 in New Delhi. Meeting at the
level of Deputy Chief Negotiator level was held on 10-11
December, 2012 in Singapore.
10. India - SACU PTA (South
Africa, Botswana, Lesotho,
Swaziland and Namibia)
Five rounds of negotiations have been held so far. 5th round
of negotiations was held in Oct 2010 in New Delhi.
11. India - Mercosur PTA
(Argentina, Brazil,
Paraguay and Uruguay)
The process of expansion of India-MERCOSUR (a block of
Brazil, Argentina, Uruguay, Paraguay) is currently in progress
with the objective to enhance the benefits of the Agreement
through higher trade coverage. The inclusion of Venezuela in
the said PTA is presently being examined as at the time of
signing of PTA, MERCOSUR consisted of four countries, i.e.
Brazil, Argentina, Paraguay and Uruguay. Now, Venezuela
has become part of MERCOSUR in July, 2012 and the
current presidency is also with Venezuela. Modifications/
amendment of PTA provision of preamble and other relevant
parts of the Annexes is underway. During the DVC held on 9th
July, 2013, both sides agreed to the proposal for increasing
the list of product eligible for tariff reduction.
12. India – Chile PTA With the objective to gain optimal benefits and boost up
bilateral trade between two countries, the expansion of India-
Chile PTA is currently in progress. So far, five meetings of
Joint Administration Committee / round of negotiation have
been held to discuss the expansion of PTA. Both sides have
45
exchanged their consolidated final offer list including
SPS/TBT and RoO Cabinet Note for expansion of India-Chile
PTA has been circulated to Ministries/Department on
14.11.2013 for their comment.
13. BIMSTEC CECA
(Bangladesh, India,
Myanmar, Sri Lanka,
Thailand, Bhutan and
Nepal)
19 meetings of the Trade Negotiation Committee (TNC) have
taken place. 19th meeting was held in Bangkok from 21 to 23,
February 2011.
Texts of the agreements on trade in goods, rules of Origin,
customs cooperation and trade facilitation have been
finalized. It was expected that Trade in Goods Agreement
would be signed by the end of 2011 and the tariff
concessions would be implemented by July 2012. However,
due to the reluctance of Sri Lanka the negotiations have
failed to move forward
Negotiations on the agreements on service and investments
are continuing.
14. India - Gulf Cooperation
Council (GCC)
Framework Agreement
(Saudi Arabia, Oman,
Kuwait, Bahrain, Qatar
and Yemen)
Two rounds of negotiations have been held so far in
2006 and 2008. The second round was held in
September 9-10, 2008. No round could take place held
in the last 4 years since GCC has deferred its
negotiations with all countries and economic groups and
is currently reviewing its negotiations with all countries
and economic groups.
15. India – Canada FTA Eight rounds of negotiation on India-Canada CEPA have
been held so far. The Eighth round was held in Ottawa,
Canada from 24th to 26th June, 2013. The next round will
be held in New Delhi.
16. India - Indonesia
Comprehensive Economic
Cooperation Agreement
(CECA)
Commencement of negotiation on Indonesia - India CECA
was announced on 25th January 2011 during the visit of
Indonesian President to New Delhi. Negotiations are yet to
commence.
17. India – Australia FTA /
CECA
Five rounds of negotiations have been held so far. The 5th
round of negotiations was held in Canberra (Australia) on 20-
21st May, 2013.
18. Regional Comprehensive
Economic Partnership
(RCEP) Agreement
among ASEAN + 6 FTA
Partners (Australia, China,
India, Japan, South Korea
and New Zealand)
Based on the Declaration of the Leaders during the
ASEAN Summit in November, 2012, negotiations for a
comprehensive economic partnership between the 10
ASEAN member states and its 6 FTA partners
commenced in May, 2013. Two rounds of negotiations
have been held. The Third round is to be held from 20-
25 January, 2014 in Malaysia.
46
b) International Trade Organizations
(i) ESCAP
The 69th Session of ESCAP was held in Bangkok, Thailand from 25th April to 1st
May, 2013. The theme for the Session was “Opportunities to build Resilience to
Natural Distars and Major Economic Crises”. The Hon’ble Minister of State for
Commerce and Industry led the Indian delegation and delivered India’s Policy
Statement at this Session.
The delivery of ESCAP’s programmes is supported by the regional institution and the
sub-regional offices. India has worked in close cooperation with ESCAP during the
year. India has also committed continued financial support to the following regional
institutions of ESCAP:
Asian and Pacific Centre for Transfer of Technology (APCTT), New Delhi, India;
Asian and Pacific Training Centre for Information and Communication Technology
for Development (APCICT), Incheon, Republic of Korea;
Statistical Institute for Asia and Pacific (SIAP); Chiba, Japan; and
Asia and Pacific Centre for Agriculture and Engineering Machinery (APCAEM),
Beijing, China
(ii) United Nations Conference on Trade and Development (UNCTAD)
United Nations Conference on Trade and Development (UNCTAD) aims at
integration of developing countries into the world economy. UNCTAD serves as the
focal point within United Nation for the integrated treatment of trade and development
and the interrelated issues in the areas of finance, technology, investment and
sustainable development. Three pillars of UNCTAD’s existing mandate are: a)
independent policy analysis; b) consensus building; and c) technical assistance.
The Ministerial Conference, which meets every four years, is UNCTAD’s highest
decision making body and sets priorities and guidelines for the organization and
provides an opportunity to debate and evolve policy consensus on key economic and
development issues. The XIII Ministerial Conference was held in Doha, Qatar from
20 -26 April, 2012.
(iii) Global System of Trade Preferences (GSTP)
The Agreement establishing the Global System of Trade Preferences (GSTP) among
Developing countries was signed on April 13, 1988 at Belgrade following the
conclusion of the First Round of Negotiations. The GSTP came into being after a long
process of negotiations during the Ministerial Meeting of the Group of 77, notably at
Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign
Affairs of the Group of 77 in New York set up the GSTP Negotiating Committee in
1982. The New Delhi Ministerial meetings, held in July 1985, gave further impetus to
the GSTP negotiation process. The Brasilia Ministerial Meeting held in May 1986
launched the First Round of GSTP Negotiations. At the conclusion of the First Round
in April 1988 in Belgrade, the GSTP Agreement was signed on April 13, 1988 it
entered into force on 19th April 1989. Forty-four countries have ratified the Agreement
and have become participants. The GSTP establishes a framework for the exchange
of trade concessions among the members of the Group of 77. It lays down rules,
47
principles and procedures for conduct of negotiations and for implementation of the
results of the negotiations. The coverage of the GSTP extends to arrangements in the
area of tariffs, para-tariff, non-tariff measures, direct trade measures including
medium and long-term contracts and sectoral agreements. One of the basic
principles of the Agreement is that it is to be negotiated step by step improved upon
and extended in successive stages.
