HOW BENEFICIAL IS THE FOREIGN TRADE POLICY 2009-2014?

HOW BENEFICIAL IS THE FOREIGN TRADE POLICY 2009-2014?

V.M. KHALEELUR RAHMAN

The much awaited Foreign Trade Policy 2009-2014 which was announced on 27th August 2009 by the honourable union minister for commerce and industry, Mr. Anand Sharma is intended to bring the declining exports back on the growth path. It has a number of measures such as tax sop, interest reduction, dollar credit for exporters etc. According to available reports, India’s exports have declined by about 30% due to the world recession particularly in the U.S. and Europe. He blamed the decline to the protectionist measures adopted by some of the developed countries. To set right this the government has decided to add 26 additional countries in Africa, South America and CIS under Focus Market Scheme. According to the announcement, the policy seeks to help Indian exporters expand their business in existing markets, make inroads into new markets, upgrade technology through cheaper imports of capital goods, and reduce transaction costs and time. While announcing the policy, the honourable Minister has said that “we cannot remain oblivious to declining demand in the developed world and we need to set in motion strategies and policy measures which will catalyse the growth of exports” and hoped that the country would achieve an export figure of $200 billion in 2010-11 as against $168 billion in 2008-9 as the industry has achieved a 7% growth in July 2009 which is a sign of recovery being on the way. He further said that the policy would give special thrust to the employment-oriented sectors that had witnessed job losses in the wake of recession, especially in the fields of textiles, leather and handicrafts.

FORMATION OF COMMITTEE

Another important aspect of the policy is that a committee comprising Finance and Commerce Secretaries and Indian Banks Association Chairman was constituted and it would meet regularly to ensure that the dollar-credit needs of the exporters were met in a timely manner. There is yet another new approach in the policy and that is the government would promote “Brand India” in at least six “Made-in-India” shows to be organised across the world every year.

WELL CHALKED OUT POLICY

The experts and industrialists are of the opinion that the policy is well chalked out to arrest and reverse the declining trends of exports and provide additional support especially to those sections which have been badly hit by recession in the developed world as the minister rightly pointed out. According to the minister, the government will review the policy after two years and take further measures as per the situation. He was optimistic of doubling our country’s exports of goods and services by 2014 to the extent of $336 billion. The government target of export growth is at 15% per annum for first two years and at 25% per annum for the last three years.

INCENTIVES

The government has also decided to extend the Duty Entitlement Passbook Scheme till December 31, 2010. The other booster schemes which were announced earlier for the benefit of exporters and are in force now will also continue. Many organizations have welcomed the policy. While welcoming it FICCI President Mr. Harsh Pati Singhania has said that “Even though drawing up a new foreign trade policy in the current difficult times is a tough task, the Commerce Minister has presented a reasonably good blueprint for taking our exports to $200 billion in next two years”.

REACTION IN THE LEATHER INDUSTRY

There is no press release from the Chairman of the Council for Leather Exports till the time of writing this write-up. However there are mixed reaction to the policy in the leather industry. Although it is generally welcomed, some small tanners feel that the measures are mainly for the big industrialists. Many small tanners are not willing to try for new export contracts for finished leathers and take risk particularly at the present difficult times as the norms for identification of finished leathers are rigid and they are not sure if the sort of goods they will produce as per the requirements of the customers will be passed for export or not. The recent custom problems encountered by some have dampened their spirits. Another section feels that there is an urgent need for the government to allow E.I. Tanned hides and skins for export without any restriction temporarily at least for 5 years for the benefit of small tanners and exporters who have suffered heavy losses, to overcome recession and also to increase our growth and export. But others, particularly leather products manufacturers, consider this argument as unacceptable and going back from the progressive industrial policy the government has adopted.

ROLE OF THE COUNCIL FOR LEATHER EXPORTS

The Council for Leather Exports is doing its best to increase our country’s growth and export in leather and leather products in many ways. It has planned to organise a Road Show in Spain during 10-13 November 2009 as part of the Annual Action Plan for 2009-10 under the Mission Mode Scheme of the ILDP. The Council states that the Road Show will be in the form of presentation-cum-Interaction session in which India will be presented as an attractive destination for business and joint venture collaborations. The opportunities available to the Spanish companies in Indian leather industry will be highlighted during the sessions. According to the Council, at present Spain holds 6th rank in India’s export from the leather sector. Therefore for India, Spain continues to be one of the important and potential markets for enhancing the business opportunities and attracting joint venture and technical collaborations into the leather & leather products industry. Another important event the Council has decided to arrange is the combined buyer-seller meet on 3rd and 4th December 2009 in New York (coinciding with New York Shoe Expo) and on 7th and 8th December 2009 in Chicago, both in footwear, leather garments, leather goods and accessories. These meets are very important because of the fact that the USA is the largest market for leather products in the world accounting for 20% share in the global import trade of US$127.73 billion in 2007 and our country’s share of leather and leather products is 9% in its total export of US$3.5 billion. There is no doubt that the union government has presented a well planned foreign trade policy 2009-14 to the country in order to overcome the global recession and increase our growth and export. (V.M. Khaleelur Rahman in Indian Leather, September 2009)