GLOBAL TRADE RESEARCH INITIATIVE REPORT ON INDIA’S EXPORTS

Context

GLOBAL TRADE RESEARCH INITIATIVE (GTRI) report has highlighted the Indian export scenario, FTA’s and made recommendations.

Major Takeaways of the GTRI Report

An FTA (Free Trade Agreement), is a deal between two or more countries to make it easier to trade goods and services with each other. In this agreement, the countries agree to reduce or eliminate certain taxes (called tariffs) on the products they trade. The goal is to promote economic cooperation and boost business between the countries involved.

1. Many countries want to make deals with India to trade freely through FTA’s (Free Trade Agreements). They are interested because India has high taxes on imported goods, making it hard for them to sell in India's big and fast-growing market.
2. But the countries negotiating with India have lower import duties than India itself.

• For example, the UK, Canada, and the USA have duties at 4.1%, 3.3%, and 2.3%, respectively, while India's duties are higher at 12.6%.
• This suggests that India may not see a big increase in exports through Free Trade Agreements (FTAs), as these countries already have low or no import duties.

3. India's exports are not doing well because taxes on imports are high in India, but lower in countries it has trade deals with. GTRI report points that Indian companies often don't use these trade deals when taxes are already low, as the costs of following the deal rules don't make up for the tax benefits.
4. One of the reasons why India's important trade agreements (FTAs) with ASEAN, South Korea, and Japan didn't work well is because of the difference in import taxes. This led to a big increase in India buying more goods from these partners compared to what it sells to them, making the trade deficit much larger.
5. India has been selling fewer goods to its FTA partners compared to what it's been buying from them.
   1. With ASEAN, India’s exports increased by 123.9%, but India's imports went up by 175.7%.
   2. With Japan, India's exports grew by 56.4%, but imports increased by 98.5%.
   3. With South Korea, India's exports went up by 89.1%, but imports surged by 127.3%/
6. Other issues include: Infrastructural deficits in the agricultural sector, quality control issues, and non-tariff barriers etc.

Policies of Developed Countries:

1. Developed countries like the United States and countries of European Union use high import taxes and subsidies. They do this to discourage imports and boost their own exports.
2. Countries like Australia, which export a lot of agricultural products, want India to reduce taxes and subsidies on farm goods so they can sell more. These countries also use advanced technology to produce more, making their products more competitive.

Report Recommendations:

1. Creation of a common exclusion list for merchandise trade.
2. Focusing on obtaining real market access.
3. Engaging in sectoral agreements with poor and developing countries.
4. Exploring new subject areas such as environment, labor, data governance, digital trade, gender, small and medium enterprises, anti-corruption, and sustainable food systems.
5. Focus on modern infrastructure, quality control etc. in the agriculture sector. 
6. Diversify the agricultural export basket.

India’s initiatives for export promotion Export Credit Guarantee Corporation (ECGC): ECGC provides insurance cover to Indian exporters against the risk of non-payment by overseas buyers. Merchandise Exports from India Scheme (MEIS): MEIS aims to incentivize exports of specified goods to certain countries by providing duty credit scrips to exporters. Services Exports from India Scheme (SEIS): SEIS encourages the export of notified services by providing rewards to service providers. Export Promotion Capital Goods (EPCG) Scheme: EPCG allows import of capital goods at zero or concessional customs duty for the production of export goods. Trade Infrastructure for Export Scheme (TIES): TIES aims to create modern infrastructure to boost export competitiveness. Market Access Initiative (MAI): MAI is a financial assistance scheme to promote exports by accessing new markets and market research. Foreign Trade Policy (FTP): The FTP provides a framework for enhancing exports, simplifying procedures, and promoting trade. Export Promotion Councils (EPCs): EPCs are industry-specific organizations that promote and facilitate exports in various sectors. Special Economic Zones (SEZs): SEZs offer a conducive environment for export-oriented production. National Trade Facilitation Action Plan (NTFAP): NTFAP focuses on simplifying and streamlining trade processes to reduce transaction costs and boost exports Foreign Trade Policy 2023: A government framework outlining strategies and measures to enhance and regulate India's international trade. Agriculture Export Policy 2018: A policy focusing on promoting and boosting agricultural exports from India to global markets. One District-One Product: An initiative aiming to develop specific districts as specialized export hubs, each focusing on a unique product to promote local industries and exports.

 

Must Check: Best IAS Coaching In Delhi