1

RECENT TRENDS IN GLOBAL TRADE

Just when the world economy and trade, reeling under the jolt given by the 2008 global economic crisis started recovering with output and trade in many developed and emerging economies reaching pre-crisis levels and in some countries even surprising pre-crisis trends, came the second shock in the form of the crisis in the euro area and slowdown in the US. The structural sovereign debt crisis in the euro zone area and the fiscal imbalance in the US which led to the present set back originated from the earlier crisis. The tumultuous recession-ridden years of 2008 and 2009 seem to be re-emerging with fall in world trade being steeper than the decline in real gross domestic product (GDP). Indias exports which had surpassed not only pre-crisis levels but also pre-crisis trends have started feeling the heat of this second global downturn which has come in quick succession to the first, though the country is in a better position than many others to weather the crisis.

A.

World Trade

World trade value, which fell sharply from US $ 16 trillion in 2008 to US $ 12.4 trillion in 2009, recovered to US $ 15.1 trillion in 2010 though it was still below the pre-crisis level. World trade volume growth also picked up sharply to 12.7 per cent in 2010 from 10.7 per cent in 2009, though this was also still below pre-crisis growth. In the absence of the earlier low base effect, it moderated to 6.9 percent in 2011. Trends in growth in trade volumes projections 2010 2011 2012 2012

World trade volume IMPORTS Advance economies Emergning and developing economies EXPORT Advance economies Emergning and developing economies

12.7

6.9

3.8

5.4

11.5 15.0

4.8 11.3

2.0 7.1

3.9 7.7

12.5 13.8

5.5 9.0

2.4 6.1

4.7 7.0

In the first half of 2011, world trade had reached US $ 8.7 trillion with a value growth of 23.1 percent. But with the escalating euro area crisis entering a perilous new phase in the fourth quarter of 2011, world trade volume growth is expected to decelerate to 3.8 per cent in 2012 as per the International Monetary Funds (IMF), World Economic Outlook (WEO), January 2012. This near halving of trade growth in 2012 is an ominous sign of the impending crisis as in 2008. With the IMF moderating its growth projections of world output to 3.3 per cent in 2012 and 3.9 percent in 2013 and with limited policy options in their armoury, the advanced economies are expected to grow at 1.2 per cent in 2012. This is also reflected in their expected import and export trade volume growths at 2.0 and 2.4 per cent respectively. The emerging and developing economies are expected to grow at a relatively better rate of 5.4 per cent in 2012 with import and export volume growths at 7.1 per cent and 6.1 per cent respectively.

Trade Credit
Trade credit, both its availability and cost is an important barometer of international trade. There have been many ups and downs on this front in recent years. Trade Credit : International Scenario According to the latest quarterly survey conducted by the Institute of International Finance (IIF) in the second half of September 2011, banks domiciled in emerging market economies continued to experience tight bank-lending conditions. The overall index of bank-lending conditions dipped to its weakest ever level in Q3 (third quarter) 2011. There has thus been a significant deterioration in emerging market bank-lending conditions over the three quarters of 2011, during which time the overall index has moved from its strongest to its weakest level. The most significant deterioration has occurred in funding conditions facing banks in emerging economies. While local funding conditions are broadly unchanged over Q3, funding conditions on international markets have deteriorated significantly, and across all major regions. This is clear evidence of a spillover to emerging economies from the growing

problems in mature economies most notably, the challenges resulting from the severe debt problems in the euro area. Conditions for international trade finance have also been adversely affected by current unstable financial conditions. Although the overall diffusion index for international trade finance conditions is still almost above the 50 threshold level( the reading is 49.3 for Europe), the mood is weaker than in the previous quarter. ( A diffusion index reading of above 50 means greater strength, below 50 means weakness, and 50 is a neutral reading.) In Q3 2011,23 per cent of banks said conditions for international trade finance had improved, whereas it was 44 percent in Q2 ( second quarter) 2011. The strongest improvement was witnessed in Asia. Demand for international trade finance has deteriorated slightly in Europe, while it remained robust in the other regions. In Europe, 17 per cent of the participants said that the demand decreased over the last three quarters. On the supply side, banks in Latin America reported a declined in willingness to supply trade finance, while the supply conditions continued to improved in Africa and the Middle East (AFME) and Asia. Overall, 19 per cent of banks acknowledged improvement in supply conditions (as against 42 percent inQ2 2011).

Trade Credit : Indian scenario

Reflecting improved global financial conditions the gross inflow of short-terms trade credit to India had reached US $ 75.7 billion during 2010-2011, which was 42.2 per cent higher than recorded during 2009-10. Trade credit at US $ 50.6 billion continued to show an up trend in the first half of 2011-12 and grew by 43.5 per cent as compared to 59.8 per cent in the first half of 2010-11. In value, volume, Unit Values & terms of trade Trade Performance : Growth in Value, Volume, Unit Values & Terms Of Trade ( Annual per cent change) Export value Rupee terms 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 25.3 14.7 28.2 0.6 35.1 28.7 US$ Terms 22.6 29.0 13.6 -3.5 40.5 23.5 Volume 10.2 7.9 9.0 -1.1 43.2 Unit Value 13.7 5.1 16.9 1.0 -5.1 -

Import Value 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Rupee terms 27.3 20.4 35.8 -0.8 -5.1 34.8 US$ Terms 24.5 35.5 20.7 -5.0 23.4 29.4 Volume 9.8 14.1 20.2 9.9 28.2 Unit Value 15.1 1.9 13.8 10.0 10.1 -

However, growth in outflow on account of trade credit was higher at 57.7 percent in the first half of 2011-12 as against 28.1 per cent in the first half 2010-11. As a result, net inflow was marginally lower at 5.9 billion in the first half of 2011-12 as compared to US$ 6.9 billion in the first half of 2010-11. Export credit growth has decelerated to 8.4 percent in 2011-12 (up to 30 December 2011) over end March 2011 as against 22.2 per cent growth in the full financial year (FY) 2010-11. Export credit as a percent of net bank credit (NBC) has been decelerating over the years and accounted for only 4.2 per cent as on 30 December 2011 compared to the 9.8 per cent as on 24th March 2000. As concerns relating to the euro area crisis have intensified since September 2011, the downward risks to trade credit in the coming quarters seem to have increased. Keeping in view the tight liquidity conditions and widening of credit spread due to recent developments in international financial markets, on 15 November 2011 the ceiling rate on export credit in foreign currency by banks was increased to London Inter bank offered Rate (LIBOR) rate on the lines of credit wit, overseas banks has also been increased from six months LIBOR/EURO LIBOR/ EURIBOR plus 100 basis points to six months LIBOR/ EURO LIBOR/ EURIBOR plus 250 bps. These changes are applicable till 31 March 2012 and would be subject to review thereafter. Similarly, recognizing the fact that domestic importers were experiencing difficulties in raising trade credit within the existing All-In-Cost (AIC) ceiling, on 15 November 2011, the Reserve Bank revised the AIC ceiling for trade credits from six months LIBOR plus 200 bps to LIBOR plus 350 basis points for trade credit up to one years as well as that with maturity period of more than one year and up to three years. The AIC ceiling includes arranger fee, upfront fee, and management fee, handling / processing charges, out-of-pocket and legal expenses, if any. The enhancement in AIC ceiling is also applicable up to 31 March 2012 and subject ot review thereafter.

B. a)

State Of World Trade since 2010 Economic growth

World GDP at market exchange rates expanded 3.6 per cent in 2010, one year after an unprecedented contraction of 2.4 per cent that accompanied the financial crisis in 2009. Output of developed economies rose 2.6 per cent in 2010 after falling 3.7 per cent in 2009, while the rest of the world (including developing economies and theCIS ) grew 7.0 per cent, up from 2.1 per cent in 2009. Growth was stronger in the first half of the year, but weakened in the second half as the sovereign debt crisis affecting smaller euro area economies restrained economic growth, especially in Europe. Although developing economies collectively avoided an outright decline in 2009, many individual economies saw fall in their GDP for example South Africa, Chile, Singapore and Chinese Taipei. However, all of these economies returned to positive growth in 2010, and the only large developing country that remained mired in recession was the Bolivarian Republic of Venezuela. GDP grew faster in developing Asia (8.8 per cent) than in other developing regions last year, with China and India registering strong increases of 10.3 per cent and 9.7 percent, respectively. South and Central America also saw vigorous growth of 5.8 per cent, driven by Brazils strong 7.5 per cent up turn. However, Africa had the fastest average rate of GDP growth of any region over the last five years (4.7 per cent between 2005 and 2010). Developed economies grew more slowly than developing economies, but some performed better than other. Concerns about the possibility of sovereign defaults in Greece, Ireland, Portugal and Spain brought renewed financial market instability and fiscal austerity

in the second half of 2010, which held Europes growth rate down to 1.9 per cent, the slowest of any region. The economies of Greece, Ireland and Spain all contracted in 2010, as did Icelands which was hit by a banking crisis in 2008. The major exception to the below average GDP growth in Europe was Germany, whose 3.6 per cent growth rate outpaced all euro area economies and all European Union members except for Sweden and Poland. According to OECD National Accounts Statistic, Germanys net exports of goods contributed 1.4 per cent to its 3.6 per cent GDP growth or 40 per cent of the total increase. By comparison, domestic final consumption expenditure only contributed 0.7 percent to GDP or 19 per cent of the total increase. GDP growth in the United States was more subdued, at 2.8 per cent in 2010, while Japans was up 3.9 per cent. However, the Japanese recovery should be seen in the context of the 6.3 per cent drop in output that the country experienced in 2009, the most severe decline among leading industrialized economies. Japan also surrendered the position of the worlds second-largest economy to China, measured in dollar terms. In terms of income per head, however, it may be noted that Japans per capita GDP was US $ 44800 in 2010, compared with a figure of US $ 4800 for China.

