DARE - Because Entrepreneurs Do

There are positive indications of recovery of exports of specific products. In October 2009, improvement in export performance has been observed in Iron Ores, Drugs, Tobacco, Spices, Cashew, Oil Meals, Fruits & Vegetables and Marine Products over the corresponding month of the previous year. It is further expected that export will record a positive growth towards the end of the 3rd quarter or the beginning of the 4th quarter of the current financial year. During the first half of the current year continues to be negative though the deceleration is progressively slower;  “The intensity of the decline in exports to -6.6 per cent in October ‘09 from a level of -35.5 per cent in April ‘09 is encouraging”, Anand Sharma, Union Minister of Commerce & Industry, said in a media interaction recently.

India’s Merchandise exports reached a level of US $ 182.6 billion in 2008-09 from a level of US $ 63.8 billion in March 2004 recording a Compounded Annual Growth Rate (CAGR) of 23.4 percent.  Performance of export during the five year Policy period (2004/05 to 2008/09) clearly reflects a significantly different trend growth as compared to the preceding five years (1999-2000 to 2003-04) when the export increased only by CAGR of 14 per cent.

Special Economic Zones
The Special Economic Zones (SEZs) Policy intends to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Center and the State level, with the single window clearance mechanism.  The process of globalization has enhanced the relevance of SEZs and SEZs have become an important component in the export led industrialization strategy, playing a crucial role in promoting the manufacturing sector, including enabling investment climate for SMEs and offer platform for attracting export-oriented FDI.

In short span of about three years since SEZs Act and Rules were notified in February, 2006, formal approvals have been granted for setting up of 570 SEZs out of which 346 have been notified. Out of the total employment provided to 4,18,129 persons in SEZs as a whole 2,83,425 persons is incremental employment generated after February, 2006 when the SEZ Act came into force.   The exports during the first two quarters of the current financial year has been to the tune of Rs. 89,750 crores (approx.).

Even during the current economic meltdown, SEZs have registered an impressive growth in export, investment and employment generation. Details of some prominent new generation SEZs which have made significant progress in terms of Exports, Employment and Investment generation are:  Nokia Special Economic Zone in Tamil Nadu; Mahindra City SEZ, Tamil Nadu; Apache SEZ (Adidas Group) in Andhra Pradesh (Footwear SEZ);  Mundra Port and Special Economic Zone, Gujarat;  Moser Baer SEZ, Noida, Uttar Pradesh;  Wipro Limited, Andhra Pradesh;  Divi’s Laboratories Limited, Andhra Pradesh;  Flextronics SEZ in Tamil Nadu;  ETL Infrastructure IT SEZ, Tamil Nadu; Wipro Limited, Karnataka - 2 SEZs in Sarjapur and Electronic City; Biocon Limited, Karnataka;  Serum Bio-Pharma Park, Maharashtra;  Manyata Promoters Private Limited, Karnataka;  Chandigarh Administration, Chandigarh;  Hyderabad Gems Limited, Hyderabad; Maharashtra Airport Development Corporation Limited, Maharashtra;  Reliance Jamnagar Infrastrucure Ltd.; and Suzlon Infrastructure Ltd.

CEPA / RTA / FTA
India signed a Comprehensive Economic Partnership Agreement (CEPA) with South Korea on 7th August 2009. This is India’s second comprehensive agreement with any country, first being with Singapore in 2005. This is also India’s first such Agreement with an OECD/developed Country. It covers not only Trade in Goods but also Investments, Services and bilateral Cooperation in other areas of mutual benefit. This Agreement covers more then 85% of India’s trade and more then 90% Korea’s trade & tariff lines. The Agreement will boost trade in goods & Services between the two countries. Indian professionals from software, engineering, finance and telecommunication sectors will now be able to get easier access to Korea’s Services sector. The Agreement will also facilitate more investments from Korean Companies. It will come into force from 1/1/2010.

Negotiations for a Comprehensive Economic Partnership Agreement with Japan are at an advanced stage. In pursuance to the recommendation of India-China JSG a Joint Task Force to study in detail the feasibility of India-China RTA was constituted and finalized its report during October 2009. The report will be considered by the two Commerce Ministers at the 8th session of India-China JEG to be held in Beijing on 19th January, 2010.   All these Agreements are in accordance with the well-considered “Look East” policy of the Government, which aims at increasing economic integration with countries of East Asia.

Multilateral Trade
India has always been a strong protagonist of the multilateral trading system and consistently maintained that an early conclusion of the Doha Round is in our best interests. The Delhi Ministerial meeting, on 3-4 September 2009, was the first occasion since July 2008 that Ministers representing practically all shades of opinion and interests came together.  As the objective was to resume and intensify negotiations, technical issues were not discussed. Discussions focused on the best way to spark the multilateral negotiations to move the Round to a quick closure.  The aim was to draw up a clear plan for re-engagement at the WTO in the near future so as to take the Round forward.

There was unanimous affirmation of the need to expeditiously conclude the Doha Round, particularly in the present economic situation and the need to address concerns of LDCs was emphasized. Acknowledging that the LDCs and the Small and Vulnerable Economies had the most at stake in this Round, Ministers collectively re-affirmed that development remained at the heart of the Doha Round and called for placing all LDC concerns on a fast track for negotiating convergence.   Members at the Conference were unanimously appreciative of India’s effort to revive the flagging negotiations by bringing together a widely representative group of WTO members in an effort to bring about a broad-based consensus on the road ahead in the Doha Development Round.

The 7th WTO Ministerial meeting was held in Geneva from 30 Nov-3 Dec, 2009. The general theme for discussion was “The WTO, the Multilateral Trading System and the Current Global Economic Environment”.  The Conference was not a substantive negotiating round but a platform for ministers to review the functioning of WTO, including the Doha Round, and to discuss issues such as monitoring and surveillance of disputes, accessions, Aid for Trade, technical assistance and international governance.  The main negotiating issues and the key elements from India’s perspective in the Doha Round are to honour the development dimension; protecting the interest of poor farmers and industry and seeking greater market opportunities for its farmers and industry.  India has been engaging with coalition groups to ensure that India’s key interests are maintained.

Foreign Direct Investment
During the current financial year (i.e. April, 2009 to October, 2009), FDI Equity Inflows amounting to US $ 17.65 billion have been received.  This is comparable, in US $ terms, to the figure of US $ 18.71 billion received during the corresponding period last year (i.e. April, 2008 to October, 2008).  FDI Equity Inflows amounting to US $ 2.332 billion were received during the month of October, 2009.  These figures represent an increase of 56% in US $ terms over the corresponding figure of US $ 1.497 billion received during the corresponding month last year (i.e. August, 2008).

Major sectors receiving FDI equity inflows are: Services sector (US $ 2.63 billion); Telecommunication (US $ 2.01 billion); Housing & Real estate (US $ 1.89 billion); Agriculture Services (US $ 1.30 billion); Power (US $ 1.20 billion). Source countries are: Mauritius, USA, Singapore, Cyprus and Japan are the major investing countries during this period.

Source: PIB

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