This document provides a strategy paper for the Department of Commerce outlining their vision, mission, objectives and functions. It assesses India's export situation by analyzing external factors like global economic conditions and competition from China. It also does a SWOT analysis of India's exports. The strategy proposes projections for doubling India's exports and share in global trade by 2014 and 2020. It outlines focusing on increasing exports in non-traditional sectors like engineering goods, chemicals and agro-products while also diversifying markets and products to move beyond traditional strengths and break into new growth areas.

1. Strategy Paper
for the
Department of Commerce
Submitted by
Jayant Dasgupta
&
Depinder Singh Dhesi
Phase V Training Programme, LBSNAA Mussoorie
January 7, 2011
1

2. Table of Contents
Page
1. Section 1: Ministry’s Vision, Mission, Objectives 3
and Functions
2. Section 2: Assessment of the situation 6
3. Section 3: Outline of the Strategy 11
4. Section 4: Implementation Plan 20
5. Section 5: Linkage between the Strategic Plan and RFD 22
6. Section 6: Cross Departmental and cross functional issues 23
7. Section 7: Monitoring and Reviewing arrangements 24
8. Annex 1: Strategic Targets for 2014-15 26
2

3. SECTION- 1
Ministry’s Vision, Mission, Objectives and Functions
The Department of Commerce has been tasked with the regulation,
development and promotion of India’s international trade and commerce
through the formulation of appropriate policies and their implementation.
This has also been stated in the Annual Report (2009-10) of the Department
as follows1:
“The basic role of the Department of Commerce is to facilitate the creation
of an enabling environment and infrastructure for accelerated growth of
international trade. The Department formulates, implements and monitors
the Foreign Trade Policy which provides the basic framework of policy and
strategy to be followed for promoting exports and trade.”
1.2 The Vision of the Department as enunciated in the Results Framework
Document (RFD) 2010-11 is to make India a major player in world trade by
2020 and for India to assume a role of leadership in international trade
bodies commensurate with its importance in the contemporary world.
1.3 The Mission of the Department outlined in the Foreign Trade Policy
(2009-2014) and the RFD is to double India’s exports of goods and services
by 2014 in the medium term along with doubling India’s share in global
trade by 20202 as a long term goal, through appropriate policy support. The
Department is targeting an annual growth rate of exports of 25% during the
period 2011-12 to 2016-17 to achieve these twin targets3.
1.4 The Objectives formulated by the Department are as follows:
(i) Apart from focusing on increasing our exports in traditional sectors
like textiles & clothing, gems & jewellery, handicrafts etc., sustained efforts
would also be made to give a boost to our exports in hitherto non-traditional
1
Annual Report (2009-10) of the Department of Commerce, Government of India, New Delhi
2
Foreign Trade Policy (2009-2014) and Results Framework Document of the Department of Commerce,
Government of India, New Delhi
3
Strategic Plan (2009-10), Department of Commerce, Government of India, New Delhi
3

4. areas like machinery and transport equipment (accounted for 37% of global
trade between 2003-07), chemicals, pharmaceuticals and agro-products etc.
(ii) Special efforts would be undertaken to increase the production,
productivity and profits of the plantation crops i.e. rubber, tea, coffee, spices
and tobacco, which have been a traditional source of strength for our exports
as well as providing employment to millions of workers.
(iii) Along with product diversification, efforts would also be directed to
diversify our markets instead of concentrating just on the traditional ones
like the US and the EU, because the advanced economies are expected to
grow much slower than the developing and emerging economies in the next
decade.
(iv) Steps would be taken to conclude our ongoing Free Trade Agreement
(FTA) negotiations and to conclude the Doha Round negotiations, which
would provide additional market access for our goods and services. Non-
tariff measures (NTMs), which adversely impact exports, would be
addressed both through the FTAs as well as the WTO.
(v) Concerted efforts would be made to reduce our trade related
transaction costs.
(vi) Infrastructure bottlenecks, especially in respect of power, roads,
railways and ports would be addressed on priority basis. The Assistance to
States for Development of Export Infrastructure and Allied Activities
(ASIDE) scheme would continue to be used to cover critical gaps in export
infrastructure. More allocations would be sought for the ASIDE scheme
coupled with improvements in quality of output and effective monitoring,
which would help address the infrastructure deficit in a speedier manner.
(vii) The coverage of export credit as well as its quantum needs to be
enhanced. This would be addressed in consultation with the Ministry of
Finance, including the feasibility of utilizing the foreign exchange reserves
of the country for the purpose.
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5. (viii) Protecting sensitive sectors of the Indian economy against the
adverse impact of trade liberalization.
1.5 The major functions of the Department are as follows:-
(i) Formulation of the Foreign Trade Policy, setting annual targets of
exports and implementation of programmes for increasing India’s exports
(ii) Implementation of Focus Market and Focus Product schemes for
export diversification, both in terms of new markets as well as products
(iii) Undertaking export promotion activities through Market Development
Assistance (MDA) and Market Access Initiative (MAI) schemes
(iv) Negotiation of bilateral and regional trade agreements with different
countries and trade partners for securing preferential access in their markets
(v) Negotiation of multilateral trade agreements in the WTO, UNCTAD
etc.
(vi) Facilitating the creation of infrastructure for promoting exports
through the implementation of the Special Economic Zones (SEZs) Act and
Assistance to States for Development of Export Infrastructure and Allied
Activities (ASIDE) Schemes
5