B ) Merchandise trade in volume terms :

World merchandise exports in volume terms (i.e excluding the influence of prices and exchange rates) rose 14.5 percent On the import side, faster than average growth was observed in South and Central America (22.7 percent), the CIS (20.6 per Cent), Asia (17.6 per cent ) and North America (15.7 per cent) while slower growth was reported in Europe (9.4 per cent), middle East (7.5 per cent) and Africa (7.1 per cent)/ Asias rapid real export growth in 2010 was led by China and Japan, whose shipments to the rest of the world each rose roughly 28 per cent. Chinas trade performance is more impressive when one considers that the decline in the countrys exports in 2009 was less than half that of Japlan (11 per cent compared with 25 per cent). Mean while, the United States and the European Union saw their exports growing more slowly at 15.4 per cent and 11.4 per cent, respectively. Imports were up 22.1 per cent in real terms in China, 14.8 per cent in the United States,10.0 per cent un Japan and 9.2 per cent in the European Union. Regions that export significant quantities of natural resources ( Africa, the CIS the middle East and South America) all experienced relatively low export volume growth in 2010, but very strong increases in the dollar value of their export. ( For example, Africas exports were up 6 per cent in volume terms, and 28 per cent in dollar terms).

An explanation for this can be seen in rising primary commodity prices, which resumed their upward trajectory in 2010, after plunging in 2009. Despite recent volatility, the overall trend towards higher prices is clear. Prices fell sharply in 2009 as the global recession took hold, but then shot up again when growth resumed in 2010. The increase were driven to a large extent by rising import demand on the part of fast-growing developing economies such as China and India. Between 2000 and 2010, prices for metals rose faster than any other primary commodity group, wit average annual increase of 12 per cent, followed closely by energy with 11 per cent growth per annum.
Only agricultural raw material prices stagnated, with increases of just 2 per cent per year on average over the last ten years. In 2010, while world imports grew 13.5 per cent. In principle, world exports and imports should increase at roughly the same rate, with some discrepancies due to differences in data recording across countries. World trade as measure by exports grew four times as fast as global GDP in 2010, whereas trade normally grows about twice as fast as GDP. The uneven recovery in output produced an equally uneven recovery in trade. While world merchandise exports rose 14.5 per cent in volume terms, those of developed economies increased by 12.9 per cent, and combined shipments from developing economies and the CIS jumped 16.7 per cent. Imports of developed economies grew more slowly than exports last year (10.7 per cent compared with 12.9 per cent) while developing economies plus the CIS saw the opposite happen (17.9 per cent growth in imports compared with 16.7 per cent for exports). Only in Asia and North America did exports grow faster than the world average (15.0 per cent and 23.1 per cent, respectively ), whereas slower than average growth was in contrast to primary products, prices of manufactured goods rose very little in 2010. Exports and import price indices may differ substantially across countries, but as an example, US non-fuel import prices in 2010 were nearly unchanged from 2009 (up 2.7 per cent in 2010 after falling 3 per cent 2009), and prices of imports from China (predominated by manufactures) declined by 0.1 per cent. This means that nominal trade figures for natural resources exports, where as real trade growth for countries that mostly export manufactured goods would be relatively close to their nominal growth rates recorded in Europe (10.8 per cent), the CIS (10.1 per cent, ) the Middle East (9.5 per cent), Africa (6.4 per cent) and South and Central America (6.2 per cent).

c)

Merchandise and commercial services trade in value terms

As a result of rising commodity prices and depreciating US currency ( down 3.5 per cent on average against major currencies in 2010 according to US Federal Reserve nominal effective exchanged rate statistics), growth in the dollar value of word trade in 2010 was greater than the increase in volume terms. World merchandise exports were up 22 per cent, rising from US$ 12.5 trillion to US$ 15.2 trillion in single year, while world exports of commercial services rose 8 per cent, from US$ 3.4 trillion to US$ 3.7 trillion.

The faster growth of merchandise trade compared with services can be partly explained by the smaller decline in services in 2009 (just 12 per cent compared with 22 per cent for merchandise), which implies less need for faster- than-average growth to catch up to earlier trends. The average annual growth in the value of merchandise trade and commercial services trade between 2005 and 2010 was the same, at 8 per cent. World exports of goods and commercial services in current US dollars rebounded more quickly than world GDP in 2010, and as a result the ratio of world trade to GDP rose sharply after falling even more sharply in 2009. At 124 in 2010, it remained below its 2008 peak of 132, but the 2010 value was still high by historical standards.

Merchandise trade
Nominal merchandise exports of developed economies jumped 16 per cent in 2010 to SU$ 8.2 trillion, up from US$ 7.0 trillion in 2009. However, because this rate of increase was slower than the world average of 22 per cent, the share of developed countries in word merchandise exports fell to 55 per cent, its lowest level ever. This falling share cannot be explained mainly as a result of higher prices for primary products exported predominantly by developing countries. This is because the latter prices were even higher in 2008 but the share of developed countries in world trade at the time was also higher, at nearly 58 per cent. The story is similar on the import side, where developed economy imports increased 16 per cent to US$ 8.9 trillion, but their share in world imports dropped to 59 per cent from 61 per cent in 2009 and 63 per cent in 2008. Commercial services World exports of commercial services increased 8 per cent to US$ 3.67 trillion in 2010 after dropping 12 per cent in 2009. Transportation was the fastest growing component of commercial services exports in 2010, with an increase of 14 per cent to US$ 782.8 billion. The faster growth of transport services is not surprising since they are closely linked to trade in goods, which saw record growth last year. Travel grew in line with commercial services overall, whereas other commercial services ( including financial services ) advanced more slowly. North Americas exports were worth US$ 599 billion in 2010, while the value of the regions imports came to US$ 471 billion. Exports and imports were both up 9 per cent year-on-year, but Mexico lagged on the export side with 5 per cent growth. South and Central Americas exports rose 11 per cent to US$ 111 billion, nut imports grew more than twice as fast (23 per cent) to reach US$ 135 billion. Bothe exports and imports of Brazil grew faster than the regional average (15 per cent and 35 per cent, respectively ), with

particularly high growth rates observed for imports of transport services ( 42 per cent ) and travel (51 per cent), partly due to the strength of the real. Europes exports and imports were both larger than any other regions in 2010 (US$ 1.72 trillion and USS 1.5 trillion, respectively) but they were also the least dynamic, with growth of just 2 per cent on the export side and 1 per cent on the import side. The reason for Europes poor performance can be found in the weakness of travel services, which declined by 3 per cent on the export side and 2 per cent on the import side. In 2010, exports of CIS countries increased by 10 per cent to US$ 78 billion. The regions imports also rose 14 per cent to US$ 105 billion. Russian exports growth of 6 per cent was driven by transport services.

D ) Sectroal developments
Prices for traded manufactured goods tended to be more stable than those of primary products, both before and after the economic crisis, so movements in nominal trade flows reflect changes in quantities reasonably well. This is important because the product composition of trade was a major determinant of the extent to which the exports and imports of various countries declined in 2009, and the same was true during the recovery of 2010. By the end of 2010, exports of manufactures had only just returned to a level close to their pre-crisis maximum, while particular categories such as automotive products and iron and steel were still well below their mid-2008 peaks. World exports of office and telecom equipment declined less than other products during the crisis, but have grown faster since then. Exports of office and telecom equipment rose nearly 73 per cent between Q1-2009 and Q4-2010, and automotive products increased by a similar amount (71 per cent). However, automotive products declined much more during the crisis (51 per cent compared with 30 per cent for office and telecom), so that by the end of 2010 they were only 5 per cent above their level at the beginning of 2007, whereas world trade in office and telecom equipment was up 37 per cent. Manufactures as a whole rose 46 per cent between Q1-2009 and Q4-2010. The share of office and telecom equipment in exports of developing economies is greater than its share in developed economies exports (15 per cent in 2008 for the former, 7 per cent for the latter) while automotive products are responsible for a larger share of developed economy exports (11 per cent, compared with 4 per cent for developing economies), so it is perhaps not surprising that developed country export share lagged behind those of developing countries since the crisis.

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World trade in textiles and clothing did not fluctuate as much as other products in 2009 ( down 14 per cent_ and 2010 (up 11 per cent) but the category other machinery matched the trend for total manufactures almost perfectly. This is partly due to its relatively large share in manufactures trade ( about 13 per cent in 2009) but also to the fact that it is mostly made up of investment goods ( industrial machinery, power generating equipment, etc.) which are highly sensitive to economic conditions and closely linked to production. About 4 per cent of trade in manufactures is composed of consumer durables other than automobiles (mostly household appliances). Due to insufficient data, we cannot say at this stage whether world trade became more or less regional in 2010.

E) Trade balances and exchange rates

Trade imbalances of leading economies widened in 2010, as exports iand imports bounced back from their depressed levels of 2009. However, for most countries the gap between exports and imports was smaller after the crisis than before. The monthly trade deficit of the United States widened from a low of US$ 32 billion in February 2009 to around US$62 billion per month on average in the second half of 2010, and the deficit for the year increased 26 per cent compared with 2009. However, the 2010 deficit of US$ 882 billion in 2008. China s ,merchandise trade surplus for 2010 totaled US$ 183 billion, roughly 7 per cent less than the US$ 196 billion it recorded in 2009, and 39 per cent les than the nearly US$ 300 billion surplus of 2008. The European Union had a trade deficit with the rest of the world of US$ 190 billion in 2010, which was up 26 per cent from 2009 but down 49 per cent from the US$ 375 billion it recorded in 2008. Japan was an exception to the trend towards smaller trade deficits/ surplus after the financial crisis. In 2008 the country recorded a US$ 19 billion surplus of exports over imports, but this nearly quadruples to US$ 77 billion in 2010. In terms of exchanges rates, by February 2011 the yuan had appreciated against the US dollar in nominal terms by around 3.8 per cent from its previous level. Howwever, real appreciation against the dollar is happening at a faster rate due to higher inflation in China. Chinas real real ( i. e. inclation adjusted ) effective exchange rate against a broad basket of currencies rose 1.3 per cent in2010 according to indices supplied by J.P. Morgan. By

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comparison, the US dollar registered a 5 per cent real effective depreciation against trading partners currencies during the same period.

