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STATEMENT OF ACTIVITIES

2013-2014

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF COMMERCE

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Ministry of Commerce & Industry

Department of Commerce

Table of Contents

Sl.

No.

Contents

1. Overview

2. Role, functions and organisational set up

3. Strategic Initiatives and Priorities

4. Trends in India’s Foreign Trade

5. Critical Achievements

6. Foreign Trade Policy

7. Export Promotion Measures – ASIDE, MAI, MDA, major

initiatives taken by the EPCs

8. Special Economic Zones (SEZs)

9. Commodity Boards, other development authorities and

Trade Facilitation Institutions.

10. Bilateral and Multilateral Negotiations

11. WTO Negotiations

12. Conclusion and Way Ahead

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1. Overview

Past two and a half years saw a slowdown in the global economy but, finally there are

signs that a path towards a sustainable recovery has started. The advanced

economies are gradually recovering after the global financial crisis, growth in

developing and emerging markets is finally picking up, after a flat growth in the first

quarter of 2013-14. Economic activity strengthened in developed economies. The US

is exhibiting modest growth and economies of Europe have also picked up growth

momentum. Expansionary policy in Japan has moved out its economy from

stagnation.

Global Economic Growth

The IMF World Economic Outlook (WEO), released in January 2014, highlights that

global economic activity has picked up during the second half of 2013 with

expectation of further improvement in 2014–15. The outlook has projected world

growth at 3.7% in 2014 and by 3.9% in 2015. It also mentions that recovery in global

economy will be supported by improvement in the advanced economies as final

demand in advanced economies has expanded with higher inventory demand. On the

other hand financial condition in emerging markets has remained tight with equity

prices not fully recovered and some currencies under pressure after US tapering

announcement in May 2013.

The WEO also mentions that downside risks remain in advanced economies where

output gaps have remained large. Growth in emerging market and developing

economies (EMDEs) will be supported by stronger external demand from advanced

economies despite domestic weakness.

The data on advanced world economies shows that growth in United States is

expected to be 2.8 percent in 2014, up from 1.9 percent in 2013 with expansion and

improvement in final domestic demand, reduction in fiscal drag. The forecast for 2015

is marked at 3%. The projection for Euro Area is marked at 1% and 1.4% for 2014

and 2015. With exports further contributing to growth, high debt and financial

fragmentation is expected to affect domestic demand. The annual growth is expected

to remain broadly unchanged for Japan at 1.7% in 2014, before moderating to 1% in

2015.

The growth in EMDEs is expected to increase to 5.1% in 2014 and 5.4% for 2015.

China is projected to grow at the rate of 7.5% and 7.3% for 2014 and 2015. The

growth in China rebounded in second half of 2013 due to improvement in investment.

Growth in India picked up after a favourable monsoon and export growth and is

expected to firm further on stronger structural policies supporting investment. The

projection for India is 5.4% and 6.4% for 2014 and 2015 respectively which is a 0.2%

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and 0.1% increase from earlier projections made in the October 2013 WEO for the

year 2014 and 2015 respectively.

Global trade has reduced from 5.2% in 2011 to 2% in 2012. WTO as per the September

Press release, predicts a growth of 2.5% for 2013 (down from the 3.3% forecast in April), and

4.5% in 2014 (down from 5.0%), but conditions for improved trade are gradually falling into

place. Besides, after the historic Bali accord, WTO and all the member countries are looking

forward to the prospect of yearly increase of world trade amounting to $ 1 trillion per year.

India’s foreign trade can also therefore get a major boost. The developed economies are

expected to grow at the rate 1.2% in 2013 and 1.9% in 2014. The projections for

developing economies are 4.5% in 2013 and 4.9% for 2014.

WTO ranked India as the 19th largest merchandise exporter in the world, with a share

of 1.6% of the global trade and the 10th largest importer with a share of 2.6% of global

imports in 2012 (WTO's International Trade Statistics, 2013). In Commercial Services Trade,

India was the 6th largest exporter with 3.4% share of world market and 7th largest importer

with 3% share of world market.

2. Role, Functions and Organizational set up

The mandate of the Department of Commerce is regulation, development and

promotion of India’s international trade and commerce through formulation of

appropriate international trade & commercial policies and implementation of the

various provisions thereof. The basic role of the Department is to facilitate the

creation of an enabling environment and infrastructure for accelerated growth of

international trade. The Department formulates, implements and monitors the Foreign

Trade Policy (FTP) which provides basic framework of policy and strategy to be

followed for promoting exports and trade. The Trade Policy is periodically reviewed to

incorporate changes necessary to take care of emerging economic scenarios both in

the domestic and international economy. Besides, the Department is also entrusted

with responsibilities relating to multilateral and bilateral commercial relations, Special

Economic Zones, state trading, export promotion and trade facilitation, and

development and regulation of certain export oriented industries and commodities.

The Department is headed by a Secretary who is assisted by an Additional Secretary

& Financial Adviser, four Additional Secretaries, twelve Joint Secretaries and Joint

Secretary level officers and a number of other senior officers. There is large increase

in workload in matters related to the World Trade Organization (WTO), Regional

Trade Agreements (RTAs), Free Trade Agreements (FTAs), Special Economic

Zones (SEZs), Joint Study Groups (JSGs) etc.

The Department is functionally organized into eight Divisions viz. Administration and

General Division, Finance Division, Economic Division, Trade Policy Division, Foreign

Trade Territorial Divisions, State Trading & Infrastructure Division, Supply Division

and Plantation Division.

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There are three Attached Offices, eleven Subordinate Offices, ten Autonomous

Bodies, five Public Sector Undertakings, two Advisory Bodies, fourteen Export

Promotion Councils and six other Organizations, under the administrative control of

the Department.

3. Strategic Initiatives and Priorities

The key strategic initiatives to achieve the aspirations have been formulated on the

basis of the critical assessment of our strengths, weaknesses, opportunities and

challenges facing the Indian economy and the export sector. These are based on a

series of discussions within the Department and consultation with stake holders i.e.

premier industry organizations and Export Promotion Councils and expected trends of

growth in world economy and trade. The important initiatives include –

Diversification of export product basket

Diversification into non-traditional markets and conclusion of ongoing FTA

negotiations and initiating new FTAs

Strengthening export related infrastructure

Enhancing credit flows for exports at lower cost

Reducing Transaction Costs

Diversification of Services exports

Building up a Brand Image of India

Support to Plantation Sector

Protection to sensitive domestic industries

Focus Areas

Traditional sectors like textiles, gems & jewellery and handicrafts have been the

strong areas of our exports. These sectors individually account for only a small

segment in the world trade. Similarly, our share in other important sectors like

chemicals, pharmaceuticals and agricultural products is not significant. The strategy

to boost our capabilities of exports in these sectors would receive the high priority in

any future strategy for export promotion and diversification.

i. Along with product diversification, diversification of markets based on the

changing dynamics of growth in the world economy is equally important to ensure

sustained and accelerated growth of exports. The demand for Indian exports in

the traditional markets of developed west i.e. North America and Europe is

projected to slow down as a result of slowing output expansion in these

economies. The markets in Asia including ASEAN, Africa and Latin America

would be important in the future. These markets would be the focus areas in

Department's strategy for market diversification.

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ii. Working out conducive trading arrangements with trading partners holds a crucial

place in the entire strategy of export promotion. The efforts towards successful

conclusion of free trade agreements (FTAs) with our important partners would

receive utmost attention.

iii. Developed countries are increasingly resorting to the use of Non-Tariff Measures

(NTMs) to protect their domestic industries. NTMs measures include trade related

procedures, technical regulations, standards, import or export licensing systems

etc. India has adopted a multi-pronged strategy to deal with issues relating to

NTMs and to increase India's market access abroad and will play a proactive role

in addressing the concerns of India's trading community on these measures. On

the import side, efforts will be strengthened to create suitable Sanitary and

Phytosanitary (SPS) measures/ technical regulations on Indian imports in a

phased manner over a period of time depending on the capability of the domestic

sector to comply with the same.

iv. Besides, the concerned Departments/ Ministries/Organizations have been

requested to upgrade their infrastructure and surveillance system at the major

ports and airports to ensure due compliance of India's standards and technical

regulations. In addition wherever our export interest is affected, the Department of

Commerce will continue its efforts for raising three or four issues in every Regular

SPS and TBT Committee Meetings of the WTO to get suitable redressal of our

export concerns.

v. Adequate flow of credit and at reasonable costs is a crucial requirement for the

growth of export sector. The Department in consultation with the Ministry of

Finance would aim to address the financing requirement of the exports sector.

vi. Availability of reliable, disaggregated and timely data on trade of goods and

services is an important input for policy making. One of the major constrains being

faced by policy makers for trade negotiations and policy interventions in respect of

services trade is that disaggregated data at the level required is not available. At

present, RBI is the only source of data available on BOP basis. The Department

plans to coordinate with the concerned agencies like CSO towards putting in place

a system for generating disaggregated data on trade in services (mode-wise and

country-wise) through surveys on the lines of best international practices being

followed by other countries. A pilot project for firming up the methodology for

generating the required data in respect of two sectors i.e. health and tourism has

been planned by the Directorate General of Commercial Intelligence and Services

(DGCI&S).

vii. In respect of data on merchandise trade, the Department aims to substantially

reduce the time lag for release of disaggregated data. The reduction in time lag

would depend to a large extent on the progress of coverage of ports under the

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EDI. The infrastructure support facilities at DGCI&S, Kolkata is being accordingly

strengthened to take care of the increased number of transactions resulting from

the targeted high growth rate of exports envisaged in the future.

viii. Department of Commerce is the administrative Ministry responsible for production,

distribution and development of the plantation crops i.e. rubber, tea, coffee, spices

and tobacco. Plantation crops have been the traditional exports of India providing

employment to millions of workers. Aging plants resulting in low productivity, low

value addition and volatility of international prices and demand are the major

constraints facing the sector. Increasing production, productivity and profits would

continue to be the cornerstone of the Department's developmental efforts in the

sector. Structural reforms would be another major area of action.

ix. Assistance to States for Development of Export Infrastructure and Allied Activities

(ASIDE) is the flagship scheme of the Department for critical gaps pertaining to

export related infrastructure by providing financial assistance to States and

Central agencies. Due to inadequate availability of resources under the scheme, it

is not possible to take up large projects which by themselves could make a

substantial improvement in the overall infrastructure available for promoting

exports. Getting more funds allocated for the scheme, improving the quality of

output and effective monitoring of the scheme would be the major cornerstone of

the strategy pertaining to the scheme.

x. Directorate General of Foreign Trade (DGFT) is responsible for implementation of

various provisions and schemes under the Foreign Trade Policy and is the main

interface between the Government and the trading community i.e. the importers

and exporters. The main thrust of the organization in future would be to make it

user friendly and digital friendly by undertaking business process engineering. A

comprehensive review of the various export promotion schemes would be

undertaken and the schemes restructured accordingly to make them more

effective.

4. Trends in India's Foreign Trade

India’s merchandise exports reached a level of US $ 300.40 billion during 2012-13

registering a negative growth of 1.82 percent as compared to a growth of 21.83

percent during the previous year. Despite the recent setback faced by India’s export

sector due to global slowdown, merchandise exports still recorded a Compound

Annual Growth Rate (CAGR) of 17.35 per cent from 2004-05 to 2012-13.

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Exports

Exports recorded a negative growth of 1.82 per cent during Apr-Mar 2012-13. The

Government has set an export target of US $ 325 billion for 2013-14. The

merchandise exports have reached US $ 230.34 billion in 2013-14(Apr-Dec). Export

target and achievement from 2004-05 to 2012-13 and 2013-14 (Apr-Dec.) is given in

the Chart 4.1 below:

Note: The corresponding target is annual while the achievement pertains to the period Apr.-Dec. 2013-14

Imports

Cumulative value of imports during 2013-14 (Apr-Dec.) was US $ 340.38 billion as

against US $ 364.24 billion during the corresponding period of the previous year

registering a negative growth of 6.55 per cent in dollar terms. Oil imports were valued

at US $ 124.96 billion during 2013-14 (Apr-Dec) which was 2.57 per cent higher than

oil imports valued at US $ 121.83 billion in the corresponding period of previous year.

Non-oil imports were valued at US $ 215.42 billion during 2013-14 (Apr-Dec.) which

was 11.13 per cent lower than non-oil imports of US $ 242.41 billion in previous year.

Trade Balance

The Trade deficit in 2013-14 (Apr-Dec) was estimated at US $110.04 billion which

was lower than the deficit of US $ 146.83 billion during 2012-13 (Apr-Dec.).

Performance of Exports, Imports and Balance of Trade during 2004-05 to 2013-14

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(April-Dec.) is given in the table A below:

Table A : Trade Data for period 2004-05 to 2013-14 (Apr-Dec)

(Values in Rs crores)

Sl.

No Year Exports %Growth Imports %Growth

Trade

Balance

1 2004-2005 3,75,340 27.94 5,01,065 39.53 -1,25,725

2 2005-2006 4,56,418 21.6 6,60,409 31.8 -2,03,991

3 2006-2007 5,71,779 25.28 8,40,506 27.27 -2,68,727

4 2007-2008 6,55,864 14.71 10,12,312 20.44 -3,56,448

5 2008-2009 8,40,755 28.19 13,74,436 35.77 -5,33,680

6 2009-2010 8,45,534 0.57 13,63,736 -0.78 -5,18,202

7 2010-2011 11,42,922 35.17 16,83,467 23.45 -5,40,545

8 2011-2012 14,65,959 28.26 23,45,463 39.32 -8,79,504

9 2012-2013 16,34,319 11.48 26,69,162 13.8 -10,34,843

10 2012-13 (Apr-Dec)

Press Release

11,84,749

19,83,941

-7,99,192

11 2013-14 (Apr-Dec)

Press Release

13,86,496 17.03 20,36,568 2.65 -6,50,072

Data Source: DGCIS, Kolkata

(Values in US $ Millions)

Sl.

No Year Exports %Growth Imports %Growth

Trade

Balance

1 2004-2005 83,536 30.85 1,11,517 42.7 -27,981

2 2005-2006 1,03,091 23.41 1,49,166 33.76 -46,075

3 2006-2007 1,26,414 22.62 1,85,735 24.52 -59,321

4 2007-2008 1,63,132 29.05 2,51,654 35.49 -88,522

5 2008-2009 1,85,295 13.59 3,03,696 20.68 -1,18,401

6 2009-2010 1,78,751 -3.53 2,88,373 -5.05 -1,09,621

7 2010-2011 2,51,136 40.49 3,69,769 28.23 -1,18,633

8 2011-2012 3,05,964 21.83 4,89,319 32.33 -1,83,356

9 2012-2013 3,00,401 -1.82 4,90,737 0.29 -1,90,336

10 2012-13 (Apr-Dec)

Press Release

2,17,415

3,64,242

-1,46,827

11 2013-14 (Apr-Dec)

Press Release

2,30,336 5.94 3,40,378 -6.55 -1,10,042

Data Source: DGCIS,

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Exports by Principal Commodities

Exports of the top five commodities in US dollar terms during the period 2013-14

(April-November) have a share of 50.66 per cent mainly due to significant contribution

in the exports of Petroleum (Crude & Products), Gems & Jewellery, Transport

Equipments, Machinery and Instruments and Drugs, Pharmaceuticals & Fine

Chemicals.

The share of top five Principal Commodity Groups in India’s total exports during

2013-14 (April-November) is given at Chart 4.3 below:

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The export performance (in terms of growth, values taken in million terms) of

top five commodities during 2013-14 (April-November) vis-a-vis the corresponding

period of the previous year is shown in Chart 4.4.

Imports by Principal Commodities

Imports of the top five commodities in US dollar terms during the period 2013-14

(April-November) have a share of 61.27 per cent mainly due to significant imports of

Petroleum (Crude & Products), Electronic Goods, Gold, Machinery except electrical

and electronic and Pearls, precious and semi-precious stones.

The share of top five Principal Commodity in India’s total imports during 2013-14

(April– November) is given at Chart 4.5 below:

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The import performance by growth of top five Principal commodities during 2013-14

(April– November) vis-a-vis the corresponding period of the previous year is shown at

Chart 4.6.

Direction of India’s Foreign Trade

Share of major destinations of India’s Exports and sources of Imports during 2013-14

(April– November) are given in Chart 4.7 and 4.8 respectively.

During the period 2013-14 (April– November), the share of Asia comprising of East

Asia, ASEAN, West Asia, Other West Asia, North East Asia and South Asia

accounted for 49.61 per cent of India’s total exports. The share of Europe and

America in India’s exports stood at 18.44 per cent and 17.47 per cent respectively of

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which EU countries (27) comprises 16.38 per cent. During the period, USA (12.92 per

cent) has been the most important country of export destination followed by UAE

(9.83 per cent), Singapore (4.67 percent), China P RP (4.44 per cent) and Hong Kong

(4.12 per cent).

Asia accounted for 61.30 per cent of India’s total imports during the period followed

by Europe (15.62 per cent) and America (12.46 per cent). Among individual countries

the share of China P RP stood highest at (11.39 per cent) followed by Saudi Arabia

(8.05 per cent), UAE (6.76 per cent), USA (5.00 per cent) and Switzerland (4.7 per

cent).

5. Critical Achievements

A New Expanded Duty Free Tariff Preference (DFTP) Scheme for Least

Developed Countries (LDCs)

One of the elements of the Hong-Kong Ministerial Declaration of December 2005 was

to extend Duty Free Quota Free (DFQF) access to the Least Developed Countries

(LDCs).India was the first developing country to extend this facility to Least

Developed Countries (LDCs). India’s Duty Free Tariff preference (DFTP) Scheme for

LDCs came into effect in August, 2008 with 85% of India’s total tariff lines made duty

free, 9% tariff lines enjoying a Margin of Preference ranging from 10% to 100% and

only 6% of total tariff lines retained in the Exclusion List with no duty preferences, for

the exports from LDCs.

This year, the Cabinet has approved increase in coverage as well as simplification of

the Scheme, in line with both the Hong Kong Ministerial Mandate as well as requests

from several LDCs ((like Tanzania, Uganda and Ethiopia) for additional product

coverage under the duty free list to cover products of their export interest and

simplification of the Rules of Origin procedures.

