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The year 2004 witnessed a record surge in India’s exports, with exports of merchandise goods registering the highest ever growth rate in over a decade of 24% in dollar terms during April-November 2004. With this rate of growth in 2004, Shri Kamal Nath, Union Minister of Commerce and Industry, has said that India’s exports for the full year 2004-05 would exceed the target of 16% to touch US $ 75 billion. Significantly, exports to all major destinations have shown record growth in 2004. According to provisional data of April-October 2004, exports to the European Union (EU) grew by 22.7%; to USA by 24%; and to Asia and Oceania by over 42%. India’s exports to Africa witnessed a growth rate of 25.6% and to the United Arab Emirates (UAE) exports grew by over 52%. Bilateral trade with China during 2004 have crossed the $ 10 billion mark, while exports to Pakistan have trebled.
Data for the past decade shows that the growth rate of India’s merchandise exports in dollar terms in 1992-93 was 3.76%; in 1993-94 19.96%; in 1994-95 18.41%; in 1995-96 20.76%; in 1996-97 5.26%; in 1997-98 3.93%; in 1998-99 was –4.50%; in 1999-2000 10.85%; in 2000-01 growth of 21.01%; in 2001-02 –1.65%; in 2002-03 20.29%; and in 2003-04 20.36%.
A comprehensive Foreign Trade Policy (2004-09) was announced by Shri Kamal Nath on 31st August, 2004 aimed at doubling India’s share of global merchandise trade by 2009 and to act as an effective instrument of economic growth by giving a thrust to employment generation. The key strategies adopted in the Policy to enhance exports included simplification of procedures, reduction in transaction cost, neutralisation of incidences of all levies and duties on inputs used for export production, facilitating development of India as a global hub for manufacturing, trading and services, identifying and nurturing special focus areas like agriculture, handlooms, handicraft, gems & jewellery and leather, footwear etc. In addition, export promotion schemes like ‘Vishesh Krishi Upaj Yojna’ and ‘Served from India’ scheme to accelerate the growth of agriculture and service exports were announced. Besides, an Export Promotion Council has been set up for Services.
To bring down transaction cost of exporters during the year 2004, procedures were simplified, issue of import-export licences online promoted and various community partners like banks, customs and Directorate General of Foreign Trade (DGFT) were linked through Electronic Data Interface (EDI). Time limits were prescribed for issuance of various licences and related operations have been fully computerized in 32 regional offices of DGFT. At present approximately 70% import-export licences are being issued online. A recent survey done by the Exim Bank indicates that the transaction costs of Indian exports have come down significantly due to these initiatives taken by the government.
Three new Special Economic Zones (SEZs) were cleared during the year, viz., establishment of a SEZ by M/s. WIPRO Limited for software development and IT enabled services at Salt Lake Electronic City, Kolkata at an estimated investment of Rs.125 crore; and two new sector-specific SEZs for IT and automobiles and auto-parts respectively at Sedarper-Karasur (Pondicherry). With this, the number of SEZs have so far approved comes to 36. An SEZ Bill is also on anvil.
On the multilateral trade front, India took an active part in the revival of the Doha process by interacting with both the developing and the developed countries. As a result of these efforts, the Framework Agreement was adopted by WTO member countries in the General Council meeting in Geneva of the WTO on 1st August, 2004 ensuring that the negotiations were back on track. The Framework Agreement and the deliberations preceding it in which Shri Kamal Nath participated has provided necessary guidance and parameters for further negotiations before the next Ministerial Conference of the WTO is held in Hong Kong, China, in December 2005. India was able to achieve all her major objectives in this Framework Agreement, including in the crucial area of agriculture. With a view to safeguarding the interests of farming sector, India made concerted efforts with like-minded alliance on agriculture and the G-33 alliance on Special Products. This ensured that the elements and principles incorporated in the agreed framework on agriculture would lead to substantial reductions in trade-distorting domestic subsidies provided to their farm sector largely by the developed countries, a credible end date for elimination of their export subsidies and substantial market access improvements for products of export interest to developing countries.
Similarly, India negotiated successfully in the area of non-agricultural market access (NAMA), Services, and ensured that the Framework Agreement includes a firm commitment to addressing Implementation Issues and operationalisation of Special and Differential Treatment (S&DT) for developing countries on a time-bound basis. One of the significant achievements in the Framework Agreement was the removal of 3 of the 4 Singapore issues on which India had raised objections – namely Investment, Government Procurement and Competition.
While attaching prime importance to a fair and rule based multilateral trading system, the year saw the launch of fresh initiatives for regional free trade agreements or comprehensive economic cooperation agreements. During the year, India continued to engage in transforming the Preferential Trade Arrangement (PTA) with SAARC countries into a SAARC Free Trade Area (SAFTA), which would come into existence from 1st January 2006. Besides, an Early Harvest Programme in BIMST-EC which covers countries on the rim of the Bay of Bengal, negotiations with ASEAN countries collectively and with countries with Singapore individually are nearing completion. Negotiations for a PTA with MERCOSUR grouping of Latin America are complete and talks on an agreement with SACU (South Africa Customs Union) are on the anvil.
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