6. SECTION- 2
Assessment of the situation
2.1 External Factors
2.1.1 A country’s export performance depends on a number of external
factors. First and foremost among these is the export competitiveness,
including the level of technological sophistication, of the major global
suppliers. On this count, the major threat facing the rest of the world is the
manufacturing behemoth that China has been able to put up since 1979.
Intertwined with its large capacities is the implicit and explicit subsidies that
its industries receive, specially for exports. Though the Chinese subsidies are
getting challenged lately in the WTO, because of the non-tranparent nature
of many Chinese government procedures, it would take a long time before
all the knots are unraveled. Another contributing factor to China’s
competitiveness is the artificial pegging down of the renminbi, which makes
imports from China additionally attractive. In 2009, China emerged as the
largest exporting country in the world with 9.6% share of global trade,
thereby displacing Germany. It has also surpassed Japan as the second
largest economy, from the third quarter of 2010. Contrary to the dire
predictions of many economists, the Chinese economy did not suffer
much on account of the economic downturn and has bounced back to
near 10% growth levels in the second half of 2010. The Chinese with
their large pool of technical manpower and alleged reverse engineering
skills and persistent violation of IPRs, are also among the front runners
in the sunrise sector of green technology. With their IT skills and
rapidly growing numbers of English speaking young persons (including
the largest number of foreign students in the US, Australia, Canada, UK
etc) are poised to move up in the Services field also from their current
standing of 5.
2.1.2 The second factor impacting upon exports is the state of the global
economy. India’s exports, which recorded an average annual growth rate of
23.9% during the period 2004-05 to 2008-09, came down to 13.6% in 2008-
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7. 09 and showed negative growth during 2009-104. The economies of the EU
and the US, which are still our major markets, have not recovered
completely from the economic downturn. Unemployment levels are still
quite high in these countries, leading to contraction in demand for consumer
goods. The EU has had to rescue Greece and Ireland from their sovereign
debt problems in 2010 and the US has had to unfold a $600 billion package
by way of Quantitative Easing 2 a few months ago to continue with its
stimulus to the economy. The net result is that consumer spending in these
countries is still low and luxury or gift items are not being purchased as
much as in 2007. This has affected the exports of many of our traditional
items like gems &jewellery, handicrafts and carpets. It has also impacted
upon our textiles and clothing exports because consumers are now more
likely to defer purchase of non-essential items.
2.1.3 Another fall-out of the economic downturn has been that investments
in the developed countries have come down, resulting in a contraction in the
demand for engineering goods, which is the largest sector of our exports
currently.
2.1.4 Our traditional strengths in exports have been our comparatively low
wages (steel forgings and castings, powerloom fabrics), our skilled workers
(carpets, gems& jewellery, clothing), low cost of primary raw materials
(cotton, tea, coffee, rubber, iron ore, hides and skins), low import intensity
of raw materials (except rough diamonds) and low energy intensity of our
export products (handicrafts, hand-knotted carpets, gems & jewellery,
embroidered clothing). The typical Indian export oriented industry worker,
most likely illiterate or non-matriculate, is intelligent, skillful, innovative
and able to absorb and carry out instructions well. He is, however, saddled
with a high morbidity burden and is most likely working on piece rate basis
in the unorganized sector, staying away from his family and living in low
rental housing in slum like surroundings.
2.1.5 With our rising wages, low levels of mechanisation and productivity,
infrastructural bottlenecks and comparative lack of product development and
4
Annual Report (2009-10), Department of Commerce, Government of India, New Delhi
7