Indias Merchandise Trade

India s exports and imports registered a five to seven fold increase in the last decade from US$ 44.6 billion and US$ 50.5 billion respectively in 2000-01 to US$251.1 billion and US$369.8 billion in 2010-11 respectively. While the Compound Annual Growth Rates (CAGR) of Indias exports and imports in US dollar terms) were 8.2 per cent and 8.4 percent respectively in the 1990s, they increased to 19.5 per cent and 25.1 per cent during 2000-01 to 2008-09. The resilience of Indias trade can be seen from the fact that its export and import growth, which fell to -3.5 per cent and 5 per cent in 2009-10 as a result of the shock from the 2008 global economic crisis, rebounded to 40.5 per cent and 28.2 per cent 2010-11. India not only reached pre crisis levels in exports, but surpassed pre-crisis trends in export growth rate unlike many other developing and even developed countries. Indias share in global exports and imports also increased from 0.7 per cent and 0.8 per cent respectively in 2000 to 1.5 per cent and 2.2 per cent in 2010 (1.4 and 2.1 per cent as per WTO). Its ranking in the leading exporters and importers improved from 31 and 26 in 2000, to 20 and 13 in 2010 respectively. During the first half of 2011-12, Indias exports witnessed a high growth of 40.6 per cent. However, since October 2011 there has been a deceleration in export growth as a result of the crisis originating in the periphery of the euro zone area and spreading to the core economies resulting in now evident mild recession in the euro area. Exports registered a high growth of 61.1 percent in July 2011. After that growth decelerated to 41.5 per cent, 25.2 per cent, and 18.1 per cent in August, September, and October 2011 respectively. In November 2011 export growth was negative at 0.5 per cent but in December 2011 and January 2012, it was positive but low at 6.7 per cent and 10.1 per

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cent respectively. Cumulative exports were at US $242.8 billion, registering a growth of 23.5 percent during 2011-12 ( April-January). During April- December 2011, the export sectors that have done well are petroleum and oil products registering a growth of 55 per cent; gems and jewellery 38.5 percent; engineering 21.6 per cent; cotton fabrics made ups, etc. 13 per cent; electronics 21.1 percent readymade garments 23.7 percent; and drugs 21.5 percent. While export growth in dollar terms decelerated slightly in 2011-12 ( AprilDecember) over the corresponding period compared to the growth in 2010-11 full year, it was stable or decelerated less in rupee terms which is a direct reflection of the depreciation of 3.1 per cent in 2011-12 ( April-December). On the other hand import growth in rupee terms accelerated more sharply than in dollar terms.

Indias Trade Performance

Exports
Indias merchandise exports reached a level of US$ 178.7 billion during 2009-10 Reregistering a negative growth of 3.5 per cent as compared to a growth of 13.6 per cent during the previous year . Not with standing the deceleration of the growth in 20096-2010, Indias export sector has exhibited remarkable resilience and dynamism in recent years. Our mechandies exports recorded a Compound Annual Growth Rate ( CAGR ) of 22.0 per cent during the five year export from 2004-05 to 2008-09 as cpmpared to the preceding five years when export increased by lower CAGR of 14.0 per cent .According to latest WTO data ( 2009 ) Indias share in the world merchandise trade from 30th in 2004 to 21 st in 2009. Indias export have not been affected to the same extent as that of other economies of the world during the phase of global slowdown. After declining consistently for the first seven months of the year 2009-10,Indias exports reversed the trend in October ,2009; 20.3% in December, 2009; 18.7% in January ,2010, 34.8% in February ,2010; 54.1% in march 2010,42.1 % in April 2010,34.1% in May 2010 , 46.5% In June 2010, 13.8% In July 2010,23.3% In August 2010 , 23.8% in September 2010,21.3% in October , 2010 36.5% in November 2010 and 36.4 % in December 2010 . The extent of sustained recovery of export would ultimately depend on the strength of the recovery of global demand. Month wise export from November , 2009 to December ,2010 Month November, 2009 December, 2009 January, 2010 Percentage growth 30.0 20.3 18.7

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February, 2010 March, 2010 April,2010 May, 2010 June, 2010 July, 2010 August, 2010 September, 2010 October, 2010 November, 2010 December, 2010

34.8 54.1 42.1 34.1 46.5 13.8 23.3 23.8 21.3 26.5 36.4

The government had set an export target of US $ 175 billion for 2009-10 With merchandise reaching US $ 178.7 Billion in 2009-10, the actual export the target by 2.1 per cent which is a remarkable achievement during a period of recession in Indias major export destinations . During 2010-11 ( Apr Dec ) export reached a level of US $ 164.7 billionn registering a growth of 29.5 per cent with almost the major commodity groups making positive growth. Only seven commodities showed negative growth viz. Tea ( 1.95) , cashew ( 7.73 ) , Fruits & vegetables ( 28.03), Iron Ore ( 93. 14 ), Computer software ( 92.73 ), Petroleum Products ( 13.50 ) and Handicraft ( excl . Handmade carpets ) ( 56.90)

Trends IN growth of export Export target & achievement

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250

200

150

100

50

0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010

IMPORTS
Imports during 2009-10 WERE us $ 288.4 Billion as Against US $ 303.7 billion During 2008-09 registering a negative growth of 5.1 per cent in Dollar terms. Oil Imports were valued at US $ 87.1 Billion which was 6.5 per cent lower then valued at US $ 93.2 billion in the previous year. Non oil imports were US $ 93.2 Billion which was 3.4 per cent higher than non oil imports of US $ 194.6 billion in the previous year

TRADE BALANCE

During 2009-10 trade deficit decline marginally as there was a mild recovery in export and marginal decline in imports. The trade deficit in 2009-10 was US $ 109.6 Billion which was lower than the deficit of US $ 118.4 billion during 2008-09. Performance of export ,Imports and Balance of trade in repees during 2004-05 to 2010-11 ( April-Dec ) is given in the table. Performance of Export, Imports and Balance Trade Value in Rs crore

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S.No
1 2 3 4 5 6 7 8

Year
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 20112012(Provisional) 2011-12 (AprilFebruary) Press Release 2012-13 (AprilFebruary) Press Release

Exports
3,75,340 4,56,418 5,71,779 6,55,864 8,40,755 8,45,534 11,42,92 2 14,59,28 1 13,20,83 6 14,46,62 7

%Growth
27.94 21.60 25.28 14.71 28.19 0.57 35.17 27.68

Imports
5,01,065 6,60,409 8,40,506 10,12,312 13,74,436 13,63,736 16,83,467 23,44,772

%Growth
39.53 31.80 27.27 20.44 35.77 -0.78 23.45 39.28

Trade Balance
-1,25,725 -2,03,991 -2,68,727 -3,56,448 -5,33,680 -5,18,202 -5,40,545 -8,85,492

21,32,198

-8,11,362

10

9.52

24,36,564

14.27

-9,89,938

P Perfomance of Export ,Import and Balance of trade Value In US $ Million S. No. 1 2 3 4 5 6 7 8 Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011Exports 83,536 1,03,091 1,26,414 1,63,132 1,85,295 1,78,751 2,51,136 3,04,624 %Growth 30.85 23.41 22.62 29.05 13.59 -3.53 40.49 21.30 Imports 1,11,517 1,49,166 1,85,735 2,51,654 3,03,696 2,88,373 3,69,769 4,89,181 %Growth 42.70 33.76 24.52 35.49 20.68 -5.05 28.23 32.29 Trade Balance -27,981 -46,075 -59,321 -88,522 -1,18,401 -1,09,621 -1,18,633 -1,84,558

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2012(Provisional) 9 2011-12 (AprilFebruary) Press Release 2012-13 (AprilFebruary) Press Release 2,77,125 4,46,939 -1,69,814

10

2,65,946

-4.03

4,48,037

0.25

-1,82,090

Indias export has not been affected to the same extent as other economies of the world during the phase of global slowdown, yet exports which had suffered a decline since October ,2008 continued of first seven consecutive month in 209-10 as well . However, the declining trend become less steep from 2005 onwards and turned the positive phase from the month of November, 2009 reversing the earlier trend.

FOREIGN TRADE POLICY , 2009-14 The foreogn Trade Policy ( FTP ) 2009-14 was announced on 27th August, 2009 in the backdrop of a fall in Indias export due to global showdown. T he short term objective FTP ( 2009-14 ) was to arrest and reserve the Declining trend of exports as well as to provide additional suuprt especially to those sector which were hit badly by recession in the developed world. The Policy envisaged an annual export growth of 15 per cent with an annual export target of US % 200 billion by March 2011 and to come back on the high export growth path of around 25 per cent annum in the long term policy objective for the government is to double Indias share in global trade by 2020. Subseqently, as annual Supplement 2010-11 to the FTP ( 2009-14) was announced on 23rd August, 2010. In This Supplement Further measures to enhance export have been eLabourated. Further measures were announced on 11th February 2011.

