Emergence of India on the Global trading scenario

By: Ripon Roy Preeti Ahuja Pragnyasmitha Priyanka sharma Priyanshu Rabindranath Rajan Pujan

FOREIGN TRADE POLICY

International trade is the exchange of

goods and services across international borders or territories Union commerce ministry- FTP policy Need for foreign trade

 Foreign Trade was earlier governed by the

Foreign Exchange Regulation Act in India.

Later on this was replaced by the Foreign Exchange Management Act, which was liberal on its regulations and policies.
The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. A series of reforms were undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient

Foreign trade policy measures

Tariffs

Export Subsidies
Import Quotas

General Objectives of Export import Policy

To establish the framework for globalization
To promote the productivity, competitiveness of

Indian industry To Encourage the attainment of high and internationally accepted standards of quality. To augment export by facilitating access to raw material, Intermediate components and capital goods from the international markets. To promote internationally competitive import substitution and self-reliance.

Pre-liberalization impact
Excess of Import due toShortage of food & raw material due to partition. Rapid industrialization needs capital goods as raw material Need of food grains due to failure of monsoons in 1965-66. Rapid increase in Population. Low Productivity of Indian Industries. Outdated Technological Equipments.

Post-liberalization impact
1992-1997- Liberalize imports

Boost exports 1997-2002- simplified export procedures generate employment quality consumer products free export and import of goods 2002-2007- special focus initiatives

Before 1991
Get

After 1991
from the

permission Government or RBI Be it import of

Government

Be it exporter

raw material, travel abroad, procuring books or paying fees for a ward who pursues higher studies abroad. has to surrender the foreign exchange to RBI and get it converted at a rate predetermined by RBI.

eased the movement of foreign trade. No need of permission on case to case basis Government liberalized the flow of foreign exchange to include items like amount of foreign currency that can be procured for purposes like travel abroad, studying abroad, engaging the services of foreign consultants etc.

TOTAL INCREASED IN GLOBAL INTREGATION THROUGH

( US $ in bn) 900 800 700 600 500 312 252 195 114 61 53 FY2003 142 112 84 FY2005 149 103 FY2006 186 EXPORT 126 FY2007 163 FY2008 251 IMPORT 414 TOTAL

400
300 200 95 100 51 0 44 FY2002

78 64
FY2004

Indias Major Trading Partners

Total Export Market(FY 2008,US $2008 bn)
Italy Belgium Germany Netherland HK UK Singapore China UAE USA 0 3.9 4.2 5.1 5.2 6.3 6.7 7.4 10.8 15.6 20.7 5 10 15 20 25

Total Export Market(FY 2008,US $2008 bn)

The major exported commodities to USA are :

Cut and polished diamonds and jewelry. This section accounts for almost 29% of the total trade volume. Textiles (25%)
Engineering goods and machinery including

electrical machinery(3.24%) Organic chemicals (3.46%) Vehicles and parts (3.24%)

The major exported commodities to UAE are: Machinery, audio equipment, TVs and videos Textiles and textile articles Vehicles Aircraft Vessels Base metals and articles of base metal

Indias Major Trading Partners

Top Import sources(FY 2008,US$ bn)
Italy Belgium Germany Netherlands HK UK Singapore China UAE USA 0 7.7 7.8 8.1 9.8 9.9 10.9 13.5 19.4 21 27.1 10 20 30

Top Import sources(FY 2008,US$ bn)

US exports to India:
Engineering goods and machinery including

electrical machinery (30.20%) Precious stones and metals (9.25%) Organic chemicals (7%) Optical and medical instruments (7%) Aircraft, aviation machinery and parts (10.4%)

 Imports from UAE to India:

Precious & semi-precious stones and precious metals Crude oil Aluminum and articles

Indias Trade Basket

Top Export Items (FY2008, US$ bn)
Prim & Cot. Yam& Iron ore Transport Manuf of RMG cotton Pharma & machiner Gems & Petroleum 0

Top Import Items(FY 2008, US$ bn)

Coal, 6.4 Organic 7.2 Metailifer. 7.9 Pris. Iron & steel Gold Machine Transport Electronic Petroleum

4.2 4.7 5.8 7 7.1 7.5 7.6 9.1

19.7 28.4 20 40

Top Export Items (FY2008, US$ bn)

8
8.2 16.7 19.9

Top Import Items(FY 2008, US$ bn)

20.1
20.7 79.6

Indias Direct Investment Flows

35000 30000 25000 20000 15000 13107 8961 10073 1797 22079 32425

18369
FDI Inflows

10000

FDI Outflows

6130 5035 6051 5043 4322 5000 4029 829 1490 1892 1495 1770 0

Highlights of Foreign Trade Policy 2009-14

FTP 2009-14 seeks to boost the productivity and exports of : Marine Sector Gems & Jewellery Agriculture Leather Tea Pharmaceutical Sector Handlooms

How is it being done?

Higher Support for Market and Product Diversification

by various incentives for R & D.

Waiver of Incentives Recovery, On RBI Specific Write

off.
Simplification of Procedures.

How is it being done?

Reduction of Transaction Costs.

Draw Back Duty on various Exports

Emerging Sectors of the Indian Economy in Foreign Markets.

Health Care Growth estimated to be worth US$ 40 billion

by 2012. Revenues from this sector accounts for 5.2% of the GDP.
Tourism - 22% of growth is seen each year.

Entertainment - . The industry is expected to grow at a

CAGR of 27 per cent.

CAGR Compounded Annual Growth Rate

 Manufacturing - Manufacturing exports from India likely to

grow to USD 300 billion by 2015 from USD 48 billion in 2003.

The Indian Telecom Sector - India is the fourth largest

telecom market in Asia. The telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in developed economies.

 Textiles -

National Textile Policy aims to take up the textile and apparel exports from USD 11 billion in 2004 to USD 50 billion in 2010. Food Processing - India is the worlds largest producer of tea, sugarcane and milk.