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Under the new expanded DFTP Scheme, India would be granting duty free access on

96.4% of the total tariff lines, thereby retaining only about 3.6% of lines in the

Exclusion and Positive Lists. Items in the Positive List would be provided a Margin of

Preference (MOP) ranging from 10% to 60%, while items in the Exclusion List will

have no duty preferences, taking due care of India’s domestic sensitivities in these

lines.

The new and expanded DFTP Scheme would provide improved market access to the

28 beneficiary countries as well as to the new entrants, the Republic of Yemen and

Haiti being some of them. Overall, this initiative by India would strengthen the

country’s position in the WTO on issues relating to LDCs and is expected to send a

strong signal to major developed countries which are yet to comply with the Hong

Kong Ministerial Mandate to adopt similar measures.

Recent development in the World Trade Organisation (WTO) negotiations

The Doha Round of negotiations is continuing in the WTO since the year 2001. After

protracted negotiations yielding little results for almost a decade, consensus was

reached to negotiate a small package consisting of Trade Facilitation, some elements

of agriculture and development/LDC issues for an early outcome in the Ninth

Ministerial Conference of the WTO to be held in December 2013 in Bali, Indonesia.

The Ninth Ministerial Conference of the WTO was held in Bali, Indonesia from 3 to 7

December 2013. During the conference in Bali, intense discussions were held on

the Bali package which was approved by the Ministers taking into account the

concerns of the Members. The Bali outcome consists of an agreement on Trade

Facilitation and Ministerial decisions on some elements of agriculture and

development/LDC issues.

In the area of agriculture, which is very important for the developing countries, the

proposal submitted by G-33, a group of developing countries in the WTO relates to

updating the rules concerning public stockholding for food security. The Ministers

approved an interim mechanism, until a permanent solution is found to enable the

developing countries meet this policy objective subject to some notification and

transparency provisions. The interim mechanism stipulates that WTO Members will

not challenge the compliance of a developing member with obligations under the

WTO Agreement on Agriculture in relation to support provided for traditional staple

food crops in pursuance of public stockholding programmes for food security

purposes, if they are consistent with the existing rules. The decision also agrees that

an agreement for a permanent solution of the issue of public stockholding for food

security purposes for adoption by the 11th Ministerial Conference.

The agreement on trade facilitation in the Ministerial Meeting is aimed at simplifying

customs procedures by reducing costs and improving their speed and efficiency. It

will be a legally binding agreement. The objectives are: to speed up customs

procedures; make trade easier, faster and cheaper; provide clarity, efficiency and

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transparency; reduce bureaucracy and corruption, and use technological advances. It

also has provisions on goods in transit, an issue particularly of interest to landlocked

countries seeking to trade through ports in neighbouring countries.

Other Achievements

India has always stood for an open, equitable, predictable, non-discriminatory and

rule based international trading system. Recognizing that Regional Trading

Agreements (RTAs) would continue to feature permanently in world trade, India has

engaged with its trading partners / blocs with the intention of expanding its export

market since early part of the previous decade and began concluding, in principle

agreements to move, in some cases, towards Comprehensive Economic Cooperation

Agreements (CECA) which covers FTA in goods (i.e. having a zero customs duty

regime within a fixed time frame on items covering substantial trade and a relatively

small negative list of sensitive items on which no or limited duty concessions are

available), services, investment and identified areas of economic cooperation. As of

November, 2013, India concluded 10 Free Trade Agreements, 5 limited scope

Preferential Trade Agreements and is in the process of negotiating / expanding 18

more Agreements.

The Plantation Sector comprising of tea, spices and rubber is important to India’s

economy given the livelihood concerns of a large number of people employed in the

industry. Tea and Spices are the brand ambassadors of `India’. This has been a

remarkable year for India in terms of taking the lead at international commodity

bodies in pursuing the producers’ interests in the tea, spices and coffee sectors. The

Union Cabinet has approved India’s joining the International Tea Producers Forum as

a founder member. India has been elected as the Chair of International Coffee

Organization Council, India has also succeeded in forming a Codex Committee on

Spices and Culinary Herbs (CCSCH) by Codex Alimentarius Commission, which

would harmonize quality parameters for spices, across the globe and help our

exports. These are significant steps in achieving a commanding place in world trade

in these sectors and thereby protect the interests of lakh of growers.

To sustain and accelerate the growth rate of engineering exports, the Department of

Commerce has launched a strategic brand promotion of engineering goods in

coordination with IBEF and EEPC. Since the Engineering Sector is having a large

span of products, covering under more than 30 panels, based on the core strengths

in the initial phase, machine tools and Pump and Valves sector have been identified.

Formal launching of their campaign is expected to be done in January, 2014.

Increasing competence of Indian pharma in the global market place especially the

fact that India is emerging as `pharmacy of the world’ and reliable supplier of

authentic, quality, safe and affordable drugs, resulted in a malign campaign by certain

vested interests to brand generic medicines of India as sub-standard, spurious / fake.

It was in this context that Department of Commerce took the initiative of proposing

technological solutions for tracing and tracking the `Made in India’ drugs in the global

market. Extensive consultations were held with the industry, concerned departments

and it was decided that trace and track features need to be incorporated on all

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medicinal products being manufactured and exported from India as a measure to

build better image and credibility of Indian pharma products.

Services Conclave for Promoting Services Export From India:

Services Sector has emerged as a prominent sector in terms of its contribution to

national income, trade flows and FDI inflows. Recognizing the importance of services

exports for the country, a Services Conclave was organized by the Department of

Commerce in partnership with Confederation of Indian Industry (CII), Federation of

Indian Export Organizations (FIEO), Centre for WTO Studies (CWTOS) and Services

Export Promotion Council (SEPC), on 12 and 13 November, 2013 to explore

opportunities and challenges in promoting services exports. It was inaugurated by the

Union Minister of Commerce & Industry, Shri Anand Sharma. The conclave brought

together experts, academics, industry practitioners as well as government

representatives on the same platform.

The main purpose of the Services Conclave was to discuss issues and bottlenecks

hindering exports of services from India. It deliberated on a roadmap for augmenting

exports of various services so as not only to diversify India’s services exports but also

to position India as a key player in world services trade. The primary aim of the

Conclave was to address issues relating to the challenges and opportunities of

services sector exports for India especially in the specific sectors of logistics,

professional services (Architectural services, Accountancy, Management Consultancy

services), IT/ITeS, Telecom services, Tourism, Health and Medical services and

Creativity and Entertainment services.

Based on the outcome of the Services Conclave, the concerned Ministries are being

pursued to prepare a strategy and initiate action accordingly. A Task Force of industry

and government is also planned to be set up to specifically look into issues of

Services export.

6. Foreign Trade Policy

During 2013, there were following major developments in the Foreign Trade Policy

(2009-14):

Public Notices issued : three Chapter Offices of Federation of Indian Export

Organizations (FIEO) were added in Appendix-2 of Handbook of Procedures-Volume

1 (Appendices and Aayat Niryat Forms), 2009-2014. The validity of zero duty EPCG

authorization was amended from 9 months to 18 months w.e.f. 18.04.2013 by

amending Para 2.12 of HBP Vol. I. The earlier dispensation of transfer/sale of

imported weapons (firearms) by shooters was also liberalised by amending Para

2.43.2 of HBP Vol. I. Visvesvaraya Trade Promotion Centre (VTPC), Bangalore and

its two branches at Dharwad and Mysore were enlisted for issuing Certificate of

Origin (Non-Preferential) under Appendix.

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Notifications Issued: notification was issued to bring in more clarity to the

import policy for various categories of second hand goods. Used Rails, including cut

rails of all lengths, were notified to be classified under Chapter 73 of ITC(HS) with

the import policy made ‘free’ subject to Pre-Inspection Condition for these items.

Import policy of cars manufactured prior to 1st January, 1950 was revised from

‘restricted’ to ‘free’ for actual users; Two new Customs Ports( ICD, Faridabad and

Ennore Port) were added to the list of 10 existing ports for importing new vehicles;

Import of items containing Ozone Depleting Substances (ODS) has been restricted

and non-ODS items have been made free; prescribed standard of EPA & DHA

content in Fish Body Oil (Refined) was revised to ‘Not less than 5% by weight’

without any upper limit; minimum price for import of Areca Nuts has been enhanced

from Rs. 75/- to Rs. 110/- per Kilogram while minimum price for import of Cashew

Kernel (broken) and Cashew Kernel (whole) has been fixed to Rs. 288/-per Kg. and

Rs 400/-per Kg. respectively; requirements of Sanitary Import Permit issued by Deptt.

of Animal Husbandry have been incorporated under relevant Chapters of ITC(HS),

2012; Prohibition on import of milk and milk products from China was extended for

one more year, i.e., till 23.6.2014. The need for authorization for import of electrical

energy was done away with and exemption was granted to the Import of steel and

steel products for major industrial/infrastructure projects from the applicability of Steel

and Steel Products (Quality Control) Second Order, 2012. Import of Ammonium

Nitrate of certain specification would now require prior permission from Chief

Controller of Explosives. Human Embryo has been classified under ITC (HS) Code

0511 99 99 and its import has been made free subject to NOC from ICMR.

An enabling provision has been made by amending Paragraph 2.35 (b) to allow

export of goods imported against payment in freely convertible currency where export

proceeds will be realised in Rupees subject to at least 15% value addition.

Subsequently, Iran was notified as a country for which benefits could be availed as in

modified Para 2.35 (b). The Para 2.38 of FTP, 2009-14 has been amended to

prohibit re-export of defective parts/spares imported exclusively for undertaking root

cause analysis, testing and evaluation purpose by the companies/firms and original

equipment manufacturers. Para 2.17A FTP has been harmonised with Section 47 of

SEZ Rules, 2006 to provide for sale of waste or scrap from SEZ to DTA without an

authorization. Also Para 9.28 of FTP has been amended to include Limited Liability

Partnerships in the definition of Group Company.

Department of Commerce and Department of Electronics and Information Technology

(DeitY) notified the Electronics Hardware Technology Park (EHTP) and the Software

Technology Park (STP) schemes in 1992 and 1994 respectively and both these

schemes were notified as 100% EOU Schemes under the Exim policy of the Ministry

of Commerce and Industry. IMSC in its meeting held on 5th July, 2012 resolved that

the STP and EHPT schemes need to be revamped in order to give a push to IT /

ITES and ESDM sectors. Accordingly, the IMSC constituted a Sub-Group comprising

18

of the members Dr. Omkar Rai, DG, STPI, Shri Manoj K. Arora, ADG, DGEP and Dr.

L.B. Singhal, ADG, DGFT to review the two schemes and suggest changes that are

required to revamp the same. Based on the discussions and the inputs provided by

the industry, the Sub-Group has made a number of suggestions for revamping the

STP and EHPT schemes. In April, 2013 Sub-Group of the Inter-Ministerial Standing

Committee has submitted their report on revision of the STP and EHPT Schemes.

The report in this regard is under consideration with DeitY.

“Deemed Exports” refer to those transactions in which goods supplied do not leave

country, and payment for such supplies is received either in Indian Rupees or in free

foreign exchange. Deemed Exports Scheme is for encouraging import substitution

and mainly covers such supply of goods which are otherwise allowed at Zero custom

duty. Detailed policy provisions for deemed exports are given in Chapter 6 of the

Foreign Trade Policy. The detailed procedure to implement these policy provisions is

given in Chapter 8 of the Handbook of Procedure. On the issues pertaining to these

schemes representations/references are received from different quarters i.e. Regional

Authorities of DGFT, Development Commissioners, Trade & Industry etc.

Clarification on the same are given by the DGFT. In addition to this, as and when

required, necessary changes are carried out in the policies/procedure which are

uploaded on DGFT website through Notification/Public Notice/Circular etc.

Based upon the inputs / suggestions received from the Apex Chambers of Commerce

& Industries, FIEO, EPCs & internal deliberations, the provisions of deemed exports

were re-written and notified on 05.06.2012. These provisions have been aligned with

the corresponding customs notification. The clarifications issued by the Policy

Interpretation Committee have been incorporated. The benefits available for deemed

exports under different categories have been consolidated in a tabulated form, under

para 8.4 of FTP. Policy Circular No.15 dated 21.02.2013 has been issued clarifying

benefits for supplies against ARO / Invalidation. Similarly, Policy Circular No.16 dated

15.03.2013 has been issued making it clear that where ab-initio exemption of duties

is available, no refund of TED will be provided. Notification No.4 dated 18.04.2013

has been issued incorporating the changes made under paras 8.3 & 8.4 of FTP.

Policy Circular No.9 dated 30.10.2013 has been issued clarifying the applicability of

duty drawback as per col ‘B’ of All Industry Rate and requirement of certificate

regarding CENVAT declaration as contained in the Public Notice No. 35 dated

01.03.2011.

The Hon’ble Minister of Commerce & Industry had made following announcement

to the Foreign Trade Policy on 18.4.2013:-

One new country Norway has been added under Focus Market Scheme and

one new country Venezuela have been added under Special Focus Market

Scheme.

19

Approx. 126 new products added for duty credit @2% or 5% of FOB value of

exports which included Engineering, Electronics, Chemicals, Pharma and

Textiles etc.

Around 47 new products and 2 new countries have been added under Market

Linked Focus Product Scheme. MLFPS has been extended till 31st March

2014 for export to USA and EU in respect of items falling in Chapter 61 and

Chapter 62 (textiles and clothing).

Incremental Exports Incentivisation Scheme (IEIS) has been extended for the

year 2013-14. 53 Latin American and African countries have been added in the

list w.e.f. 1.4.2013.

Scrips of FPS, FMS & VKGUY can now be used for payment of Service Tax.

Chapter 3 scrips can also be used for payment of composition fee, application

fee and value-wise shortfall in Export obligation.

SFIS scrips can be utilised for purchase of Motor Vehicles.It can be used for

manufacturing sector business of the service provider.

Now under SFIS scheme calculation is based on Net Foreign Exchange

earned .

2 new towns have been declared as Towns of Export Excellence (TEE). These

are Gurgaon (Textiles) and Morbi (Ceramic Tiles & Sanitaryware).

The Rupee Export Credit Interest rate Subvention Scheme was available to

certain labour intensive sectors like Handicrafts, Carpets, Handlooms, SMEs,

Readymade Garments, Processed Agriculture Products, Toys, Sport Goods.

Now interest subvention scheme has been extended to 101 tariff line of

Engineering sector and 6 tariff line of Chapter 63 of ITC HS( textiles madeup).

The validity of Scheme has also been extended to 31st March 2014. The rate

of Interest Subvention has been increased from 2% to 3% w.e.f. 01.08.2013.

Other Major Announcement

Approx. 160 new products including 153 hi tech products added for duty credit

@2% of FOB value of exports on 10.07.2013 (effective from 15.08.2013).

Entitlement goods imported or procured under SFIS scheme can be

alienated on completion of 3 years from the date of import / procurement.

All Garments covered under Chapter 61 and Chapter 62 of ITC HS

Classification of Export and Import Items have been extended the benefit of

duty credit scrip @2% of FOB value of exports to USA and EU from 1.4.2011

till 31.3.2012. This benefit has now been extended till 31st March 2014.

Incremental Exports Incentivisation Scheme (IEIS) has been extended for the

year 2013-14.

Other initiatives of DGFT

The Directorate General of Foreign Trade’s electronic Bank Realization

Certificate (e-BRC) project has won the first prize in the 2013 eASIA Award

under Trade Facilitation category as announced by Asia Pacific Council for

Trade Facilitation and Electronic Business (AFACT) in Ho Chi Minh City,

20

Vietnam on November 29, 2013. The eASIA Award, held every two years,

aims at promoting the achievement of AFACT member countries/economies in

the development of trade facilitation, electronic business policies and activities,

and initiatives for bridging digital divide in the Asia Pacific Region. eBRC has

also won the award in 48th Annual Convention of Computer Society of India

held on 14th December,2013.

Second Task Force on Transaction Costs has been constituted on April 18,

2013 under chair of DGFT and with members from concerned administrative

ministries and Trade and Industry bodies. The task force members are visiting

port and other points of contact of exporters with a view to find solutions to

reduce transaction costs.

“Niryat Bandhu” as a strategic initiatives started during the 12th Five Year

Plan(2012-17).

In pursuance of Para 2.51 of Foreign Trade Policy, a ‘Niryat Bandhu’ Scheme

for mentoring first generation entrepreneurs has been approved for

implementation during 12th Five Year Plan (2013-14 to 2017-18). The Niryat

Bandhu would primarily mentor interested individuals in the area of

international business. Such hand-holding by officers of DGFT would help the

new exporters/importers by leveraging the knowledge base of officers and by

providing timely and appropriate guidance.

Following are the key objectives and targets of the scheme:

To provide mentorship and develop a class of new business entrepreneurs

who would carry out foreign trade.

To bring more entrepreneurs into the field of international trade.

To train about 1000 persons annually. It is expected that many of the new

entrepreneurs would start in the field of international trade.

Capacity building of officers. This will also make them impart the role of

Niryat Bandhu in more productive way.

To begin with Rs. 1.00 crore has been sanctioned for 2013-14 against the

total estimated outlay of Rs. 23.23 crore for the 12th Five Year Plan. The

Scheme and its outlay have been approved by the Planning Commission/

Standing Finance Committee.

7. Export Promotion Measures – ASIDE, MAI, MDA, major initiatives taken

by EPCs.

The Department implements the following export promotion measures at micro level

to embark upon the short term and long term problems faced by the trade and

industry related to external sector :-

a) Assistance to States for Developing Export Infrastructure and Allied

Activities (ASIDE) Scheme

The ASIDE scheme was launched by the Department of Commerce on 13.3.2002, in

pursuance of the EXIM Policy announcement in March, 2000, for the purpose of

21

creation of export infrastructure by optimizing the utilization of resources to achieve

the objectives of export growth through a coordinated effort of the Central

Government and the States.

Funds allocated under ASIDE scheme are disbursed directly to a Nodal Agency

nominated by the State Government where it is kept in a separate financial account-

head of Nodal Agency.

