The March 2011 North Japan earthquake and tsunami destroyed ports on Japan’s Honshu coast and blocked imports. Californian computer chip exporters were severely hit as a result. The 2010 Eyjafjallajokull volcanic eruption in Iceland disrupted both trade and air travel in Europe and beyond for up to a month.
Trends in Indian Exports
Course : Money, Banking & Public Finance
Instructor : Dr. Prashanta Panda
Topics to be covered in the presentation
Foreign Trade Policy
Sector wise distribution of Indian Exports
Indian Exports Post 1991 & Relation with Indian Foreign
Region wise distribution of Indian Exports
Concepts of Trade - Export
•Foreign Trade Policy
The Union Commerce Ministry, Government of India announces the integrated Foreign
Trade Policy (FTP) for every five year period. <EXIM policy> [ 2009 – 2014]
* Short Term Objectives:
To arrest and reverse the declining trend of exports; and
To provide additional support to those sectors which have been hit badly by recession in
the Developed World.
* Medium term Policy Objectives :
To achieve an Annual Export growth of 15% with an Annual Export Target of US$ 200 billion
by March 2011.
To achieve an Annual Export growth of around 25% by 2014.
To double India’s exports of goods and services by 2014.
* Long Term Objective :
To double India’s share in Global Trade by 2020.
*The Indian scenario post 1991
SPECIAL FOCUS INITIATIVES (SFI)
1. Obligation under EPCG
2. To aid technological up
gradation of export sector,
EPCG Scheme at Zero Duty has
3. Export obligation on import
of spares, moulds etc. under
EPCG Scheme has been
reduced by 50%.
Announcements for MDA & MAI:
Higher allocation for Market Development
Assistance (MDA) and Market Access
Initiative (MAI) has been announced.
Towns of Export Excellence (TEE)
The following cities have been recognized as
towns of export excellence (TEE)
Handicrafts : Jaipur, Srinagar and Anantnag
Leather Products : Kanpur, Dewas and Ambur
Horticultural Products: Malihabad
Extension of Income Tax Exemption to EOU
Income Tax exemption to 100% EOUs units
under Section 10B and 10A of Income Tax
•Assistance from Govt. of India
Steps taken to assist exporters
EXPORT COMPONENT SUPPORT
Trade Fairs and Exhibitions
Export Risk Insurance
Quality control and Pre-shipment
India Brand Equity Fund
Export Inspection Council
Indian Institute of Foreign Trade
Indian Institute of Packaging
Export Promotion Councils,
Commodity Boards and
5. Federation of Indian Export
6. Indian Council of Arbitration
7. India Trade Promotion
INDIAN EXPORTS [BY VALUE IN INR BILLION]
( 1992 – 2013 )
Indian Oilmeal Exports
Iran as the largest importer
Oilmeal – bird/animal feed
Uncertainty over India’s
largest export market – Iran
30% exports to Iran
3.55% increase in the
period April – August 13’
Advantage to Indian
exporters – Rupee
denominated trade with
•Sectoral Distribution of Indian Exports
Source : DGCI&S, Ministry of Commerce
•Food & Agricultural Products
Agro processing defined as a set of techno- economic
activities, applied to all the produces, originating from
Agro-processing enhance socio-economic impact
specifically on employment and income generation.
Value addition of food products is expected to increase
from 8% to 35% by the end of 2025.
India is the worlds largest producer of food next to China.
India is its 5th largest in terms of production, consumption, export
and expected growth.
Companies have adapted various strategies to maintain and
increase their market share in India.
Counter the threat of low priced competition.
It has reengineered its cost to lower its own fixed cost structure.
In mass segment, Britannia introduced biscuit packs at lower
Haldirams – Competitive pricing and labor intensive projects.
Nestle – Continuously launched new products.
SWOT Analysis of Food & Agro sector
Round the year
High transportation costs
Huge storage facilities (Cold Storage, Go downs, Granaries)
India is the 3rd largest producer of leather in the world after
China and Italy.
The leather industry occupies a place of prominence in the
Indian economy on account of its massive potential for
growth, exports and employment.
The export of leather and leather products gained momentum
during the past two decades. There has been a phenomenal
growth of exports from Rs. 320 million in the year 1965-66 to
Rs. 69558 million in 1996-97.
