India’s Export for The Period April- November 2011 Cumulative Stood at Us $ 192.7 Billion
Annual Supplement 2011-12 to the Foreign Trade Policy 2009-2014 Announced
Government Submits Report on the Task Force on the Transaction Cost
Normalization of Trade With the Pakistan
India Signs Ceca With Malaysia & Japan
Year End Review of Department of Commerce

                                The basic role of the Department of Commerce is to facilitate creation of an enabling environment and infrastructure for accelerated growth of exports and trade. The core functions of the Department are regulation, development and promotion of India’s international trade and commerce through formulation and implementation of appropriate international trade and commercial policies. The long-term vision of the Department is to make India a major player in the world trade by 2020 and assuming a role of leadership in the international trade organizations commensurate with India’s growing importance. The goal in the medium-term as outlined in the Foreign Trade Policy (FTP 2009-14) is to double India’s exports of goods and services by 2014 with a long term objective of doubling India’s share in global trade by the end of 2020 through appropriate policy support. A snapshot of the year under review of the Department of commerce is as follows:

STRATEGY FOR DOUBLING EXPORTS IN NEXT THREE YEARS (2011-12 TO 2013-14)

Shri Anand Sharma, the Union Minister for the Commerce, Industry & Textiles unveiled the Strategy for doubling exports on 3rd May, 2011. The Salient points of the strategy are as follows:

THE TARGET

The target is to double the country’s merchandise exports in dollar terms over the next three years (2011-12 to 2013-14) from US $ 246 billion in 2010-11 to US$ 500 billion in 2013-14.

To realize this, exports have to grow at a compound average growth of 26.7 % per annum.

The overall strategy to realize this goal is

PRODUCT STRATEGY

Build on our strength in sectors with great growth potential

engineering goods

basic chemical industries and organic and inorganic chemical industries

pharmaceutical industry (including biotech)

electronics

Promote light manufacturing exports with high value  addition

leather products and textiles

Encourage high employment generating sectors

gems and jewellery

agricultural products

MARKET STRATEGY

Focus on markets in Asia (including ASEAN), Africa and Latin America.

Open up new vistas, both in terms of markets and new products in these new markets

Retain presence and market share in our “old developed country markets”;

Move up the value chain in providing products in these old developed country markets

TECHNOLOGIES AND R&D

Areas that hold out promise for high technology exports

Pharmaceuticals

Electronics

Automobiles

Computer and software based smart engineering.

Environmental products; green technology and high-value engineering products.

High end areas in electronics, aerospace, and engineering products.

BUILDING A BRAND IMAGE

thrust for quality upgradation.

expanded certification of export products encouraged, where needed.

Brand India promotion campaign for key export products

 Essential Support

Essential policy support needed to realize the ambitious export targets for 2013-14 and beyond is:

Stable policy environment: Continuation of existing incentive schemes

Preferential access to new markets: putting in place conducive trading arrangements

Reduction in transaction costs: Implementation of recommendations of Task Force

Substantial step up in overall Plan support

Priority strengthening of trade related infrastructure

ANNUAL SUPPLEMENT 2011-12 TO THE FOREIGN TRADE POLICY (FTP) 2009-2014

The Commerce, Industry and Textiles Minister (CITM), Shri Anand Sharma, announced the Annual Supplement 2011-12 to the Foreign Trade Policy 2009-2014 on 13th October, 2011. The salient features are as under:

(i) Special Bonus Benefit Scheme: A new scheme to provide special assistance to specified sectors for 6 months has been introduced. The support is given to Engineering, Pharmaceutical and Chemical sectors covering 50 products. This scheme will be available on exports made on or after 1.10.2011 and up to 31.3.2012. The rate of duty credit is 1% of FOB value of exports.

(ii) Special Focus Market Scheme [SFMS]: Exporters of all products to notified countries are entitled for Duty Credit Scrip equivalent to 3% of FOB value of exports. The Scheme covers a total of 112 markets. However, exports to SFMS markets in CIS, Latin American and African countries are entitled for 1% additional benefit of FOB value of exports with effect from 1.4.2011.

(iii) Focus Product Scheme [FPS]: The list of items under FPS has been expanded to include 130 additional items covering Chemicals, Pharmaceuticals, (only specified APIs) Textiles, Handicrafts, Engineering and Electronics sector. The items covered under FPS are entitled for Duty Credit Scrip equivalent to 2% of FOB value of exports.

