A new trade strategy: India’s performance on exports is a result of policy interventions

Source– The post is based on the article “A new trade strategy: India’s performance on exports is a result of policy interventions” published in The Indian Express on 7th March 2023.

Syllabus: GS3- Indian economy

Relevance– Issues related to export policy

News– India’s robust export performance has made a critical contribution to its economic growth in recent times.

Despite global economic woes, India’s overall exports grew at 17.33% to $641 billion during April-January 2022-23 compared to $547 billion during the same period last year.

How has India improved its export performance in recent years?

The country’s exports performance was the result of well-crafted trade policy interventions, their efficacious implementation and a host of other initiatives.

Export facilitation– It ensured the effective conceptualisation and implementation of export promotion schemes.

These schemes are Market Access Initiative (MAI), Remission of Duties and Tax on Exported Products (RoDTEP), Trade Infrastructure for Exports Scheme (TIES) and Interest Equalisation Schemes on pre- and post-shipment rupee export credit.

Production-linked Incentive scheme– It has been a game changer. It has not only transformed India into a manufacturing hub. It has also curtailed its large trade deficit in electronics and other manufactured goods.

As a result of this scheme, electronics manufacturing attracted a massive investment and its exports have grown rapidly by over 55 % annually. Exports of mobile phones alone may reach $10 billion during the current financial year.

Logistics– it has been a critical stumbling block in India’s exports competitiveness. It has been proactively addressed in the Union budget 2023-24.

Capital expenditure allocation has been sharply increased by 33% to a record Rs 10 trillion on the development of rail, road, air, and ocean infrastructure.

It will make export logistics efficient. It will also integrate Indian production systems with global value chains.

Restructuring of process– There has been rationalisation of work allocation within the Ministry of Commerce and restructuring of its divisions and subordinate offices. It is likely to transform India’s institutional mechanisms to promote exports.

Adopting the latest technology in the collection, assimilation, processing of data and making available real-time information across stakeholders has bridged the information gap between the exporters and the various government departments.

Work with state governments– In recent years, the Ministry of Commerce has been actively engaging with state governments and at the district level for speedy and effective implementation of policy measures to promote exports.

Each of the Indian states was asked to prepare an export promotion strategy. Proactive involvement of Indian missions abroad helped not only in market identification but also in facilitating product entry.

Free Trade Agreements– Most Free Trade Agreements signed by India previously became counterproductive. The Ministry of Commerce has re-examined all the FTAs. It is in the process of engaging in newer ones to benefit India.

Recently, India negotiated new FTAs with UAE, Mauritius and Australia. It is in the advanced stages of negotiations with the UK.

It is also actively exploring new trade agreements with the EU and US.