The current round of GSTP negotiations, also known as “São Paulo Round” was
launched in 2004 with 22 participating countries, on the occasion of the UNCTAD XI
Quadrennial Conference in Sao Paulo in Brazil. At the end of the negotiations,
Ministerial Modalities were adopted on 2 December, 2009 wherein Ministers agreed
to modalities based on a tariff reduction of at least 20 percent on at least 70 percent
of all dutiable tariff-lines. Members who were in the process of their WTO accession
namely, Algeria and Iran were to be given specific flexibilities.
Based on these modalities, intensive negotiations were held in 2010 for finalisation of
the schedules of Members. During this period, Cuba, Egypt, India, Indonesia, Korea,
Malaysia, Mercosur and Morocco submitted their schedules and bilateral negotiations
were held to finalise the schedule. It is significant to note that India unilaterally offered
a tariff reduction of 25 percent on 77 percent of its tariff lines for Least Developed
Countries (LDCs).
A Ministerial Meeting of the GSTP Negotiating Committee was held on 15 December,
2010 in Foz do Iguacu, Brazil for signing of the “Final Act Embodying the Results of
the Sao Paulo Round” and the “Sao Paulo Round Protocol on the Agreement on
GSTP”. The Ministers or Heads of the Delegations of Members who have submitted
their final schedules namely Cuba, Egypt, India, Indonesia, Korea, Malaysia,
Mercosur and Morocco signed the two documents. India was represented by its
Ambassador in Brazil.
So far, 8 out of 44 member countries, including India, have signed the protocol. Of
these 8 countries, two countries viz. India and Malaysia have ratified it. The Cabinet
Committee on Economic Affairs (CECA) has approved implementation of India’s
Schedule of Concessions under the Third Round of negotiations.
The schedules of concessions under the Third Round of negotiations will be
implemented when a minimum of four participants ratify the schedules and inform the
GSTP Secretariat. The tariff concessions will be implemented amongst such four
participants and other participants will avail of the concessions after they ratify their
schedules.
(iv) Asia Pacific Trade Agreement (APTA)
The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok
Agreement, signed in 1975 as an initiative of ESCAP, is a preferential tariff
arrangement that aims at promoting intra-regional trade through exchange of mutually
agreed concessions by member countries. APTA has six members namely
Bangladesh, China, India, Republic of Korea, Lao People’s Democratic Republic and
Sri Lanka. ESCAP functions as the secretariat for the Agreement.
During the Second Session of the Ministerial Council at Goa on October 26, 2007 the
following important decisions were taken:
48
To launch the 4th Round of Negotiations
To adopt modalities for extension of negotiations in other areas such as non-tariff
measures, trade facilitation, services, and investment
A common set of Operational Procedures for the Certificate and Verification of the
Origin of Goods for APTA was approved and it was decided that the same would be
implemented w.e.f. January 1, 2008; and
To explore the possibilities of expanding the membership of the Agreement
Under the 4th Round, the Standing Committee of Participating States has finalised
framework agreements in the areas of (i) trade facilitation, (ii) trade in services and
(iii) promotion and liberalisation of investments. Offers of further tariff liberalisation in
goods have also been exchanged. The Standing Committee is also considering a
framework agreement on non-tariff measures and a revision of the APTA rules of
origin.
Under the Fourth Round of negotiations, participating states have agreed to offer
concessions at an average margin of preference (MoP) of 40%on 40% of their tariff
lines. Negotiations among participating states on concluding tariff concessions
continue.
(v) Bay of Bengal Initiative on Multi- Sectoral Technical and Economic
Cooperation (BIMSTEC)
The initiative to establish Bangladesh-India-Sri Lanka-Thailand Economic
Cooperation (BIST-EC) was taken by Thailand in 1994 to explore economic
cooperation on a sub regional basis involving contiguous countries of South East &
South Asia grouped around the Bay of Bengal. Myanmar was admitted in December,
1997 and the initiative was renamed as BIMST-EC. It may be mentioned that the
initiative involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri
Lanka) and 2 members of ASEAN (Thailand, Myanmar). BIMST-EC is visualized as a
‘bridging link’ between two major regional groupings i.e. ASEAN and SAARC. BIMST-
EC is an important element in India’s “Look East” strategy and adds a new dimension
to our economic cooperation with South East Asian countries. A Free Trade
Agreement among the member states of BIMSTEC is being negotiated. The
BIMSTEC Trade Negotiating Committee (TNC) has had 19 sessions of negotiations.
The negotiations are spread over the areas of (i) tariff concessions on trade in goods,
(ii) customs cooperation, (iii) services and (iv) investments. At the 18th meeting of the
TNC parties reached agreement on the text of the Agreement on Trade in Goods as
well as the text of the Rules of Origin and the Operational Certification Procedures
and the text of the Agreement on cooperation and mutual assistance in customs
matters. The 19th meeting of the TNC was held in Bangkok on 21-23 February 2011.
Negotiations continue on finalizing the schedules of concessions and on the
agreements on services and investment.
(vi) BRICS (Brazil, China, India and South Africa) Trade Ministers meeting
On 13 April 2011, a meeting of the BRICS Trade Ministers was held in Sanya, China.
Brazil, China, India and South Africa remained committed and called upon other
members to support a strong, open, rule-based multilateral trading system embodied
in the World Trade Organization and a successful, comprehensive and balanced
49
conclusion of the Doha Development Round, built on the progress already made and
consistent with its development mandate. Brazil, India, China and South Africa
extended full support to an early accession of Russia to the World Trade
Organization.
The Third Meeting of the BRICS Trade Ministers was held in Durban, South Africa on
26 March 2013. The BRICS Trade Ministers held open and constructive discussions
under five main headings viz. (1) Global Economic Development;(2) The WTO and
Doha Development Agenda;(3) Cooperation in other multilateral fore where trade and
investment issues arise such as GZO, UNCTAD, UNDP, UNIDO and WIPO amongst
others; (4) Intra-BRICS cooperation; and (5) BRICS Partnership to support Africa’s
Development Agenda by strengthening their cooperation in the search for synergies
for investment in Africa’s infrastructure, agriculture and manufacturing sectors.
The 5th meeting of the BRICS CGETI was held on 22nd November, 2013 at Pretoria,
South Africa. The Ministers reaffirmed their view of the centrality of the WTO for a
transparent and inclusive rules-based multi-lateral trading system. They emphasized
the continued relevance of the development mandate agreed to at Doha in 2001, and
reiterated their commitment to a conclusion of the negotiations based on the
programme made since then. The Ministers also endorsed the BRICS Trade and
Investment Cooperation Framework developed by the contact group for Economic
and Trade Issues (CGETI) and instructed the CGETI to implement the said
Framework and build on it in future. The Ministers also welcomed the launch of the
BRICS Business Council that will bring together business associations from each of
the BRICS countries and manage engagement between the business communities
on an ongoing basis.