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EXPORT BY PRINCIPAL COMMODITIES Export during the period Apr- Dec. 2010-11 Registered growth of 29.5% in US $ terms. The share of top five principal commodity groups in indias total export during 2010-11 ( April September ) is given at chart Share of top 5 commodity Groups in Indias Export 2012-13

April - September

Petroleum Gems & Jewellry Transport Equpitment Machine Drug

Top 5 commodities of export by growth ( Apr. Jan ) 2011-12 & 2012-13

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50 40 30 20 10 0 Petroleum -10 -20 Gems Transport Machinery Drug other

Series 1 Series 2

Export of plantation crops during 2010 Plantation Crops

Export of Plantation crops during 2012-13 (AprilJanuary), decreased by 9.95 per cent in US $ terms compared with the corresponding period of the previous year. Export of Coffee registered a negative growth of 11.44 per cent, the value decreasing from US $ 741.05 million to US $ 656.26 million. Export of Tea also decreased by 8.50 per cent.

Agriculture and Allied Products

Agriculture and Allied Products as a group include Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guargum Meals, Castor Oil, Shellac, Sugar & Molasses, Processed Food, Meat & Meat Products, etc. During 2012-13 (AprilJanuary), exports of commodities under this group registered a growth of 27.57 per cent with the value of exports increasing from US $ 21353.59 million in the previous year to US $ 27240.35 million during the current year.

Ores and Minerals

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Exports of Ores and Minerals were estimatedat US $ 4389.03 million during 201213 (April-January) registering a negative growth of35.48 per cent over the same period of the previous year. Sub groups viz. Iron Ore, Mica, Other ores & minerals and Coal have recorded a negative growth of 64.99 per cent, 0.80 per cent, 9.46 per cent and 5.24 percent respectively. Processed minerals registered a growth of 12.14 per cent.

Leather and Leather Manufactures

Export of Leather and Leather Manufactures recorded a negative growth of 2.22 per cent during 2012-13 (April-January). The value of exports decreased to US $ 3973.92 million from US $ 4064.33 million during the same period of the previous year. Exports of Leather and Manufactures have registered a growth of 3.98 per cent and Leather Footwear registered a negative growth of 10.01 per cent. export of Readymade Garments, Manmade Textiles & Made Ups, Natural Silk Textiles, Wool and Woolen manufactures, Coir and coir manufactures and Jute manufactures registered negative growth of 7.80 per cent, 12.61 per cent, 23.34 per cent, 19.98 per cent, 7.18 per cent and 16.37 per cent respectively. However, Cotton yarn/Fabrics/Made-ups etc. registered a positive growth of 6.38 per cent.

Handicrafts and Carpets

Exports of Handicrafts declined to US $ 180.51 million during 2012-13 (AprilJanuary), from US $ 214.84 million during the corresponding period of the previous year registering a negative growth of 15.98 per cent. Export of carpets increased to US $ 812.17 million from US $ 699.26 million during the same period last year registering a growth of 16.15 per cent.

Project Goods
During 2012-13 (April-January), the export of Project Goods were estimated at US $ 87.70 million compared with US $ 44.10 million during the corresponding period of last year registering a substantial growth of 98.88 per cent

Petroleum Crude & Products

20

The import of Petroleum Crude & Products stood at US $ 140729.62 million during 2012-13 April - January as against US $ 125871.43 million during the same period of the previous year registering a growth of 11.80 per cent.

Fertilizers
During 2012-13 (April January), import of Fertilizers (manufactured) decreased to US $ 6991.61 million from US $ 8718.13 million in April-January 2011-12 recording a negative growth of 19.80 per cent.

Pearls, Precious and Semi-Precious Stones

Import of Pearls, Precious and Semi-Precious Stones during 2012-13 (April January) decreased to US $ 17696.44 million from US $ 26339.27 million during the corresponding period of the previous year registering a substantial decline of 32.81 per cent.

Gold & Silver

During 2012-13 (AprilJanuary) import of Gold and Silver decreased to US $ 46769.39 million from US $ 51751.03 million during the corresponding period of the previous year registering a negative growth of 9.63 per cent.

Direction of Indias Foreign Trade

The value of Indias exports and imports from major regions/ countries both in Rupee and Dollar terms are given in Appendix at Table 3.3, 3.4, 3.7 and 3.8 respectively. Share of major destinations of Indias Exports and sources of Imports during 2012-13 (April January) are given in Chart 3.7 and 3.8 respectively.

Gems and Jewellery

21

The export of Gems and Jewellery during 2012-13(April-January) decreased to US $ 34758.78 million from US $ 38755.30 million during the corresponding period of last year showing a negative growth of 10.31 per cent.

Chemicals and Related Products

During the period 2012-13 (April-January), the value of exports of Chemicals and Related Products increased to US $ 34686.90 million from US $ 32319.14 million during the same period of the previous year registering a growth of 7.33 per cent. Basic Chemicals and Pharmaceuticals & Cosmetics and Rubber, Glass & Other Products have registered a positive growth and Residual Chemicals and allied products and Plastic & linoleum registered a negative growth.

Engineering Goods
Items under this group consist of Machinery, Iron & Steel and Other Engineering items. Export from this sector during the period 2012-13(April-January) stood at US $ 45543.37 million compared with US $ 47966.60 million during the same period of the previous year, registering a negative growth of 5.05 per cent. The growth in export of Other Engineering items stood at 5.78 per cent, Machinery & Instruments stood at 3.53 per cent and Machine Tools stood at 4.59 per cent.

Electronic Goods
During the period 2012-13 (April-January), exports of Electronic Goods as a group was estimated at US $ 7102.84 million compared with US $ 7441.50 million during the corresponding period of last year, registering a negative growth of 4.55 per cent.

Textiles
During the period 2012-13 (April-January), the value of Textiles exports was estimated at US $ 21200.12 million compared with US $ 22447.75 million in the corresponding period of the previous year, recording a negative growth of 5.56 per cent. Theas compared with US $ 46489.12 million during the same period of last year recording a growth of 4.57 per cent.

Cotton Raw including Waste

22

There was a negative growth in the exports of Cotton Raw including waste by 21.13 per cent from US $ 3326.67 million in 2011-12 (April-January) to US $ 2623.68 million during 2012-13 (April-January).

Imports of Principal Commodities

Disaggregated data on imports of principal commodities, both in Rupee and Dollar terms, available for the period 2012-13 (April January), as compared to the corresponding period of the previous year are given in Appendix at Table 3.5 and Table 3.6 respectively. Imports of the top five commodities during the period 2012-13 (April-January) registered a share of 61.8 per cent mainly due to significant imports of Petroleum (Crude & Products), Gold, Electronic Goods, Machinery except electrical and electronic and Pearls, precious and semi-precious stones. The share of top five Principal Commodity in Indias total imports during 2012-13 (April January) The import performance by growth of top five Principal commodities during 2012-13 (AprilJanuary) vis-a-vis the corresponding period of the previous year is shown at Chart 3.6.

Organic and Inorganic Chemicals

During 2012-13 (AprilJanuary), import of Organic and Inorganic Chemicals increased to US $ 16116.77 million from US $ 15837.29 million during the same period of last year, registering a growth of 1.76 per cent. Import of Medicinal and Pharmaceutical Products increased to US $ 2550.01 million from US $ 2446.88 million during the corresponding period of last year registering a growth of 4.21 per cent

Coal, Coke & Briquettes

During 2012-13 (AprilJanuary), import of Coal, Coke & Briquettes decreased to US $ 13301.43 million from US $ 14851.58 million during the same period of last year, registering a negative growth of 10.44 per cent. During the countries (27) comprises 16.99 per cent. During the period, USA (12.89 per cent) has been the most important country of export destination followed by UAE (12.20 per cent), Singapore (4.79 percent), China (4.59 per cent) and Hong Kong (3.95 per cent). Asia accounted for 60.08 per cent of Indias total imports during the period followed by Europe (17.39 per cent) and America (11.64 per cent). Among individual countries the share

23

of China stood highest at (11.21 per cent) followed by UAE (7.67 per cent), Saudi Arabia (6.78 per cent), Switzerland (6.01 per cent) and USA (5.00 per cent). Major Destination of Indias export In US $ terms 2012-13( April January )

USA U Arab EMTS Singapour China p rp Hong kong rest of the world

Major sourc e of indias Imports in US $ terms for 2012-2013 (April January )

China P RP U Arab EMTS Saudi Arab Switzerland USA Rest of the world

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The long-term vision of the Department of Commerce is to make India a major player in world trade by 2020, and assume a role of leadership in the international trade organizations commensurate with Indias growing economic and demographic profile. In consonance with its vision of ensuring sustained accelerated growth of exports and making India a major player of world trade, the Government announces a Foreign Trade Policy (FTP) every five years. FTP is annually reviewed to incorporate changes necessary to take care of emerging economic scenarios both domestically and globally. The underlined philosophy of supplement to Foreign Trade Policy is based on seven broad principles: a) Give a focused thrust to employment intensive industry. b) Encourage domestic manufacturing for inputs to export industry and reduce the dependence on imports c) Promote technological up gradation of exports to retain a competitive edge in global markets d) Persist with a strong market diversification strategy to hedge the risks against global uncertainty e) Encourage exports from the North Eastern Region given its special place in Indias economy f) Provide incentives for manufacturing of green goods recognising the imperative of building capacities for environmental sustainability g) Endeavour to reduce transaction cost through procedural simplification and reduction of human interface

The FTP 2009-14, was updated on June, 2012. The salient features of this focussed on reducing interest burden and extension of the Interest Subvention Scheme upto 31st March, 2013, focus on labour intensive sectors such as Toys, Sports Goods, Processed Agricultural Products and Ready-Made Garments. The Supplement also provided for extension of the Zero Duty EPCG Scheme (Export Promotion Capital Goods Scheme) till 31st March 2013 with enlarged scope. Other critical initiatives include: Support for Export of Green Technology Products, Support for Infrastructure for Agriculture Sector, Incentives for Promoting Investment in Labour Intensive Sectors, Encouragement for Manufacturing Sector in Domestic Market, adding three new towns of export excellence, simplification of procedures, focussing on E enabled transmission of foreign exchange etc. In view of the Departments strategy of export diversification with focus on new markets and commodities, 7 new markets have been added to Focus Market Scheme (FMS), 7 new markets have been added to the Special Focus Market Scheme (Special FMS) and 46 new items have been added to Market Linked Focus Product Scheme (MLFPS).