The Government has spent Rs. 2,050 Crore and Rs 3,048 Crore under ASIDE

scheme during the 10th Five Year Plan (2002-2007) and the 11th Five Year Plan

(2007-2012) respectively. During current financial year (2013-14), a budget of Rs.

800 crore (BE) has been allocated under ASIDE scheme. Details of funds released

under ASIDE from 2008-09 to 2013-14 to various States, the North Eastern Region

and the Central Sector is indicated below:-

(Rs. in Crore)

Year Total

Outlay

Sanction/Release to

States (including

N.E.R.)

Sanction / Release in

the Central Sector

Total sanction

release under

ASIDE scheme

2008-09 570.00 437.84 131.40 569.24

2009-10 570.00 433.93 136.07 570.00

2010-11 662.98 530.00 132.98 662.98

2011-12 707.16 560.32 116.62 676.94

2012-13 655.50 524.73 130.77 655.50

2013-14* 800.00 523.58 104.65 628.23

*As on 28.11.2013

b) Infrastructure

In order to resolve the infrastructural constraints being faced by exporters/ importers,

Department of commerce has been taking up the matter with Ministry of Shipping,

Ministry of Road Transport and Highways, Department of Revenue, Ministry of Civil

Aviation, Ministry of Railways etc.

The following steps have been taken by Department for trade infrastructure

development and trade facilitation:-

Inter Ministerial Committee (IMC):

Single Window Clearance for the proposals for setting up of Inland Container

Depots/Container Freight Stations (ICDs/CFSs) is given through an Inter-Ministerial

Committee (IMC) functioning since 1992 under the Chairmanship of Additional

Secretary (Infrastructure Division), Department of Commerce. So far, 280 Letters of

Intent have been issued out of which 188 are functional and 92 are under

implementation.

In the year 2013-14 (i.e. upto 06.11. 2013), two IMC meetings have been held, in

which 10 proposals for issue of Letter of Intent (LOI) and 8 cases of extension of LOI

have been approved. ‘In-principle’ approval for setting up an ICD was granted to one

company and 2 cases of extension of ‘in-principle approval’ were approved. The

next meeting of IMC this year is scheduled on 13.12.2013.

22

c) Market Access Initiative (MAI) Scheme

The Market Access Initiative (MAI) Scheme is a Plan scheme formulated to act as a

catalyst to promote India’s exports on a sustained basis, based upon ‘focus product’

and ‘focus market’ concept. Under the scheme, assistance is extended to the

Departments of Central Government and organizations of Central/ State

Governments, Export Promotion Councils, Registered Trade Promotion

organizations, Commodity Boards, recognized Apex Trade Bodies and Recognized

Industrial Clusters and individual Exporters (only for product registration and testing

charges for engineering/Pharmaceuticals products abroad).

Year-wise status of MAI allocation/release is as under:- (Rs. in Crore)

Year Outlay Expenditure

2009-10 64.00 64.99

2010-11 110.00 110.00

2011-12 150.00 150.00

2012-13 125.00 125.00

2013-14 179.99 152.00*

*Upto 10th December 2013.

d) Marketing Development Assistance (MDA) Scheme

To facilitate various measures being undertaken to stimulate and diversify the

country’s export trade, Marketing Development Assistance (MDA) Scheme is under

operation. The Scheme supports the following activities:

Assist exporters for their participation in approved EPC/Trade Promotion

Organization led export promotion events abroad.

Assist Export Promotion Council (EPCs) to undertake export promotion activities for

their product(s) and commodities.

Assist approved organization/trade bodies in undertaking exclusive nonrecurring

innovative activities connected with export promotion efforts for their members.

Assist Focus export promotion programmes in specific regions abroad like FOCUS

(LAC), Focus (AFRICA), Focus (CIS) and Focus (ASEAN +2) Programmes.

Year wise status of MDA Releases/Allocation

(Rs. in Crore)

Year Outlay Expenditure

2009-10 53.00 53.00

2010-11 56.00 56.00

2011-12 50.00 50.00

2012-13 39.49 39.49

2013-14 49.99 34.99*

*Upto 10th December 2013.

23

e) Export Credit Guarantee Corporation of India Ltd. (ECGC)

The Export Credit Guarantee Corporation of India Ltd. (ECGC), Mumbai has the

primary objective of supporting the country's exports by extending credit insurance

facilities to Indian exporters and commercial banks.

The Export Credit Insurance Policies issued by the Corporation to Exporters provide

insurance cover against commercial and political risks for shipments made on short-

term / long-term credit. The total value of business covered under short term policies

schemes amounted Rs.1,26,100 crores as against Rs 1,19,621 crores in 2011-12

recording a growth of 5.41%.

The total premium collected from all the schemes of the Corporation during the year

amounted to Rs 1,157.25 crores as compared to Rs 1004.83 crores in 2011-12,

registering a growth of 15.16%.

The Corporation has declared and paid a dividend of Rs 60.00 crore for the year

2012-13 as compared to Rs 54.00 crore paid for the previous year.

f) National Export Insurance Account (NEIA)

The National Exports Insurance Account (NEIA) was set up in 2006. A sum of Rs 916

crores has been funded by the Government of India (GoI) till FY 2012-13. The total

fund of NEIA as on 31.03.2013 is Rs 1,433 crores constituting corpus, premium, fees

and interest accrued.

The objectives of NEIA is to promote export from India, which may not take place but

for the support of a credit risk insurance cover which the ECGC is not in a position to

provide because of its own underwriting capacity constraints. The NEIA is maintained

and operated by NEIA Trust, a Public Trust set up jointly by the Department of

Commerce and ECGC.

g) India Brand Equity Foundation (IBEF)

India Brand Equity Foundation (IBEF) is a Trust established by the Department of

Commerce, Ministry of Commerce and Industry, Government of India. IBEF’s primary

objective is to promote and create international awareness of the Made in India label

in markets overseas and to facilitate the dissemination of knowledge of Indian

products and services. Towards this objective, IBEF works closely with stakeholders

across government and industry.

During 2013-14, IBEF successfully consolidated the global Brand India Pharma

campaign in its second phase, creating resonance in international media with its

preferred positioning as the Pharmacy of the World. Under the aegis of the

Department of Commerce, IBEF has also been engaged in conceptualising a brand

promotion strategy for select engineering segments and specific commodities like tea,

coffee and spices.

h) Federation of Indian Export Organisations (FIEO)

The Federation was set up in 1965 under the aegis of Ministry of Commerce, as an

Apex Body of Export Promotion Organisations and institutions. The main objective of

24

FIEO is to render an integrated package of services to various organizations

connected with export promotion. It functions as a primary servicing agency to

provide integrated assistance to its over 16,000 members comprising professional

exporting firms holding recognition status granted by the Government, consultancy

firms and service providers.

FIEO has been designated as Registering Authority for status holder exporting firms,

other exporters dealing in multi-products. The Federation organizes Seminars, Open

House Meets, Interactive Sessions, Awareness Programmes, Training Programmes

and arranges participation in various exhibitions in India and abroad. Besides, FIEO

provides e-platform to buyer/sellers through huge network of members and non-

members, and also organizes India Shows, Trade Fairs and Exhibitions across the

globe, particularly in untapped countries. FIEO has signed over 75 MOUs with

leading chambers across the globe to provide commercial information and marketing

support to its members.

i) e-TRADE Project

The project eTRADE aims to facilitate Export and Import led clearances in online

environment, integrating international standards and best practices. This is a

community project covering trade regulatory and facilitating agencies like Customs,

Directorate General of Foreign Trade (DGFT), Sea Ports, Airports, ICDs/CFSs,

Exporters, Importers, Agents and Banks. The project facilitates electronic delivery of

services like document filing/clearances; e-Payments integration etc.

The electronic bank realization certificate (eBRC) system has been operationalised

by the DGFT. eBRC standardizes the process of reporting and collection of BRC

data. It also facilitates monitoring and facilitation of exports related foreign exchange

transactions. The eBRC project has won eASIA Award in Trade Facilitation category

given by Asia Pacific Council for Trade Facilitation (AFACT) at the ceremony held at

Ho Chi Minh City, Vietnam.

The Centralized Port Community System (PCS) a single window interface has

already been operationalised at 19 seaports. The agreement has been made with

Gujarat Maritime Board (GMB) and integration of four seaports of Gujarat with PCS

has been started. Other seaports are also pursued for integration.

The Central Server system of Customs has been rolled out at 120 locations. The

message exchange for critical messages is operational with community partners like

Airports, seaports through Ports community system(PCS), Container Corporation of

India (CONCOR) and other major ICDs/CFSs.

The Risk Management System (RMS 3.1) for imports under central server

environment is already operational and RMS for exports has also been launched.

RMS for export is being rolled out at various locations in phased manner. E-

Payments have been integrated by DGFT, Customs, Seaports through PCS and

other community partners.

25

j) Important Initiatives by Export Promotion Councils

(i) Gem & Jewellery Export Promotion Council (GJEPC)

The Gem & Jewellery Export Promotion Council, the apex trade body of the Indian

gems and jewellery industry has completed more than 45 years of its existence. It has

approximately 5300 members. The gems & jewellery manufacturing sector is India’s

leading foreign exchange earning sector. Exports of gems and jewellery from India

during the fiscal year 2012-2013 registered a performance of US$ 43768.39 million.

This sector contributes to about 14.57% of the country's total merchandise exports

estimated at US$ 300400.68 million. It consists of a large number of SME units,

employing skilled and semi skilled labour, almost entirely in the unorganized sector.

(ii) Electronics and Computer Software Export Promotion Council (ESC)

Electronics and Computer Software Export Promotion Council (ESC) is mandated to

promote India’s exports of Electronics, Telecom, Computer Software and IT Enabled

Services. ESC offers a varied set of services to its members for accelerating exports.

Some of the services of ESC are as follows:

Facilitates participation in Global Trade Shows/Expositions and Conferences.

Undertakes Market Research/Studies and publicity Campaigns in overseas

markets.

ESC facilitates business interface between Indian and foreign companies through

Buyers – Seller Meets, and locates new business partners for Indian electronics,

computer software and IT companies.

For facilitating foreign trade, ESC provides on-line facility for Data Search.

During the year 2012-13, export of Electronics Hardware and Software reached to a

level of US$ 83.14 billion as compared to US$ 76.90 billion in 2011-12.

During the period April 2013 to September 2013, Export of Electronics Hardware is

estimated to be US$ 3800 million and Software Export is estimated to have reached

US$ 40.79 billion.

(iii) Council for Leather Exports (CLE)

The Leather Industry holds a prominent place in the Indian economy. This sector is

known for its consistency in high export earnings and it is among the top ten foreign

exchange earners for the country.

With an annual turnover of about US$10 billion, the export of leather and leather

products increased manifold over the past decades and touched US$ 4.99 billion in

2012-13, recording a cumulative annual growth rate of about 8.54% (5 years). The

leather industry is an employment intensive sector, providing job to about 2.5 million

people, mostly from the weaker sections of the society. Women employment is

predominant in leather products sector with about 30% share.

26

The major markets for Indian Leather & Leather Products are Germany with a share

of 12.60%, UK 11.96%, USA 10.51%, Hong Kong 8.82%, Italy 8.77%, France 6.39%,

Spain 5.34%, Netherlands 3.79%, China 2.48%, Belgium 1.86%, UAE.2.53%,

Australia 1.48%. These 12 countries together accounts for nearly 76.53% of India’s

total leather& leather products export.

The Government had identified Leather Sector as a Focus Sector in its Foreign

Trade Policy in view of its immense potential for export growth prospects and

employment generation. With the implementation of various industrial developmental

programmes as well as export promotional activities; and keeping in view the past

performance, and industry’s inherent strengths of skilled manpower, innovative

technology, increasing industry compliance to international environmental standards,

and dedicated support of the allied industries, the Indian leather industry aims to

augment the production, thereby enhance export to US$ 14 bn mark by 2016-17, and

resultantly create additional employment opportunities.

(iv) Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion

Council (CHEMEXCIL)

CHEMEXCIL implements a lot of export promotional activities which included

participation in Exhibitions/Buyer Seller Meets held/organized abroad and in India,

conducting of Educative Seminars like Skill Development Programme, Open House

Meets with DGFT in various regions, Building up of Indian Chemical inventory,

Registration of Substances of firms in European Countries( i.e. REACH), etc.

The export performance of the items covered under the purview of CHEMEXCIL

during the period 2012-13 has been 13855 million as compared to 11270 million of

the corresponding period last year, registering an increase of 22.9%.

The export performance of CHEMEXCIL’s items during the period April 2013 to

September, 2013 has been 6396 million as compared to 5893 million of the

corresponding period last year registering an increase of 8.5%.

Chemical Inventory - CHEMEXCIL has prepared a model chemical inventory of

4600 substances with available data from DGCI&S, substances pre-registered under

REACH, Public Liability Insurance Act, and substances in CHEMEXCIL’s Directory. A

Chemical Inventory Committee has been established comprising of about 40

members representing multinationals, small, medium and large Indian chemical

companies, representatives of industry associations, chemical consultants, exporters,

etc. For highly technical discussions and drafting the legislative text, a core

committee established of about 19 persons, who are actually involved in Product

Stewardship or EHS activities. Further work on the financial/Budget part of the

inventory is being followed up with the Ministry of Commerce & Industry and the

Ministry of Chemicals & Fertilizers, Government of India.

27

(v) The Plastics Export Promotion Council (PLEXCONCIL)

The Plastics Export Promotion Council has been participating in International Trade

fairs and organising Buyer – Seller Meets (BSMs) round the globe and Reverse

Buyer – Seller Meets(RBSMs) in India.

Plastic raw materials constitute about 38% of the total plastic exports with a negative

growth of 3.62% in 2012–13. The growth registered by value – added items was

about 2.7% which is encouraging given the adverse economic scenario in respect of

our major trading partners the EU and USA. Most value – added items exhibited

encouraging growth rates. Growth in exports in the current financial year has been

encouraging and total exports from the plastics sector is expected to exceed US$

7.50 billion in 2013-14.

(vi) Chemicals and Allied Products Export Promotion Council (CAPEXIL)

CAPEXIL is a Multi Product Export Promotion Council and it has sixteen

different group of products subdivided broadly under Mineral and Non-Mineral Sectors.

Export Performance

Year 2009-10 2010-11 2011-12 2012-13* Performance during 2013-14 (Apr-July)

Target Exports 2013-14

Export (US$) Mn)

13,134.8

16,418.4 15,630.7 13,159.4 4837.7 4442.3 14,237.6

Growth 25% -4.80% -15.81% -8.17%

*Provisional

During the current financial year (i.e. 2013-14) from Apr-Jul 2013, CAPEXIL has

reported a decrease in exports as compared to corresponding period of Apr-Jul

2012 by 8.18%.

The dip in exports is largely attributable to the Mineral segment i.e. Bulk

Minerals and Ores, where the fall was a staggering 37.27 per cent to 808.67 million

during Apr-Jul 2013 from 1289.23 million in the corresponding period of the

previous year i.e. Apr-Jul 2012.

The Non-Mineral segment, however, continued to show growth, registering a nearly

2.43 per cent increase to 2590.01 million during Apr-Jul 2013 from 2528.64

million in the comparable period of the previous year.

The Export Performance for Apr-Jul 2013 has been to the tune of 4442.29 million

against 4837.72 million in the same corresponding period i.e. Apr-Jul 2012.

28

(vii) Shellac and Forest Products Export Promotion Council (SHEFEXIL)

Export Performance of Products of SHEFEXIL

(US $ mn )

Performance during 2012-13 Projected

Export

2013-14

Commodity

Name 2009-10

2010-

11

2011-

12

2012-

13

Apr-Jul,

2012

Apr-Jul,

2013

Growth

(%)

1

NTFPs &

their variants 561.2 715.4 953.5 1309.7 431.2 412.8 -4.3 1497.8

2 Guar Gum 239.2 621.3 3354.8 3901.4 2333.1 1015.3 -56.5 4486.6

3

Sesame

seeds 315.3 484.0 554.0 528.2 203.8 197.6 -3.1 607.4

4 Niger seeds 5.1 9.1 24.8 16.5 5.7 5.0 -12.0 18.0

TOTAL 1120.7 1829.7 4887.1 5755.8 2973.9 1630.7 -45.2 6609.9

(viii) Sports Goods Export Promotion Council (SGEPC)

Sports Goods Export Promotion Council (SGEPC) is working for the promotion of

India’s exports of sports goods and toys. The Council was founded in 1958 and it

represents all the leading manufacturers and exporters of sports goods and toys in

India.

Exports of sports goods and toys for the year 2012-13 is US$ 206.57 million. The top

items of exports during 2012-13 were inflatable Balls, Cricket Bats, General Exercise

Equipments, Sports Nets and Protective Equipment for Cricket. The contribution of

top 5 items in the total export of sports goods from this sector was 54%.The top three

countries of export are UK, Australia and USA.

Sports Goods & Toys continue to be focus products under Foreign Trade Policy. The

MDA and MAI schemes given by the government continue to encourage exporters to

reach unchartered territories and ceiling for amount reimbursement to exporters has

also been enhanced. Moreover, both the Sports Goods & Toys sector are eligible for

duty credit scrip of 7% under Focus Product scheme. Few essential items for

manufacturing of Sports goods are also available under duty free import scheme,

which allows duty free import of these inputs up to 3% of FOB value of exports.

During 2012-13, five items were added in the list and now there are 21 items in the

list.

(ix) Engineering Export Promotion Council (EEPC India)

The EEPC INDIA is a nodal organisation for exports promotion of engineering goods,

projects and services from India. Over the last five decades, it has grown to be the

largest Export Promotion Council, with membership strength of nearly 13,000 Indian

firms, covering the entire spectrum of engineering industry consisting of large

Corporate Houses, Small and Medium Enterprises and Trading & Manufacturing

Companies.

29

During the last five years, engineering exports achieved a Compound Annual Growth

Rate (CAGR) of 12%. India’s exports of engineering goods grew at 25.2% (CAGR)

during 2000-01 to 2007-08. In 2008-09, the growth moderated to 18.7% and in 2009-

10 it declined by 19.6% because of global recession, with its share in total exports

falling to 18.2%. Engineering exports touched US $ 49.8 billion in 2010-11 recording

growth of over 50% over 2009-10 and further to 58.22 in 2011-12 with a growth rate

of 16.88% from 2010-11. Over the years, the scenario has completely changed and

as of date, about 34% of the total engineering exports are made to developed

countries.