(vii) IBSA (India Brazil and South Africa) Trade Ministers meet in Pretoria
A meeting of the three Trade Ministers from India Brazil and South Africa was held in
Pretoria, South Africa where it was decided to hold an annual trilateral meeting of the
Trade Ministers from the IBSA members to further enhance the intra- IBSA trade. The
three nation’s trade is already close to US $ 20 billion, having crossed in 2009 the
target of US $ 15 billion set for 2012. India’s trade with its trade partners in IBSA
accounts for a majority of this trade. The Leaders at the IBSA Summit felt that the
trends indicate that the target of 25 billion US $ trade by 2015 will be achieved early,
and this gave reasons to be optimistic and more ambitious. The Leaders have
mandated the Working Group on Trade and Investment to examine all issues related
to trade holistically including issues relating to non-tariff barriers, maritime and air
links and opportunities for investments. Direct air connectivity is expected to give
tourism a major boost and the trade ministers agreed to look at the visa related
issues so that the process for business visas is made easy. The three Trade
Ministers also interacted with the IBSA Business forum on 17 October 2011.
The Ministers have also decided to set up a technical team under the IBSA’s Working
Group on Trade and Investment to reconcile the trade data and devise a common
reporting format as well as methods for capturing all the data of trilateral trade
including those occurring through third countries.
50
The South African and Indian trade ministers also decided to enter into long term
contracts for purchase of raw materials and commodities, and the recently opened
office of MMTC in South Africa has been mandated to work on this proposal
expeditiously.
The Ministers also felt that with the ratification process of the MERCOSUR SACU
FTA advancing, and initiation of the process of deepening of the India MERCOSUR
Preferential Trade Agreement (PTA), the deck is now clear for making progress on a
trilateral FTA involving India SACU and MERCOSUR. “This FTA linking developing
countries in the three continents is envisaged as one of the most ambitious free trade
area and will be a symbol of growing South-South cooperation”, said Minister Anand
Sharma. His sentiment was shared by his counterparts from Brazil and South Africa
and the Brazilian Trade Minister, Mr. Pimental has offered to host the second
Ministerial meeting of India-SACU- MERCOSUR in June/ July 2012 in Brazil.
India hosted the 10th meeting of the IBSA Working Group on Trade and Investment
(WGTI) on 23rd May, 2013 at New Delhi. The WGTI reviewed the work and progress
made since the 9th meeting held on 11th September, 2012 in South Africa. The WGTI
also discussed developments in the intra-IBSA trade &investment, trade target,
composition of trade, implementation of the MoU on Standards, Technical Regulation
& Conformity Assessment, MSME Cooperation, Cooperation in Tourism Sector and
update on the IBSA PTAs.
(viii) Regional Comprehensive Economic Partnership (RCEP) Agreement
among ASEAN + 6 (Australia, China, India, Japan, Korea and New Zealand)
The Association of South East Asian Nations (ASEAN) and its FTA Partners
(Australia, China, India, Japan, South Korea and New Zealand) have been
deliberating on a Regional Economic Architecture for East Asia for greater
integration. The ASEAN Report on the Emerging Regional Architecture resulted in the
ASEAN Framework on a Regional Comprehensive Economic Partnership (RCEP)
which was adopted by the Leaders of ASEAN at the 19th ASEAN Summit held in
November 2011 at Bali, Indonesia. During the 20th ASEAN Summit held in Cambodia
in April 2012, ASEAN States agreed to move towards establishing the Regional
Comprehensive Economic Partnership Agreement (RCEP) involving ASEAN and its
FTA partners.
The objective of launching RCEP negotiations is to achieve a modern,
comprehensive, high-quality and mutually beneficial economic partnership agreement
among the ASEAN member States and ASEAN’s FTA Partners. RCEP will cover
trade in goods, trade in services, investment, economic and technical cooperation,
intellectual property, competition, dispute settlement and other issues.
Negotiations for the RCEP recognizes ASEAN Centrality in the emerging regional
economic architecture and the interests of ASEAN’s FTA Partners in supporting and
contributing to economic integration, equitable economic development and
strengthening economic cooperation among the participating countries.
India is participating in the RCEP negotiations with a clear understanding of her
strengths and concerns and to try to address the same when the modalities are being
finalised.
51
The RCEP negotiations were launched in May, 2013. Two rounds of negotiation
have been held so far. The third round is scheduled to be held from 20-25 January,
2014 in Malaysia.
(ix) Indian Ocean Rim Association (IORA)
Established in Mauritius in March 1997 with the primary objective of promoting
“sustained growth and balanced development of the region and of its Member States,
and create common ground for regional economic co-operation”, the IORA (formerly
known as IOR-ARC) is the apex pan-Indian Ocean multilateral forum with its
membership open to all sovereign States of the IOR that adhere to the principles and
objectives of its Charter. India is one of the founders and key members of IOR-ARC.
The 13th meeting of the Council of Ministers of the IORA held on 1st November, 2013
in Perth, Australia has adopted IORA as the new name of the organization. The
Ministerial meeting was preceded by meeting of the Working Group on Trade and
Investment.
(x) Kimberley Process Certification Scheme
The Kimberley Process (KP) is a joint government, industry and civil society initiative
to stem the flow of conflict diamonds (rough diamonds used by rebel movements to
finance wars against legitimate governments). Kimberley Process Certification
Scheme (KPCS) is an UN mandated (UNGA Resolution 55/56 of 2000 and UNSC
Resolution 1459 (2003)) international certification scheme. It requires each participant
to impose internal control over production and trade of rough diamonds. Trading in
rough diamonds with a non-participant is not allowed. All exports of rough diamonds
have to be accompanied by a valid KP Certificate stating that diamonds are conflict
free.
India is one of the founding members of KPCS. KPCS currently has 54 member
States including the European Community representing 28 member States. Thus, it
has a membership of 81 countries. All major diamond producing, trading and
polishing centres are members of KP. Civil Society and industry groups also actively
participate in the KP. Chairmanship of KP is rotated on annual basis. India was KP
Chair in 2008. South Africa is the Chair for the year 2013 and People’s Republic of
China will be the Chair for the year 2014. India and Belgium have signed a
Memorandum of Understanding on 25th November, 2013 at New Delhi to facilitate the
KPCS data sharing between the two countries as a pilot project.
India’s important Trading partners
(1) SAARC
Highlights of Trade with SAARC
During 2012-13, Bangladesh was the largest trading partner of India in SAARC region.
During 2012-13, the highest growth for exports was recorded for Bangladesh.
During 2012-13, the lowest decline in growth of exports was recorded for Maldives.
India runs a trade surplus with all other trading partners.
South Asian Association for Regional Cooperation (SAARC) with India, Bangladesh,
Bhutan, Maldives, Nepal, Pakistan and Sri Lanka as members was established at the
52
first SAARC Summit held on 4-8 December 1985. Afghanistan became its eighth
member during the 14th SAARC Summit held in April 2007.