8. innovation, our exports have grown at a rate far lower than that of China or
the other East Asian tigers in the nineties. Unless we are able to break out of
this mould and provide products of greater technological sophistication and
variety at globally competitive rates, it might be difficult to make a
significant difference in our export performance in the years to come.
2.1.6 In order to achieve this breakthrough, we have, however, a very able
ally in the shape of our new generation of entrepreneurs/stakeholders, who
are young, energetic and willing to take risks. What they expect of the
government and the planners to do is to provide an enabling and facilitating
environment for them to go out into the global arena and climb new peaks.
These stakeholders want to have world class infrastructure, an inspector Raj
-free and hassle-free working environment and predictability and
transparency in government policies and functioning. This in essence is what
we need to deliver.
2.2 A SWOT analysis of our exports is presented below against the
backdrop of the above general discussion.
Strengths
 Availability of most natural resources and long coastline
 Diversified Industrial Base
 Skilled manpower, including entrepreneurial ability
 English language skills
 Growing middle class and disposable incomes represent a
robustly growing domestic market
 Low wages compared to all developed and emerging developing
countries like China and Brazil
 Younger population as compared to all developed countries and
China
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9. Weaknesses
 Major infrastructural deficit in terms of power, ports, roads,
railways
 Lack of state of the art technology in many manufacturing sectors
 Low investments in R& D
 Low literacy levels and generally poor quality of technical
education (except in a few colleges)
 Low productivity and high morbidity burden on labour
 High transaction costs and cost of lending
 Red tape and procedural delays (including in the judicial
proceedings)
 Corruption
Opportunities
 Good combination of skilled manpower and comparatively lower
wage costs could act as a catalyst to attract FDI for a wide range
of manufacturing activities, provided we bridge the
infrastructural deficit
 Improvement in farm productivity and establishment of cold
chain could transform into an agro-products exporting power,
specially in fruits and vegetables
 Large greying population among wealthier countries would
compel them to outsource many of their activities to lower cost
suppliers like India
 The availability of large numbers of skilled IT professionals could
be leveraged to turn India into the global back-office
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10. Threats
 Higher labour productivity, world class infrastructure and
large manufacturing base of China could make it difficult for
India to gain a larger share of global exports. India’s bilateral
trade with China is also currently running an annual trade
deficit of $17 billion.
 Lower cost competitors like Bangladesh (in textiles and
clothing) and Vietnam (for textiles, clothing, tea, coffee and
some spices) could erode India’s share in global trade.
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11. SECTION - 3
Outline of the Strategy
3.1 Projections for exports
3.1.1 India’s exports of goods and services in 2009 were $ 155 billion and $
86 billion and its share of global trade was 1.2% and 2.6% in goods and
services respectively5. Including intra-EU trade, India’s standing was 22 and
12 among the world’s leading exporters of goods and services.
3.1.2 Based on WTO data on global trade in goods pertaining to 1990-2009
and taking the trend growth rate for this period, which was 13.27%, global
exports projection for 2014 and 2020 work out to $18450 billion and
$29,450 billion respectively6. India’s exports share as a proportion of global
exports in goods in 2014 and 2020 works out to 1.64% ($303 billion) and
2.17% ($640 billion) respectively.
3.1.3 As regards Services, the projections indicate that global trade would
increase to $5050 billion and $8060 billion in 2014 and 2020 respectively, in
which India’s share would be 4.42%($223 billion) and 8.1% ($653 billion).
3.1.4 Thus the secular growth projections would appear to indicate that
India should be able to meet its twin export growth objectives for 2014 and
2020 respectively. However, there are some major caveats to this, which are
discussed below. Before we proceed to discuss them, however, it would
be pertinent to point out that there are some gains to be made if we
align the timelines for meeting our objectives, to coincide with the 12th
Plan period (2012-17). This would be especially relevant for the areas
where inter-departmental coordination and joint efforts are required. It
is for the Department of Commerce to take a call on this issue.
3.2 Outline of Potential Strategies
5
World Trade Report 2010, World Trade Organisation, Geneva
6
Unpublished joint report of the Centre for WTO Studies and FIEO, December 2010
11