(x) Services Export Promotion Council (SEPC),

The Services Export Promotion Council (SEPC), is an apex trade body set up by this

Department to facilitate service exporters of India. It has been serving as a platform of

interaction between service exporters and policy makers and has been instrumental

in promoting the efforts of Indian services exports. The Council acquired a strong

membership base of more than 1900 members from the 14 service sectors which are

under its purview.

The services sector of India contributes more than 60% to the country’s gross

domestic product (GDP). It has emerged as a prominent sector in terms of its

contribution to national and states' incomes, trade flows, FDI inflows and

employment. Services exports expanded at 2.35% to US $ 145.67 billion in 2012-13

compared to a contraction of 1.03% in merchandise exports to US $ 306.58 billion. In

2013-14 till September, the export of Commercial Services from India has been of a

value of US $ 75.53 Billion which is almost 11% higher as compared to the

corresponding period during the last financial year.

During the year 2013-14, SEPC constituted Core Groups for Healthcare Services and

for Hotel and Tourism related Services to drive sector specific agenda in exploring the

key potential markets.

(xi) Pharmaceutical Export Promotion Council (PHARMEXCIL

Indian Pharma, a highly knowledge based industry, is growing steadily and playing a

major role in the Indian economy. India’s Pharmaceuticals manufacturing picked up

momentum in 1970’s from Various Drug Policies of the government favouring the

domestic manufacturing sector where indigenous technology was emphasized.

India plays a major role in supply of API’s, and drug intermediates, at global level.

India exports bulk drugs to approximately over 190 countries / colonies, and to 62 of

them, the export of Bulk Drugs / Intermediates is over US $ 10 Million per annum (for

each country).

Brand Pharma Mission was launched by India in March 2012. The momentum is

being carried forward in 2013-14 also and CPhI Frankfurt was selected as the

important event of the year for branding campaign.

Trace and track features for the time being based on GS1 global standards was

decided to be mandated in 2011 as these are widely used all across the globe in

tracing and tracking various products. Bar code or digital mass serialisation/unique

30

numbers with GS1 global standards was mandated on all drugs consignments

exported from India.

(xii) Telecom Equipment & Services Export Promotion Council

Telecom Equipment & Services Export Promotion Council (TEPC) as a Council plays

a critical role in furtherance of Telecom Exports from the Country and assists its

member companies in easy facilitation of their respective exports. The Council caters

to the complete Telecom Ecosystem including Telecom Hardware Manufacturers,

Telecom Service Providers, Telecom Software Vendors and Consultants. TEPC’s

vision is to make India a globally competitive, telecom manufacturing and services

hub for driving telecom exports. TEPC works closely with the government as well as

the industry to create a vibrant eco-system of telecom manufacturing in India.

Telecom Equipment export has been consistently rising since 2009-10 and have

increased from Rs 135000 million in 2009-10 to Rs. 210000 million in 2012-13 and

Rs. 102970 million till September, 2013.

8. Special Economic Zones (SEZs)

India was one of the first in Asia to recognize the effectiveness of the Export

Processing Zone (EPZ) model in promoting exports. A revised Special Economic

Zones (SEZs) Policy was announced in April 2000. This policy intended to make

SEZs an engine for economic growth supported by quality infrastructure

complemented by an attractive fiscal package, both at the Centre and the State level,

with a user-friendly regulations framework.

In order to impart stability to SEZ regime and to achieve generation of greater

economic activity and employment through the establishment of SEZs, a

comprehensive Special Economic Zones Act, 2005, was introduced.

The main objectives of the SEZ Act are:-

a) generation of additional economic activity

b) promotion of exports of goods and services

c) promotion of investment from domestic and foreign sources

d) creation of employment opportunities

e) development of infrastructure facilities

Approvals have been granted for setting up 574 SEZs out of which 391 have been

notified. Out of the total employment provided to 11,56,677 persons in SEZs as a

whole 10,21,973 persons is incremental employment generated after February, 2006

when the SEZ Act has come into force. This is apart from millions of man days of

employment generated by the developers for infrastructure activities. Physical exports

from the SEZs has increased from Rs.3,64,478 crore in 2011-12 to Rs.4,76,159 crore

in 2012-13, registering a growth of 31%. There has been overall growth of export of

1,985% over past eight years (2005-06 to 2012-13). The total physical exports from

SEZs as on 30th September, 2013 i.e. in the second quarter of the current financial

year 2013-14, has been to the tune of Rs. 2,46,646 crore approximately, registering

a growth of 3% over the exports of corresponding period of the previous financial

year. The total investment in SEZs till 30th September, 2013 is Rs.2,81,134 crore

31

approximately, including Rs.2,59,329 crore in the newly notified SEZs set up after

SEZ Act, 2005. 100% FDI is allowed in SEZs through automatic route.

Exports from the operational SEZs are as under:

(in Rs. crore)

Years Exports Growth over previous year

2005-2006 22,840 -

2006-2007 34,615 52%

2007-2008 66,638 93%

2008-2009 99,689 50%

2009-2010 2,20,711 121%

2010-2011 3,15,868 43.11%

2011-2012 3,64,478 15.39%

2012-2013 4,76,159 31%

2013-2014 2,46,646 (as on 30.9.2013) 3%

A total of 175 SEZs are exporting at present. Out of this 97 are IT/ITES, 20 Multi

product and 58 other sector specific SEZs. There are a total of 3,769 units setup in

the SEZs.

Impact of the scheme: The SEZ scheme has generated tremendous response

amongst the investors, both in India and abroad. In addition to foreign exchange

earning, infrastructure development, SEZs have also created a significant local area

impact in terms of employment, social life, human development facilities etc.

The Act provides for setting up of Single Window Clearance Mechanism for speedy

implementation of SEZ Projects. State Governments are also encouraged to enact

their SEZ Act to provide friendly environment to investors. SEZ rules and procedures

are reviewed from time to time to facilitate speedy implementation of SEZ projects.

Comprehensive guidelines have been issued regarding energy conservation in SEZs.

SEZ Policy and Operational Framework Reform Initiative: A comprehensive

analytical assessment of the performance of the sector has been carried out which

has highlighted the need that certain aspects of the SEZ Policy and Operational

framework require a re-look.

In this regard a draft discussion paper to facilitate stakeholder consultation on

‘Potential reform of the SEZ Policy and Operating Framework’ had been prepared

and was hosted on the department’s website. After wide consultations with a detailed

proposal – ‘SEZ Policy and Operational Framework Reform Initiative’ has been

notified on 12th August, 2013. Highlights of measures are as under:-

Minimum Land Area requirement has been reduced by half, for Multi-product SEZ

from 1000 hectares to 500 hectares and for Sector-specific SEZ from existing 100

hectares to 50 hectares.

To provide greater flexibility in utilizing land tracts falling between 50-450 hectares,

it has been decided to introduce a Graded Scale for Minimum Land Criteria which

would permit a SEZ an additional sector for each contiguous 50 hectare parcel of

32

land. This will also bring about more efficient use of the infrastructure facilities created

in such an SEZ.

Further flexibility to set up additional units in a sector specific SEZ is being provided

by introducing Sectoral broad-banding to encompass similar / related areas under the

same sector.

The existing policy allows for parcels of land with pre-existing structures not in

commercial use to be considered as vacant land for the purpose of notifying an SEZ,

it has now been decided that additions to such pre-existing structures and activities

being undertaken after notification would be eligible for duty benefits similar to any

other activity in the SEZ.

In order to encourage agro-based industries in SEZ, a new sector specific SEZ

named ‘agro-based food processing’ sector with a minimum land area requirement of

10Ha. has been introduced.

IT Exports constitute a very significant part of India’s exports and IT SEZs have a

major contribution in it. Exports from IT SEZs during financial year 2012-13 have

exceeded Rs. 1.40 lakh crore registering a growth of over 70% over the previous

year’s exports. We have specifically addressed issues to boost growth of this very

important sector and also to give a fillip to employment and growth in Tier-II and Tier-

III cities.

The present requirement of 10 hectares of minimum land area has been done away

with. Now there would be no minimum land requirement for setting up an IT/ITES

SEZ. Only the minimum built up area criteria would be required to be met by the SEZ

developers.

The minimum built up area requirement has also been considerably relaxed with the

requirement of one lakh square meters to be applicable for the 7 major cities viz:

Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangalore, Pune and Kolkata. For the

other Category B cities 50,000 square meters and for remaining cities only 25,000

square meters built up area norm will be applicable.

The present SEZ Framework does not include an Exit Policy for the units and

feedback was that this was perceived as a great disadvantage. It has now been

decided to permit transfer of ownership of SEZ units, including sale.

9. COMMODITY BOARDS AND OTHER DEVELOPMENT AUTHORITIES

AND TRADE FACILITATION INSTITUTIONS

(i) TEA

India is the largest producer and consumer of black tea in the world. Tea is grown in

15 States in India. On average 20% of the total production is exported and balance

80% is consumed within the country.

Production

During 2013-14 (Apr-Sep), the estimated production stands at 778.51 M.Kgs., as

against 733.64 M.Kgs of corresponding period, thereby an increase of 44.87 M.Kgs

(6.12%).

Exports: During 2012-13 the exports increased by 2 M.Kgs. Because of higher unit

price, the total value of exports during 2012-13 was also higher than the previous

33

year by Rs. 701 crore. Total foreign exchange earned during 2012-13 was US$ 736

Mn as against US$ 690 Mn of corresponding period. The average unit price of

exports during 2012-13 was also higher by Rs. 31 compared to the corresponding

period.

During 2012-13, improvement in the exports took place with respect to countries such

as Russia, Germany, UAE, Iran and Egypt (ARE). Improved market share of exports

is seen in UAE (19.17%), Iran (69.50%), Egypt (47.03%) over the corresponding

period.

Scheduled Caste Sub-Plan: For the current financial year a sum of Rs.10 Cr has

been earmarked for extending assistance to SC small tea growers. The expenditure

incurred upto to December 2013 add upto Rs 1.26 crore.

Intellectual Property Rights (IPR) activities: Tea Board has continued its

objectives to protect and preserve its various tea names and logos as India’s

treasured geographical indications and icons of India’s cultural and collective

heritage. The Tea Board continued to challenge, by way of

opposition/invalidation/cancellation actions, legal notices, court actions and domain

name cancellations instances of attempted registrations and misuse of these tea

names and logos both at the domestic and international level. A noteworthy highlight

of the year has been to make the largest importer of India tea – M/s Orimi Trade in

the world as the valid licensee of our Assam marks in Russia.

(ii) COFFEE

Production: The post blossom crop estimates for 2013-14 has been placed at

3,47,000 MT consisting of 1,11,000 MT of Arabica and 2,36,000 MT of Robusta as

compared to the 2012-13 final crop estimates of 3,18,200 MT comprising of 98,600

MT of Arabica and 2,19,600 MT of Robusta.

Export of Coffee: The total quantity of coffee exported from India during 2012-13

including re-exported coffee after value addition was 299030 Metric Tonnes. The top

five export destinations for Indian Coffee are Italy, Germany, Russian Federation,

Belgium and Slovenia, which accounted for about 53% of our total coffee exports.

The value realization out of coffee exports during 2012-13 was Rs. 4548.29 crores.

The provisional coffee exports for 2013-14 covering the period April – October 2013

are 179151 Metric Tone valued at Rs.2712.82 crores, as against the export target of

2,56,000 MTs for 2013-14. As per the trend, we may reach the export target by the

end of the year.

Debt Relief Package – 2010: The Government sanctioned the Coffee Debt Relief

Package – 2010 for the debt ridden small coffee growers with a total implication of

Rs. 241.00 Crores. As against the targeted 74,929 small growers, 1,20,025 small

growers were benefited by the scheme with the Govt. share of relief of Rs.241.00

Crores. In the 2nd phase, Government sanctioned and released additional funds of

Rs.58.00 Crores. Out of which Rs.52.45 crores of Govt. share of liability has been

reimbursed towards settlement of pending/supplementary claims benefiting 15,258

small coffees growers till the end of March 2013, Thus the total amount reimbursed

so far is Rs.293.45 crores benefiting 1,35,283 small growers

34

(iii) RUBBER

India occupies first position in terms of average yield per hectare of natural rubber

(NR) among the major producing countries. This achievement is despite the

constraints caused by sub-optimal agro-climatic conditions prevailing in the country’s

rubber growing regions as against optimum conditions prevailing in other major

producing countries.

Export: Volume of India’s export of NR improved to 30,594 tonne during 2012-13

from the previous year’s 27,145 tonne. Higher international prices in May 2012 and

from the beginning of December 2012 to mid-March 2013 made exports attractive. In

terms of value, NR exports from India fell 8.5% to US$ 86.12 million from US$ 94.07

million earned in the previous year.

The country exported 3,975 tonne of NR during April to October 2013 as against

8,611 tonne exported during the same period in the previous year.

Planning: Annual outlay under Plan in 2013-14 was Rs. 170.01 crore and Non-Plan

budget amounted to Rs 50.00 crore. Plan Review Meetings were held to monitor the

progress in the implementation of Plan Schemes. Plan and Non-Plan expenditure

during April – October 2013 was Rs. 97.17 crore and Rs.32.00 crore respectively.

(iv) SPICES

The Board is headed by a Chairman with its head office at Kochi. Spices Board is

responsible for the development of cardamom industry and export promotion. The

primary function of the Board includes production development of small and large

cardamom, promotion, development and regulation of export of spices.

Export:

Indian spices exports have been able to record strident gains in both volume and

value in rupee terms during 2012-13. It is first time in the history of spices export from

the country, the growth in volume registered all time high of 22%. The total export of

spices during the period has also crossed Rs.10,000.00 crore marks for the first time.

The export had gone up from 470,520 MT valued at Rs.5300.26 crore (US$ 1168.40

million) in 2008-09 to 699,170 MT valued Rs.11171.16 crore (US$ 2040.18 million) in

2012-13. During 2013-14 (April – September), the estimated export of spices is

378,755 MT valued at Rs.6117.83 crore (US$ 1031.11 million) against 314835 MT

valued Rs.4285.74 crore (US$ 787.49 million).

Production: The estimated production of cardamom (small) and cardamom (large) in

India during 2012-13 is 14000 MT and 4145 MT respectively.

Plan Schemes of the Board: The XII Plan scheme / programmes are visualised

with the objective of enhancing spices export from the country by making in-roads

into building processing capacities and capabilities, expansion of markets, increasing

production and productivity of cardamom (small & large), modernising the spice

cultivation and post-harvest operations thereby attracting youths to the spices

cultivation, promoting organic cultivation, addressing food safety concerns of

importing countries, market and productivity driven research, skill development,

transfer of technology etc.

35

(v) THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY

(MPEDA)

The Marine Products Export Development Authority, is mandated for the

development of export of marine products from India.

Export: Exports of Marine Products during the first eight months of 2013-14 (April –

November) was of the value of US $ 3332.46 million as against US $ 2372.36 million

thereby recording of growth of 40.47%. in rupee terms, export were of the order of

Rs. 20220.25 crore (April-November, 2013) as against Rs. 12910.98 crore (April-

November, 2012), recording a growth of 56.61%. However, there has been a decline

in quantity of Marine Products by 0.24% during the above period.

Thrust Areas: To facilitate extending financial assistance for conversion /

construction of Tuna Long Liners and imparting training to crew to develop Tuna

industry, Implementation of Catch Certification scheme for preventing / discouraging

Illegal, Unreported and Unregulated (IUU) fishing. Production through Organic

farming in potential areas for value addition of aquaculture products. Assisting the

setting up of state-of-art processing facilities for Value Added Marine Products meant

for export.

MPEDA is operating a Sea-freight assistance scheme for the promotion of export of

value added marine products by the registered seafood manufacturer exporters. The

scheme also offers assistance for importing of raw materials for further processing

and re-exporting as value added seafood. MPEDA has introduced a voluntary

“LOGO” of quality for promotion of value added consumer products in major markets.

Preliminary inspections are being undertaken to grant LOGO to more units.

Establishing presence of Indian Seafoods in major International markets by co-

branding Indian products with seafood giants abroad.

(vi) TOBACCO BOARD

Tobacco Board was established on 01/01/1976 under the provisions of the Tobacco

Board Act, 1975. The important functions of the Tobacco Board are regulating

the production and curing the Virginia tobacco, propagating information useful to the

growers, dealers and exporters of Virginia tobacco and manufacturers of Virginia

tobacco products, establishment of auction platforms for the sale of Virginia tobacco

and function as auctioneer, maintenance and improvement of existing markets and

development of new markets outside India.

Production- FCV Tobacco: FCV tobacco is cultivated in more than 2.00 lakh

hectares every year. In 2013-14, the area under FCV tobacco is 0.98 lakh hectares in

Karnataka and about 0.95 lakh hectares is planted under tobacco as on 22.11.2013

in the states of Andhra Pradesh and Odisha. The plantations in Andhra Pradesh are

still in progress. 41385 growers in Karnataka and 45230 in Andhra Pradesh are

engaged in FCV tobacco cultivation.

36

FCV tobacco production in India is declining for the last three years from a peak of

323.25 M.kgs., in 2009-10. FCV production in 2013-14 is estimated at 280 M.kgs., up

by about 3% over last year’s production of 270.50 M.kgs. The production of FCV

tobacco in Karnataka is estimated at 110 M.kgs., and that of Andhra Pradesh at 170

M.kgs.

Farm Mechanisation: In order to improvise the farm operations and ridge formations

in the tobacco fields, the Board had organized supply of 105 Bullock Drawn Ridgers

and 447 Tyne Cultivators to growers in Karnataka at subsidized cost.

PVC pipes: The Board with a view to help the growers in the drought prone area

of Andhra Pradesh to go for a life saving irrigation using available waters in the wells /

ponds is supplying PVC pipes at subsidized cost and the same is under progress to

supply 22,000 pipes.