The SAARC Preferential Trading Arrangement (SAPTA) provided a framework for
exchange of tariff concessions and also for liberalization in para-tariff and non-tariff
measures with a view to promoting trade and economic cooperation among the
SAARC member countries. The Agreement on South Asian Free Trade Area
(SAFTA) was signed during the Twelfth SAARC Summit held at Islamabad in January
2004 which came into force from 1st January 2006. SAFTA, inter alia, prescribes a
phased Tariff Liberalization Programme (TLP) according to which all the member
states would reduce their tariffs, at the MFN applied rate existing as on 1st January
2006, to zero to five percent within ten years of the agreement coming into force. This
TLP would cover all tariff lines except those items kept in the Sensitive List by each
country. With the SAFTA Agreement coming into force, there would be no more
negotiations under SAPTA.
Agreement on establishing the SAARC Regional Seed Bank signed during the 17th
SAARC Summit meeting will provide regional support to national seed security
efforts, address regional seed shortages through collective actions, promote increase
of Seed Replacement Rate and act as a regional seed security reserve for the
Member States.
SAFTA Ministerial Council (SMC) consisting of Ministers of Commerce/Trade of the
Member States is the highest decision making body of SAFTA and the SMC is
supported by a Committee of Experts (COE) with nominees from member states. The
Eighth meeting of the SMC and Ninth meeting of COE are scheduled to be held in
April, 2014 at Thimphu, Bhutan.
India’s Trade with SAARC Countries
(US $ Billion)
2008-09 2009-10 2010-11 2011-12 2012-13 2012-13
(April-Oct)
2013-14
(April-Oct)
Exports
India’s Total 185.30 178.75 251.13 305.96 300.40 168.70 179.02
% share of SAARC
countries
4.62 4.69 4.64 4.35 5.03 4.96 4.73
Imports
India’s Total 0.60 288.37 369.77 489.31 490.73 280.73 269.41
% share of SAARC
countries
0.60 0.57 0.59 0.50 0.55 0.59 0.42
Source: DGCI&S
(2) Trade with Europe
Europe’s largest block is the European Union (EU) which presently consists of 28
countries viz. Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic,
Slovenia, Spain, Sweden and U.K. Besides, there is also a bloc of EFTA countries
comprising of Switzerland, Norway, Iceland and Liechtenstein. Turkey, Albania,
53
Bosnia and Herzegovina, Macedonia and Serbia while considered part of Europe, are
neither a member of the EU nor EFTA blocks.
European Countries accounted for about 17.81% of India’s total trade during 2012-
13. During 2013 -14(April –Oct.), India’s trade with Europe has declined by 6.42% as
compared to the corresponding period in 2012-13 with exports decreasing by 3.23%
and imports by 8.41%. The top five items of India’s exports to Europe during the
period were petroleum (crude & products), ready-made garments cotton including
accessories, gems & jewellery, transport equipment and machinery & instrument. The
top five items of India’s imports from Europe were gold, pearls/precious & semi-
precious stone, machinery (except Electrical & Electronics), electronic goods and
transport equipment. Besides, there is also a bloc of EFTA countries comprising of
Switzerland, Norway, Iceland and Liechenstein with which India is concluding an
FTA. Our trade with this group is currently US $ 15.40 billion (April-October, 2013)
and is poised to strengthen further through FTA in future. Turkey, Albania, Bosnia
and Herzegovina, Macedonia and Serbia while considered part of Europe, are neither
a member of the RU nor EFTA blocks but India maintains robust economic
engagement. India’s overall trade with EU is US $ 57.69 billion (April – October,
2013) and total investments are US $ 53.34 billion (April 2000 to October, 2013).
Trade between India and Europe
(US $ million)
Year Exports Growth
rate (%)
Imports Growth
rate (%)
Total
Trade
Balance of
Trade
2007-08 37,288 29.01 51,579 28.41 88,867 (-) 14,291
2008-09 42,076 12.84 57,262 11.02 99,338 (-)15,186
2009-10 38,523 (-)8.44 55,713 (-)2.71 94,236 (-)17,190
2010-11 49,926 29.60 71,181 27.76 1,21,107 (-)21,255
2011-12 57,798 15.70 92,818 28.60 1,50,616 (-)35,020
2012-13 55,933 (-)3.23 85,008 (-)8.41 140,941 (-)29,075
2012-13 (Apr-Oct) 31,280 (-)7.97 47,188 (-)16.16 78,468 (-)15,907
2013-14 (Apr-Oct) P 33,153 5.99 42,683 (-)9.55 75,836 (-)9,530
*Provisional. Source: DGCI&S
(3) Trade with Commonwealth of Independent States (CIS)
The Commonwealth of Independent States (CIS) comprises the Russian Federation,
Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan and Uzbekistan (the last 5 countries jointly referred to as the
Central Asian Republics). Bilateral trade with these countries is as shown in the graph
below:
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Trade with CIS (US$ Million)
Year Export Import Total Trade %Growth
2009-10 1,687.68 6,104.00 7,791.68 (-)9.8
2010-11 2,681.86 5,664.28 8,346.15 (+)7.11
2011-2012 3,059.98 8,237.84 11,333.82 (+)35.79
2012-2013 3,682.98 7,879.78 11,562.76 (+)2.01
2013-14 (Apr-Sep.) 1,697.56 3,567.54 5,265.10
(Source: DGCI &S) . (P) Provisional
The CIS region had a share of 1.23 per cent in India’s exports and 1.61 per cent in its
imports during 2012-13. The principal commodities of exports to the region include
drugs and pharmaceuticals & fine chemicals, machinery & instruments, electronic
goods, plastic and linoleum products, tea, coffee, meat & preparation, transport
equipments, RMG cotton including accessories, manufactures of metals etc.
Important items of imports to India from this region are iron and steel, fertilizers, non-
ferrous metals, petroleum, crude & products, silver, synthetic & reclaimed rubber,
vegetable oils, newsprint, project goods, crude minerals, inorganic chemicals,
metalifers ores and metal scrap etc.
(4) Trade with Latin American and Caribbean Countries
During the last one decade, the economic engagement between India and LAC has
grown significantly and our exports have been showing a continuously increasing
trend.
The total Indian bilateral merchandise trade with the region increased from a modest
US$ 2.065 Billion in 2002-03 to US$ 41.015 Billion in 2012-13. During this period total
Indian exports to the region grew from a modest US$ 1.084 Billion to US$ 13.518
Billion, a growth of about 1147.05% over these ten years. Similarly our imports grew
from about US$ 0.98 billion to 27.497 US$ Billion over this period, a growth of about
2705.82 %.
The trade with all the 43 countries of the Latin American and Caribbean (LAC) region
accounted for 5.18% of the total world trade in 2012 – 13. The percentage share of
India’s exports to Latin America in its global exports has increased from 2.058 % in
2002-03 to 4.5% in 2012-13. In the same period, the share of India’s imports from
Latin America in its global import has increased from 1.59% to 5.6%.
Focus LAC Programme: An integrated programme “Focus: LAC” was launched in
November, 1997 which has been extended upto March 2014 in order to consolidate
the gains of the previous years and significantly enhance India’s trade with the LAC
region.
Progress during 2012-13
(i) Implementation of India-Chile PTA: A Preferential Trade Agreement (PTA)
between India and Chile was signed on March 8, 2006. The said PTA came into force
with effect from August, 2007. With the objective to gain optimal benefits and boost
up bilateral trade between two countries, the expansion of India-Chile PTA is
currently in progress.
