Conference of India’s Commercial Representatives abroad “Core areas with potential to boost Indian export: Exim Policy of India/ Principal export and important commodities, region wise” Foreign Service Institute February 17, 2015

Commercial Representatives Commercial Representative’s role in enhancing India’s trade is very important Pro-active work required to ensure that Indian exports, whether in goods or services find their rightful share. This would require identifying areas where Indian exports can be directed, creating awareness about Indian products and promoting ‘Brand India’. Identify opportunities for trade opening in hitherto unchartered areas; for our goods and services. A frank opinion on the trade barriers and ways to overcome such barriers to trade useful for advancing our interests. Department of Commerce has been and in coming times, will be depending on the inputs provided by all of you to formulate and update policies from time to time.

Trade Scenario India is the 19th largest exporter in the world with a share of 1.7% and the 12th largest importer with a share of 2.5% in 2013 in merchandise trade. In commercial services, India is the 6th largest exporter in the world with a share of 3.2% and the 9th largest importer with a share of 2.8%. India’s share so far as the world trade is concerned has a great growth potential, which need to be exploited through focussed policies and planning. We need to increase our share in the world trade in keeping with our geo-political status as one of the major emerging economies.

Trade Scenario India’s merchandise exports reached a level of US$ billion during (P) registering a growth of 4.7 percent as compared to a negative growth of 1.8 percent during the previous year. As a percentage of India’s GDP exports stand at and imports at percent. Despite the recent setback faced by India’s export sector due to global slowdown, merchandise exports recorded a Compound Annual Growth Rate (CAGR) of 15.9% percent from to (P). The trade balance however is not in our favour and from 27,981 million US$ in the year , it had reached 1, 10,052 million US$.

Trade Performance & April-December During the year (P), the cumulative value of exports was US $ billion as against US $ billion over the corresponding period of the previous year Positive growth of 4.7 per cent in exports. Cumulative value of imports for the year (P) was US $ billion as against US $ billion during the corresponding period of the previous year. Imports registered a negative growth of 8.3 per cent.

Trade Performance The Trade deficit in (P) was estimated at US $ billion which was lower than the deficit of US $ billion during The value of exports in April-December is higher than the value in the corresponding period of last year Exports are US $ billion in April- December vis-a-vis US $ billion in April-December

Trade Performance The value of imports in April-December is higher than the value in the corresponding period of the previous period Imports are US $ billion in April- December vis-a-vis US $ billion in April-December India’s merchandise trade deficit is higher in April-December at US $ billion as compared to US $ billion during the corresponding period of the previous year.

Exports Composition * The top five commodity exported by India are Petroleum products with a total share of %, Pearl, Precious, semi precious stones at 7.65%, Gold and other precious metal jewellery at 4.59%, drug formulations, Biological at 3.59% and cotton including accessories at 2.85%. Together, these commodities account for US$ 89,813.80, which is 38.04% of India’s total exports. *April to Dec 2014

Exports Direction USA continues to be India’s number one trade partner occupying 13.76% share of India’s exports. As of April- December, the exports to the US stood at 32, million US$. The US is followed by the UAE, Hong Kong, Saudi Arabia and China with 10.63, 4.26, 4.02 and 3.88% share in India’s exports during April to December Together, these five countries account for 36.55% of the total exports. At a total of US million $ 2, 36,089.91, the exports to these five countries have registered a growth of 1.84% over April –December 2013.

Global Scenario Global economy is still struggling to gain momentum. Many high-income countries continue to grapple with the legacies of the global financial crisis. Low-income countries however continue to grow at a robust pace, despite a challenging global environment. Developing countries real GDP to grow at 4.4 per cent in 2014*. The growth forecast for 2015 is 4.8 percent, strengthening to 5.3 per cent and 5.4 per cent in 2016 and 2017 respectively Real GDP growth in India (at factor cost) is estimated at 5.6 per cent in 2014, 6.4 percent in 2015, rising to 7.0 percent in 2016 & * World Bank’s estimates

Global Scenario Global growth to receive a boost from lower oil prices, which reflect to an important extent higher supply. This boost, however is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies. Stagnation and low inflation still concerns in the euro area and Japan. Slower growth in China will also have important regional effects, which partly explains the downward revisions to growth in much of emerging Asia. *IMF in its World Economic Outlook (WEO) update (January 2015),

Global Scenario India The growth forecast is broadly unchanged. Weaker external demand offset by the boost to the terms of trade from lower oil prices. A pickup in industrial and investment activity after policy reforms. As a result, India is projected to grow at 6.3% for 2015 and 6.5% at 2016.

India’s Response Though the global scenario does not inspire much confidence as a weak external demand does not bode well for enhancing exports, there is always a case for creating opportunities. The government of India in its effort to attain a better growth trajectory and improving the living standards of its citizens has been working for creation of a better policy environment in the country. Some of these policy initiatives will have a positive impact on our export capabilities.

Policy Initiatives Make in India, is one of the recent initiatives launched by the government of India. The initiative envisions an increase in manufacturing sector growth to 12-14% per annum over the medium term. The share of manufacturing in the country’s Gross Domestic Product to increase from 16% to 25% by million additional jobs by 2022 in manufacturing sector will be created. The initiative aims at creation of appropriate skill sets among rural migrants and the urban poor for inclusive growth, increase in domestic value addition and technological depth in manufacturing, Enhancing the global competitiveness of the Indian manufacturing sector and Ensuring sustainability of growth, particularly with regard to environment.

Policy Initiatives Apart from encouraging investment in Indian manufacturing industry, the initiative will also result in creation of assets and more importantly enhancing production of quality products. Make in India initiative, alongwith various other initiatives of the Government of India to boost exports, will help India in manufacturing for the world. Other initiatives include skill development, which is one of the top priorities with the government of India. By developing quality skill sets, India aspires to provide the best professionals to manufacturing industry domestically and best services personnel to the world. Availability of skilled personnel coupled with the demographic profile of our workforce will help us to catapult to top spot in provision of skilled manpower to the developed countries.

Foreign Trade Policy Foreign Trade Policy is an instrument used to provide necessary impetus to growth of trade in the country. In order to increase India’ share in the world exports, the Foreign Trade Policy of India has special focus initiatives for Market Diversification, Technological Upgradation, Agriculture, Handlooms, Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries, Green products, Exports of products from North-East, Sports Goods and Toys sectors. Government of India is making concerted efforts to promote exports in these sectors by specific sectoral strategies that are notified from time to time.

Foreign Trade Policy Focus Market Scheme (FMS)of the Government of India aims to diversify the export market. FMS ensures incentive and support for exports to all countries in Africa and Latin America, and major Asian markets like China and Japan. Niryat Bandhu, another scheme of Department of Commerce /DGFT is an initiative to provide a modicum of handholding for potential exporters who would like to leverage their manufacturing skills for exporting. The Government is constantly seeking feedback on this scheme for reviewing it and making it more effective for manufacture led exports from the country.

Foreign Trade Policy The new FTP is under preparation and the government of India is committed to provide a conducive environment to manufacturers in line with the initiatives like ‘ make in India’ The aim is to make the Indian products more competitive in the international market. This would be necessary to make manufacturing in India profitable on a sustainable basis.

THANK YOU !