12. 3.2.1 At present, engineering goods, gems & jewellery and textiles &
clothing account for 19.8%, 17.8% and 11.3% respectively of our exports
basket. Petroleum products account for another 13.8% of our exports. The
value addition in gems & jewellery exports is low at present, because it is
mainly concentrated in the diamond polishing business. However, with
better design inputs and product innovation and diversification, we can
increase our exports in this sector.
3.2.2 Similarly, there are natural limits to growth in the traditional products
of our textiles & clothing sector because of the structure of our industry (still
mostly in the small or unorganized sector) and our rising wages. Lower cost
producers like Vietnam and Bangladesh have already overtaken us in textiles
and clothing and we can only improve our position in this sector if we move
up the value chain by establishing brand names and designer labels as well
as venturing into the production of hitherto non-traditional items like men’s
and women’s business suits for example.
3.2.3 In the case of the leather sector, which provides employment to lakhs
of workers, our exports are mainly confined to exports of finished leather,
men’s shoes, garments and accessories. We have negligible exports in
children’s and ladies footwear as well as non-leather footwear, which
together account for more than 80% of global trade. There is tremendous
scope for improving our position in leather products and non-leather
footwear exports, provided we take the right policy initiatives.
3.2.4 It is most unlikely that we would be able to double our exports in the
medium term by just producing “more of the same”. It appears imperative
to have a paradigm shift in our manufacturing and exports strategy, so
as to move onto a different growth path. For this, we have to significantly
diversify our product basket in addition to putting in efforts to produce
higher value added products in our traditional exports sectors. The new areas
in which we could provide a thrust could, for instance, include engineering
goods, chemicals and pharmaceuticals (including biosimilars), electronic
goods, agro-products etc.
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13. 3.2.5 In order for us to move up the value chain, we would need to : (i)
provide R&D and state of the art testing facilities (ii) marketing support
for thrust sectors and countries, (iii) attract foreign investments and
technology through further liberalization of our investment regime and
schemes like the Special Economic Zones and (iv) build up a brand image
of quality and reliability for India, through use of the India Brand Equity
Fund and other appropriate schemes.
3.2.6 In view of the low growth rate projections for the advanced
economies in the next 4-5 years, the intense competition for market share in
these countries as well as the robust growth projected for the emerging
economies and some other developing countries, we could be benefited by
focusing our attention also on penetrating new markets. The bilateral Free
Trade Agreements (FTAs) and the Regional Trade Agreements, could
provide the right platform for moving into non-traditional markets, through
preferential access. Thus the emphasis has to be to conclude the FTAs that
India is negotiating as soon as possible along with entering into fresh FTA
negotiations with new trade partners where careful analysis indicates mutual
benefits for both partners. Efforts must also be made to conclude the Doha
Round as soon as possible because of the promise it holds for further trade
liberalization.
3.2.7 With the progressive reduction in tariffs, specially in the developed
country markets (the average tariffs in both the US and the EU are currently
at 4% for industrial products) and with further reductions proposed in the
Doha Round negotiations, tariffs are going to play a much reduced role in
inhibiting exports in future. On the other hand, non-tariff barriers (NTBs)
and Sanitary and Phytosanitary (SPS) measures are going to play an
increasing role in determining trade flows. In order to address these issues,
we would need to include a fast track mechanism for their resolution in our
FTAs. We would also need to push vigorously for reduction and elimination
of NTBs in the Doha Round negotiations.
3.2.8 Inadequate availability (specially to the MSME sector) and
comparatively high cost of export credit (as compared to the developed
13

14. country or Chinese exporters) pushes up the costs of our exporters. In the
absence of Indian bank branches in many of our export destinations, our
exporters also have to rely on expensive third country banking services.
Consolidation of our nationalized banks (on the lines of what the SBI is
trying to do through mergers of its associates) will enable our banks to attain
a critical mass and provide some of these facilities in our export destinations.
One of the ways of providing low cost short term credit in foreign currency
could be to access part of our foreign exchange reserves, which is invested
in foreign treasury bonds and other securities. The whole issue of adequacy
and cost of borrowing needs to be addressed urgently in consultation with
the Finance Ministry and RBI.
3.2.9 Another factor impacting our global competitiveness is our high
transaction costs. A part of this is infrastructure related but another part is
largely procedural. The latter could be addressed effectively through
appropriate IT solutions. Computerisation of clearances by Customs, DGFT
and other associated agencies and integration of their networks to facilitate
timely payment of duty drawback and other export incentives is imperative
to reduce transaction costs.
3.2.10 In Services, we would need to diversify beyond IT/ITES and Tourism
to get deeper into Financial Services, Telecom Services, Audio Visual
Services, Professional Services (e.g. medicine, dentistry, nursing, law,
accountancy, management consulting, architecture, medical diagnostics)
etc. as well as developing better infrastructure for the Tourism sector, which
contributes significantly to our exports earnings. In order to make further
gains in both IT/ITES as well as professional services, we would need to
press hard for liberalization of Mode 4 (movement of natural persons) by the
developed countries in the Doha Round negotiations.
3.2.11 Our infrastructure, be it power, road, rail or port related, is already
under tremendous pressure because of the demands placed on it on account
of our robust economic growth between 2003-08. With the anticipated
growth in exports as well as concomitant increase in imports in the current
decade, the pressure on our infrastructure is bound to get accentuated and
14