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(ii) India-MERCOSUR PTA: A Preferential Trade Agreement (PTA) between India
and MERCOSUR (a trading bloc of Argentina, Brazil, Paraguay and Uruguay in South
America region) was signed on 25th January, 2004 and annexes to this Agreement
were incorporated on March 19, 2005. India- MERCOSUR PTA came into operation
from 1st June, 2009. The process of expansion of India-MERCOSUR is currently in
progress with the objective to enhance the benefits of the Agreement through higher
trade coverage.
(5) Trade with Countries in Sub Saharan Africa (SSA) Region
Since Independence India has had cordial and friendly trade relations with countries
in Sub-Saharan Africa (SSA) Region, consisting of Eastern, Western, Central and
Southern Africa.
Total bilateral trade with countries in SSA Region during 2012-13 amounted to
57,848 million with exports amounting to 23,460 million and imports at 34,387
million. The total provisional bilateral trade with Sub Saharan Africa during the 6-
month period of April 2012 to Sept, 2012 in the current FY 2013-14 has been 28,141
million with exports at 11,743 million and imports at 16,398 million. The
corresponding figure during April to September 2012 was US$ 27,691 million (total
trade), US$ 10,649 million (exports) and US$ 17,042 million (imports) respectively.
Bilateral trade with West African countries was US$ 22,787 million during 2012-13 as
compared to US$ 24,225 million during 2011-12. Rice (other than basmati); drugs,
pharmaceuticals, fine chemicals; transport equipments, machinery & instruments;
transport equipments; manufacturers of metals; electronic goods; cotton yarn, fabrics,
madeups; petroleum (crude & products), primary & semi-finished iron and steel;
plastic and linoleum products were the major items of export. Petroleum (crude and
products); Cashew nuts; metalifers ores and metal scrap; wood and wood products;
fertilizers; Cotton; non ferrous metals, natural rubber and; oil seeds were the major
items of import. Nigeria was the top most trading partner within this region with
bilateral trade of US$ 14,826 million during 2012-13.
Bilateral trade with countries in Southern Africa was US$ 24,005 million during 2012-
13 as compared to US$ 24,467 million during 2011-12. South Africa was the top most
trading partner within this region with a trade of US$ 13,994 million.
Bilateral trade with countries in East Africa was US$ 9893 million during 2012-13 as
compared to US$ 7137 million during 2011-12. Kenya was the top most trading
partner within this region with a trade of US$ 3876 million.
Bilateral trade with countries in Central Africa was US$ 1161 million during 2012-13
as compared to US$ 798 million during 2011-12. Uganda was the top most trading
partner within this region with a trade of US$ 492.40 million.
(6) India and SACU (Southern African Customs Union) Preferential Trade
Agreement (PTA)
SACU consists of a group of 5 countries, namely, Botswana, Lesotho, Namibia,
Swaziland and South Africa. India and SACU (Southern African Customs Union) are
negotiating for a Preferential Trade Agreement (PTA). Till now, five rounds of
negotiations have been held for negotiating the PTA.
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The following two Working Groups have been constituted for negotiating the PTA:-
a. Working Group on Market Access comprising of two subgroups, namely:
Sub Group I responsible for market access for trade in goods
Sub Group II responsible for Rules of Origin and Customs
Procedures.
b. Working Group on Legal and Institutional Issues responsible for the legal
vetting of the text of the PTA, Dispute Settlement, SPS and TBT measures and
Safeguards and Trade Remedies.
(7) Trade with countries in the West Asia & North Africa (WANA) Region
The West Asia and North Africa (WANA) region comprises 18 countries viz six Gulf
Cooperation Council (GCC) countries, six West Asian countries, and six North African
countries (Algeria, Egypt, Libya, Morocco, Sudan and Tunisia).
India’s total trade with WANA countries during 2012 -13 was US$ 203.17 billion
(25.68% of India’s total trade with the World) as compared to US$ 191.25 billion in
2011-12(24.05%) of India’s total trade with the World). While India’s total exports to
WANA countries in 2012-13 were 64.74 billion, India’s imports were US$ 138.43
billion during the same period.
India’s share of exports to WANA countries as a percentage of India’s total exports to
the world was of the order of 21.55% in 2012-13. Further, WANA region’s share in
India’s total imports from the World accounted for 28.21% in 2012-13. While our
exports to WANA countries grew by 13.22 % between 2012 -13 and 2011-12, our
imports grew by 3.25%.
During Apr-Sep (2013-14) trade with the WANA Region registered a decline by 2.5%
over the corresponding period in the financial year 2012-13. The major items of
decline in our exports and import to the WANA region took place in the area of gold,
diamond jewellery and crude oil & products and appear to be an outcome of the
overall Government policy for the containment of import of non-essential
commodities. The decline can also be attributed to the weak rupee which caused all
the above items to have turned more expensive leading to reduced import of gold,
diamond, Oil & Gas.
11. WTO Negotiations
The Doha Round of negotiations is continuing in the WTO since the year 2001. The
efforts made by developed countries centred on a Trade Facilitation Agreement.
India and other developing countries worked together to ensure that other issues of
the interest to the developing countries and the LDCs also formed a part of any
package identified for an early outcome. After protracted negotiations yielding little
results for almost a decade, consensus was reached to negotiate a small package
consisting of Trade Facilitation, some elements of agriculture and development/LDC
issues for an early outcome in the Ninth Ministerial Conference of the WTO to be held
in December 2013 in Bali, Indonesia.
The Ninth Ministerial Conference of the WTO was held in Bali, Indonesia from 3 to 7
December 2013.
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In the area of agriculture, the proposal submitted by G-33, relates to updating the
rules concerning public stockholding for food security. The Ministers approved an
interim mechanism. The mechanism stipulates that WTO Members will not challenge
the compliance of a developing member with obligations under the WTO Agreement
on Agriculture in relation to support provided for traditional staple food crops in
pursuance of public stockholding programmes for food security purposes, if they are
consistent with the existing rules.
Other issues in agriculture relate to the export competition pillar. The G-20 group of
developing countries in the WTO, of which India is also a member, wanted an
outcome on the issues of export subsidies and Tariff Rate Quota administration. The
proposal which seeks to reduce export subsidies arises partly from a 2013 deadline
for eliminating all forms of export subsidies originally agreed at the Hong Kong
Ministerial Conference in 2005. The Ministerial Declaration on the subject sends out a
strong message to fulfill the mandate of the Hong Kong Ministerial Declaration as a
priority issue for the post Bali work programme. The situation will be reviewed at the
10th Ministerial Conference of the WTO.
The other proposal by the G20 proposes tighter disciplines on TRQ administration. It
envisages a number of measures for sharing information and monitoring how quotas
are used. If a quota is persistently under-filled, the importing government would have
to apply one of a prescribed set of methods for administering quotas aimed at
removing impediments. Members have agreed on a combination of consultation and
provision of information when quotas are under-filled. The one remaining issue to be
settled was which countries would reserve the right not to apply the system after six
years and they have been identified as Barbados, Dominican Republic, El Salvador,
Guatemala and the US.
