Concept Note:

At the end of August India’s new Foreign Trade Policy 2009-14 entered into force. The new Foreign Trade
Policy lays out ambitious objectives in times of the challenging worldwide economic, food, fuel and climate
crises. Commerce Minister Sharma states “We would like to achieve an annual export growth of 15% over
2010-11 with an annual export target of $200 billion by March 2011. In the remaining three years of this
Foreign Trade Policy, the country should be able to come back on the high export growth path of around 25%
per annum. By 2014 we expect to double India’s exports of goods and services. The long term policy
objective for the government is to double India’s share in global trade by 2020" Though the global recession
has not affected India to the same extent as other economies of the world, yet Indian’s exports have
suffered a decline in the last 10 months due to a contraction in demand in the traditional exports’ to
developed countries. To insulate Indian exports from the decline in demand from developed countries, a
policy focus is on diversification of Indian exports to other markets, especially those located in Latin America,
Africa, parts of Asia and Oceania. Still, India’s commitment to conclude the WTO Doha Round as well as
ongoing North-South free trade agreement negotiations such as the EU-India FTA negations, figure
prominently on the agenda. Based on the neo-classical theory of a positive relationship between openness to
international trade and growth, trade liberalisation is promoted as an engine of development and a solution
to the current economic crisis. However, the immense poverty problem India is facing and the rising
inequality, aggravated by the financial and economic crisis, the food and fuel crisis – interlinked crises which
are partly originating in the deregulation and liberalisation policies of the last decades- are posing
tremendous challenges on India. Given the threat that FTAs ‘considerably reduce or fully remove policy
options and instruments available to a developing country to pursue its development objectives', an
important question to be addressed is what kind of macroeconomic and trade policies are needed that serve
the interest of sustainable economic development, poverty eradication, gender equality and women's social
and economic empowerment. Based on a number of recent studies in the framework of the ongoing EU-India
FTA negotiations the workshop examines the impacts of free trade policies on specific sectors. Special
attention is hereby given to impacts on gender equality as integral part of sustainable development and
social justice. The meeting will unbundle linkages between trade, development and gender and offers the
possibility to discuss approaches and strategies to shape trade policies in such a way that they respond to
sustainable development, poverty eradication, gender and social justice. It aims at building further alliances
among interested civil society actors, academics, media and women’s groups and enables collective thinking
toward an action plan for promoting a just and equitable trade agenda

resentation Transcript
Impact of Global Meltdown on India :
Impact of Global Meltdown on India Chhitiz Kumar * This presentation is from one of the guest lectures delivered by
the author at B-School.

It’s a Global Village :

It’s a Global Village Key Drivers World Trade Growth (see Annexure 1) International Finance Capital Growth of MNC
(control $ 30 Trillion out of $ 65 Trillion global GDP) Enablers Technology Transportation & Logistics
Strategic questions … :
Strategic questions … Capitalist (for Profit) and Socialist (for Losses)? Reserve Currency – Why US $ ? Efficient
Market Hypothesis Role of Global Institutions – IMF, World Bank etc Role of Individual Govt. vs. the World. Need for
a Global Regulator vs Country Regulator? Risk Management vs Financial Innovations “Greed is Good”…Really?

Impact on INDIA :
Impact on INDIA The Good Part Domestic Demand driven Economy : Export/GDP at 25% (China 40%) Well –
diversified export portfolio (See Annexure 2) Inflation is down : Commodity Stable Banking System : No Bankruptcies
Prudent Lending Norms : No Subprimes Crises Services driven economy The Trouble is … Liquidity Crunch and Cost
of Capital Project delay/postponement Forex Reserves flucuations – FII withdrawl Exports – Challenging Global
Demand scenario Ironically, $ is currency of choice !! GDP Projections lowered

Impact on Indian Banking System :

Impact on Indian Banking System Short Term (next 12 months) – Watchful, reactive to global and national events.
Medium Term (1-3 Year) Various national regulators – Reserve Bank of India, SEBI, IRDA, MoF will stay hawkish
Entry of MNC Banks to India will be delayed/abandoned PSU Banks will get stronger and spread overseas. FII Inflow
in Indian Markets, PE deals Retail Banking will revive NBFC will have to find new Business avenues/models

ThankYouE –mail : chhitiz@yahoo.comLinkedIn : http://www.linkedin.com/in/chhitizMobile : +91 - 9711013990

:
ThankYouE –mail : chhitiz@yahoo.comLinkedIn : http://www.linkedin.com/in/chhitizMobile : +91 - 9711013990

Annexure 1 -World Trade (in $ Bn) :

Annexure 1 -World Trade (in $ Bn) Source : WTO, 2008 Report

Slide 8:
Annexure 2

DECLINE IN EXPORTS

Impact on Indian exports:

Suffered a decline in the last 11 months since October 2008.