Additional incentives to boost exports

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Government has recently reviewed the situation arising out of current economic scenario and declining growth in the western world. Some urgent steps are required for policy stability, to boost the exports and to reverse this decliningtrend. Accordingly, it has been decided to:

(a) Extend period of Interest subvention

2% Interest Subvention Scheme on rupee export credit is available to certain specific export sectors. These are (i) Handicrafts, (ii) Carpets, (iii) Handloom, (iv) Readymade Garments, (v) Processed Agriculture Products, (vi) Sports Goods and (vii) Toys. In addition Small and Medium Enterprises (SME) in all sectors enjoy this benefit. Currently the scheme ends on 31st March, 2013. Now this scheme of 2% interest subvention to these specific sectors will be extended by one more year, i.e., up to 31st March, 2014.

(b) Widen Interest Subvention Scheme

Engineering Sector contributes handsomely to both job creation and value addition of Indian manufacture. To retain this competitive edge and also to give a boost to our engineering exports, certain specific sub-sectors of engineering sector would be extended the benefit of 2% interest subvention. They will receive this benefit for the last quarter of the current financial year, that is, from 1st January 2013 to 31st March 2013. The general interest subvention scheme is being continued till 31st March, 2014. Accordingly these specific engineering sub-sectors would continue to enjoy this benefit of interest subvention till 31st March, 2014.

(c) Introduce a pilot scheme of 2 % Interest Subvention for Project Exports through EXIM Bank

A pilot scheme of 2% interest subvention is being introduced for Project Exports, through EXIM BANK for countries of SAARC region, Africa and Myanmar. This scheme is being made operational for year 2012-13 onwards, for a combined worth of 500 million USD to begin with. The interest subvention would be linked to the Buyers Credit Scheme which was introduced in the last financial year and which is being implemented through EXIM BANK, ECGC and the National Export Insurance Account (NEIA). The essence of the scheme is to boost Indias Project exports inthe SAARC/African region and to our neighbour Myanmar, by providing long term concessional credit through the EXIM BANK, as co-financing for the project exports in infrastructure sectors. After the experience of this initial pilot, the

26

upper cap may be raised. The eligible cases for such incentive would be sponsored by EXIM BANK.

(d) Incentive on Incremental Exports

It has been decided to grant incentive on incremental exports made during the period January-March 2013 over the base period January-March 2012. The incentive would be granted to an IEC holder at the rate of 2% on the incremental growth of exports made to USA, EU and Asian Countries during this particular quarter i.e., January-March 2013. Certain exports like deemed exports, service exports, third party exports, export-turnover of SEZ units etc. would not be eligible under the scheme. Thus there will be focus on increasing export to certain specific destinations.

(e) Additions in the Chapter 3 Schemes

Certain products under the Focus Product Scheme and markets under Focus Market Scheme have been added. Similarly some additions have been made to MLFPS/VKGUY. These additions under Focus Market Scheme (FMS)/Focus Product Scheme (FPS)/Market Linked Focus Product Scheme (MLFPS)/Vishesh Krishi & Gram Udyog Yojna (VKGUY) would be eligible for incentives on exports from 1.1.2013 which has been notified through Public Notice 42 dated 31.12.2012.

Scheme-wise details

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Duty neutralization / remission schemes are based on the principle and the commitment of the Government that Goods and Services are to be exported and not the Taxes and Levies. Purpose is to allow duty free import / procurement of inputs or to allow replenishment either for the inputs used or the duty component on inputs used. There are two categories of these schemes namely,pre-export schemes and the post-export schemes. Brief of these schemes alongwith the amendmentscarried out during the current year are given below.

Pre - Export Schemes

Advance Authorization Scheme
Scheme allows duty free import of inputs, along with fuel, oil, catalyst etc., required for manufacturing the export product. Inputs are allowed either as per Standard Input Output Norms (SION) or on adhoc Norms basis under actual user condition. Norms are fixed by Technical Committee i.e., Norms Committee. This facility is available for physical exports (also including supplies to SEZ units & SEZ Developers) and deemed exports including intermediate supplies. Minimum value addition prescribed is 15%, except for certain items. Exporter has to fulfil the export obligation over a specified time period, both in quantity and value - wise. This year the facilities to club authorizations have been simplified and powers have been decentralized to RAs. Export obligation period in respect of Advance Authorisations have been reduced to 18 months from 36 months. The validity of Advance Authorisations / Duty Free Import Authorisation (DFIAs) has been reduced from 24 months to minimum 12 months or up to 31.3.14 from issue date, whichever is more.

Duty Free Import Authorization (DFIA)

DFIA Scheme has been made operational from 01.05.2006. One of the objectives of the scheme is to facilitate transfer of the authorisation or the inputs imported as per SION, once export is completed. Provisions of DFIA Scheme are similar to Advance Authorisation scheme. A minimum value addition of 20% is required under the scheme.

Schemes for Gems & Jewellery Sector

Gems & Jewellery exports constitute a major portion of our total merchandise exports. It is an employment oriented sector. Exports from this sector suffered significantly on account of theglobal economic slowdownDuty free import / procurement of precious metal (Gold / Silver / Platinum) from the nominated agencies is allowed either in advance or as replenishment. In addition, exporters of Gems & Jewellery items are allowed access to duty Free Import of consumables for export production upto a certain specified percentage of FOB value of previous years export. List of items allowed for duty free import by Gems & Jewellery sector has been expanded by inclusion of additional items such as tags and labels,

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security censor on card, staple wire and poly bag. This will reduce the cost of the product to some extent. Monitoring of import of Gold by Nominated Agencies as per the new guidelines has begun and this would result in better compliance.

Post- Export Schemes Duty Drawback Scheme

Duty Drawback scheme allows refund of customs duty and the excise duty on the inputs used in the manufacture of the export product at a specified percentage of FOB value of exports. Service Tax on the input services has also been factored in the All Industry rate of Duty Drawback. Duty drawback scheme for physical exports is being administered by the Department of Revenue and that of deemed exports, by the DGFT. Duty drawback rates for a number of products have been reduced on account of reduction in tariff and roll back of adhoc increase effected earlier. The products which were in the DEPB scheme are given appropriate rates of duty drawback so that taxes suffered by the inputs which go in the manufacture of the export product are rebated. The Duty Drawback Scheme was announced on 20.09.2011 in place of DEPB scheme.

Other Policy Initiatives

Interest subvention of 2 per cent has been extended upto March 2014. It has also been extended to labour intensive sectors, namely, Toys, Sports Goods, Processed Agricultural Products and Ready-Made Garments, in addition to four sectors viz. Handicrafts, Carpets, Handlooms and SMEs benefiting from the scheme earlier. With effect from January 2013, certain sub-sectors of Engineering sector has also been added to the list for 2% Interest Subvention. Time period of export realization for non-status holder exporters has been increased to 12 months, at par with the Status holders. This facility had been extended upto 30.09.2012. Further extension is under consideration of RBI.

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Vishesh Krishi and Gram Udyog Yojana (Special Agriculture and Village Industry Scheme) [VKGUY]
Objective of this scheme is to promote employment generation in rural and semi urban areas. Duty Credit Scrip benefits are granted with an aim to compensate high transport costs and to offset other disadvantages. VKGUY has been gradually expanded to include export of Agricultural Produce and their value added products; Minor Forest Produce and their value added variants; Gram Udyog Products; and Other Products, as notified under Appendix 37A of HBP vol.1, from time to time. Exporters of notified products are entitled for Duty Credit Scrip equivalent to 5% of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards. Exporter who has availed benefits of Drawback, at rates higher than 1% of FOB value of exports; or Specific DEPB rate (i.e. other than Miscellaneous Category Sr.Nos. 22D & 22C of Product Group 90); or Advance Authorization or Duty Free Import Authorization for import of inputs (other than catalysts, consumables and packing materials) for the exported product for which Duty Credit Scrip under VKGUY is being claimed then rate is reduced to 3%. Few products are also eligible to additional 2% over & above the 5% or 3%, as admissible for specified products inIn case of Status Holder, higher incentive is available in the form of duty credit scrip (Agri. Infrastructure Incentive Scrip) equal to 10% of FOB value of agricultural exports, limited to Rs. 100 crore per annum, for products covered under ITC HS Chapters 1 to 24. This includes incentive under VKGUY scrip. These scrips can be utilised to import Capital Goods and equipments for Cold Storage Units, Packhouses etc. These scrips will also be eligible for import of following specified equipments for setting up of Pack-houses: Packing grading equipments for fruits and vegetables Equipments for ripening of fruits including ethylene generator Adiabatic humidifiers for cold rooms Gas sensor and controlled system covering Co2, ethylene and oxygen levels Ethylene scrubbers Co2 scrubbers Blast freezers for IQF plants Doors for gastight rooms, applications like CA, Banana/fruit ripening Nitrogen generators Gas controlling systems for CA stores Bulk bins for CA stores Reach stackers for cold stores and warehouses Belt driven conveyors for bulk handling of cargo Gantry cranes, unloading, mechanized loaders for bulk and break bulk cargo For import of Cold Chain Equipment, this Incentive Scrip shall be freely transferable amongst Status Holders as well as to units in the Food Parks.