The Agreement involves assistance for developing and least developed countries to
update their infrastructure, train customs officials, or for any other cost associated
with implementing the agreement. It will increase trade flows and revenue collection,
create a stable business environment and attract foreign investment. The text
adopted in Bali will be checked and corrected to ensure the language is legally
correct, for its adoption by the General Council by 31 July 2014.
The decision on Duty-Free, Quota-Free access says that countries that have not
done so for at least 97% of products “shall seek to” improve the number of products
covered.
Non-Agricultural Market Access (NAMA)
Information Technology Agreement (ITA-2)
India is a signatory to the Information Technology Agreement (ITA) (now also known
as ITA-1), a plurilateral agreement of WTO. As on date, there are altogether 75
member signatories, including 27 EU member countries, accounting for about 97
percent of the world trade in Information Technology (IT) products. India joined the
ITA on 25th March 1997.
As a signatory to the ITA-1, India bound its tariffs at zero on 217 ITA lines (including
expositions). Out of these 217 lines, 95 lines were reduced to zero level by 2000; 4
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lines in 2003, 2 lines in 2004 and the remaining 116 lines were made duty free in
2005.
In light of recent measures taken by the Government of India to build a sound
manufacturing environment in the field of Electronics and Information Technology,
this is the time for us to incubate our industry rather than expose it to undue
pressures of competition. Accordingly and also keeping in view the opinion of the
domestic IT industry, it has been decided not to participate in the ITA expansion
negotiations for the time being.
India’s Duty Free Tariff Preference (DFTP) Scheme for LDCs
One of the elements of the Hong Kong Ministerial Declaration of December 2005 was
to extend Duty Free Quota Free (DFQF) access to the Least Developed Countries
(LDCs). India became the first developing country to extend this facility to LDCs.
India’s Duty Free Tariff Preference (DFTP) Scheme for LDCs came into effect in
August, 2008 with tariff reductions spread over five years. The Scheme provides
preferential market access on tariff lines that comprise 92.5% of global exports of all
LDCs.
This year, the Cabinet has approved the increase in coverage as well as
simplification of the Scheme, in line with both the Hong Kong Ministerial Mandate as
well as requests from several LDCs ((like Tanzania, Uganda and Ethiopia) for
additional product coverage under the duty free list to cover products of their export
interest and simplification of the Rules of Origin procedures. Under the new expanded
DFTP Scheme, India would be granting duty free access on 96.4% of the total tariff
lines, thereby retaining only about 3.6% of lines in the Exclusion and Positive Lists.
India and the Government Procurement Agreement
The Government Procurement Agreement (GPA) is a plurilateral agreement in the
WTO. A comprehensive study on various elements of the GPA was conducted by the
Department of Commerce through the Centre for WTO Studies. In light of the study
and given the fact that the Public Procurement Bill 2012 (legislation to regulate
Government Procurement in the country), is still being considered by Parliament and
the same is likely to take some time before it gets passed, it has been decided to
review the matter once the Public Procurement Bill is enacted by the Parliament and
related Rules/Regulations are also framed and implemented.
Global Value Chains
The much talked about issue in the circles of international trade in recent times has
been the ‘global value chains’ (GVCs). In fact, what started as regional supply chains
in East Asia by Japanese investors have today become a phenomenon that
countries, both developed and developing cannot afford to ignore. Especially for the
policy makers in the developing countries, linking into GVCs has emerged as the new
development challenge. GVCs have thus become a prominent item in the agenda of
discussions not only in the WTO, but at other fora as well, especially the G20.
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A global value chain can simply be understood as the sequence of all functional
activities beginning from research and development activities, product designing,
sourcing of primary products, production of intermediate products, final assembly of
product, packaging, branding and marketing of the product etc, required in the
process of value creation involving more than one country. GVC for a particular
product may therefore not only span over countries but also span across different
industries including services.
In the light of the above developments, the Department of Commerce is conducting a
study on various aspects of GVCs through the Centre for WTO Studies, mainly to
understand India’s present position and level of participation in GVCs and explore
policy options to further the country’s participation in key sectors, create a strong
presence in possible regional supply chains and possibilities of functional upgrading ,
all of which would increase the extent of value-addition in exports and serve the
development objectives as well.
Services Negotiations
The year 2013 did not see much headway in the negotiations on the Doha
Development Agenda. However, a number of new issues came up for discussion
under the aegis of the Council for Trade in Services and its various Committees.
Services waiver
A decision on a ‘services waiver’ was adopted in the WTO's Eighth Ministerial
Conference in December 2011. It allows WTO members to provide preferential
treatment to services and services suppliers of LDCs.
The Ministerial Decision at MC9 stipulates that the Council for Trade in Services shall
convene a High-level meeting six months after the submission of an LDC collective
request identifying the sectors and modes of supply of particular export interest to
them. In that meeting, developed and developing Members, in a position to do so,
shall indicate sectors and modes of supply where they intend to provide preferential
treatment to LDC services and service suppliers.
Trade in Services Agreement (TISA)
Trade in Services Agreement (TISA) earlier known as ‘International Services
Agreement’ (ISA) is a plurilateral approach to services proposed by the US, the EU,
Australia and other members also known as Really Good Friends of Services (RGF).
The negotiations involve more than 40 countries contributing around 70% of global
trade in Services.
India, Brazil, South Africa and a host of developing countries do not support this
approach. However, China which was so far in the league of opposing this approach
has now shown interest in joining TISA. India is not yet a part of TISA negotiations
because the questions relating to the impact of this approach on multilateralism and
the Doha Round still remain unanswered. Also, the negotiations can have the effect
of disincentivizing the conclusion of the multilateral agreement on services under a
single undertaking.
Rules Negotiations
Negotiations are being held as per the Doha Declaration mandate aimed at clarifying
and improving disciplines under the Anti-Dumping Agreement and the Agreement on
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Subsidies and Countervailing Measures (ASCM), while preserving the basic
concepts, principles and effectiveness of these agreements and their instruments and
objectives. Members have also been discussing new disciplines on fisheries
subsidies.
Though, there has been some progress in the text of the Negotiating Group on Rules
(NGR) consensus has remained elusive on most of the bracketed issues of the
Chair’s text and strong divergences in views of members on several issues in the
Anti-Dumping Agreement and ASCM have surfaced during the discussions. In anti-
dumping, such issues were related to the prohibition on the use of zeroing in dumping
margin calculations, strengthening the sunset review provisions, new rules on anti
circumvention, non-attribution analysis for causal link, lesser duty rule, public interest
examination, etc. During the recent negotiations, efforts have also been made to
understand the post investigation country specific practices. In case of Subsidies,
such issues were related to financing by loss making institutions, calculation
methodology for determining export competitiveness, market benchmarks for export
credits and overseeing of successor undertakings under the OECD Export Credit
Arrangement by the WTO.