April - September 2009 exports show a decline of 28.5% (in $ terms) and 18.6% (in Rupee
terms) vis-à-vis last year.

Employment intensive sectors have been severely affected.

Tea (-37.2%), Spices (-27.8%), Cashew (-27.5%), Oil-meals (- 42.9%) Iron-ore (-29.5%),
Leather and Leather Manf. (-26.6%), Gems & Jewellery (-28%), Basic Chemicals (-26.9%),
Engineering Goods (-32.1%), Electronic Goods (-32.2%). Cotton Yarn /Fabrics /Made-ups (-
31.5%), Jute Mfg. incl. Floor Covering (-39.8%), Carpets (-29.8%), Handicrafts (-29.8%),
Petroleum Products (-43.1%), Plastics & Linoleum (-23.2%).

REASONS FOR EXPORT DECLINE

Major Hurdles faced by Indian Exporters:

Unprecedented Rupee Appreciation by about 12% in the year 2007-08;

Global Economic Slowdown and Recession in Developed Economies during 2008-09 and its
impact.
High Interest Rates Non-availability of trade credit Withdrawal of GSP Benefits by US on
certain products such as Gems and Jewellery items, certain leather products etc.

Ban on exports of certain food products since 2007. High Incentives provided by some of the
countries like China, Bangladesh etc.

ackground:
The global recession has raised unemployment rates nearly to double digits in developed countries and to less
drastic but still worrying levels in developing countries. Since late 2009, the pace of job losses has slowed in many
countries due to a pick up in demand and credit conditions. But unemployment rates might continue to increase
through 2010, constraining global consumption and pushing many workers into poverty. Inadequate safety nets
and retraining programs and slow pick-up in hiring pose risks of lengthy unemployment duration and deterioration
of human capital. To reduce the risks of structural unemployment and discontent among workers, governments are
implementing fiscal stimulus to prevent lay-offs and boost hiring, and are also resorting to populist measures.

RGE CLIENTS
Mumbai: One of the main risks to domestic growth is a prolonged global recession, Reserve
Bank of India Governor Duvvuri Subbarao told analysts in a conference call on Wednesday, a
day after it hiked key rates as expected.
On Tuesday, the Reserve Bank of India (RBI) raised its key policy rates for the sixth time since
March and said it was unlikely to adjust rates again in the near future but would remain vigilant
about inflation that remains above its comfort level

Let’s take a look at the Mandarin word for crisis – 危機, when read separately, the two characters each
represents danger and the other represents opportunity, when written together as a word, it carries the
meaning ‘crisis’.
Amazing isn’t it? In times of danger, opportunity exists. For example, in a downturn certain recession
proof investments and businesses thrive, such as ‘Office and House Movers’ or services that offer ways
to ‘save on printer ink and toner cartridges’, not to mention recycling company, business consolidation
debt opportunity, mlm opportunity, work from home job opportunities.
While certain service sector might experience a slow down, some are actually booming, such as those in
the service and repair industry, in a recession, companies are more likely to repair and maintain their
hardware as oppose to throwing them away and purchase new equipments in good time.
To be honest, some of the things I mentioned earlier are not true. The Mandarin word for “crisis” is not
composed of elements that signify “danger” and “opportunity.” Instead, it is “danger” and “moment”, this
misinterpretation occurs because it is translated word by word from mandarin to english, thus losing its
meaning along the way. Unlike other languages, Mandarin words can’t be read individually, a combination
of words carries a whole new meaning and pronunciation, making it the hardest language to learn in the
world, not to mention it is the one and only surviving pictogram writing system.
None the less, I love the misinterpretation of the ‘Crisis’ word in mandarin, somehow it is more
meaningful.