15. hinder exports, unless we take advance action. A brief overview of our
infrastructural requirements is provided below.
3.2.12 Power
 In order to meet our export targets, we would need to diversify our
exports basket significantly and get into more energy intensive
manufacturing processes as compared to handicrafts, gems &
jewellery, textiles & clothing etc. at present. This would require high
quality and uninterrupted power for our manufacturing hubs as well as
for our rail transportation network. There is already a significant
energy deficit in the country and even the modest target for additional
power generation during the 11th Plan is not likely to be achieved.
This sector requires concerted efforts for improvement otherwise it
can act as a huge drag on our exports.
3.2.13 Ports
 Ports handle 95% of our total trade in terms of volume and 70% in
terms of value. As per world benchmarking, efficient working is
achieved when the handling capacity of ports is 30% more than the
actual traffic handled. By 2020, our capacity requirement has been
estimated to be 3025 Million Tonnes (MT), whereas the planned
capacity for 2020 currently is only 1685 MT- a shortfall of 1340 MT.
The Ministry of Shipping is going to come out with a Revised
Perspective Plan for 2020 shortly, which is expected to aim for a
capacity of 3200 MT for 2020. This Perspective Plan would need
adequate and timely financing for execution.
 It has been noticed that even when our ports are able to handle the
cargo at their berths, a huge bottleneck is faced in the shape of
inadequate landside evacuation facilities. Thus there would have to be
simultaneous development of the feeder rail and road networks along
with port development.
15

16.  Currently a lot of time and money is wasted by Indian exporters
because their goods have to be transshipped through either Colombo,
Singapore or Dubai. Effective steps need to be taken to reduce the
pre-berthing and turn around times of vessels, so as to attract mainline
vessels to Indian ports and reduce transportation costs and time.
3.2.14 Roads
 Roads carry 61% of freight currently. With the anticipated growth in
export and import volumes by 2020, the road network would need to
be strengthened significantly. In India, expressways are nearly non-
existent, while China’s highway network consists of over 45,000 kms
of 4 or 6 lane access controlled expressways linking its major cities.
Currently 6 lane highways constitute only 1% of national highways in
India.
 India does not fare well in speed comparisons of its trucks as well.
According to a World Bank study7, the transit time between major
cities in India, on average, is about 33% more as compared to the US.
Moreover, Indian trucks are used for 60000-100000 km a year, which
is less than a quarter of those in developed countries. A joint study8 by
the Transport Corporation of India and IIM, Kolkata has estimated
that the average effective speed of trucks on Indian roads is only about
20 kmph, because of poor roads and check post delays. Apart from
increasing the width of the highways, the riding quality of the roads
needs to be improved and check posts across state borders need to be
eliminated.
3.2.15 Railways
 As per the Ministry of Railways Vision 2020, the target for freight
traffic for 2020 has been pegged at 2165 MT. However, it has been
estimated that the projected traffic would be 4787 MT by 2020,
7
Road Transport Service Efficiency Study, November 2005, Energy and Infrastructure Operations Division,
South Asia Regional Office, World Bank
8
Operational Efficiency of National Highways for Freight Transportation in India, TCI and IIM Kolkata
16