Power Sprayers: The Board with a view to help grower to take up timely plant

protection measures had indented for supply of 375 Power sprayers in Andhra

Pradesh at subsidized cost and the same is under progress. This apart the Board is

contemplating to supply 25 units of Back pack sprayers through NIPHM on

experimental basis.

Export Performance (In - 2012-13): The exports of tobacco and tobacco products

during 2012-13 were 263575 tons valued at Rs.4979.05 crore (914.43 M.US$)

against 240395 tons valued at Rs.4100.30 crore (854.94 M.US$) exported in 2011-

12.

Progress of exports in 2013-14 : During April – October 2013, exports of

unmanufactured Tobacco and Tobacco Products were 156178 tons valued at

Rs.3491.36 crore (586.98 M.US$) against 152938 tons valued at Rs.2759.86 crore

(506.40 M.US$) exported during the corresponding period of last year.

During April – October 13, the unmanufactured tobacco exports were in the order of

139308 tons valued at Rs.2860.04 crore and exports of Tobacco products are in the

order of 16870 tons valued at Rs.631.32 crore. The unmanufactured tobacco exports

had increased marginally by 2% in quantity terms but increased by 27%, and 16% in

rupee and dollar terms respectively compared to the exports made during the same

period of last year. While the exports of unmanufactured tobacco during April –

October 2013 have shown a growth by 4% in quantity terms and an increase by 33%

and 22% in rupee and dollar terms respectively compared to same period last year.

Exports of FCV tobacco during April-October 2013 have shown a growth by 3% in

quantity terms and increase by 34% and 23% in rupee and dollar terms. As far as

exports of tobacco products are concerned, the same have decreased by 12% in

quantity terms but an increase by 4% in rupee terms as compared to the exports

made during the corresponding period of last year.

37

Export Promotion Activities: As a part of export promotion activities, Executive

Director, Tobacco Board had participated in Global Tobacco Networking Forum,

Cape Town, South Africa during 4-8 November 2013.

With a view to promote the exports of tobacco and tobacco products, the Board had

participated in international exhibitions at the following places to show case the Indian

unmanufactured tobacco and tobacco products.

1) The India Show, Dares Salaam, Tanzania during 25 -27 September 2013

2) World Tobacco Europe 2013, Hamburg, Germany during 12-14 November

2013

(vii) The Agricultural and Processed Food Products Export Development Authority

(APEDA)

The Agricultural and Processed Food Products Export Development Authority (APEDA) was

established under the Agricultural and Processed Food Products Export Development

Authority Act passed by the Parliament in December, 1985. APEDA has been entrusted with

the responsibility of export promotion and development of 14 agricultural and processed food

product groups listed in the Schedule to the APEDA Act. In addition to this, APEDA has been

entrusted with the responsibility to monitor the import of sugar as well.

APEDA has been actively engaged in the development of markets besides upgradation of

infrastructure and quality to promote the export of agro products. In its endeavour to promote

agro exports, APEDA provides financial assistance to the registered exporters under its

Schemes for Market Development, Infrastructure Development, Quality Development and

Transport Assistance.

Export Performance: The export of APEDA products for the period April-October’13 is as

below:

Rs. in Lakhs

Product Group Export 2012-13

(April-Oct.)

Export 2013-14

(April-Oct.)

Growth in %

Floriculture & Seeds 47263.61 51178.07 8.28

Fruits & Vegetables 334494.65 440580.91 31.72

Processed Fruits & Vegetable 234189.96 330855.09 41.28

Livestock Products 999162.61 1654005.80 65.54

Other Processed Foods 2222061.63 1477282.16 -33.52

Non-Basmati Rice 769255.60 1037518.82 34.87

Basmati Rice 1005869.46 1554167.38 54.51

Wheat 468106.73 592075.32 26.48

Other Cereals 355842.85 422330.05 18.68

Total 6436247.11 7559993.60 17.46

Source : DGCIS – Principal commodities data April-October, 2013 (Provisional data)

The provisional export data for the period April-October, 2013 shows an overall positive

growth of 17.46% over the same period of previous year.

38

The Government has approved “Agriculture Export Promotion Plan scheme“ for

implementation during the XII plan period at projected outlay of Rs. 1100 crores.

- Scheme for Market Development

- Scheme for Infrastructure Development

- Scheme for Quality Development

- Transport Assistance Scheme

TRADE FACILITATION INSTITUTIONS

(i) Indian Institute of Foreign Trade (IIFT)

The Indian Institute of Foreign Trade (IIFT) was established in 1963 by the

Government of India with the objective to strengthen the country’s external trade

sector through development of human resources and by generating, analyzing and

disseminating data, conducting research and providing consultancy services. Since

then, the Institute has been the pioneer in imparting training in foreign trade

management in the country besides undertaking research and consultancy in various

areas of International Business. It is because of its all round achievements that the

Institute was awarded the status of Deemed University in May 2002 by University

Grants Commission (UGC) and accredited in May 2005 as “A” grade institution by

National Assessment and Accreditation Council (NAAC).

The Institute has emerged as a major Centre of International Business by aligning its

teaching, research and training capabilities with its core vision over the years and by

constantly striving to create academic excellence through its five academic divisions,

namely, Graduate Studies Division (GSD), Research Division (RD), Management

Development Programmes (MDPs) Division, International Collaboration and Capacity

Development (ICCD) Division and International Project Division (IPD). Each Division

caters to competency development in a specific area and contributes to the overall

growth of the Institute.

(ii) Centre For WTO Studies

The activities undertaken by the Centre for WTO Studies seek to achieve three broad

objectives: (i) to assist India’s trade negotiators and policy makers in participating

effectively in the WTO and at the related multilateral trade negotiations; (ii) to

enhance the understanding of key trade issues among stakeholders through outreach

and dissemination activities; and (iii) to develop capacities within India and in other

developing countries for analysing WTO and other trade-related issues through

training programmes.

The Centre organised several stakeholder consultation meetings, which have

provided an opportunity for two-way dialogue between trade negotiators and trade

policy officers on the one hand and stakeholders on the other. The Centre maintains

a comprehensive database of STS and TBT notifications made by WTO members.

The database was updated during 2013-14.

39

(iii) Quality Control and Pre-Shipment Inspection Agency

The major function of the Organisation are inspection & certification of exports for

areas related to health & safety and requirements of importing. In line with the

economic reforms initiated by the Government in early 1990’s, the operation

compulsory quality control & inspection of notified commodities under the Act &

meant for export has been simplified for various categories of exporters. However, in

the post WTO scenario with importing member countries imposing further stringent

requirements of the health & safety, compulsory certification was mandated food

sector.

Exports certification is carried out through its field organisation (EIA), and is based on

a system approach to include GHP/GMP/HACCP and also tailored to meet the

requirements of the importing countries.

Export Inspection Council of India (EIC)

The Export Inspection Agencies (EIAs) located at Mumbai, Kolkata, Kochi, Delhi and

Chennai with a network of 29 sub offices backed by the state of art, NABL accredited

laboratories.

EIC has diversified, expanded and increased its spectrum of activities – all aimed to

encourage, develop, sustain and boost export of food commodities.

Pre-shipment Inspection and certification based on consignment wise inspection

(CWI) to ensure quality of Export commodities.

Approval of processing units based on Food safety Management system to ensure

Quality and safety of food items meant for export as per importing countries

Issuance of Certificate of Origin (CoO) under various Preferential Tariff Schemes/

Bilateral arrangements such as GSP, GSTP, APTA, SAFTA, ISFTA, CEPA, CEKA,

IMPTA, PTA with Chile, India Afghanistan FTA (IAFTA), SAPTA, CECA, and Thailand

FTA etc.

Collaboration with FSSAI for Laboratory testing services and testing samples of

imported food items and inspection of domestic establishments.

Training and capacity building of industry and other stake holders in areas of Quality

and Food safety Management system.

Monitoring TBT Notification by WTO members’ countries and their impact on India’s

Trade.

Export Certification: EIC operates mandatory certification through its field

organization, Export Inspection Agencies(EIAs), for notified food The EIAs also

continue to certify other notified products such as basmati rice, black pepper etc and

non-notified products on voluntary basis. EIC/ EIAs are authorized to issue health

certificate, Non GMO, Authenticity certification etc.

E certification has also been made live from March 2013 for export of fishery products

to China & Russian Federation and for Animal Casing for EU only.

Certificates of Origin: EIC/EIAs continued to issue Certificates of Origin under

various preferential tariff schemes. As on date, EIC / EIAs are issuing preferential

certificates of origin under the following 15 schemes.

40

iv) Footwear Design & Development Institute (FDDI)

Footwear Design & Development Institute is a premier leather products, footwear,

fashion, design and retail institution in the world & has been playing a pioneering role

in enhancing the competency and performance of the industries globally.

The Institute, having Pan-India presence with eight well designed campuses at Noida,

Fursatganj, Chennai, Kolkata, Rohtak, Chhindwara, Jodhpur and Guna is providing

trained human resource to the industry.

FDDI provided training to workers and artisans involved in the manufacturing of

footwear in SME's and village clusters under the `Support to Artisan' Programme

where it trained more than 22000 artisans from Rae Bareli and neighbouring districts

in the State of Uttar Pradesh, Jaipur, Alwar, Jodhpur and neighbouring districts in the

State of Rajasthan and Patiala and neighbouring districts in the State of Punjab,

Mumbai and Kolkata in the State of Maharashtra & West Bengal respectively under

the 12th Five Year Plan.

The scope of the training programme included up-gradation of the present skill and

induction of latest technology to the artisans to bring 360 degree intervention in the

area of technology improvement, effective use of material, tools & techniques for

different operation of Footwear Making, Trust Building and SHG Formation,

Establishment of Centralized Resource Centers (CRC's), Process Product & Design

Development and Development of Market Linkages.

Implementation of Placement Linked Skill Development Programme (PLSDP):

In order to overcome the acute shortage of trained manpower in the leather &

footwear industry and to provide gainful employment to the unemployed youth,

Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce &

Industry, Government of India launched Placement Linked Skill Development

Programme (PLSDP). FDDI was also nominated as one of the main implementing

agency for this job.

FDDI established six full-fledged Operator’s Training Centres at Agra, Kanpur, Rae

Bareli, Bahadurgarh, Kolkata and Ranipet having state-of-the art- machinery in

Cutting and Closing operations. At these centres, unemployed youths belonging from

the economically weaker section of the society are being selected, trained & provided

assistance to get employment in the footwear industry at the shop floor level

operations.

The PLSDP is being conducted on a continuous basis & FDDI has trained 74087

fresh & unemployed youths. Out of the total trainees, 47.05% belong to the SC

community, 0.98% belong to ST community, 28.46% to the OBC community & rest

23.49% to General Category. Out of the total trainees 15.87% (11760) trainees are

females.

41

10. Bilateral & Multilateral Negotiations

I. Details of India’s FTAs

(i) FTAs already signed and operational

S.

No.

Name of the Agreement

and the participating

countries

Date of Signing Date of Implementation

1. India - Bhutan Agreement

on Trade, Commerce and

Transit

17.01.1972

(revised on 28.07.2006)

(Agreement is renewed, from

time to time, by mutual

consent to such changes and

modifications as may be

agreed upon between the two

countries)

29.07.2006

2. Revised Indo-Nepal Treaty

of Trade

06.12.1991

(Revised on 27.10.2009)

(The Treaty is amended/

modified by mutual consent

of the contracting parties and

the present Treaty is valid till

26.10.2016)

27.10.2009

3. India - Sri Lanka FTA 28.12.1998 01.03.2000

4. Agreement on South

Asian Free Trade Area

(SAFTA) (India, Pakistan,

Nepal, Sri Lanka,

Bangladesh, Bhutan and

the Maldives)

Afghanistan became

Eighth Member of SAARC

from April, 2007 and the

provisions of Trade

Liberalization Programme

(TLP) are applicable to

Afghanistan w.e.f.

07.08.2011).

04.01. 2004 01.01.2006

5. India - Thailand FTA -

Early Harvest Scheme

(EHS)

01.09.2004 01.09.2004

6. India - Singapore

Comprehensive Economic

Cooperation Agreement

(CECA)

29.06.2005 01.08.2005

7. India - South Korea

Comprehensive Economic

Partnership Agreement

(CEPA)

07.08. 2009 01.01.2010

42

8. India – ASEAN Trade in

Goods Agreement (Brunei,

Cambodia, Indonesia,

Laos, Malaysia, Myanmar,

Philippines, Singapore,

Thailand and Vietnam)

13.08.2009 1st January 2010 in respect

of India and Malaysia,

Singapore, Thailand.

1st June 2010 in respect of

India and Vietnam.

1st September 2010 in

respect of India and

Myanmar.

1st October 2010 in respect of

India and Indonesia.

1st November in respect of

India and Brunei.

24 January 2011 in respect of

India and Laos.

1st June 2011 in respect of

India and the Philippines.

1st August, 2011 in respect of

India and Cambodia.

9. India - Japan

Comprehensive Economic

Partnership Agreement

16.02.2011 01.08.2011

10. India - Malaysia

Comprehensive Economic

Cooperation Agreement

18.02.2011 01.07. 2011

(ii) Preferential Trade Agreement (PTAs) already signed and operational

S.

No.

Name of the Agreement and the

participating countries

Date of Signing Date of

Implementation

1 Asia Pacific Trade Agreement

(APTA) (Bangladesh, China, India,

Lao PDR, Republic of Korea, and

Sri Lanka)

July, 1975

(revised Agreement

signed on 02.11.2005

01.11.1976

2 Global System of Trade Preferences

(G S T P)

(Algeria, Argentina, Bangladesh,

Benin, Bolivia, Brazil, Cameroon,

Chile, Colombia, Cuba, Democratic

People's Republic of Korea, Ecuador,

Egypt, Ghana, Guinea, Guyana, India,

Indonesia, Iran, Iraq, Libya, Malaysia,

Mexico, Morocco, Mozambique,

Myanmar, Nicaragua, Nigeria,

Pakistan, Peru, Philippines, Republic

of Korea, Romania, Singapore, Sri

Lanka, Sudan, Thailand, Trinidad and

Tobago, Tunisia, Tanzania,

April, 1988 April,1989

43

Venezuela, Viet Nam, Yugoslavia,

Zimbabwe)

3 India - Afghanistan 06.03.2003 May, 2003

(The Agreement

would remain in

force till either party

gives to the other, a

notice for its

termination).

4 India - MERCOSUR 25.01.2004 01.06.2009

5 India - Chile 08.03. 2006 August, 2007

(iii) FTAs under negotiation:

S. No. Name of the Agreement Status

1. India - EU BTIA

(Austria, Belgium,

Bulgaria, Cyprus, Czech

Republic, Denmark,

Estonia Finland, France,

Germany, Greece,

Hungary, Ireland, Italy,

Latvia, Lithuania,

Luxembourg, Malta,

Netherlands, Poland,

Portugal, Romania,

Slovakia, Slovenia, Spain,

Sweden, United Kingdom)

Negotiations commenced in June 2007 in the areas of

Goods, Services, Investment, Sanitary and Phyto-

sanitary Measures, Technical Barriers to Trade, Trade

Facilitation and Customs Cooperation, Competition, IPR

& GIs. Etc.

Fifteen rounds of negotiations and a number of inter-

sessional and Chief Negotiator level meetings have

been held till date. A Ministerial review meeting

between Hon’ble Commerce & Industry Minister and

EU’s Trade Commissioner was held on 15th April, 2013

at Brussels.

2. India - ASEAN CECA -

Services and Investment

Agreement

(Brunei, Cambodia,

Indonesia, Laos, Malaysia,

Myanmar, Philippines,

Singapore, Thailand and

Vietnam)

Conclusion of negotiations on Agreement on Services

and Investment was announced at the ASEAN-India

Commemorative Summit on 20 December, 2012.

3. India – Sri Lanka CEPA No discussion is currently taking place on India-Sri Lanka

CEPA.

4. India - Thailand CECA Early Harvest Scheme on 82 items implemented. So

far 28 rounds of India-Thailand Trade Negotiation

committee (ITTNC) meetings have been held. The last

round was held on 6-7 November, 2013 in New Delhi.

5. India - Mauritius CECPA Ten rounds of negotiations on India-Mauritius CECPA have

been held between the two sides so far. The last round of

negotiation was held between India and Mauritius on 23–24

44

October, 2006. However, CECPA negotiations have been

formally put on hold as decided by the Government of India.

6. India EFTA BTIA (Iceland,

Norway, Liechtenstein and

Switzerland)

A meeting of Chief Negotiators, of both sides was held

in Geneva on 18th September, 2013 under the India-

EFTA BTIA Negotiations. Twelve rounds of negotiations

have been held so far. The 12th Round was held from

14-25th October, 2013 with both sides having covered

substantial ground. The 13th and final round is

scheduled for 25-29th November, 2013. Ahead of the

final round meetings on various tracks are being held

almost on daily basis.

7. India - New Zealand

FTA/CECA

The inaugural round of FTA/CECA negotiations was held in

April, 2010 in New Delhi. So far nine rounds of negotiations

have been held. The ninth round of negotiations was held in

Wellington, New Zealand on 29-30th July, 2013 followed by

intersessional discussion held on 9-10th December, 2013 in

New Delhi.

8. India – Israel FTA Seven rounds of negotiations on India-Israel FTA have been

held so far. The seventh round was held during 25-27 June,

2013 in New Delhi". Eighth round of negotiations is scheduled

to be held in Israel from 24-26 November, 2013.

9. India - Singapore CECA Second review of India-Singapore CECA was launched in

May, 2010. Meeting at the Chief Negotiator level (CS) was

held on 1-2 November, 2012 in New Delhi. Meeting at the

level of Deputy Chief Negotiator level was held on 10-11

December, 2012 in Singapore.

10. India - SACU PTA (South

Africa, Botswana, Lesotho,

Swaziland and Namibia)

Five rounds of negotiations have been held so far. 5th round

of negotiations was held in Oct 2010 in New Delhi.

11. India - Mercosur PTA

(Argentina, Brazil,

Paraguay and Uruguay)

The process of expansion of India-MERCOSUR (a block of

Brazil, Argentina, Uruguay, Paraguay) is currently in progress

with the objective to enhance the benefits of the Agreement

through higher trade coverage. The inclusion of Venezuela in

the said PTA is presently being examined as at the time of

signing of PTA, MERCOSUR consisted of four countries, i.e.