(iv)  Market Linked Focus Products Scheme [MLFPS]: The list of items under MLFPS has been extended to cover new items to specified countries. It has been decided to extend MLFPS for exports of Agricultural tractors greater than 1800cc capacity which would now be eligible for duty credit for exports made to Turkey.

Sugar machinery & high-pressure boilers would be eligible for Brazil, Kenya, South Africa, Tanzania and Egypt. The scheme has also been extended to all existing MLFPS Countries for printing inks, writing ink, etc. The items covered under MLFPS are entitled to get duty credit scrip @ 2% of FOB value of exports. Benefits under MLFPS have been extended for export of ready-made garments to USA and EU.

(v) EDI initiatives: In furtherance of the EDI initiatives, online message exchange of DFIA Authorization with Customs has started from 13.10.2011. Therefore, now Advance Authorization, EPCG and DFIA are completely EDI enabled. In order to reduce the interface of exporters with the Regional Authorities of DGFT, the application of IEC (Import-Export Code) has been made online w.e.f. 1.1.2011.

REDUCTION IN TRANSACTION COST

The Report of Task Force on Transaction Cost in Exports was released here today by the Finance Minister, Shri Pranab Mukherjee in the presence of Shri Anand Sharma, Minister of Commerce and Industry and Shri Jyotiraditya M Scindia, Minister of State for commerce and Industry.    The Task Force chaired by Shri Scindia was constituted in October 2009 to identify and suggest ways to achieve significant improvement in the functioning of export processes and reduce time and money spent in export transactions, with a view to enhance the competitiveness of Indian exports.

 The Task Force identified 44 issues and taken up with the relevant Ministries and after consultations with them, it was agreed to implement 32 of these issues.    It is expected that implementation of 23 issues is likely to mitigate the transaction cost by approximately Rs.2100 crore.  Permanent reduction of transaction cost through these initiatives will have a long term positive impact on the competitiveness of India’s exports.

TRADE NORMALISATION WITH PAKISTAN

New Ground was covered during the 5th round of talks in April 2011 When Commerce Secretary Shri Rahul Khullar visited Pakistan. Many bilateral Groups/ Sub-groups were set up. Almost all of these Groups/ Sub-groups have met and worked on their specific designated tasks. Shri Anand Sharma invited his Pakistan counterpart and the Commerce Ministers of both countries met in September 2011 and gave a clear political mandate to the respective Commerce Secretaries to lay down specific timelines for full normalisation of the trade relationship, dismantling of remaining non-tariff barriers, and full implementation of the legal obligations under the SAARC Agreement on South Asian Free Trade Area (SAFTA).  Both  sides agreed that Pakistan’s Commerce Minister’s visit to India after 35 years and the political ownership of  leaders of both the countries has not only given the trade normalization process further strength and direction but  a great hope and confidence to the business community also. During the 17th SAARC Summit held at Maldives (9 – 11 November 2011), the political leadership on both sides directed that the two sides also work on enhancing preferential trading arrangements as part of the shared vision to significantly expand bilateral trade. Pakistan side informed that its Cabinet has given a mandate to the Commerce Ministry for complete normalization of trade with India.

The 6th round of India-Pakistan talks on Commercial and Economic Co-operation was held during 14th-16th November 2011 at New Delhi, between Commerce Secretaries of India and Pakistan.   The move to full normalisation of trade relations shall be sequenced.  In the first stage, Pakistan will transition from the current Positive List approach to a Negative List.  The consultation process on devising this Negative List is almost complete.  A small Negative List shall be finalised and ratified by February, 2012.  Thereafter, all items other than those on the Negative List shall be freely exportable from India to Pakistan.  In the second stage, the Negative List shall be phased out.  The timing for this phasing out will be announced in February 2012 at the time the List is notified and it is expected that the phasing out will be completed before the end of 2012.

STATUS OF FTAS IN INDIA

CECA with Malaysia came into force on 1st July 2011 and a very comprehensive CEPA with Japan came into force on 1st August, 2011.