Focus Market Scheme (FMS)

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For offsetting high freight cost and other externalities to select international markets with aview to enhance Indias export competitiveness in these countries, Focus Market Scheme has been launched w.e.f. 1.4.2006. Exporters of all products to notified countries (as in Table 1 & Table 2 of Appendix 37C of HBP vol.1) shall be entitled for Duty Credit Scrip equivalent to 3% of FOB value of exports. Another 7 markets added to Focus Market Scheme (FMS) w.e.f. 5th June, 2012. These countries are Algeria, Aruba, Austria, Cambodia, Myanmar, Netherland Antilles, and Ukraine. So far, the Scheme covers a total of 119 markets. However, additional duty credit scrip @1% FOB value of exports is given to markets listed in Table 3 of Appendix 37C with effect from 1.4.2011 under Special Focus Market Scheme. 7 new markets have been added to the Special Focus Market Scheme (Special FMS) w.e.f. 5th June, 2012 taking the total countries under Special FMS to 48. These countries are Belize, Chile, El Salvador, Guatemala, Honduras, Morocco and Uruguay. Another five new markets have been added to FMS w.e.f. 01.01.2013. These countries are Cayman islands, New Zealand, Latvia, Lithuania and Bulgaria. One new market namely Eritrea has been added to the Special FMS w.e.f from 01.01.2013.

Focus Products Scheme (FPS)

To incentivise export of such products which have high export intensity / employment potential, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products, a scheme called Focus Products Scheme, has been introduced w.e.f. 1.4.2006. Exports of notified products (as in Appendix 37D of HBP vol.1) to all countries (including SEZ units) shall be entitled for Duty Credit Scrip equivalent to 2% or 5% of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards. Further, Bonus Benefits @2% of FOB value of exports is given over and above the existing benefit for specified products covered under Appendix 37D for exports made from 1.4.2010 onwards. So far, around 1200 products have been covered at 8 digit level underthe scheme, which include leather products and footwear, handloom products, handmade carpets and other textile floor covering, handicrafts, coir and jute products, technical textiles, engineering products, green technology products, electronic products, etc.

Market linked Focus Products Scrip (MLFPS)

To give significant boost to market penetration for specific products in specified markets, a variant under Focus Product Scheme called Market Linked Focus Products Scrip has been introduced from 1.4.2008. Export of products / sectors of high export intensity / employment potential (which are not covered under present FPS List) would be incentivised @ 2% of FOB value of exports (in free foreign exchange) under FPS when exported to the Linked Markets (countries), which are not covered in the present FMS List, as notified in Appendix 37D of HBP vol.1, for exports made from 27.8.2009 onwards. Further, 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 2013.

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Presently the products covered under the scheme include Motor vehicles, auto-components, bicycles and parts, apparels, knitted and crocheted fabrics, pharma products, value added plastic and rubber goods, glass products, dyes and chemicals, household articles, Machine Tools, Earth Moving equipments, Transmission towers, electrical and power equipments, steel tubes, pipes and galvanized sheets, Compressors, Iron and Steel Structures, Auto components, three wheelers and cotton woven fabrics etc. The countries covered under the Scheme include Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Ukraine, Australia, New Zealand, Cambodia, Vietnam, Japan and China amongst others. There are around 5000 products so far covered at 8 digit level. Table 2 ofAppendix 37D of HBP vol.1 may be referred for the list of products and countries.

Served from India Scheme (SFIS)

The objective of the Scheme is to accelerate growth in export of services so as to create a powerful and unique Served From India brand, instantly recognized and respected the world over. Indian Service Providers, of services listed in Appendix 41 of HBP vol.1, who have free foreign exchange earning of at least Rs.10 lakh in current financial year shall qualify for Duty Credit Scrip. For Individual Indian Service Providers, minimum free foreign exchange earnings would be Rs. 5 lakh. Service Providers are entitled to Duty Credit Scrip @10% of the free foreign exchange earned. However, Services and Service Providers listed in Para 3.6.1 of Hand Book of Procedures vol.1 are not eligible. Imports are allowed with actual user condition for import of capital goods, office equipments, consumables, vehicles which are in the nature of professional equipment to the service provider, etc.

Status Holders Incentive Scrip (SHIS)

With an objective to promote investment in upgradation of technology of some specified sectors such as leather, textiles, Jute, handicrafts, plastics, basic Chemicals, rubber products, glass and glassware, paper and books, paints and allied products, plywood and allied products, electronics products, sports goods and toys, engineering products viz. iron and steel, pipes and tubes, ferro-alloys etc., Status Holders shall be entitled to incentive scrip @ 1% of FOB valueof exports made during 2009-10 for six sectors, viz: Leather Sectors (excluding finished leather); Textiles and Jute Sector; Handicrafts; Engineering Sector (excluding Iron & Steel, Non-ferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors & parts and Ships, Boats and Floating Structures); Plastics; and Basic Chemicals (excluding Pharma Products), and expanded for exports in 2010-11 and 2011-12 of additional sectors listed in para 3.10.8 of Hand Book of Procedures vol.1, in the form of duty credit [subject to prescribed exclusions as specified in Policy] with actual user condition. This shall be over and above any duty credit scrip claimed/availed under Chapter-3 of FTP. This facility is available upto 31.3.2013. Status holders are issued Status Holders Incentive Scrip (SHIS) to import Capital Goods for promoting investment in up-gradation of technology of some specified labour intensive sectors like Leather, Textile & Jute, Handicrafts, Engineering, Plastics and Basic Chemicals. It is now decided that up to 10% of the value of these scrips will be allowed to be utilized to import components and spares of capital goods imported earlier. Such a dispensation was not available earlier. These scrips were subject to Actual User Condition and were not transferable. Since a status holder may or may not have manufacturing facility, limited transferability of SHIS has been allowed. However, such Transferee shall have to (a) be a status holder and (b) have manufacturing facility.

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A. Policy Initiative Announced in the Annual Supplement to FTP on 5th June, 2012

7 new markets have been added to Focus Market Scheme (FMS). These countries are Algeria, Aruba, Austria, Cambodia, Myanmar, Netherland Antilles, and Ukraine. 7 new markets have been added to the Special Focus Market Scheme (Special FMS). These countries are Belize, Chile, El Salvador, Guatemala, Honduras, Morocco, and Uruguay. 46 new items have been added to Market Linked Focus Product Scheme (MLFPS). This has the effect of including 12 new markets for the first time. MLFPS has been extended till 31 st March 2013 for export to USA and EU in respect of items falling in Chapter 61 and Chapter 62. 100 new items have been added to the Focus Product Scheme (FPS) list. 3 new towns have been declared as Towns of Export Excellence (TEE). These are Ahmedabad (Textiles), Kolhapur (Textiles), and Saharanpur (Handicrafts). Export of specified products through notified Land Customs Stations of North Eastern Region has been provided additional incentive to the extent of 1% of FOB value of exports. This benefit is in addition to any other benefit that may be available under Foreign Trade Policy in respect of these exports. Now Duty Credit Scrips shall be permitted to be utilized for payment of Excise Duty for domestic procurement. Earlier only scrips under SFIS were so permitted for procurement of goods from domestic market. Now all scrips would be permitted to source from domestic market so as to encourage manufacturing, value addition and employment. This will be an important measure for import substitution and will help in saving of foreign exchange in addition to creating additional employment. It is now decided that up to 10% of the value of Status Holders Incentive Scrip (SHIS) will be allowed to be utilized to import components and spares of capital goods imported earlier. Since a status holder may or may not have manufacturing facility, it is now decided to allow limited transferability of SHIS scrip. However, such Transferee shall have to (a) be a status holder and (b) have manufacturing facility.

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B. Measures announced on 26th December, 2012

(a) Extending period of Interest subvention 2% Interest Subvention Scheme on rupee export credit is available to certain specific export sectors. These are (i) Handicrafts, (ii) Carpets, (iii) Handloom, (iv) Ready - made Garments, (v) Processed Agriculture Products, (vi) Sports Goods and (vii) Toys. In addition Small and Medium Enterprises (SME) in all sectors enjoy this benefit. Currently the scheme ends on 31st March, 2013. Now this scheme of 2% interest subvention to these specific sectors has been extended by one more year, i.e., up to 31st March, 2014. (b) Widening of Interest Subvention Scheme Engineering Sector contributes handsomely to both job creation and value addition of Indian manufacture. To retain this competitive edge and also to give a boost to our engineering exports, certain specific sub-sectors of engineering sector would be extended the benefit of 2% interest subvention. They will receive this benefit for the last quarter of the current financial year, that is, from 1st January 2013 to 31st March 2013. The general interest subvention scheme is being continued till 31st March, 2014. Accordingly these specific engineering sub-sectors would continue to enjoy this benefit of interest subvention till 31st March, 2014. (c) Introduce a pilot scheme of 2 % Interest Subvention for Project Exports through EXIM Bank A pilot scheme of 2% interest subvention is being introduced for Project Exports, through EXIM BANK for countries of SAARC region, Africa and Myanmar. This scheme is being made operational for year 2012-13 onwards, for a combined worth of 500 million USD to begin with. The interest subvention would be linked to the Buyers Credit Scheme which was introduced in the last financial year and which is being implemented through EXIM BANK, ECGC and the National Export Insurance Account (NEIA). The essence of the scheme is to boost Indias Project exports in the SAARC/African region and to our neighbour Myanmar, by providing long term concessional credit through the EXIM BANK, as co-financing for the project exports in infrastructure sectors. After the experience of this initial pilot, the upper cap may be raised. The eligible cases for such incentive would be sponsored by EXIM BANK. (d) Incentive on Incremental Exports It has been decided to grant incentive on incremental exports made during the period January-March 2013 over the base period January-March 2012. The incentive would be granted to an IEC holder at the rate of 2% on the incremental growth of exports made to USA, EU and Asian Countries during this particular quarter i.e., January-March 2013. Certain exports like deemed exports, service exports, third party exports, export-turnover of SEZ units etc. would not be eligible under the scheme. Thus there will be focus on increasing export to certain specific destinations. Some specific type of exports would not be eligible. Detailed notification would follow. (e) Additions in the Chapter 3 Schemes Certain products are being added to the Focus Product Scheme. A few markets are being added to Focus Market Scheme. And similarly some additions are being made to MLFPS / VKGUY. These additions under Focus Market Scheme (FMS)/ Focus Product Scheme (FPS) / Market Linked Focus ProProduct Scheme (MLFPS) / Vishesh Krishi & Gram Udyog Yojna (VKGUY) would be notified separately. EPCG Scheme