Moreover industry employs over 2.5 million people and
accounts for US$2.4 billion of exports in 2004-05 with most of
it being exports to developed countries.
•Gems & Jewellery
Cut/polished diamonds, Gold and precious stones
India is engaged in
which involves ,
gemstones and metals
such as diamonds, gold
Gems & Jewellery – Sector Overview
TRENDS in the Sector
Low labour cost
Availability of skilled craftsmen
Rising disposable income
Favorable Govt. policies
Abolition of Gold Control Act in 1992
Rise in the number of working women
Jewellery design, refining, model making,
jewellery manufacturing, gemmology
Increasing credibility through Kimberley
Process Certification Scheme (KPCS)
Changes in tastes and preferences through
Working Capital Intensive
Raw Material - Intensive
•Textiles & Readymade Garments
30% of total exports, 20% of National production, 21% workforce
- Cotton manufacturing began in 1200 B.C
- Flourished in ancient times from China to Cape of Good Hope
- High demand in Europe from 1794-1824, and levy of heavy import duties
for goods from India
From 1950 – 1990
- 1950, Govt restriction on export of cotton fabric > high export duties &
- Since 1955, cost of production increased compared to TIGER economies
due to their modernization
Post 1991 era
- Exports doubled from 91-92
- Entire decade of increased export growth rate
- 2001-02 exports declined due to decrease in demand from importing
countries & competition from China, Bangladesh
•Trends in Indian Textile Export
depreciation as a tool
for boosting exports
Ready-made garments will
drive the growth in other
segments of textiles and
hence, overall textiles
export would be better this
High cost of production in
China – steep rise in labour
cost – causing shift in textile
orders to India
US contributes 20% to
Indian ready-made garment
•Geographical Distribution of Indian Exports
*Exports to Europe
Europe: Following Products are exported to Europe
1) Mineral Fuel
2) Jewellery and Gems
4) Electronics such as television, sound recorders and others
5) Iron and Steel
Reasons for Exports is due to India has significant sources of coal (fourthlargest reserves in the world), bauxite, titanium ore, chromite, natural gas,
diamonds, petroleum, and limestone.
Due to high demand of jewellery and gems in Europe India is exporting
high amount of Jewellery and Gems in Europe
Televisions and other electronic goods are also exported mainly because
the production cost of electronic goods in Europe is quite high as
compared to Asia or any other continent. India mainly exports to
Germany, France, Spain & England.
•Exports to North American Countries
India exports Basmati rice to north American Countries. Basmati rice
being novel product is characterized by its unique grain size, aroma and
cooking qualities. Being high value product, it has got good export
demand. Hence, the export has been very high and exports have been
However the export to other countries remains constant with slight
fluctuation from year to year. India's major markets for basmati rice
exports have been Saudi Arabia, Australia, Austria, Belgium, Bahrain,
France, Germany, U.K., Denmark, U.S.A., Canada, Belgium , Kuwait, Italy,
Oman, Yemen, Netherlands, Jordan, Indonesia etc. In fact, Saudi Arabia
traditionally has been the largest market for Indian basmati rice.
Other Product which is Exported by North American Country’s is Coffee.
reason being, India accounts for about 4.5 % of world coffee production.
Industry provides employment to 6 lakh workforce. It was seen from the
exports figures that India exports major portion of green coffee instead of
processed coffee. It is exported to Countries like Costa Rica, USA, Canada,
Cuba , Guatemala and other north American Countries
•Indian Exports to African countries
Commodities such as crude oil, diamonds, refined petroleum products,
coffee, sisal, fish and fish products, timber, cotton are exported.
Cotton produced in Africa is exported mainly to Asia, where nearly 80% of
the world’s cotton fibre is processed into yarn, with China and India leading
the way. The cotton sector provides income for millions of people in Africa,
especially those living in rural areas, and is an important source of foreign
exchange earnings. ITC’s efforts in this sector are aimed at boosting Africa’s
competitiveness and establishing stronger links with cotton importers in
Fish, and fish products came close, followed by oil cakes, cashew kernels,
and cotton. In 1992-93 fish and fish products became the main agricultural
export, followed by oil meals, then cereals, and then tea. The share of fish
products rose steadily from less than 2 % of all agricultural exports in 1960,
to 10 % in 1980, to around 15 % for the 3-year period ending in 1990, and
to 23 % in 1992. The contribution of tea in agricultural exports fell from 40
% in FY 1960 to around only 13 % by 1992.