India has been seeking to strengthen the rules in Anti Dumping so as to prohibit the
use of zeroing in dumping margin calculation, bring in strong disciplines on conduct of
sunset reviews including automatic sunset after a certain agreed period etc. India had
also moved a proposal for mandatory application of lesser duty. In the Subsidies
Agreement, India has argued for policy space for the developing countries keeping in
mind their specific developmental needs.
In the Anti-Dumping (AD) and SCM Committee meetings held in October 2013,
demands have been raised by several members of the WTO for early/timely
notification of AD investigations as well as SCM notifications to the WTO Secretariat
for the purpose of transparency. The issue of India achieving export competitiveness
in textile & apparel sector (as the export share of this section has reached 3.25% of
world share) has been raised by some members with a view to phase out the export
subsidies provided in this sector. India, for the purpose of clarity re-iterated its earlier
communication seeking clarification from WTO on issues like definition of “product”
and the “applicable period of phasing out the subsidy” under the agreement. In
the mean time, India is working for strategies to honour the WTO commitment on
subsidies. On the other hand, India has sought comments from the US in the
Subsidies Committee meeting on the Renewable Energy programs of some of its
States.
In the Fisheries Subsidies meetings where the members are trying to discipline the
fisheries subsidies, in particular, for wild catch fisheries, to control over-exploitation,
India has been seeking effective special and differential treatment for the developing
countries in the light of employment and livelihood concerns for small, artisanal
fishing communities and for retaining sufficient policy space to enable developing
countries to develop their infrastructure. While the Chair is yet to table a revised text
in fisheries subsidies, discussions on a road map on the identified issues (viz.
subsidies covered by the prohibited list, general exceptions, special and differential
61
treatment to developing countries, general disciplines, fisheries management,
transparency notification requirements, dispute settlement, implementation and
transition rules) have continued.
India has sought exception from prohibition of subsidies meant to support the fishing
operations in coastal regions and EEZ. India along with Brazil, China and Mexico
submitted a new proposal seeking effective, special and differential treatment for
developing countries in the fisheries subsidies disciplines. During the negotiations
held in 2010, and thereafter, consensus has eluded Members on the important issues
such as the type of fisheries subsidies to be prohibited, scope of coverage of general
exceptions and the provisions relating to general disciplines. On special and
differential treatment for developing countries, consensus remains elusive on the
extent and scope of the S&D.
Trade Facilitation
An important area of the WTO Doha Round negotiations is Trade Facilitation. With
the lowering of tariffs and removal of quantitative restrictions, the focus in
international trade has shifted to simplification of trade procedures in general and
customs procedures in particular. There is a widespread recognition that
simplification of trade procedures would help promote cross-border trade, bring
greater predictability to traders and help improve the climate for investment.
WTO Members initiated negotiations in the year 2004 for putting in place a new
multilateral Agreement on Trade Facilitation (“TF Agreement” in short). In the Ninth
Ministerial Conference held during 3-7 December 2013, WTO Members decided to
conclude the negotiations and agreed to enter into the TF Agreement. The TF
negotiations took place in accordance with the mandate set out in Annex D of the July
2004 Framework Agreement. The three main pillars of the negotiations, as per the
Framework Agreement, are:
(a) Pillar I: To clarify and improve relevant aspects of Articles V, VIII and X of
the GATT 1994 with a view to further expediting the movement, release and
clearance of goods, including goods in transit.
(b) Pillar II: To enhance technical assistance and support for capacity building in
this area.
(c) Pillar III: To provide for effective cooperation between customs or any other
appropriate authorities on trade facilitation and customs compliance issues.
Draft Consolidated Negotiating Text on trade facilitation has been evolving since
2004. The eighteenth revision of the Draft Text was issued on 23 October 2013. It
was further streamlined in subsequent technical negotiations in Geneva. Thereafter,
Members agreed to conclude negotiations at the Ninth Ministerial Conference held on
3-7 December 2013. In a Ministerial Decision dated 6.12.2013, Members also agreed
to enter into a multilateral Agreement on Trade Facilitation.
Non-Tariff Barriers
Non Tariff Measures (NTMs) refer to those measures on international trade that are
not in the form of a tariff or a tax. These measures include trade-related procedures
such as documentation, certification and inspections; technical regulations;
standards; import related measures such as restrictions, prohibitions, seasonal
62
duties; tariff rate quotas; foreign exchange controls including artificial exchange rates;
public procurement practices etc. Non Tariff Barriers (NTBs) are a sub-set of NTMs.
NTBs are considered unfair measures discriminating against imports and therefore
are violative of the obligations under the Agreements of the WTO. Specific Trade
Concerns relating to NTMs including SPS and TBT are being raised in the regular
meetings of Committees of TBT and SPS in the WTO.
We are in the process of developing a regulatory environment that would encourage
a regime of quality production. On the export side, we have set-up a web based trade
portal containing database on the SPS/TBT notification (which may result into NTMs)
notified to the WTO by the Members of the WTO. It includes information rate of tariffs
at HS 8 digit level, applicable SPS/TBT rules and regulations, tariff line wise,
preferential tariff rates (for which countries India has trade agreement) and
information about rules of origin. This is to provide information to our exporter about
the regulatory regime of other countries.
Environmental Goods & Services (EGS)
With a view to enhancing the mutual supportiveness of trade and environment, Para
31, 32, 33 and 51 of Doha Ministerial Declaration (DMD) gives mandate to the
Members of the WTO for negotiations on environmental goods & services. As of now
there is no agreed definition of Environmental Goods (EGs) in the WTO. Most of the
developed countries including US, Canada, the EU, Japan, Korea, New Zealand,
Norway etc. are advocating a list based approach for elimination of tariffs on
environmental goods (EGs) that offers a potential for high degree of convergence
among members.
In the absence of an agreed definition of EGs, it is difficult to work out the list of EGs.
Hence, India and many developing countries do not support list approach due to
multiple end-uses of most of the products. It is also apprehended that the List
Approach will adversely impact the growth of EGs in developing countries.
India and many developing countries are of the view that to undertake climate change
mitigation and adaptation measures, access to cutting edge clean energy
technologies is essential. Besides, Special &Differential Treatment elements should
be an essential part of any discussion on EGs.
Trade Related Aspects of Intellectual Property Rights (TRIPS- Convention on
Biodiversity (CBD)
India along with bio-diversity rich and other like-minded members of WTO has been
demanding incorporation of three disclosure norms in the TRIPS Agreement so as to
make it obligatory for an applicant seeking a patent, based on some genetic resource
(GR) and/or traditional knowledge (TK), to disclose (i) source and the country of origin
of the genetic resource/traditional knowledge used in the patent; (ii) Prior Informed
Consent and (iii) Access and benefit sharing arrangement.
This demand has emanated from the fact that a number of patents were erroneously
granted in the past which were based on genetic resource and/or traditional
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knowledge i.e. patents based on antiseptic and antifungal properties of Neem; anti-
hypoglycaemic properties of Jamun, bitter gourd etc.
