New Delhi, Aug 27 Against grim global trading milieu and falling markets, the five-year foreign trade policy (FTP) unveiled by the Government on Thursday is “a bold statement to reassure small and medium enterprises and labour-intensive exporters that the government is sensitive and has the grit to step in and support them”.
In an interview to Business Line here, after unveiling the policy earlier, the Union Commerce and Industry Minister, Mr Anand Sharma, responded to the instant criticism that the FTP is but a status quo policy. He said maintaining policy stability by not tinkering with existing benefits, extending support to technological upgradation to improve India’s competitive advantages and competitiveness and market diversification and expansion were not status quo. This, complemented by support to the labour-intensive sectors and reduction in transaction cost to trade and industry, constitutes the “five underlying principles” governing the policy.
He said the policy was formulated in “a very challenging backdrop when the global financial meltdown had affected all economies including our economy with contraction worldwide badly affecting our exports”.
Export slide
He said the earlier two stimulus measures together with the Budget measures had helped in arresting the steady fall in India’s exports and there is a slow recovery. Earlier, “we were talking about 34 per cent decline and this has come down to 26 per cent but still, the exports are negative”, he added.
Mr Sharma said the Government has responded to the situation by ensuring that taxes are not factored in exports through continuing with the drawback, DEPB schemes and by rationalising benefits under the VKGUY scheme for agri exporters by expanding coverage and adding tea under the scheme. He said under the Focus Market Scheme, 26 new markets were added out of which 16 are in Latin America and 10 in Oceania.
Mr Sharma said under the market linked focus market scheme (MLFPS), the entitlement has been enhanced and the products coverage augmented. He said in Latin America, Brazil and Mexico have been added, while in Africa, South Africa, Nigeria, Algeria, Egypt, Kenya and Tanzania have been added to reach out “to distant continent because the traditional destinations and markets have fallen sharply”.
Sops for new markets
He defended the incentives for the new markets on the grounds that even if the recovery takes place in the traditional markets, it would take time for them to reach the pre- recession level and exporters, in the meanwhile, could explore and engage in the new markets to stay and sustain their activities. To a question about the strategy being in sync with India’s diplomacy of engaging with members of the developing world in the face of distinct decline in western markets, Mr Sharma said that the territorial divisions of Africa and Latin America in the External Affairs Ministry have already met and they were working together on a strategy paper. This is being synchronised with India’s interest and deeper engagement with Africa and Latin American and Caribbean countries.
The Minister said that there would be “greater coordination and synergy between the Ministry of External Affairs and the Ministry of Commerce and Industry and all the missions abroad remain engaged in our endeavour to access new markets and develop further emerging markets” to convert the challenges of export decline in traditional markets into opportunities to help Indian exporters. He urged the exporters to avail themselves of the new benefits to explore new markets and export new products conferred on them through the FTP.
Source : Business Line