This is Because India is Because India is Agro-Based country.
•Concepts of Trade - Export
Factors affecting trade (Export-Import)
High risk business, vulnerable to changes (economic, political, social)
Lost or damaged goods in transit
Ability to absorb burden of financial losses
Bankruptcy and political turmoil
Ease of doing business index is an index created by the World Bank
India ranks 132. (Singapore 1st)
India requires 9 export documents to be cleared, while China needs 8, with
good practice economies like France needing 2.
CECA - Comprehensive Economic
> Reduce tariffs (custom/import
> Start with CECA, evolve to CEPA
> India has CECA with Malaysia,
CEPA – Comprehensive Economic
> Reduce tariffs + cooperation in
trade services & investment
> India has CEPA with Japan, South
Korea & Sri Lanka
•Dumping & Countervailing Duty (CVD)
Dumping is an informal name for the practice of selling a product in a
foreign country for less than either (a) the price in the domestic
market, or (b) the cost of making the product.
The WTO Agreement :
# does not regulate the actions of companies engaged in "dumping".
# focuses on how governments can or cannot react to dumping — it
disciplines anti-dumping actions, and it is often called the “Antidumping Agreement”.
Countervailing Duty (CVD)
According to the WTO system, the Agreement on Subsidies and
Countervailing Measures (SCM) allows the country to impose extra
duty on dumped products in case a country finds evidence of
•Cases of Dumping and CVD
+ USA has imposed a countervailing duty (~6%) on Indian frozen shrimps,
because Indian shrimp gets plenty of subsidies from Indian government for
shrimp farming and export and hence Indians are able to dump shrimps to
USA and hurt USA’s local shrimp businessmen.
Which Indian export was slapped Anti-Dumping duty
Recently China also started Anti-dumping investigation on
Indian exports such as
1.food preservative chemical from India (known as TBHQ)widely used in Chinese food industry.
2.Optical fiber imports from India after allegations from
the local Chinese industry that they were being sold at
artificially low prices.
Against two leading Indian steel firms: Jindal and Essar.
We’ve slapped anti-dumping duty on steel wheels imported from
China used in commercial vehicles.
Under probe: US, China, Malaysia and Taiwan: Because They’re exporting
solar equipment to India at ridiculously low prices and was bleeding
the desi industry. Similar issue with glassmakers and electric cable
manufacturers from those countries.
Voluntary Export Restraints (VER)
This type of trade barrier is "voluntary" in that it is created by the
exporting country rather than the importing one. A voluntary export
restraint is usually levied at the behest of the importing country, and
could be accompanied by a reciprocal VER. For example, Brazil could
place a VER on the exportation of sugar to Canada, based on a request by
Canada. Canada could then place a VER on the exportation of coal to
Brazil. This increases the price of both coal and sugar, but protects the
Once the ban is imposed and IF we want to get the ban revoked, then
- We’ve to invite their food inspectors/specialists to India, let them check
- We’ve to bear all the cost of their accommodation, travel expenses etc.
•Solutions for Indian Export Industry
Government needs to expedite the negotiations with US, EU, China and Japan, to lift
restrictions on Indian fruit/food/marine exports into these countries.
•Encourage importing countries (primarily USA, EU, Japan) to set up offices in India for
certification of export consignments
APEDA already supports the cost of quality certification programs such as HACCP and
Eurepgap for grapes and peanuts. More food-items should be included in this scheme.
•Food Safety and Standards Authority of India.
•FSSAI needs to harmonize the differences between Codex standards and Indian food
•Encourage food testing laboratories in India to obtain accreditation from international
agencies. Given high cost of international accreditation, Government can incentivize
laboratories by part funding these costs.
•Government should introduce certification zoning systems: e.g. pesticide free zones,
organic production zones, disease free zones to facilitate high value exports from India
• Exporters to US/EU are first required to their samples to the importing country to get
trade-approval. Government should provide financial assistance to small/medium
exporters for this.