Brazil, Argentina, Paraguay and Uruguay. Now, Venezuela

has become part of MERCOSUR in July, 2012 and the

current presidency is also with Venezuela. Modifications/

amendment of PTA provision of preamble and other relevant

parts of the Annexes is underway. During the DVC held on 9th

July, 2013, both sides agreed to the proposal for increasing

the list of product eligible for tariff reduction.

12. India – Chile PTA With the objective to gain optimal benefits and boost up

bilateral trade between two countries, the expansion of India-

Chile PTA is currently in progress. So far, five meetings of

Joint Administration Committee / round of negotiation have

been held to discuss the expansion of PTA. Both sides have

45

exchanged their consolidated final offer list including

SPS/TBT and RoO Cabinet Note for expansion of India-Chile

PTA has been circulated to Ministries/Department on

14.11.2013 for their comment.

13. BIMSTEC CECA

(Bangladesh, India,

Myanmar, Sri Lanka,

Thailand, Bhutan and

Nepal)

19 meetings of the Trade Negotiation Committee (TNC) have

taken place. 19th meeting was held in Bangkok from 21 to 23,

February 2011.

Texts of the agreements on trade in goods, rules of Origin,

customs cooperation and trade facilitation have been

finalized. It was expected that Trade in Goods Agreement

would be signed by the end of 2011 and the tariff

concessions would be implemented by July 2012. However,

due to the reluctance of Sri Lanka the negotiations have

failed to move forward

Negotiations on the agreements on service and investments

are continuing.

14. India - Gulf Cooperation

Council (GCC)

Framework Agreement

(Saudi Arabia, Oman,

Kuwait, Bahrain, Qatar

and Yemen)

Two rounds of negotiations have been held so far in

2006 and 2008. The second round was held in

September 9-10, 2008. No round could take place held

in the last 4 years since GCC has deferred its

negotiations with all countries and economic groups and

is currently reviewing its negotiations with all countries

and economic groups.

15. India – Canada FTA Eight rounds of negotiation on India-Canada CEPA have

been held so far. The Eighth round was held in Ottawa,

Canada from 24th to 26th June, 2013. The next round will

be held in New Delhi.

16. India - Indonesia

Comprehensive Economic

Cooperation Agreement

(CECA)

Commencement of negotiation on Indonesia - India CECA

was announced on 25th January 2011 during the visit of

Indonesian President to New Delhi. Negotiations are yet to

commence.

17. India – Australia FTA /

CECA

Five rounds of negotiations have been held so far. The 5th

round of negotiations was held in Canberra (Australia) on 20-

21st May, 2013.

18. Regional Comprehensive

Economic Partnership

(RCEP) Agreement

among ASEAN + 6 FTA

Partners (Australia, China,

India, Japan, South Korea

and New Zealand)

Based on the Declaration of the Leaders during the

ASEAN Summit in November, 2012, negotiations for a

comprehensive economic partnership between the 10

ASEAN member states and its 6 FTA partners

commenced in May, 2013. Two rounds of negotiations

have been held. The Third round is to be held from 20-

25 January, 2014 in Malaysia.

46

b) International Trade Organizations

(i) ESCAP

The 69th Session of ESCAP was held in Bangkok, Thailand from 25th April to 1st

May, 2013. The theme for the Session was “Opportunities to build Resilience to

Natural Distars and Major Economic Crises”. The Hon’ble Minister of State for

Commerce and Industry led the Indian delegation and delivered India’s Policy

Statement at this Session.

The delivery of ESCAP’s programmes is supported by the regional institution and the

sub-regional offices. India has worked in close cooperation with ESCAP during the

year. India has also committed continued financial support to the following regional

institutions of ESCAP:

Asian and Pacific Centre for Transfer of Technology (APCTT), New Delhi, India;

Asian and Pacific Training Centre for Information and Communication Technology

for Development (APCICT), Incheon, Republic of Korea;

Statistical Institute for Asia and Pacific (SIAP); Chiba, Japan; and

Asia and Pacific Centre for Agriculture and Engineering Machinery (APCAEM),

Beijing, China

(ii) United Nations Conference on Trade and Development (UNCTAD)

United Nations Conference on Trade and Development (UNCTAD) aims at

integration of developing countries into the world economy. UNCTAD serves as the

focal point within United Nation for the integrated treatment of trade and development

and the interrelated issues in the areas of finance, technology, investment and

sustainable development. Three pillars of UNCTAD’s existing mandate are: a)

independent policy analysis; b) consensus building; and c) technical assistance.

The Ministerial Conference, which meets every four years, is UNCTAD’s highest

decision making body and sets priorities and guidelines for the organization and

provides an opportunity to debate and evolve policy consensus on key economic and

development issues. The XIII Ministerial Conference was held in Doha, Qatar from

20 -26 April, 2012.

(iii) Global System of Trade Preferences (GSTP)

The Agreement establishing the Global System of Trade Preferences (GSTP) among

Developing countries was signed on April 13, 1988 at Belgrade following the

conclusion of the First Round of Negotiations. The GSTP came into being after a long

process of negotiations during the Ministerial Meeting of the Group of 77, notably at

Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign

Affairs of the Group of 77 in New York set up the GSTP Negotiating Committee in

1982. The New Delhi Ministerial meetings, held in July 1985, gave further impetus to

the GSTP negotiation process. The Brasilia Ministerial Meeting held in May 1986

launched the First Round of GSTP Negotiations. At the conclusion of the First Round

in April 1988 in Belgrade, the GSTP Agreement was signed on April 13, 1988 it

entered into force on 19th April 1989. Forty-four countries have ratified the Agreement

and have become participants. The GSTP establishes a framework for the exchange

of trade concessions among the members of the Group of 77. It lays down rules,

47

principles and procedures for conduct of negotiations and for implementation of the

results of the negotiations. The coverage of the GSTP extends to arrangements in the

area of tariffs, para-tariff, non-tariff measures, direct trade measures including

medium and long-term contracts and sectoral agreements. One of the basic

principles of the Agreement is that it is to be negotiated step by step improved upon

and extended in successive stages.

The current round of GSTP negotiations, also known as “São Paulo Round” was

launched in 2004 with 22 participating countries, on the occasion of the UNCTAD XI

Quadrennial Conference in Sao Paulo in Brazil. At the end of the negotiations,

Ministerial Modalities were adopted on 2 December, 2009 wherein Ministers agreed

to modalities based on a tariff reduction of at least 20 percent on at least 70 percent

of all dutiable tariff-lines. Members who were in the process of their WTO accession

namely, Algeria and Iran were to be given specific flexibilities.

Based on these modalities, intensive negotiations were held in 2010 for finalisation of

the schedules of Members. During this period, Cuba, Egypt, India, Indonesia, Korea,

Malaysia, Mercosur and Morocco submitted their schedules and bilateral negotiations

were held to finalise the schedule. It is significant to note that India unilaterally offered

a tariff reduction of 25 percent on 77 percent of its tariff lines for Least Developed

Countries (LDCs).

A Ministerial Meeting of the GSTP Negotiating Committee was held on 15 December,

2010 in Foz do Iguacu, Brazil for signing of the “Final Act Embodying the Results of

the Sao Paulo Round” and the “Sao Paulo Round Protocol on the Agreement on

GSTP”. The Ministers or Heads of the Delegations of Members who have submitted

their final schedules namely Cuba, Egypt, India, Indonesia, Korea, Malaysia,

Mercosur and Morocco signed the two documents. India was represented by its

Ambassador in Brazil.

So far, 8 out of 44 member countries, including India, have signed the protocol. Of

these 8 countries, two countries viz. India and Malaysia have ratified it. The Cabinet

Committee on Economic Affairs (CECA) has approved implementation of India’s

Schedule of Concessions under the Third Round of negotiations.

The schedules of concessions under the Third Round of negotiations will be

implemented when a minimum of four participants ratify the schedules and inform the

GSTP Secretariat. The tariff concessions will be implemented amongst such four

participants and other participants will avail of the concessions after they ratify their

schedules.

(iv) Asia Pacific Trade Agreement (APTA)

The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok

Agreement, signed in 1975 as an initiative of ESCAP, is a preferential tariff

arrangement that aims at promoting intra-regional trade through exchange of mutually

agreed concessions by member countries. APTA has six members namely

Bangladesh, China, India, Republic of Korea, Lao People’s Democratic Republic and

Sri Lanka. ESCAP functions as the secretariat for the Agreement.

During the Second Session of the Ministerial Council at Goa on October 26, 2007 the

following important decisions were taken:

48

To launch the 4th Round of Negotiations

To adopt modalities for extension of negotiations in other areas such as non-tariff

measures, trade facilitation, services, and investment

A common set of Operational Procedures for the Certificate and Verification of the

Origin of Goods for APTA was approved and it was decided that the same would be

implemented w.e.f. January 1, 2008; and

To explore the possibilities of expanding the membership of the Agreement

Under the 4th Round, the Standing Committee of Participating States has finalised

framework agreements in the areas of (i) trade facilitation, (ii) trade in services and

(iii) promotion and liberalisation of investments. Offers of further tariff liberalisation in

goods have also been exchanged. The Standing Committee is also considering a

framework agreement on non-tariff measures and a revision of the APTA rules of

origin.

Under the Fourth Round of negotiations, participating states have agreed to offer

concessions at an average margin of preference (MoP) of 40%on 40% of their tariff

lines. Negotiations among participating states on concluding tariff concessions

continue.

(v) Bay of Bengal Initiative on Multi- Sectoral Technical and Economic

Cooperation (BIMSTEC)

The initiative to establish Bangladesh-India-Sri Lanka-Thailand Economic

Cooperation (BIST-EC) was taken by Thailand in 1994 to explore economic

cooperation on a sub regional basis involving contiguous countries of South East &

South Asia grouped around the Bay of Bengal. Myanmar was admitted in December,

1997 and the initiative was renamed as BIMST-EC. It may be mentioned that the

initiative involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri

Lanka) and 2 members of ASEAN (Thailand, Myanmar). BIMST-EC is visualized as a

‘bridging link’ between two major regional groupings i.e. ASEAN and SAARC. BIMST-

EC is an important element in India’s “Look East” strategy and adds a new dimension

to our economic cooperation with South East Asian countries. A Free Trade

Agreement among the member states of BIMSTEC is being negotiated. The

BIMSTEC Trade Negotiating Committee (TNC) has had 19 sessions of negotiations.

The negotiations are spread over the areas of (i) tariff concessions on trade in goods,

(ii) customs cooperation, (iii) services and (iv) investments. At the 18th meeting of the

TNC parties reached agreement on the text of the Agreement on Trade in Goods as

well as the text of the Rules of Origin and the Operational Certification Procedures

and the text of the Agreement on cooperation and mutual assistance in customs

matters. The 19th meeting of the TNC was held in Bangkok on 21-23 February 2011.

Negotiations continue on finalizing the schedules of concessions and on the

agreements on services and investment.

(vi) BRICS (Brazil, China, India and South Africa) Trade Ministers meeting

On 13 April 2011, a meeting of the BRICS Trade Ministers was held in Sanya, China.

Brazil, China, India and South Africa remained committed and called upon other

members to support a strong, open, rule-based multilateral trading system embodied

in the World Trade Organization and a successful, comprehensive and balanced

49

conclusion of the Doha Development Round, built on the progress already made and

consistent with its development mandate. Brazil, India, China and South Africa

extended full support to an early accession of Russia to the World Trade

Organization.

The Third Meeting of the BRICS Trade Ministers was held in Durban, South Africa on

26 March 2013. The BRICS Trade Ministers held open and constructive discussions

under five main headings viz. (1) Global Economic Development;(2) The WTO and

Doha Development Agenda;(3) Cooperation in other multilateral fore where trade and

investment issues arise such as GZO, UNCTAD, UNDP, UNIDO and WIPO amongst

others; (4) Intra-BRICS cooperation; and (5) BRICS Partnership to support Africa’s

Development Agenda by strengthening their cooperation in the search for synergies

for investment in Africa’s infrastructure, agriculture and manufacturing sectors.

The 5th meeting of the BRICS CGETI was held on 22nd November, 2013 at Pretoria,

South Africa. The Ministers reaffirmed their view of the centrality of the WTO for a

transparent and inclusive rules-based multi-lateral trading system. They emphasized

the continued relevance of the development mandate agreed to at Doha in 2001, and

reiterated their commitment to a conclusion of the negotiations based on the

programme made since then. The Ministers also endorsed the BRICS Trade and

Investment Cooperation Framework developed by the contact group for Economic

and Trade Issues (CGETI) and instructed the CGETI to implement the said

Framework and build on it in future. The Ministers also welcomed the launch of the

BRICS Business Council that will bring together business associations from each of

the BRICS countries and manage engagement between the business communities

on an ongoing basis.

(vii) IBSA (India Brazil and South Africa) Trade Ministers meet in Pretoria

A meeting of the three Trade Ministers from India Brazil and South Africa was held in

Pretoria, South Africa where it was decided to hold an annual trilateral meeting of the

Trade Ministers from the IBSA members to further enhance the intra- IBSA trade. The

three nation’s trade is already close to US $ 20 billion, having crossed in 2009 the

target of US $ 15 billion set for 2012. India’s trade with its trade partners in IBSA

accounts for a majority of this trade. The Leaders at the IBSA Summit felt that the

trends indicate that the target of 25 billion US $ trade by 2015 will be achieved early,

and this gave reasons to be optimistic and more ambitious. The Leaders have

mandated the Working Group on Trade and Investment to examine all issues related

to trade holistically including issues relating to non-tariff barriers, maritime and air

links and opportunities for investments. Direct air connectivity is expected to give

tourism a major boost and the trade ministers agreed to look at the visa related

issues so that the process for business visas is made easy. The three Trade

Ministers also interacted with the IBSA Business forum on 17 October 2011.

The Ministers have also decided to set up a technical team under the IBSA’s Working

Group on Trade and Investment to reconcile the trade data and devise a common

reporting format as well as methods for capturing all the data of trilateral trade

including those occurring through third countries.

50

The South African and Indian trade ministers also decided to enter into long term

contracts for purchase of raw materials and commodities, and the recently opened

office of MMTC in South Africa has been mandated to work on this proposal

expeditiously.

The Ministers also felt that with the ratification process of the MERCOSUR SACU

FTA advancing, and initiation of the process of deepening of the India MERCOSUR

Preferential Trade Agreement (PTA), the deck is now clear for making progress on a

trilateral FTA involving India SACU and MERCOSUR. “This FTA linking developing

countries in the three continents is envisaged as one of the most ambitious free trade

area and will be a symbol of growing South-South cooperation”, said Minister Anand

Sharma. His sentiment was shared by his counterparts from Brazil and South Africa

and the Brazilian Trade Minister, Mr. Pimental has offered to host the second

Ministerial meeting of India-SACU- MERCOSUR in June/ July 2012 in Brazil.

India hosted the 10th meeting of the IBSA Working Group on Trade and Investment

(WGTI) on 23rd May, 2013 at New Delhi. The WGTI reviewed the work and progress

made since the 9th meeting held on 11th September, 2012 in South Africa. The WGTI

also discussed developments in the intra-IBSA trade &investment, trade target,

composition of trade, implementation of the MoU on Standards, Technical Regulation

& Conformity Assessment, MSME Cooperation, Cooperation in Tourism Sector and

update on the IBSA PTAs.

(viii) Regional Comprehensive Economic Partnership (RCEP) Agreement

among ASEAN + 6 (Australia, China, India, Japan, Korea and New Zealand)

The Association of South East Asian Nations (ASEAN) and its FTA Partners

(Australia, China, India, Japan, South Korea and New Zealand) have been

deliberating on a Regional Economic Architecture for East Asia for greater

integration. The ASEAN Report on the Emerging Regional Architecture resulted in the

ASEAN Framework on a Regional Comprehensive Economic Partnership (RCEP)

which was adopted by the Leaders of ASEAN at the 19th ASEAN Summit held in

November 2011 at Bali, Indonesia. During the 20th ASEAN Summit held in Cambodia

in April 2012, ASEAN States agreed to move towards establishing the Regional

Comprehensive Economic Partnership Agreement (RCEP) involving ASEAN and its

FTA partners.

The objective of launching RCEP negotiations is to achieve a modern,

comprehensive, high-quality and mutually beneficial economic partnership agreement

among the ASEAN member States and ASEAN’s FTA Partners. RCEP will cover

trade in goods, trade in services, investment, economic and technical cooperation,

intellectual property, competition, dispute settlement and other issues.

Negotiations for the RCEP recognizes ASEAN Centrality in the emerging regional

economic architecture and the interests of ASEAN’s FTA Partners in supporting and

contributing to economic integration, equitable economic development and

strengthening economic cooperation among the participating countries.

India is participating in the RCEP negotiations with a clear understanding of her

strengths and concerns and to try to address the same when the modalities are being

finalised.

51

The RCEP negotiations were launched in May, 2013. Two rounds of negotiation

have been held so far. The third round is scheduled to be held from 20-25 January,

2014 in Malaysia.

(ix) Indian Ocean Rim Association (IORA)

Established in Mauritius in March 1997 with the primary objective of promoting

“sustained growth and balanced development of the region and of its Member States,

and create common ground for regional economic co-operation”, the IORA (formerly

known as IOR-ARC) is the apex pan-Indian Ocean multilateral forum with its

membership open to all sovereign States of the IOR that adhere to the principles and

objectives of its Charter. India is one of the founders and key members of IOR-ARC.

The 13th meeting of the Council of Ministers of the IORA held on 1st November, 2013

in Perth, Australia has adopted IORA as the new name of the organization. The

Ministerial meeting was preceded by meeting of the Working Group on Trade and

Investment.

(x) Kimberley Process Certification Scheme

The Kimberley Process (KP) is a joint government, industry and civil society initiative

to stem the flow of conflict diamonds (rough diamonds used by rebel movements to

finance wars against legitimate governments). Kimberley Process Certification

Scheme (KPCS) is an UN mandated (UNGA Resolution 55/56 of 2000 and UNSC

Resolution 1459 (2003)) international certification scheme. It requires each participant

to impose internal control over production and trade of rough diamonds. Trading in

rough diamonds with a non-participant is not allowed. All exports of rough diamonds

have to be accompanied by a valid KP Certificate stating that diamonds are conflict

free.