17. showing a large capacity deficit of 2622 MT. Thus a major thrust has
to be imparted to doubling and quadrupling of lines along major
freight paths and setting up dedicated rail freight corridors from the
hinterland to the major ports.
 The size of freight rakes would need to be increased and they would
also need to travel at higher speeds to transport the cargo faster and
reduce transaction costs.
3.2.16Along with rapid and orderly growth of our exports, we have to
also ensure a level playing field for our domestic industry, vis a vis
imports. Large idle capacities and ability to subsidise products heavily
(like China for instance) can wreak havoc for the domestic industry
through dumped/subsidized imports. In order to counter this, we have
to strengthen our import monitoring mechanism and act quickly with
appropriate trade defense measures, to limit the damage.
3.3 Consultation with Stakeholders
3.3.1 The stakeholders would broadly comprise the industry representatives
in different sectors, the concerned administrative ministries and state
governments, research institutions, financial institutions, service providers
like Customs, DGFT, Power, Shipping, Road Transport & Highways, Civil
Aviation etc.
3.3.2 The Department of Commerce would need to play the role of a
coordinator and facilitator among the various stakeholders. The questions
that need to be asked of the industry and administrative ministries would be
directed towards identification of new thrust areas. The research institutions
would need to be involved in the discussions and asked for technical
solutions to problems that are perceived in the path forward. The industry’s
feedback about reforms and procedural changes as well as infrastructure
strengthening would also need to be factored in appropriately. The mode of
interaction could be through open house sessions followed by brainstorming
and then formal meetings of a task force.
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18. 3.4 Building up Knowledge and Capabilities
3.4.1 We need to continuously update both our technology as well as our
management practices to be globally competitive. The obvious source for
access to both the latest technology and management practices in the short to
medium term would be through FDI, joint ventures and outright purchases.
However, in the long run, we need to invest in R&D on our own to provide
our industry with a competitive edge. China has done this spectacularly in
recent times and in an earlier era Japan and Korea have done it. This would
need to be coordinated by the administrative ministries with the industry and
research institutions and the PPP model would be ideally suited for this
endeavour.
3.4.2 On another front, we need to build up our brand image and inculcate
quality consciousness throughout our supply and production chain. As far as
brand building is concerned, the Department of Commerce has a vital role to
play in this endeavour, in association with the industry associations. On
inculcating quality consciousness, the major initiative would have to come
from the industry associations and administrative ministries.
3.4.3 We also need to have a sufficiently large number of trained personnel
in different departments of the government, who can take part in
international trade negotiations and contribute to the preservation and
building up of an institutional memory. For this we need to build up our own
training institutions, groom young officers and send them for specialized
training courses in India as well as other countries/international institutions.
We also need to build up our capabilities in the Universities and research
institutions to conduct applied research on trade issues. Finally, we need to
groom a set of lawyers in international trade law, who can represent the
government as well as individual firms in the trade defense proceedings
initiated by other countries against us.
3.4.4 We also need to sensitise and inform government departments and the
industry about the NTBs, SPS standards etc. prevailing in important export
destinations and in building up our own infrastructure and testing
capabilities to bring up our own domestic as well as export oriented industry
18

19. segments to adopt global standards and best practices. The Apex Industry
Associations and the Export Promotion Councils and Commodity Boards
would have a leading role to play in this effort.
3.4.5 One of the other important points on which we would need to focus
on is sensitization of our service providers to the impact of delays in eroding
our competitiveness in the global market and the national loss that it entails.
This would need to be carried out through Open House Sessions and
Partnership Building Exercises with the participants being the client group
and the service providers. This would need to be carried out under the joint
leadership of the field offices of the service providers as well as the local
industry associations.
3.5 Priorities in Strategic Initiatives
3.5.1 Based on the three criteria of suitablility, feasibility and acceptability,
we would suggest that the following weights be given to the strategic
initiatives listed in the foregoing paragraphs:-
Strategic Initiative 1 (Diversification of export product basket)-30
Strategic Initiative 2 (Diversification into non-traditional markets and
conclusion of ongoing FTA negotiations and initiating new FTAs)-20
Strategic Initiative 3 (Strengthening export related infrastructure)-10
Strategic Initiative 4 (Enhancing credit flows for exports at lower cost)-10
Strategic Initiative 5 (Reducing Transaction Costs)-10
Strategic Initiative 6 (Diversification of Services exports)- 10
Strategic Initiative 7 (Building up a Brand Image of India)- 05
Strategic Initiative 8 (Support to the Plantation Sector)- 03
Strategic Initiative 9 (Protection to sensitive domestic industries) - 02
19