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ECGC Scheme
A. Changes in Zero duty EPCG Scheme
(i) For continued technological up gradation of exports sector this Scheme has now been extended up to 31st March 2013. There is no change in the coverage of the sectors benefiting from this scheme. (ii) Zero Duty EPCG Scheme shall be available to such exporter who may have obtained benefit under Technology Upgradation Fund Scheme (TUFS) but the exact line of business in TUFS is different from the line of business under EPCG. Further, if it is the same line of business, Zero Duty EPCG Scheme could still be availed if the benefits of TUFS already availed are surrendered /refunded with applicable interests. (iii) Up to 31st March 2012, the benefit of Zero Duty EPCG Scheme was not available to such applicants who would have availed benefit of Status Holder Incentive Scrip (SHIS). It is now decided that if such SHIS benefit already availed is surrendered subsequently with applicable interest to the concerned RA, and then the benefit of Zero Duty EPCG Scheme would be extended.

B. Specific Export Obligation (EO) in respect of export of Green Technology Products shall be 75% of the normal EO as mentioned in the Para 5.1 or Para 5.2 of FTP. The list of Green Technology products is given in Para 5.24 of HBP vol.1. (w.e.f. 05.06.2012).

C. For units located in North Eastern Region including Sikkim, specific EO shall be 25% of the EO as stipulated in Para 5.1 or 5.2 of FTP. D. Post export EPCG Duty Credit Scrip(s) A new scheme Post export EPCG Duty Credit Scrip(s)has been introduced w.e.f. 05.06.2012 with following salient features: a)EPCG Duty Remission Scheme shall be available to exporters who intend to import/procure capital goods on full payment of applicable duties and choose to opt for this scheme. b)Duty paid on capital goods (excluding portion CENVATed/ Rebated) shall be remitted in the form of freely transferable duty credit scrip(s). (c) Specific EO under this scheme shall be 85% of the applicable specific EO, if the imports of such capital goods had taken benefit of duty exemption. (d) Duty remission shall be in proportion to the EO fulfilled. (e) These duty credit scrip(s) can be used for payment of applicable custom duties for imports and applicable excise duties for domestic procurement. (f) All provisions of the existing EPCG scheme shall apply insofar as they are not inconsistent with this scheme.

35

Export Oriented Units.

A Committee under the chairmanship of Shri S.C. Panda was constituted to review and revamp the EOU Scheme. The Committee has submitted its report in July, 2011 which is under consideration with the Department of Commerce.

Deemed Export Issues

Chapter 8 of Foreign Trade Policy (FTP) mentions that various categories of supply which are regarded as deemed exports under FTP, provided goods are manufactured in India. In deemed exports transactions, goods supplied do not leave country. Essentially, Deemed Export Scheme is for encouraging import substitution and mainly covers such supply of goods which are otherwise allowed at Zero custom duty. In case of EPCG authorizations, deemed export benefit is allowed even though import is allowed at concessional duty as well. For deemed export supplies, benefit of Advance Authorization, duty drawback of dutiespaid on inputs and refund of Terminal Excise Duty (TED) paid on final goods/exemption, as applicable, as per Foreign Trade Policy, are available. Chapter 8 of the FTP and HBP vol.1, relating to deemed exports has been completely re-written in the Annual Supplement to the FTP 2009-14, released on 05.06.2012. In this rewritten Chapter, provisions of FTP have been aligned with relevant Customs Notifications, clarifications, issued by Policy Interpretation Committee, have been incorporated and language has been re-drafted to make it more user friendly. The benefits available under various categories of deemed exports supplies have been prescribed in a tabulated form, which removes all ambiguities. During Financial year 20011-12, an amount of Rs.740 crores was spent by different Regional Authorities of DGFT. In the beginning of 2012-13, approved claims amounting to Rs.320 crores were pending for payment. During this year, amount of Rs.850 crores has been earmarked for this Directorate for meeting claims of TED refund/Deemed export drawback. Up to the end of December, 2012, DGFT(HQ) has released Rs.769.33 crores to its different Regional Authorities.

EDI Initiatives
DGFT is the first Indian Government organization to start Web Based application processing (1997) using Secured Digital Certificates (2048 Byte Key encryption- 2004). Currently, DGFT receives Shipping Bills, Bank Realization Certificates and RCMC from Customs, Banks and Export Promotion Council respectively through Digitally Secured Formats.

36

Introduction of e-BRC system

DGFT has established an e-BRC system to receive details of export proceeds from banks in digitally signed secured electronic format. DGFT dispensed with the issuance of physical copy of BRCs by banks for the purpose of DGFT use andmade e-BRC mandatory w.e.f. 17.8.2012. Earlier Banks issued Bank realization Certificates (BRCs) to exporters in physical formats. The eBRC system will significantly lower the transaction cost of exporters who will not have to visit or pay for BRC issuance to banks. Exporters can print BRC details on the DGFT site and submit it to any Department, which can, in turn verify the accuracy of the data from the DGFT website. This would mean all round manpower and effort savings for the Government agencies like Customs, Central Excise and at the State Government level, the Departments dealing with imposition and refund of Value Added Tax (VAT). These departments can source such information from the DGFT. The system may also supplement RBIs efforts towards Foreign Exchange Realization Monitoring. a) All authorizations are being issued online by DGFT. Message exchange with Customs has been implemented for Advance Authori-zation, EPCG and DFIA. Exporters can track, monitor their applications online at the DGFT website. b) A system has been established to receive RCMC from the Export Promotion Councils, Commodity Boards and FIEO in secured online format. DGFT offices will not ask for a copy of the RCMC from the Exporters. c) Electronic Fund Transfer facility is being used by exporters for payment of application fee. The facility has been extended to additional banks. So far additional 7 Banks have been added into the existing number of 13 (Total: 20 Banks). d) Import/Export Code (IEC) is the mandatory registration for the exporters. Steps have been taken to simplify the issuance of IEC. For this purpose, an online Module has been developed with effect from 1st January 2011 for receipt of application, processing and issuance of IEC. Integration with PAN database for validation is likely to be completed shortly.

Import Cell
Import Cell considers the applications for items which are restricted for import. The applications for issuance of import authorization for Restricted Items (such as Live Animals, Scrap of rubber / plastic, Refrigerant Gases and Arms and Ammunition etc.), are considered by an Exim Facilitation Committee (EFC), consisting of representatives from various Administrative Ministries and Departments, headed by Addl. DGFT. Such cases are decided on the basis of written technical inputs / comments of concerned Administrative Ministry / Department. Apart from this permissions are also granted under para 2.11 of FTP with the approval of DGFT for the items (such as Maize and Oats etc), import of which are allowed through State Trading Enterprises. Out of total 704 applications received in Import Cell during 2012-13 (upto 31st Dec 2012), as many as 435 applications (which constitute 61.78% share) have been given import permission/ EXIM facilitation Committee meetings are also held on every month on third Thursday.

37

Export Cell
Export Cell deals with licensing of the items which are Restricted in the ITC (HS) Classification for export (other than SCOMET items). The applications for issuance of export authorization for Restricted Items e.g. as Onion seeds, live animals, seaweeds, husk, fodder, chemicals under Montreal Protocol are considered by an Exim Facilitation Committee (EFC) chaired by Addl. DGFT with representatives of various Ministries and Departments. Such cases are decided on the basis of written inputs/comments and /or No Objection Certificate of concerned Ministry/Department. Meeting of EFC is generally held once in a month. In addition, clarifications on Export Policy are also issued. Out of the total 153 applications received for export permission during 2012-13 (upto 31stDecember 2012), as many as 133 applications (which constitute approx. 86% share) have been given export permission and remaining 20 are pending with the concerned Ministry/Deptt. for want of written technical comments.

SCOMET
Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) items are dual-use items having potential for both civilian and military applications. Export of such items is either restricted, requiring an authorization for their export, or is prohibited. The export policy relating to SCOMET items is given in Paragraph 2.49A of Hand Book of Procedures in Vol. I, 2009-14 and the list of such items is given in Appendix 3 to Schedule 2 of ITC (HS) Classification of Export and Import Items. There are eight categories of such items. All applications for export of SCOMET items are considered on merits by an Inter-Ministerial Working Group (IMWG) in the DGFT under the Chairmanship of Additional Director General of Foreign Trade as per guidelines and criteria laid down in Para 2.49A of the Handbook of Procedure Vol. 1. Members include, inter-alia, MEA, Cabinet Secretariat, DRDO, ISRO, DAE and Deptt. of C&PC. No export permission is required for supply of SCOMET items from DTA to SEZ. However, Export permission is required if the SCOMET items are to be physically exported outside the country from SEZ. There is an increasing trend in export of SCOMET items from India. The total value of exports of SCOMET items in 2011-12 were US$ 50.61 million while during 2012-13, upto December 2012, authorizations for items worth US$ 336.15 million have been issued.