These usurpations of GR and TK are to be seen in the context of Article 15 of the
Convention on Biodiversity (CBD) which recognizes the sovereign rights of States
over their natural resources, prior informed consent for access to genetic resources
and benefit sharing in case of commercial and other utilization of genetic resources.
Although, India has provided disclosure requirement in the Patents Act, yet national
legislation alone is not sufficient to prevent bad patents. There is a need for
internationally acceptable and enforceable legally binding instrument to prevent grant
of bad patents. The easiest way to get it is through incorporation of the three
disclosure norms in the TRIPS Agreement of WTO.
Doha Ministerial Declaration (DMD) under Para 19 had directed that the issue relating
to TRIPS-CBD relationship should be examined along with other implementation
issues pursuant to Para 12 of the Declaration.
The proponents of the mandatory ‘disclosure’ requirement have been able to garner
support of 108 WTO members (2/3 majority of WTO) including EU who have agreed
to amend the TRIPS Agreement to include a mandatory requirement for the
disclosure of the country providing/source of GR, and/or associated TK (for which a
definition will be agreed later) in patent applications and that applications seeking
patent will not be processed without completion of disclosure requirement. Further,
these Members agree to define the nature and extent of a reference to PIC and ABS
also.
During the Bali Ministerial members agreed to extend the moratorium on Non
Violation and Situation Complaints applicable to the TRIPS Agreement till the next
Ministerial meeting to be held in 2015.
Disputes in the WTO and Negotiations under the Dispute Settlement
Understanding (DSU)
As per the mandate of the Doha Declaration, the WTO Members are engaged in
negotiations aimed to improve and clarify issues related to the Dispute Settlement
Understanding (DSU). The negotiations are taking place in the Special Sessions of
the Dispute Settlement Body (DSB) and are not part of the Single Understanding. At
present, negotiations are ongoing on 12 issues, namely on Sequencing, Remand,
Mutually agreed solutions, Transparency and amicus curiae briefs, Third party rights,
Panel composition, Strictly Confidential Information, Post Retaliation, Timeframes
under the DSU procedures, Special and Differential treatment, Flexibility and Member
Control and Effective Compliance. These proposals are primarily based on Members’
experience with the Dispute Settlement System and efforts by Members to develop
areas of convergence, while maintaining the respective policy objectives. India and
other developing countries have been reiterating their objective for a development
oriented review of the Dispute Settlement Procedures under the Doha Development
Agenda (DDA). Keeping this objective in view, India by bringing many developing
countries on board is negotiating important reforms aimed at special & differential
(S&D) treatment to developing countries such as the sharing of litigation costs to
mitigate the rising transaction costs of settling WTO Disputes, cross retaliation that
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may allow the developing countries to retaliate in any sector/Agreement against the
losing developed country etc.
Conclusion and Way Ahead
The key items in our export basket are: petroleum products and gems and
jewellery, with shares of 21% and 13% respectively, for the period April-November,
2013. These items are also heavily import dependent. Both petroleum (crude and
products) and gold are the top most items in our import basket, with their shares
being about 37% and 7% respectively for the period April to November, 2013.
So far as, exports of petroleum products and gem and jewellery are concerned the
value added component is very low. It is about 7 to 8% for petroleum products and
3% for gems and jewellery. Thus, in view of the high import content of our leading
export products, the impact of depreciation in terms of increasing exports is not likely
to be very effective.
There is also need for further focus on the traditional export items such as textiles
and leather products with low import intensity. Brand building and development of
distribution networks in foreign countries can majorly contribute in this context.
India’s exports basket needs to shift towards higher value add and technology
segment. This requires significant investments in identified sectors such as:
pharmaceuticals sector, plastic sector, high technology engineering sector etc.
Market and product diversification adopted few years ago has shown results. Some
markets are difficult to open such as China, Japan and Latin America. However,
intensive efforts are underway to access these markets. Latin America is increasingly
becoming protectionist, China is non-transparent and at times un-cooperative and
Japan is extremely demanding.
Export credit needs to be included as priority sector lending for all commercial
banks.
Framing of suitable interest subvention policy for long term export credit.
Interest subvention to provided to all exporters on a timely basis.
Automatic increase in credit limit especially in lieu of Rupee depreciating.
Provide facilities for refund of various levies to exporters. Re-introduction of Section
80HHC Income Tax Benefits for a short period in view of serious crisis like situation.
Immediate re-payment of Service Tax refunds, due for the last 3-4 years.
Create an export development fund to support exports for export promotion and
development activities. Budget for marketing development and assistance schemes
implemented by DOC such as MDA / MAI needs to be enhanced.
Directing the Banking system to support export initiatives in difficult markets with
strong export potential such as Iran, Iraq, Sudan and some African countries.
Extend and deepen benefits recently announced for exports of high technology
products as they bring greater price realization, technology and skills.
Stringent tax administration leading to denials of income tax benefits and service tax
refunds have raised concerns about the transparency and stability of the tax regime.
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Import of gold jewellery, consumer electronics need to be reviewed with a view to
see if restrictions can be imposed without creating under-ground markets.
Rationalization of import duty on raw material / intermediates to ensure
competitiveness of domestic industry where significant higher value additions is
possible.
Main-streaming trade in major manufacturing sectors and services sectors.
Scanning import dependent export items with a view to incentivize those products
which are wholly obtained or require least amount of imported intermediates.
Focus on enhancing exports from MSME Sector on areas such as: Pearls and
precious stones, etc., apparel and accessories, Pharmaceutical products, Leather
goods, Electrical & Electronic equipment etc, along with emphasis on issues such as:
Technology development, Standardization, Compliance Platform , Identifying and
nurturing specific sectors with significant export potential etc.
The private sector complains of transaction costs hampering the growth and the
well being of the sector. The Transaction Cost Committee had been set up and many
of the recommendations have been implemented. The Committee has again been
set up to look at other issues which have been raised by the private sector. This
Committee must complete its report quickly and necessary action may be taken on
the recommendations to ensure that the private sector feels that their grievances are
met efficiently and effectively.
Need for trade focus for our Embassies and Ambassadors also play a role in
answering queries of the importers and help to boost exports from India.
WTO’s Subsidies Agreement permits an exporting country to provide tax
concessions on exported products and on inputs consumed in the production of the
exported product. However, for the exporting country to avail all this benefit,
exporters need to establish an unbroken trail of all indirect taxes paid on the exported
product and on the inputs consumed in its production process. In the absence of
uniform GST in India, frequently exporters are unable to get rebate or drawback on all
indirect taxes paid on the exported product and its inputs. This significantly enhances
the final price of the exported product.
The above findings underscore the imperative for extensive domestic reforms in all
areas of logistics, manufacturing, fiscal, financial and overall economic performance
on the part of both the government and industry, with targeted initiatives for improving
infrastructure and international shipments required on a priority basis. In an
increasingly globalised and integrated economy, useless domestic reforms,
productivity, quality, standards related issues etc. are addressed and benchmarked
against global competitors our exports cannot grow at a rate which may be desirable.
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