India is one of the founding members of KPCS. KPCS currently has 54 member

States including the European Community representing 28 member States. Thus, it

has a membership of 81 countries. All major diamond producing, trading and

polishing centres are members of KP. Civil Society and industry groups also actively

participate in the KP. Chairmanship of KP is rotated on annual basis. India was KP

Chair in 2008. South Africa is the Chair for the year 2013 and People’s Republic of

China will be the Chair for the year 2014. India and Belgium have signed a

Memorandum of Understanding on 25th November, 2013 at New Delhi to facilitate the

KPCS data sharing between the two countries as a pilot project.

India’s important Trading partners

(1) SAARC

Highlights of Trade with SAARC

During 2012-13, Bangladesh was the largest trading partner of India in SAARC region.

During 2012-13, the highest growth for exports was recorded for Bangladesh.

During 2012-13, the lowest decline in growth of exports was recorded for Maldives.

India runs a trade surplus with all other trading partners.

South Asian Association for Regional Cooperation (SAARC) with India, Bangladesh,

Bhutan, Maldives, Nepal, Pakistan and Sri Lanka as members was established at the

52

first SAARC Summit held on 4-8 December 1985. Afghanistan became its eighth

member during the 14th SAARC Summit held in April 2007.

The SAARC Preferential Trading Arrangement (SAPTA) provided a framework for

exchange of tariff concessions and also for liberalization in para-tariff and non-tariff

measures with a view to promoting trade and economic cooperation among the

SAARC member countries. The Agreement on South Asian Free Trade Area

(SAFTA) was signed during the Twelfth SAARC Summit held at Islamabad in January

2004 which came into force from 1st January 2006. SAFTA, inter alia, prescribes a

phased Tariff Liberalization Programme (TLP) according to which all the member

states would reduce their tariffs, at the MFN applied rate existing as on 1st January

2006, to zero to five percent within ten years of the agreement coming into force. This

TLP would cover all tariff lines except those items kept in the Sensitive List by each

country. With the SAFTA Agreement coming into force, there would be no more

negotiations under SAPTA.

Agreement on establishing the SAARC Regional Seed Bank signed during the 17th

SAARC Summit meeting will provide regional support to national seed security

efforts, address regional seed shortages through collective actions, promote increase

of Seed Replacement Rate and act as a regional seed security reserve for the

Member States.

SAFTA Ministerial Council (SMC) consisting of Ministers of Commerce/Trade of the

Member States is the highest decision making body of SAFTA and the SMC is

supported by a Committee of Experts (COE) with nominees from member states. The

Eighth meeting of the SMC and Ninth meeting of COE are scheduled to be held in

April, 2014 at Thimphu, Bhutan.

India’s Trade with SAARC Countries

(US $ Billion)

2008-09 2009-10 2010-11 2011-12 2012-13 2012-13

(April-Oct)

2013-14

(April-Oct)

Exports

India’s Total 185.30 178.75 251.13 305.96 300.40 168.70 179.02

% share of SAARC

countries

4.62 4.69 4.64 4.35 5.03 4.96 4.73

Imports

India’s Total 0.60 288.37 369.77 489.31 490.73 280.73 269.41

% share of SAARC

countries

0.60 0.57 0.59 0.50 0.55 0.59 0.42

Source: DGCI&S

(2) Trade with Europe

Europe’s largest block is the European Union (EU) which presently consists of 28

countries viz. Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,

Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,

Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic,

Slovenia, Spain, Sweden and U.K. Besides, there is also a bloc of EFTA countries

comprising of Switzerland, Norway, Iceland and Liechtenstein. Turkey, Albania,

53

Bosnia and Herzegovina, Macedonia and Serbia while considered part of Europe, are

neither a member of the EU nor EFTA blocks.

European Countries accounted for about 17.81% of India’s total trade during 2012-

13. During 2013 -14(April –Oct.), India’s trade with Europe has declined by 6.42% as

compared to the corresponding period in 2012-13 with exports decreasing by 3.23%

and imports by 8.41%. The top five items of India’s exports to Europe during the

period were petroleum (crude & products), ready-made garments cotton including

accessories, gems & jewellery, transport equipment and machinery & instrument. The

top five items of India’s imports from Europe were gold, pearls/precious & semi-

precious stone, machinery (except Electrical & Electronics), electronic goods and

transport equipment. Besides, there is also a bloc of EFTA countries comprising of

Switzerland, Norway, Iceland and Liechenstein with which India is concluding an

FTA. Our trade with this group is currently US $ 15.40 billion (April-October, 2013)

and is poised to strengthen further through FTA in future. Turkey, Albania, Bosnia

and Herzegovina, Macedonia and Serbia while considered part of Europe, are neither

a member of the RU nor EFTA blocks but India maintains robust economic

engagement. India’s overall trade with EU is US $ 57.69 billion (April – October,

2013) and total investments are US $ 53.34 billion (April 2000 to October, 2013).

Trade between India and Europe

(US $ million)

Year Exports Growth

rate (%)

Imports Growth

rate (%)

Total

Trade

Balance of

Trade

2007-08 37,288 29.01 51,579 28.41 88,867 (-) 14,291

2008-09 42,076 12.84 57,262 11.02 99,338 (-)15,186

2009-10 38,523 (-)8.44 55,713 (-)2.71 94,236 (-)17,190

2010-11 49,926 29.60 71,181 27.76 1,21,107 (-)21,255

2011-12 57,798 15.70 92,818 28.60 1,50,616 (-)35,020

2012-13 55,933 (-)3.23 85,008 (-)8.41 140,941 (-)29,075

2012-13 (Apr-Oct) 31,280 (-)7.97 47,188 (-)16.16 78,468 (-)15,907

2013-14 (Apr-Oct) P 33,153 5.99 42,683 (-)9.55 75,836 (-)9,530

*Provisional. Source: DGCI&S

(3) Trade with Commonwealth of Independent States (CIS)

The Commonwealth of Independent States (CIS) comprises the Russian Federation,

Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Kazakhstan, Kyrgyzstan,

Tajikistan, Turkmenistan and Uzbekistan (the last 5 countries jointly referred to as the

Central Asian Republics). Bilateral trade with these countries is as shown in the graph

below:

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Trade with CIS (US$ Million)

Year Export Import Total Trade %Growth

2009-10 1,687.68 6,104.00 7,791.68 (-)9.8

2010-11 2,681.86 5,664.28 8,346.15 (+)7.11

2011-2012 3,059.98 8,237.84 11,333.82 (+)35.79

2012-2013 3,682.98 7,879.78 11,562.76 (+)2.01

2013-14 (Apr-Sep.) 1,697.56 3,567.54 5,265.10

(Source: DGCI &S) . (P) Provisional

The CIS region had a share of 1.23 per cent in India’s exports and 1.61 per cent in its

imports during 2012-13. The principal commodities of exports to the region include

drugs and pharmaceuticals & fine chemicals, machinery & instruments, electronic

goods, plastic and linoleum products, tea, coffee, meat & preparation, transport

equipments, RMG cotton including accessories, manufactures of metals etc.

Important items of imports to India from this region are iron and steel, fertilizers, non-

ferrous metals, petroleum, crude & products, silver, synthetic & reclaimed rubber,

vegetable oils, newsprint, project goods, crude minerals, inorganic chemicals,

metalifers ores and metal scrap etc.

(4) Trade with Latin American and Caribbean Countries

During the last one decade, the economic engagement between India and LAC has

grown significantly and our exports have been showing a continuously increasing

trend.

The total Indian bilateral merchandise trade with the region increased from a modest

US$ 2.065 Billion in 2002-03 to US$ 41.015 Billion in 2012-13. During this period total

Indian exports to the region grew from a modest US$ 1.084 Billion to US$ 13.518

Billion, a growth of about 1147.05% over these ten years. Similarly our imports grew

from about US$ 0.98 billion to 27.497 US$ Billion over this period, a growth of about

2705.82 %.

The trade with all the 43 countries of the Latin American and Caribbean (LAC) region

accounted for 5.18% of the total world trade in 2012 – 13. The percentage share of

India’s exports to Latin America in its global exports has increased from 2.058 % in

2002-03 to 4.5% in 2012-13. In the same period, the share of India’s imports from

Latin America in its global import has increased from 1.59% to 5.6%.

Focus LAC Programme: An integrated programme “Focus: LAC” was launched in

November, 1997 which has been extended upto March 2014 in order to consolidate

the gains of the previous years and significantly enhance India’s trade with the LAC

region.

Progress during 2012-13

(i) Implementation of India-Chile PTA: A Preferential Trade Agreement (PTA)

between India and Chile was signed on March 8, 2006. The said PTA came into force

with effect from August, 2007. With the objective to gain optimal benefits and boost

up bilateral trade between two countries, the expansion of India-Chile PTA is

currently in progress.

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(ii) India-MERCOSUR PTA: A Preferential Trade Agreement (PTA) between India

and MERCOSUR (a trading bloc of Argentina, Brazil, Paraguay and Uruguay in South

America region) was signed on 25th January, 2004 and annexes to this Agreement

were incorporated on March 19, 2005. India- MERCOSUR PTA came into operation

from 1st June, 2009. The process of expansion of India-MERCOSUR is currently in

progress with the objective to enhance the benefits of the Agreement through higher

trade coverage.

(5) Trade with Countries in Sub Saharan Africa (SSA) Region

Since Independence India has had cordial and friendly trade relations with countries

in Sub-Saharan Africa (SSA) Region, consisting of Eastern, Western, Central and

Southern Africa.

Total bilateral trade with countries in SSA Region during 2012-13 amounted to

57,848 million with exports amounting to 23,460 million and imports at 34,387

million. The total provisional bilateral trade with Sub Saharan Africa during the 6-

month period of April 2012 to Sept, 2012 in the current FY 2013-14 has been 28,141

million with exports at 11,743 million and imports at 16,398 million. The

corresponding figure during April to September 2012 was US$ 27,691 million (total

trade), US$ 10,649 million (exports) and US$ 17,042 million (imports) respectively.

Bilateral trade with West African countries was US$ 22,787 million during 2012-13 as

compared to US$ 24,225 million during 2011-12. Rice (other than basmati); drugs,

pharmaceuticals, fine chemicals; transport equipments, machinery & instruments;

transport equipments; manufacturers of metals; electronic goods; cotton yarn, fabrics,

madeups; petroleum (crude & products), primary & semi-finished iron and steel;

plastic and linoleum products were the major items of export. Petroleum (crude and

products); Cashew nuts; metalifers ores and metal scrap; wood and wood products;

fertilizers; Cotton; non ferrous metals, natural rubber and; oil seeds were the major

items of import. Nigeria was the top most trading partner within this region with

bilateral trade of US$ 14,826 million during 2012-13.

Bilateral trade with countries in Southern Africa was US$ 24,005 million during 2012-

13 as compared to US$ 24,467 million during 2011-12. South Africa was the top most

trading partner within this region with a trade of US$ 13,994 million.

Bilateral trade with countries in East Africa was US$ 9893 million during 2012-13 as

compared to US$ 7137 million during 2011-12. Kenya was the top most trading

partner within this region with a trade of US$ 3876 million.

Bilateral trade with countries in Central Africa was US$ 1161 million during 2012-13

as compared to US$ 798 million during 2011-12. Uganda was the top most trading

partner within this region with a trade of US$ 492.40 million.

(6) India and SACU (Southern African Customs Union) Preferential Trade

Agreement (PTA)

SACU consists of a group of 5 countries, namely, Botswana, Lesotho, Namibia,

Swaziland and South Africa. India and SACU (Southern African Customs Union) are

negotiating for a Preferential Trade Agreement (PTA). Till now, five rounds of

negotiations have been held for negotiating the PTA.

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The following two Working Groups have been constituted for negotiating the PTA:-

a. Working Group on Market Access comprising of two subgroups, namely:

Sub Group I responsible for market access for trade in goods

Sub Group II responsible for Rules of Origin and Customs

Procedures.

b. Working Group on Legal and Institutional Issues responsible for the legal

vetting of the text of the PTA, Dispute Settlement, SPS and TBT measures and

Safeguards and Trade Remedies.

(7) Trade with countries in the West Asia & North Africa (WANA) Region

The West Asia and North Africa (WANA) region comprises 18 countries viz six Gulf

Cooperation Council (GCC) countries, six West Asian countries, and six North African

countries (Algeria, Egypt, Libya, Morocco, Sudan and Tunisia).

India’s total trade with WANA countries during 2012 -13 was US$ 203.17 billion

(25.68% of India’s total trade with the World) as compared to US$ 191.25 billion in

2011-12(24.05%) of India’s total trade with the World). While India’s total exports to

WANA countries in 2012-13 were 64.74 billion, India’s imports were US$ 138.43

billion during the same period.

India’s share of exports to WANA countries as a percentage of India’s total exports to

the world was of the order of 21.55% in 2012-13. Further, WANA region’s share in

India’s total imports from the World accounted for 28.21% in 2012-13. While our

exports to WANA countries grew by 13.22 % between 2012 -13 and 2011-12, our

imports grew by 3.25%.

During Apr-Sep (2013-14) trade with the WANA Region registered a decline by 2.5%

over the corresponding period in the financial year 2012-13. The major items of

decline in our exports and import to the WANA region took place in the area of gold,

diamond jewellery and crude oil & products and appear to be an outcome of the

overall Government policy for the containment of import of non-essential

commodities. The decline can also be attributed to the weak rupee which caused all

the above items to have turned more expensive leading to reduced import of gold,

diamond, Oil & Gas.

11. WTO Negotiations

The Doha Round of negotiations is continuing in the WTO since the year 2001. The

efforts made by developed countries centred on a Trade Facilitation Agreement.

India and other developing countries worked together to ensure that other issues of

the interest to the developing countries and the LDCs also formed a part of any

package identified for an early outcome. After protracted negotiations yielding little

results for almost a decade, consensus was reached to negotiate a small package

consisting of Trade Facilitation, some elements of agriculture and development/LDC

issues for an early outcome in the Ninth Ministerial Conference of the WTO to be held

in December 2013 in Bali, Indonesia.

The Ninth Ministerial Conference of the WTO was held in Bali, Indonesia from 3 to 7

December 2013.

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In the area of agriculture, the proposal submitted by G-33, relates to updating the

rules concerning public stockholding for food security. The Ministers approved an

interim mechanism. The mechanism stipulates that WTO Members will not challenge

the compliance of a developing member with obligations under the WTO Agreement

on Agriculture in relation to support provided for traditional staple food crops in

pursuance of public stockholding programmes for food security purposes, if they are

consistent with the existing rules.

Other issues in agriculture relate to the export competition pillar. The G-20 group of

developing countries in the WTO, of which India is also a member, wanted an

outcome on the issues of export subsidies and Tariff Rate Quota administration. The

proposal which seeks to reduce export subsidies arises partly from a 2013 deadline

for eliminating all forms of export subsidies originally agreed at the Hong Kong

Ministerial Conference in 2005. The Ministerial Declaration on the subject sends out a

strong message to fulfill the mandate of the Hong Kong Ministerial Declaration as a

priority issue for the post Bali work programme. The situation will be reviewed at the

10th Ministerial Conference of the WTO.

The other proposal by the G20 proposes tighter disciplines on TRQ administration. It

envisages a number of measures for sharing information and monitoring how quotas

are used. If a quota is persistently under-filled, the importing government would have

to apply one of a prescribed set of methods for administering quotas aimed at

removing impediments. Members have agreed on a combination of consultation and

provision of information when quotas are under-filled. The one remaining issue to be

settled was which countries would reserve the right not to apply the system after six

years and they have been identified as Barbados, Dominican Republic, El Salvador,

Guatemala and the US.

The Agreement involves assistance for developing and least developed countries to

update their infrastructure, train customs officials, or for any other cost associated

with implementing the agreement. It will increase trade flows and revenue collection,

create a stable business environment and attract foreign investment. The text

adopted in Bali will be checked and corrected to ensure the language is legally

correct, for its adoption by the General Council by 31 July 2014.

The decision on Duty-Free, Quota-Free access says that countries that have not

done so for at least 97% of products “shall seek to” improve the number of products

covered.

Non-Agricultural Market Access (NAMA)

Information Technology Agreement (ITA-2)

India is a signatory to the Information Technology Agreement (ITA) (now also known

as ITA-1), a plurilateral agreement of WTO. As on date, there are altogether 75

member signatories, including 27 EU member countries, accounting for about 97

percent of the world trade in Information Technology (IT) products. India joined the

ITA on 25th March 1997.

As a signatory to the ITA-1, India bound its tariffs at zero on 217 ITA lines (including

expositions). Out of these 217 lines, 95 lines were reduced to zero level by 2000; 4

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lines in 2003, 2 lines in 2004 and the remaining 116 lines were made duty free in

2005.

In light of recent measures taken by the Government of India to build a sound

manufacturing environment in the field of Electronics and Information Technology,

this is the time for us to incubate our industry rather than expose it to undue

pressures of competition. Accordingly and also keeping in view the opinion of the

domestic IT industry, it has been decided not to participate in the ITA expansion

negotiations for the time being.

India’s Duty Free Tariff Preference (DFTP) Scheme for LDCs

One of the elements of the Hong Kong Ministerial Declaration of December 2005 was

to extend Duty Free Quota Free (DFQF) access to the Least Developed Countries

(LDCs). India became the first developing country to extend this facility to LDCs.

India’s Duty Free Tariff Preference (DFTP) Scheme for LDCs came into effect in

August, 2008 with tariff reductions spread over five years. The Scheme provides

preferential market access on tariff lines that comprise 92.5% of global exports of all

LDCs.

This year, the Cabinet has approved the increase in coverage as well as

simplification of the Scheme, in line with both the Hong Kong Ministerial Mandate as

well as requests from several LDCs ((like Tanzania, Uganda and Ethiopia) for

additional product coverage under the duty free list to cover products of their export

interest and simplification of the Rules of Origin procedures. Under the new expanded

DFTP Scheme, India would be granting duty free access on 96.4% of the total tariff

lines, thereby retaining only about 3.6% of lines in the Exclusion and Positive Lists.