20. SECTION- 4
Implementation Plan
4.1 The Potential Strategic Initiatives have already been dealt with in
some detail in Section 3 and suggestions regarding their prioritization have
also been provided. The issue of stakeholder engagement and the learning
agenda has been discussed in paragraphs 3.3 and 3.4 of Section 3.
4.2 The resources required, whether in terms of human, capital or
infrastructure, for implementing the strategic initiatives, can only be worked
out after holding in-depth meetings with all the concerned stakeholders.
Many of the administrative ministries and state governments as well as
research institutions already have plans, schemes and projects under
implementation, which could be fine-tuned to fit the specific requirements of
each strategic initiative.
4.3 As far as the Department of Commerce (DOC) is concerned, it already
has both a Focus Product and a Focus Market Scheme in operation, for
diversification of export products and penetrating new markets. However, an
independent evaluation of these schemes, if not already undertaken, should
be immediately taken up to enable mid-course corrections as required. The
Market Development Assistance (MDA) and Market Access Initiative
(MAI) Schemes of DOC may also require a similar remodeling to meet the
emerging requirements of different sectors.
4.4 In order to have quantifiable parameters to assess progress, detailed
sub-sector and year wise targets would need to be worked out in consultation
with the Export Promotion Councils, Commodities Boards, administrative
ministries and other stakeholders. By way of an indicator, we have
attempted broad sectorwise targets for 2014-15, which is at Annex 1.
The annual targets could be worked out from the overall milestones
fixed, with a certain amount of backloading towards the end of the
period. In addition to the quantifiable targets, the outcomes of the strategic
initiatives would have certain non-quantifiable targets as well, achievements
against which would have to be assessed in terms of the completion of
20

21. certain activities. These activities would also need to be broken down into
elements and both financial and physical targets fixed, as far as practicable,
for each of these elements.
4.5 DOC would have to coordinate with the administrative ministries and
other stakeholders to closely review the progress made against each element
of activity as well as the quantifiable targets, preferably on a quarterly basis,
and to examine suggestions for making mid-course corrections/amendments
to policies as appropriate. Currently, DOC brings out Annual Supplements
to the Foreign Trade Policy (FTP) by way of such mid-course amendments
to the five year FTP. If the requirements of major sectors so require, the
Annual Supplements could be converted to ones of a shorter periodicity.
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22. SECTION-5
Linkage between the Strategic Plan and RFD
5.1 Though there is a considerable degree of convergence between the
Strategic Plan proposed here and the RFD of the Department of Commerce,
there are a few differences as well.
5.2 First, the convergence. Both the Strategic Plan and RFD emphasise
the importance of policy support in increasing India’s annual export growth
by a CAGR of around 25%. Both speak about diversification of India’s
exports through exploration of new and emerging markets as well as
promoting employment intensive products and products of high export
potential. The importance of leveraging the SEZ and ASIDE schemes to
narrow the infrastructure deficit is also underscored. Both documents
acknowledge that the FTAs should be used to gain additional market access
and trade facilitation measures are required to reduce transaction costs. Also
support for the plantation sector and increased exports of agro-products is
part of both the approaches.
5.3 On the differences between the two, the RFD prioritises the protection
of sensitive sectors of the Indian economy against the adverse impacts of
trade liberalization and facilitating improvement in the functioning of STC,
PEC, MMTC, ECGC and ITPO. On the other hand, the Strategic Plan lays
emphasis on increasing the availability and lowering the cost of export
credit; export related infrastructure development in the power, roads, rail and
ports sectors; building up a brand image of India and diversification of
Services exports as being essential for the fulfilment of the Mission of the
Department. It also mentions protection to sensitive sectors of the
domestic industry as one of the initiatives, though low in order of
priority.
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23. SECTION-6
Cross Departmental and cross functional issues
6.1 International trade (exports plus imports) today accounts for
more than 40% of India’s GDP. Because of the rising prices of oil and
our increasing current account deficit, we have very few options but to
focus on exports growth to reverse the trend.
6.2 Increased exports, especially in labour-intensive sectors like
carpets and handicrafts, gems & jewellery, leather, textiles & clothing,
plantation crops and other agro-products, provides an ideal marriage
between our twin goals of economic growth and greater employment
opportunities for our youth. Thus exports growth would contribute to
partially meeting the challenges of enhancing the capacity for growth as
well as enhancing skills and faster generation of employment, which
have been listed out as two of the challenges to be addressed in the
Twelfth Plan.
6.3 As regards meeting the Mission and Objectives of the
Department of Commerce, it would be essential to seek larger Plan
allocations for departmental schemes like ASIDE, MDA and MAI. Apart
from this, larger allocations for other departments to narrow the
infrastructure deficit for export related infrastructure as well as for
meeting the requirements of R&D support and capacity building, would
also be needed.
6.4 On the subject of Citizen’s Charter, the Department of
Commerce has a clearly enunciated Charter9 and has shown its
commitment to continuously strive to evolve procedures in the Foreign
Trade Policy that would be of maximum benefit to the public. The
Department has also put in place a Grievances Cell, a quasi-judicial
Appellate Committee and a Grievance Redressal Committee.
9
Annual Report (2009-10), Department of Commerce, Government of India, New Delhi
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24. SECTION-7
Monitoring and Reviewing Arrangements
7.1 The Department of Commerce interacts with a variety of stakeholders
on a regular basis. Officers of the Department are members on the Board of
Directors of all the Export Promotion Councils and are abreast of the
developments/problems faced by the industry on almost a day to day basis.
All the Commodity Boards like the Tea Board, Coffee Board, Tobacco
Board etc. have officers of the Department as their chief executives, who
raise problems faced by the plantation crop growers or exporters with the
Department at the earliest opportunity.
7.2 There is, however, a lacuna in terms of absence of industry bodies
in various segments of the domestic industry, which can effectively
communicate their concerns to the government. To a certain extent this
is reflective of the small and decentralized nature of many sectors of our
industry. Nevertheless, this gap needs to be bridged and an effective
feedback loop needs to be established, perhaps through the agency of
the respective State Governments.
7.3 In addition to the mechanisms mentioned in paragraph 7.1, the
Department of Commerce organizes Open House sessions with exporters,
industry associations and apex industry bodies before finalizing the Foreign
Trade Policy (FTP) or the Annual Supplements to the FTP. Meetings with
industry representatives are also held before each Budget Session.
7.4 The three major bodies under the standing institutional mechanism for
consultations on various issues and review are as follows.
(i) Board of Trade (BOT)- This provides an effective mechanism to maintain
a continuous dialogue with trade and industry in respect of major
developments in the field of international trade and make recommendations
to the Government for the various measures required for increasing the
competitiveness of Indian exports. The Board meets every quarter and is
chaired by the Commerce and Industry Minister.
24