Details of countries with which India has entered into Free Trade Agreements (FTAs) and their implementation are as follows:

S. No. Name of the Agreement Date of Signing of the Agreement Date of Implementation of the Agreement
1. India – Sri Lanka FTA 28th December. 1998 March,  2000
2. Agreement on SAFTA

(India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan, the Maldives and Afghanistan)

4th January, 2004 1st January, 2006 (Tariff concessions implemented from 1st July, 2006
3. Revised Agreement of Cooperation between Government of India and Nepal to control unauthorized trade 27.10.2009 27.10.2009
4. India – Bhutan Agreement on Trade Commerce and Transit 17.1.1972 Renewed periodically, with mutually agreed modifications.
5. India – Thailand FTA – Early Harvest Scheme (EHS) 1.9.2004 1.9.2004
6. India – Singapore CECA 29th June, 2005 1st August, 2005
7. India – ASEAN- CECA – Trade in Goods Agreement (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) 13.8.2009 1.1.2010
8. India – South Korea CEPA 7.08. 2009 1.1.2010
9. India – Japan CEPA 16.02.2011 To be implemented w.e.f. 1st August, 2011
10. India – Malaysia CECA 18.02.2011 1st July, 2011

In addition to these 10 FTAs, India has entered into Preferential Trade Agreements (PTAs) with some countries.  The details of countries with which India has entered into Preferential Trade Agreements (PTAs):

S. No. Name of the Agreement Date of Signing of the Agreement Date of Implementation of the Agreement
1. Asia Pacific Trade Agreement (APTA)

(Bangladesh, China, India, Republic of Korea, Sri Lanka)

July, 1975

(revised Agreement signed on 2nd November, 2005

1st November, 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, Venezuela, Viet Nam, Yugoslavia, Zimbabwe)

April, 1988 April,1989

 

3. India – Afghanistan 6th March, 2003 May,2003
4. India – MERCOSUR 25th January, 2004 June 1, 2009.

 

5. India – Chile 8th March, 2006 September, 2007

The details of FTAs that the Union Government is negotiating with other countries and the status of the negotiations is given below:

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  launched on 28th 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

Twelve rounds of negotiations have been held so far.

2 India – ASEAN CECA- Services and Investment Agreement

(Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam)

Negotiations on Trade in Services and Investment are under way.

 

3 India – Sri Lanka CEPA Existing FTA is being expanded into CEPA.  Negotiations on Investments and Services have been resumed in December, 2010.
4 India – Thailand CECA 20 rounds of negotiations have been held so far by the Trade Negotiating Committee (TNC).
5 India – Mauritius CECPA Chapter on Trade in Goods (Preferential Trade Agreement) has been finalised while negotiations on Trade in Services and Trade in Investment are underway.
6 India – EFTA BTIA (Iceland, Norway, Liechtenstein and Switzerland) 7 Rounds of negotiations have been held so far.
7 India – New Zealand FTA/CECA 5 rounds of negotiations have been held held so far.
8 India – Israel FTA 2 rounds of negotiations have been held so far. The 2nd round of negotiations took place in February 27-28, 2011 in Jerusalem.
9 India – Singapore CECA (Review) The Second Review of India-Singapore CECA was launched on May 11, 2010. Thereafter, Working Group meetings have been held and the last such meeting was held in Delhi during June 14-15, 2011.
10 India – Southern African Customs Union (SACU) PTA

(South Africa, Botswana, Lesotho, Swaziland and  Namibia)

5 rounds of negotiations have been held so far. The 5th round was held during October 7-8, 2010.
11 Indian – MERCOSUR PTA

(Argentina, Brazil, Paraguay and Uruguay)

Negotiations for widening the PTA by widening product coverage and deepening preferences are underway.

 

Second meeting of Joint Administrative Committee on India-MERCOSUR PTA took place in June 2010.

12 India – Chile PTA The PTA expansion by widening product coverage and deepening preferences.

 

Second meeting for expansion of the India-Chile PTA took place in August 2010.

13 BIMSTEC CECA

(Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal)

Negotiations are spread over (i) tariff concessions on trade in goods; (ii) customs cooperation; (iii) services’ and (iv) investments.  19 meetings of the Trade Negotiation Committee (TNC) have taken place so far.  At the 19th TNC meeting, the parties have agreed to conclude the Agreement on Trade in Goods within 2011.
14 India – Gulf Cooperation Council (GCC) Framework Agreement

(Saudi Arabia, Oman, Kuwait, Bahrain, Qatar and Yemen.)

2 rounds of negotiations have been held so far.  The 2nd round was held in Riyadh in September, 2008.
15 India – Canada  CEPA The inaugural round of negotiation took place in November, 2010 in New Delhi.  This was followed by the first meeting in Ottawa, Canada during 4-5 July, 2011.
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.
17 India-Australia CECA Negotiations have started

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