India and the Government Procurement Agreement

The Government Procurement Agreement (GPA) is a plurilateral agreement in the

WTO. A comprehensive study on various elements of the GPA was conducted by the

Department of Commerce through the Centre for WTO Studies. In light of the study

and given the fact that the Public Procurement Bill 2012 (legislation to regulate

Government Procurement in the country), is still being considered by Parliament and

the same is likely to take some time before it gets passed, it has been decided to

review the matter once the Public Procurement Bill is enacted by the Parliament and

related Rules/Regulations are also framed and implemented.

Global Value Chains

The much talked about issue in the circles of international trade in recent times has

been the ‘global value chains’ (GVCs). In fact, what started as regional supply chains

in East Asia by Japanese investors have today become a phenomenon that

countries, both developed and developing cannot afford to ignore. Especially for the

policy makers in the developing countries, linking into GVCs has emerged as the new

development challenge. GVCs have thus become a prominent item in the agenda of

discussions not only in the WTO, but at other fora as well, especially the G20.

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A global value chain can simply be understood as the sequence of all functional

activities beginning from research and development activities, product designing,

sourcing of primary products, production of intermediate products, final assembly of

product, packaging, branding and marketing of the product etc, required in the

process of value creation involving more than one country. GVC for a particular

product may therefore not only span over countries but also span across different

industries including services.

In the light of the above developments, the Department of Commerce is conducting a

study on various aspects of GVCs through the Centre for WTO Studies, mainly to

understand India’s present position and level of participation in GVCs and explore

policy options to further the country’s participation in key sectors, create a strong

presence in possible regional supply chains and possibilities of functional upgrading ,

all of which would increase the extent of value-addition in exports and serve the

development objectives as well.

Services Negotiations

The year 2013 did not see much headway in the negotiations on the Doha

Development Agenda. However, a number of new issues came up for discussion

under the aegis of the Council for Trade in Services and its various Committees.

Services waiver

A decision on a ‘services waiver’ was adopted in the WTO's Eighth Ministerial

Conference in December 2011. It allows WTO members to provide preferential

treatment to services and services suppliers of LDCs.

The Ministerial Decision at MC9 stipulates that the Council for Trade in Services shall

convene a High-level meeting six months after the submission of an LDC collective

request identifying the sectors and modes of supply of particular export interest to

them. In that meeting, developed and developing Members, in a position to do so,

shall indicate sectors and modes of supply where they intend to provide preferential

treatment to LDC services and service suppliers.

Trade in Services Agreement (TISA)

Trade in Services Agreement (TISA) earlier known as ‘International Services

Agreement’ (ISA) is a plurilateral approach to services proposed by the US, the EU,

Australia and other members also known as Really Good Friends of Services (RGF).

The negotiations involve more than 40 countries contributing around 70% of global

trade in Services.

India, Brazil, South Africa and a host of developing countries do not support this

approach. However, China which was so far in the league of opposing this approach

has now shown interest in joining TISA. India is not yet a part of TISA negotiations

because the questions relating to the impact of this approach on multilateralism and

the Doha Round still remain unanswered. Also, the negotiations can have the effect

of disincentivizing the conclusion of the multilateral agreement on services under a

single undertaking.

Rules Negotiations

Negotiations are being held as per the Doha Declaration mandate aimed at clarifying

and improving disciplines under the Anti-Dumping Agreement and the Agreement on

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Subsidies and Countervailing Measures (ASCM), while preserving the basic

concepts, principles and effectiveness of these agreements and their instruments and

objectives. Members have also been discussing new disciplines on fisheries

subsidies.

Though, there has been some progress in the text of the Negotiating Group on Rules

(NGR) consensus has remained elusive on most of the bracketed issues of the

Chair’s text and strong divergences in views of members on several issues in the

Anti-Dumping Agreement and ASCM have surfaced during the discussions. In anti-

dumping, such issues were related to the prohibition on the use of zeroing in dumping

margin calculations, strengthening the sunset review provisions, new rules on anti

circumvention, non-attribution analysis for causal link, lesser duty rule, public interest

examination, etc. During the recent negotiations, efforts have also been made to

understand the post investigation country specific practices. In case of Subsidies,

such issues were related to financing by loss making institutions, calculation

methodology for determining export competitiveness, market benchmarks for export

credits and overseeing of successor undertakings under the OECD Export Credit

Arrangement by the WTO.

India has been seeking to strengthen the rules in Anti Dumping so as to prohibit the

use of zeroing in dumping margin calculation, bring in strong disciplines on conduct of

sunset reviews including automatic sunset after a certain agreed period etc. India had

also moved a proposal for mandatory application of lesser duty. In the Subsidies

Agreement, India has argued for policy space for the developing countries keeping in

mind their specific developmental needs.

In the Anti-Dumping (AD) and SCM Committee meetings held in October 2013,

demands have been raised by several members of the WTO for early/timely

notification of AD investigations as well as SCM notifications to the WTO Secretariat

for the purpose of transparency. The issue of India achieving export competitiveness

in textile & apparel sector (as the export share of this section has reached 3.25% of

world share) has been raised by some members with a view to phase out the export

subsidies provided in this sector. India, for the purpose of clarity re-iterated its earlier

communication seeking clarification from WTO on issues like definition of “product”

and the “applicable period of phasing out the subsidy” under the agreement. In

the mean time, India is working for strategies to honour the WTO commitment on

subsidies. On the other hand, India has sought comments from the US in the

Subsidies Committee meeting on the Renewable Energy programs of some of its

States.

In the Fisheries Subsidies meetings where the members are trying to discipline the

fisheries subsidies, in particular, for wild catch fisheries, to control over-exploitation,

India has been seeking effective special and differential treatment for the developing

countries in the light of employment and livelihood concerns for small, artisanal

fishing communities and for retaining sufficient policy space to enable developing

countries to develop their infrastructure. While the Chair is yet to table a revised text

in fisheries subsidies, discussions on a road map on the identified issues (viz.

subsidies covered by the prohibited list, general exceptions, special and differential

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treatment to developing countries, general disciplines, fisheries management,

transparency notification requirements, dispute settlement, implementation and

transition rules) have continued.

India has sought exception from prohibition of subsidies meant to support the fishing

operations in coastal regions and EEZ. India along with Brazil, China and Mexico

submitted a new proposal seeking effective, special and differential treatment for

developing countries in the fisheries subsidies disciplines. During the negotiations

held in 2010, and thereafter, consensus has eluded Members on the important issues

such as the type of fisheries subsidies to be prohibited, scope of coverage of general

exceptions and the provisions relating to general disciplines. On special and

differential treatment for developing countries, consensus remains elusive on the

extent and scope of the S&D.

Trade Facilitation

An important area of the WTO Doha Round negotiations is Trade Facilitation. With

the lowering of tariffs and removal of quantitative restrictions, the focus in

international trade has shifted to simplification of trade procedures in general and

customs procedures in particular. There is a widespread recognition that

simplification of trade procedures would help promote cross-border trade, bring

greater predictability to traders and help improve the climate for investment.

WTO Members initiated negotiations in the year 2004 for putting in place a new

multilateral Agreement on Trade Facilitation (“TF Agreement” in short). In the Ninth

Ministerial Conference held during 3-7 December 2013, WTO Members decided to

conclude the negotiations and agreed to enter into the TF Agreement. The TF

negotiations took place in accordance with the mandate set out in Annex D of the July

2004 Framework Agreement. The three main pillars of the negotiations, as per the

Framework Agreement, are:

(a) Pillar I: To clarify and improve relevant aspects of Articles V, VIII and X of

the GATT 1994 with a view to further expediting the movement, release and

clearance of goods, including goods in transit.

(b) Pillar II: To enhance technical assistance and support for capacity building in

this area.

(c) Pillar III: To provide for effective cooperation between customs or any other

appropriate authorities on trade facilitation and customs compliance issues.

Draft Consolidated Negotiating Text on trade facilitation has been evolving since

2004. The eighteenth revision of the Draft Text was issued on 23 October 2013. It

was further streamlined in subsequent technical negotiations in Geneva. Thereafter,

Members agreed to conclude negotiations at the Ninth Ministerial Conference held on

3-7 December 2013. In a Ministerial Decision dated 6.12.2013, Members also agreed

to enter into a multilateral Agreement on Trade Facilitation.

Non-Tariff Barriers

Non Tariff Measures (NTMs) refer to those measures on international trade that are

not in the form of a tariff or a tax. These measures include trade-related procedures

such as documentation, certification and inspections; technical regulations;

standards; import related measures such as restrictions, prohibitions, seasonal

62

duties; tariff rate quotas; foreign exchange controls including artificial exchange rates;

public procurement practices etc. Non Tariff Barriers (NTBs) are a sub-set of NTMs.

NTBs are considered unfair measures discriminating against imports and therefore

are violative of the obligations under the Agreements of the WTO. Specific Trade

Concerns relating to NTMs including SPS and TBT are being raised in the regular

meetings of Committees of TBT and SPS in the WTO.

We are in the process of developing a regulatory environment that would encourage

a regime of quality production. On the export side, we have set-up a web based trade

portal containing database on the SPS/TBT notification (which may result into NTMs)

notified to the WTO by the Members of the WTO. It includes information rate of tariffs

at HS 8 digit level, applicable SPS/TBT rules and regulations, tariff line wise,

preferential tariff rates (for which countries India has trade agreement) and

information about rules of origin. This is to provide information to our exporter about

the regulatory regime of other countries.

Environmental Goods & Services (EGS)

With a view to enhancing the mutual supportiveness of trade and environment, Para

31, 32, 33 and 51 of Doha Ministerial Declaration (DMD) gives mandate to the

Members of the WTO for negotiations on environmental goods & services. As of now

there is no agreed definition of Environmental Goods (EGs) in the WTO. Most of the

developed countries including US, Canada, the EU, Japan, Korea, New Zealand,

Norway etc. are advocating a list based approach for elimination of tariffs on

environmental goods (EGs) that offers a potential for high degree of convergence

among members.

In the absence of an agreed definition of EGs, it is difficult to work out the list of EGs.

Hence, India and many developing countries do not support list approach due to

multiple end-uses of most of the products. It is also apprehended that the List

Approach will adversely impact the growth of EGs in developing countries.

India and many developing countries are of the view that to undertake climate change

mitigation and adaptation measures, access to cutting edge clean energy

technologies is essential. Besides, Special &Differential Treatment elements should

be an essential part of any discussion on EGs.

Trade Related Aspects of Intellectual Property Rights (TRIPS- Convention on

Biodiversity (CBD)

India along with bio-diversity rich and other like-minded members of WTO has been

demanding incorporation of three disclosure norms in the TRIPS Agreement so as to

make it obligatory for an applicant seeking a patent, based on some genetic resource

(GR) and/or traditional knowledge (TK), to disclose (i) source and the country of origin

of the genetic resource/traditional knowledge used in the patent; (ii) Prior Informed

Consent and (iii) Access and benefit sharing arrangement.

This demand has emanated from the fact that a number of patents were erroneously

granted in the past which were based on genetic resource and/or traditional

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knowledge i.e. patents based on antiseptic and antifungal properties of Neem; anti-

hypoglycaemic properties of Jamun, bitter gourd etc.

These usurpations of GR and TK are to be seen in the context of Article 15 of the

Convention on Biodiversity (CBD) which recognizes the sovereign rights of States

over their natural resources, prior informed consent for access to genetic resources

and benefit sharing in case of commercial and other utilization of genetic resources.

Although, India has provided disclosure requirement in the Patents Act, yet national

legislation alone is not sufficient to prevent bad patents. There is a need for

internationally acceptable and enforceable legally binding instrument to prevent grant

of bad patents. The easiest way to get it is through incorporation of the three

disclosure norms in the TRIPS Agreement of WTO.

Doha Ministerial Declaration (DMD) under Para 19 had directed that the issue relating

to TRIPS-CBD relationship should be examined along with other implementation

issues pursuant to Para 12 of the Declaration.

The proponents of the mandatory ‘disclosure’ requirement have been able to garner

support of 108 WTO members (2/3 majority of WTO) including EU who have agreed

to amend the TRIPS Agreement to include a mandatory requirement for the

disclosure of the country providing/source of GR, and/or associated TK (for which a

definition will be agreed later) in patent applications and that applications seeking

patent will not be processed without completion of disclosure requirement. Further,

these Members agree to define the nature and extent of a reference to PIC and ABS

also.

During the Bali Ministerial members agreed to extend the moratorium on Non

Violation and Situation Complaints applicable to the TRIPS Agreement till the next

Ministerial meeting to be held in 2015.

Disputes in the WTO and Negotiations under the Dispute Settlement

Understanding (DSU)

As per the mandate of the Doha Declaration, the WTO Members are engaged in

negotiations aimed to improve and clarify issues related to the Dispute Settlement

Understanding (DSU). The negotiations are taking place in the Special Sessions of

the Dispute Settlement Body (DSB) and are not part of the Single Understanding. At

present, negotiations are ongoing on 12 issues, namely on Sequencing, Remand,

Mutually agreed solutions, Transparency and amicus curiae briefs, Third party rights,

Panel composition, Strictly Confidential Information, Post Retaliation, Timeframes

under the DSU procedures, Special and Differential treatment, Flexibility and Member

Control and Effective Compliance. These proposals are primarily based on Members’

experience with the Dispute Settlement System and efforts by Members to develop

areas of convergence, while maintaining the respective policy objectives. India and

other developing countries have been reiterating their objective for a development

oriented review of the Dispute Settlement Procedures under the Doha Development

Agenda (DDA). Keeping this objective in view, India by bringing many developing

countries on board is negotiating important reforms aimed at special & differential

(S&D) treatment to developing countries such as the sharing of litigation costs to

mitigate the rising transaction costs of settling WTO Disputes, cross retaliation that

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may allow the developing countries to retaliate in any sector/Agreement against the

losing developed country etc.

Conclusion and Way Ahead

The key items in our export basket are: petroleum products and gems and

jewellery, with shares of 21% and 13% respectively, for the period April-November,

2013. These items are also heavily import dependent. Both petroleum (crude and

products) and gold are the top most items in our import basket, with their shares

being about 37% and 7% respectively for the period April to November, 2013.

So far as, exports of petroleum products and gem and jewellery are concerned the

value added component is very low. It is about 7 to 8% for petroleum products and

3% for gems and jewellery. Thus, in view of the high import content of our leading

export products, the impact of depreciation in terms of increasing exports is not likely

to be very effective.

There is also need for further focus on the traditional export items such as textiles

and leather products with low import intensity. Brand building and development of

distribution networks in foreign countries can majorly contribute in this context.

India’s exports basket needs to shift towards higher value add and technology

segment. This requires significant investments in identified sectors such as:

pharmaceuticals sector, plastic sector, high technology engineering sector etc.

Market and product diversification adopted few years ago has shown results. Some

markets are difficult to open such as China, Japan and Latin America. However,

intensive efforts are underway to access these markets. Latin America is increasingly

becoming protectionist, China is non-transparent and at times un-cooperative and

Japan is extremely demanding.

Export credit needs to be included as priority sector lending for all commercial

banks.

Framing of suitable interest subvention policy for long term export credit.

Interest subvention to provided to all exporters on a timely basis.

Automatic increase in credit limit especially in lieu of Rupee depreciating.

Provide facilities for refund of various levies to exporters. Re-introduction of Section

80HHC Income Tax Benefits for a short period in view of serious crisis like situation.

Immediate re-payment of Service Tax refunds, due for the last 3-4 years.

Create an export development fund to support exports for export promotion and

development activities. Budget for marketing development and assistance schemes

implemented by DOC such as MDA / MAI needs to be enhanced.

Directing the Banking system to support export initiatives in difficult markets with

strong export potential such as Iran, Iraq, Sudan and some African countries.

Extend and deepen benefits recently announced for exports of high technology

products as they bring greater price realization, technology and skills.

Stringent tax administration leading to denials of income tax benefits and service tax

refunds have raised concerns about the transparency and stability of the tax regime.

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Import of gold jewellery, consumer electronics need to be reviewed with a view to

see if restrictions can be imposed without creating under-ground markets.

Rationalization of import duty on raw material / intermediates to ensure

competitiveness of domestic industry where significant higher value additions is

possible.

Main-streaming trade in major manufacturing sectors and services sectors.

Scanning import dependent export items with a view to incentivize those products

which are wholly obtained or require least amount of imported intermediates.

Focus on enhancing exports from MSME Sector on areas such as: Pearls and

precious stones, etc., apparel and accessories, Pharmaceutical products, Leather

goods, Electrical & Electronic equipment etc, along with emphasis on issues such as:

Technology development, Standardization, Compliance Platform , Identifying and

nurturing specific sectors with significant export potential etc.

The private sector complains of transaction costs hampering the growth and the

well being of the sector. The Transaction Cost Committee had been set up and many

of the recommendations have been implemented. The Committee has again been

set up to look at other issues which have been raised by the private sector. This

Committee must complete its report quickly and necessary action may be taken on

the recommendations to ensure that the private sector feels that their grievances are

met efficiently and effectively.

Need for trade focus for our Embassies and Ambassadors also play a role in

answering queries of the importers and help to boost exports from India.

WTO’s Subsidies Agreement permits an exporting country to provide tax

concessions on exported products and on inputs consumed in the production of the

exported product. However, for the exporting country to avail all this benefit,

exporters need to establish an unbroken trail of all indirect taxes paid on the exported

product and on the inputs consumed in its production process. In the absence of

uniform GST in India, frequently exporters are unable to get rebate or drawback on all

indirect taxes paid on the exported product and its inputs. This significantly enhances

the final price of the exported product.

The above findings underscore the imperative for extensive domestic reforms in all

areas of logistics, manufacturing, fiscal, financial and overall economic performance

on the part of both the government and industry, with targeted initiatives for improving

infrastructure and international shipments required on a priority basis. In an

increasingly globalised and integrated economy, useless domestic reforms,

productivity, quality, standards related issues etc. are addressed and benchmarked

against global competitors our exports cannot grow at a rate which may be desirable.

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