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Commodity Specific Measures- Exports

The export of following agricultural products which are sensitive in nature due to their direct impact onthe public as well as domestic trade and industry are monitored regularly by the Government and suitable modifications are made from time-to-time in order to ensure adequate availability for domestic consumption and to keep the prices under check. The policy provisions as on 11.02.2013 are as under:-

1. Edible oil
(i) (ii) The export of all edible oils prohibited w.e.f. 17.03.2008. Vide Notification No. 24(RE-2012)/2009-14 dated 19.10.2012 ban on export of edible oils has been extended till further orders. Vide Notification No. 92 dated 01.04.2008 and Notification No. 33 dated 19.08.2008, certain exports of edible oil were granted exemption from this prohibition, namely (a) export of Castor Oil (b) Deemed export of edible oils (as input raw material) from DTA to 100% EOUs for production of non-edible goods to be exported and (c) export of oil produced out of minor forest produce even if edible, ITC(HS) Code 15159010, 15159020, 15159030, 15159040, 15179010 and 15219020. These exemptions will continue till further orders.

(iii)

(vi) Vide Notification No. 32 dated 05.02.2013 export of coconut oil has been permitted through all EDI ports and through Land Custom Stations (LCS) to be notified separately. Earlier, export of coconut oil was permitted only from Cochin Port. With effect from 05.02.2013, export of edible oils from Domestic Tariff Area (DTA) to Special Economic Zones (SEZs) to be consumed by SEZ units for manufacture of processed food products, subject to applicable value addition norms has also been exempted from ban on export of edible oils. Peanut Butter, ITC (HS) Code 15179020 has been exempted fromban vide Notification No. 31(RE-2012)/2009-14 dated 04.02.2013. (iv) Export of edible oils was permitted in branded consumer packs of upto 5 Kgs with a limit of 10,000 tons from custom EDI Ports. This was first notified on 20.11.2008 and extended from time-to-time. Through Notification No. 24(RE-2012)/2009-14 of 19.10.2012, the limit was increased to 20,000 tons. Vide Notification No. 32 dated 05.02.2013 export of edible oils in branded consumer packs of upto 5 Kgs has been permitted with a Minimum Export Price of USD 1500 per MT.

(vi) Through Notification No. 87 dated 05.12.2011, exemption has been given for export of 2400 MTs per annum of Edible Oils to Bhutan.

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2. Non Basmati Rice

(i) Export of non-basmati rice was prohibited vide Notification No. 38 dated 15.10.2007 and was completely prohibited vide Notification No. 93 dated 1st April, 2008. Exemption was given for export under Food Aid Programme and export to Maldives under Bi-lateral Trade Agreement between Government of India and Republic of Maldives. However, export of PUSA-1121 variety of non-basmati rice was allowed w.e.f. 3.9.08. (ii) Exemption has been given for export of 10,000 MTs per annum of Organic Non Basmati Rice, duly certified by APEDA. (iii) Export of all varieties of non-Basmati rice made free w.e.f. 09.09.2011. Such export to be made by private parties from privately held stocks only through EDI ports. Export is also allowed through non-EDI Land Custom Stations (LCS) on Indo-Bangladesh and Indo-Nepal border subject to registration of quantity with DGFT. (iv) Through Notification No. 87 dated 05.12.2011, exemption has been given for export of 21,200 MTs per annum of non-basmati rice toBhutan.

3. Basmati Rice
(i) Minimum Export Price for export of Basmati rice was reduced from US$ 900 PMT to US $ 700 per ton vide Notification No.97 dated 21.02.2012. Minimum Export Price on export of basmati rice removed vide Notification No. 6 dated 04.07.2012. (ii) Grain length of 6.61 mm and length to breadth(L/B) ratio of 3.5 mm has been notified for export of Basmati rice vide Notification No. 57/2009-14 dated 17.08.2010. (This was earlier Grain length of 7 mm and length to breadth(L/B) ratio of 3.6 mm).

(iii)PUSA-1121 variety of non-basmati rice was categorized as Basmati rice and it became exportable as basmati rice subject to applicable conditions. Export of Basmati rice has been permitted from all EDI ports vide Notification No. 97 dated 21.02.2012. (Earlier it was permitted only through the ports of Kandla, Kakinada, Kolkata, JNPT, Mundra and Pipavav).

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4. Pulses
(i) Vide notification No. 15 (RE-2006)/2004-2009 dated 27th June, 2006 export of pulses had been prohibited initially for a period of six months but extended till 31.3.2007 vide Notification No. 17 dated 3.7.2006. (ii) Export of pulses (except Kabuli Chana and 10,000 MTs per annum of Organic Pulses, duly certified by APEDA) is prohibited till 31.3.2013 (Vide Notification No.109 dated 27.03.2012). (iv) Export of pulses to Sri Lanka under specific permission granted by DGFT is exempted from ban. (v) Through Notification No. 87 dated 05.12.2011, exemption has been given for export of 1200 MTs per annum of pulses to Bhutan.

5.
(i)

Wheat
Export of wheat and wheat products was prohibited vide Notification No. 33 dated 8th October, 2007. Exemption has been given for export of 5,000 MTs per annum of Organic Wheat, duly certified by APEDA. Export of wheat made free w.e.f. 09.09.2011. Such export will be only through EDI ports. Export is also allowed through non-EDI Land Custom Stations (LCS) on IndoBangladesh and Indo-Nepal border subject to registration of quantity with DGFT. Through Notification No. 87 dated 05.12.2011, exemption has been given for export of 24,000 MTs per annum of wheat to Bhutan.

(ii)

(iii)

6.
(i)

Wheat Products
Vide Notification No. 116 dated 3.7.2009 (amended by Notification No. 41 dated 18.05.2010 and Notification No. 61 (RE-2010)/2009-14 dated 20.07.2011) export of Wheat Flour (Maida), Semolina (Rava / Sirgi), Wholemeal atta and Resultant Atta was permitted freely subject to a limit of 6,50,000 MTs from 3.7.2009 to 31.3.2012 only from Customs EDI Ports. This permission has been extended upto 31.3.2013 through Notification No. 110 dated 02.04.2012. Wheat or Meslin Flour, ITC (HS) Code 1101 has been exempted from restriction/ban vide Notification No. 31(RE-2012)/2009-14 dated 04.02.2013

(ii)

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7. Cotton Yarn
(i) Export of cotton yarn was subjected to registration of contracts with the Textile Commissioner prior to shipment through Notification No. 38 dated 09.04.2010. Export of Cotton Yarn (Tariff code 5205, 5206 & 5207) was Restricted vide Notification No. 14 dated 22.12.2010. (iii) Export of Cotton Yarn (Tariff code 5205, 5206 & 5207) has been made free subject to registration of contracts with DGFT with effect from 1.4.2011 through Notification No. 40 dated 31.3.2011.

(ii)

8. Sugar
(i) With effect from 01.01.2009 export of sugar was free subject to release order from the Directorate of Sugar, Department of Food & Public Distribution, Govt. of India.

(ii) Exemption has been given from the requirement of obtaining release orders from Directorate of Sugar for export of 10,000 MTs per annum of Organic Sugar, duly certified by APEDA. (iii)With effect from 14.05.2012 export of sugar is free subject to registration of quantity with DGFT.

9. Onion
(i) Upto December, 2010, the export of onion including Bangalore rose onion andKrishnapuram onion was allowed for export through 13 National/State level cooperative marketing federations subject to MEP fixed by NAFED. Export of onion including Bangalore rose onion and Krishnapuram onion was prohibited through Notification No. 13 dated 22.12.2010.

(ii)

(iii)

Through Notification No. 24 dated 18.2.2011, the ban on export of onion including Bangalore rose onion and Krishnapuram onion was removed and was allowed for export through 13 National/State level cooperative marketing federations subject to Minimum Export Price (MEP) fixed by DGFT from time to time. Export of all varieties of onions including Bangalore rose onion and Krishnapuram onion was again prohibited w.e.f. 09.09.2011.

(iv)

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(v) Ban on export of onion including Bangalore rose onion and Krishnapuram onion was removed through Notification No. 75 dated 20.09.2011 and it was allowed for export through 13 National/State level cooperative marketing federations subject to MEP fixed by DGFT from time to time. (vi) Through Notification No. 116 dated 08.05.2012 export of onion was allowed without Minimum Export Price till the midnight of 02.07.2012 which has been extended till further orders through Notification No. 3 dated 29.06.2012. (vii) Value Added products of onion ITC (HS) Code 0712 has been exempted from restriction/ban vide Notification No. 31(RE-2012)/2009-14 dated 04.02.2013.

Milk & Milk Products

(i) Export of milk and milk products was free till 18.02.2011.

(ii) Export of milk powders (Skimmed Milk Powders, Whole Milk Powders, Dairy Whitener, Infant Milk Foods etc.), Caseinand Casein Derivative was prohibited till further orders vide Notification No. 23 of 18.02.2011. Transitional arrangements under para 1.5 of Foreign Trade Policy were also made inapplicable on export of milk powders (Skimmed Milk Powders, Whole Milk Powders, Dairy Whitener, Infant Milk Foods etc.), Casein and Casein Derivative through Notification No. 25 of 24.02.2011. (iii) Through Notification No. 87 dated 05.12.2011, exemption has been given for export of 1600 MTs per annum of milk powders to Bhutan. (iv) Ban on export of casein and casein products was removed vide Notification No. 112 dated 01.05.2012 and it became exportable under licence. Casein and casein products ITC (HS) Code 3501 has been exempted from restriction/ban vide Notification No. 31(RE2012)/2009-14 dated 04.02.2013. (v) Export of Skimmed Milk Powders (SMP) was made free vide Notification No. 2 dated 08.06.2012.

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CONCLUSION

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BIBLIOGRAPHY
Book reference
Solow, R. (1956), A Contribution to the Theory of Economic Growth, Quarterly Journal of Economics Miles, D. and A. Scott (2004), Macroeconomics and the global business environment Johnson ,Mascarenhas, Economics Of Global Trade And Finance

Webliography:

www.commerce.nic.in www.wto.org www.business.gov.in www.wiki.answer.com