25. (ii) Export Promotion Board (EPB)- The Board is chaired by the Cabinet
Secretary to provide policy and infrastructural support through coordination
among different Ministries for boosting exports.
(iii) Inter-State Trade Council (ISTC)- The Council provides a platform for
dialogue between the Centre and the States in matters relating to trade
facilitation and to create a framework for making States as partners in the
national export effort.
7.5 The Department of Commerce has resolved to hold regular meetings
of all the three bodies to make them more effective instruments in shaping
policy and in reviewing the situation on the ground.
7.6 It needs to be mentioned that the RFD itself is a review
mechanism and needs to be used to monitor the progress made in the
achievement of the objectives on a periodic basis. The MOUs signed
with the PSUs , viz. STC, MMTC, PEC, ECGC, ITPO need also to be
reviewed regularly in terms of the achievement against each and
subsidiary RFDs could be drawn up for subordinate organizations of
the Department.
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26. Annex I
Strategic Targets for 2014-15
(in billions of US Dollars)
Product 2010-11 2014-15
(Estimated)
Gems and Jewellery 32.75 64.00
Engineering Goods 45.00 92.00
Textiles
Cotton Yarn and Made- ups 5.00 9.00
Manmade Yarn and Made-ups 3.75 7.00
Clothing 11.00 17.00
Other Textile Products
Carpets 0.90 2.00
Jute Goods 0.45 0.75
Petroleum Products 35.00 61.00
Drugs, Pharma and Fine Chemicals 9.60 21.00
Other Basic Chemicals 7.60 17.00
Electronic Goods 5.50 10.00
Leather Goods 3.75 8.25
Plastic and Linoleum 4.20 8.00
Iron Ore 5.00 8.00
Mica and other minerals 3.10 5.00
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27. Marine Products 2.20 4.00
Agricultural Products
Fruits and Vegetables 1.20 2.50
Oil meals 1.70 2.80
Processed Cashew nuts 0.60 1.00
Rice 2.00 4.00
Spices 1.60 3.00
Tobacco 0.90 1.40
Tea 0.55 0.80
Coffee 0.55 0.80
Miscellaneous 16.00 50.00
TOTAL 200.00 400.00
27