Foreign Trade Policy 2005
Annual Supplement 2005 to The Foreign Trade Policy 2004-09
India to be a major gainer from emerging global trends
In the fast changing international trading scenario, outsourcing of manufacturing activities in the skill intensive sectors has become an essential business strategy for the developed countries. India with its large skilled work force, growing domestic market, raw material availability and the emergence of a mature supply base is set to gain enormously from this trend since the Indian advantage goes well beyond the low wage rates. While there is no doubt that knowledge based industries such as information technology offer India a smooth route to world markets, great potential and opportunities exist in the manufacturing sector also.
FTP strategy is on the right track
When the five year Foreign Trade Policy was announced on August 31, 2004 , the Government took cognizance of the fact that a bold and clearly delineated approach was needed to tap such opportunities. The Foreign Trade Policy articulated two basic objectives that would enable India to achieve these goals.
The first objective was doubling our percentage share of global merchandise trade within five years. To achieve this, an average annual growth rate of about 16% was envisaged. The DGCI & S trade statistics show that the actual growth of the merchandise trade in the very first year of the policy period has been of the order of 24%, which has far surpassed the target we set for ourselves. This growth has been unprecedented in India ’s economic history, and if we can maintain the momentum, the Government is confident that India will cross the 150 billion dollar milestone substantially earlier than the target date.
FTP as a generator of employment
The second objective of the FTP was providing thrust to employment generation particularly in semi-urban and rural areas. The FTP announced special focus initiatives in the employment intensive areas of agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The employment generation has been encouraging not only in these sectors, but in other sectors across the board. A study commissioned by the Ministry reveals that exports generated an incremental direct employment of 10 lakh jobs in the year 2004-05, over the previous year. The total employment generated during the year corresponding to export activity valued at 78 billion was 1 crore jobs – 86 lakhs of direct employment, and 14 lakhs of indirect employment in the logistics, transport and related sectors. The study further reveals that if we achieve our target of 150 dollars over the next four years, we shall be adding a further 1 crore jobs: 85% of it direct employment, and 15% indirectly associated jobs.
A policy of partnership
The FTP provided a road map that could help Indian companies become globally competitive and simultaneously aimed at giving Indian consumers world class products and services. Specific sectoral initiatives have helped in creating more jobs, higher exports and an enhanced level of confidence for Indian products and services in the global economy.
I believe that it is the new equation of partnership and co-operation engendered by the FTP last year that has paid the rich dividends we are now encountering. Business and industry have responded remarkably.
Government is committed to resolving all outstanding problems and disputes pertaining to the past policy periods through the Grievance Redressal Committee set up last year, for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputes over entitlements, granting extensions for utilization of licenses etc. The atmosphere of partnership between Government and Business will be enhanced and taken forward.
Changing international trade dynamics
The dynamics of global trade and the opportunities provided by the multilateral trading platform necessitate a continuous realignment of our international trade strategies and priorities. While India ’s international trade will continue to function under the overall framework of the Foreign Trade Policy 2004-09 announced on 31 st August 2004, some fine-tuning needs to be done to take into account the changing international trade dynamics. This Annual Supplement endeavors to incorporate additional policy initiatives and simplify procedures, thereby facilitating and enhancing India ’s international trade.
The specific initiatives undertaken in this Annual Supplement to the Foreign Trade Policy, 2004-09 are given in this compendium.