A new Foreign Trade Policy for 2004-09, supplementing the basic components of the existing EXIM Policy (2002-07) with numerous refinements, was announced on 31″ August 2004.
Its spelt out an export-led growth strategy and aimed at doubling of India’s share in global merchandise trade by 2009 with focus on sectors having prospects for export expansion and employment generation. The measures announced in the new Policy tried to make a harmonious use of economic policies and trade strategies.
In the recent past, the focus of our trade policy has been on liberalization, openness, transparency and globalization. It has tried to provide an export friendly environment with simplified procedures for trade facilitation.
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In line with this approach, custom duties are being lowered in a phased manner to align them with those of the ASEAN countries.
A special fiscal and regulatory regime is being built for the Special Economic Zones. More and more items are being taken off the SSI reservation list. These measures are expected to enhance competitiveness and acceptability of India’s exports.
To quote Economic Survey, 2004-05, the key strategies of the new Trade Policy for achieving its objectives include the following:
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“unshackling the controls and creating an atmosphere of trust and transparency; simplifying procedures and bringing down transaction costs; neutralizing incidence of all levies on inputs used in export products; facilitating development of India as a global hub for manufacturing, trading and services; identifying and nurturing special focus areas to generate additional employment opportunities, particularly in semi-urban and rural areas; facilitating technological and infrastructure upgradation of the Indian economy, especially through import of capital goods and equipment; avoiding inverted duty structure and ensuring that domestic sectors are not disadvantaged in trade agreements; upgrading the infrastructure network related to the entire foreign trade chain to international standards; revitalizing the Board of Trade by redefining its role and inducting into it experts on trade policy; and activating Indian Embassies as key players in the export strategy.”
The thrust sectors identified by the new Trade Policy include agriculture, handlooms and handicrafts, gems and jewellery and leather and footwear sectors.
It contained sector-specific policy initiatives and introduced a new scheme of export incentives itemed Target Plus to accelerate growth of exports. Various measures for simplification of rules and procedures were also introduced.
But as yet, service exports lack the support of agencies like export promotion councils except for computer software. These exports also face various visible and invisible barriers including visa restrictions; economic needs test, sector specific restrictions and selective preferential market access through regional initiatives. Systematic efforts are needed for removing such hurdles in the way of service exports.