The ruling electoral party (UPA) of one of the fastest developing economy (India) in the world has been facing a considerable amount of challenges; in the form of tackling the severe global economic melt down. A number of countries around the world have been severely affected (though at different degrees) as all major indicators of industrial production, trade, capital flows, unemployment, per capita investment and consumption have taken a hit. According to a World Bank estimate, a total of 53 million people more would fall into the poverty net this year and over a billion would go chronically hungry. Such other social implications of the recession would be also uncovered in the coming time.
It has thus been a very crucial time for the UPA government to announce the Indian Foreign Trade Policy 2009-2010. Attempts have been made to minimise the recessionary effect in India and maximise the number of exports. Several measures have been taken which are described in the following paragraphs –
With recession changing the fortunes of economies all around the globe, India seems to be more fortunate. Although there has not been any severe effect of recession on the Indian economy, it has to bears the brunt of other economies indirectly. Because the global demand of goods and services all around the world has been reduced due to the lack of money flow in recession hit economies, Indian exports also has been showing a declining trend. Thus one of the primary objective of the FT policy announced to be in law from 27th of august, is to arrest and reverse the declining trend of exports and provide additional support to the sectors which have been hit badly by recession in the developed world. It aims to achieve an annual export growth of 15% over 2010-2011 with an annual export target of US 20$ billion by March 2011. In the remaining three years (up to 2014) of the FT policy, it aims to make the country able to come back on high export growth path of around 25% pa. By 2014, the policy claims to double India’s exports of goods and services. One of the other secondary long term objectives of the government through this policy is to double India’s share in global trade by 2020.
There has to be structural changes from the pervious policy to meet the above objectives. Thus the government aims to provide a policy environment through a mix of measures inclusive of fiscal initiatives, institutional changes and procedural rationalisation and efforts to tap the enhanced markets around the globe. Improvements in the export infrastructure, lowering transaction costs and providing full refund of indirect taxes and levies are also recommended to boosts the exports. This has serious implications on export businesses around the country. In an attempt to promote exports in the country the government of India (through the new FT policy) is providing a number of benefits to the exporters as mentioned above. Thus, the policy is encouraging the exporters to put in the extra little to sell more in the international market. Mr. Anand Sharma (Minister of Commerce and Industry, India), in his speech also stated that the government will reassure that the exporters of the country have adequate confidence to maintain their market presence even in the period of stress. This comes with a huge sigh of relief by the exporters, who have earlier been worried of loosing their businesses considering the lowering demands in the international market. The minister also added that the government will ensure that the dollar credit needs of the exporters are met in timely manner. A special committee has also been constituted to resolve the credit needs of the exporters on a timely manner. Thus a very legitimate effort of nurture the presence and growth of exporters of the country is quite evident from the policy.
One of the very purposeful steps taken by the government through the policy is of market diversification. Weaker demand in developed economies,...
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