Anand Sharma addresses Economic Editors’ Confrerence
Following is the text of the address of Shri Anand Sharma, Union Minister of Commerce and Industry, delivered at the ECONOMIC EDITORS’ CONFERNECE here today.
“It is a matter of privilege for me to have this unique opportunity to share with you the contours of policy which have been evolving over the last few months in the Ministry of Commerce and Industry.
The UPA Government has assumed office at a challenging time when the global economy is witnessing what is by far, the most severe economic recession in the last 7 decades. Countries across the world have been affected in varying degrees and all economic indicators including the industrial production, trade, employment and investment have taken a hit. WTO and IMF have projected a grim forecast for the global trade which is projected to decline anywhere between 9 to 11% in this financial year. This recessionary trend has also had a huge social implication and a billion people have been pushed in the poverty net.
Though the fundamentals of Indian economy remain strong and we have one of highest saving rates in the world, our exports have also witnessed a decline. The exports have been falling since October last year and the fall started @ 39% and this negative growth was a matter of grave concern. Steps were taken by Government through series of fiscal measures and stimulus packages, especially in the labour intensive sectors. The export data of September 2009 confirms that the negative growth has come down to 13.8% as compared to corresponding period last year and we are on the way to recovery.
The Government is mindful of the challenges faced by the Indian industry and stimulus packages were announced to boost the economy and the cumulative impact of these measures is already becoming visible. These were supplemented by the announcement of Five-Year Foreign Trade Policy in which we have provided a series of fiscal incentives for the promotion of exports. Under the new Foreign Trade Policy, we have covered 26 new markets under the Focus Market Scheme and 13 markets under the Market Linked Focus Product Scheme. We have also encouraged technological upgradation of the export sector through zero duty Export Promotion Capital Goods (EPCG). The incentives available to exporters under the DEPB scheme, interest subvention for pre-shipment credit and the income-tax exemptions for EOU and STPIs have also been extended.
I am confident that the declining trend of exports will be reversed very shortly and we will be able to achieve the target of doubling India’s exports of goods and services by 2014 and also doubling our share in global exports by 2020. It shall be our endeavour to make institutional changes for reducing transaction costs for making our exports globally competitive. The Government has given a special attention to labour intensive sectors which have been especially hit by the global recession. I have tasked the Commerce Secretary to conduct a review across sectors regarding the impact of the measures taken on various sectors and we are committed to provide additional assistance wherever it is warranted.
On the investment side, however, it is a measure of confidence that the foreign investors have demonstrated in the Indian economy that the Foreign Direct Investment has shown a positive trend this year and so have been the flows from foreign institutional investors. In the first six months of the current financial year, we received FDI inflows of US$ 15.3 billion and the cumulative FDI inflows has crossed the US$120 billion mark. Last year, we received FDI of $ 35 billion. The net FII inflow this year has been of the level of $ 10.27 billion. The performance of six core industries has shown a growth of 5% in the first six months of this year as compared to 3.4% for the corresponding period last year.
In the last few years, FDI Policy has seen enormous liberalization including simplification of procedures which has resulted in the higher equity flows in targeted sectors of economy. Most recently, we have removed cap on FDI in the small scale industry sector which is now subject to respective sectoral caps and I am sure this will see greater equity flows in this sector of economy and result in greater technology transfer.
It is a commitment of the UPA Government to accord a central role to manufacturing led industrial development as part of growth strategy for the economy. Our capital goods sector recorded a growth of 8.3% in August 2009 as compared to 0.9% in August last year, indicating a revival of the past growing trend. The consumer goods sector has picked up to 8.5% in August 2009 as compared to 6.4% in August last year.
In order to give a special thrust to industrial promotion and inviting foreign investment, a company “Invest India” has been set up in partnership with FICCI and State Governments. The mandate of this company will be to promote foreign investment in a focused manner and provide hand holding support for foreign investors in terms of rules and regulations and clearances.
We have also launched e-biz project which would provide a number of services to business users covering the entire life cycle of business and on line single window at national level for business users.
I am happy to say that Delhi-Mumbai Industrial Corridor project has gathered momentum and this ambitious project envisages over US$ 90 billion of investment, covering the states of Haryana, Rajasthan, Madhya Pradesh, Gujarat, Maharashtra and Uttar Pradesh. This project will also have industrial parks, investment regions, SEZs, agro-processing zones, knowledge hubs, ports and power plants etc. The project is being reviewed regularly at a high level and I am sure we would be able to see some visible early bird projects coming to fruition in the near future. The Government of India has been encouraged by the success of National Institute of Design at Ahmedabad and a decision has been taken to establish 4 additional institutes of similar pattern which would considerably strengthen the design education infrastructure in the country. We are also mindful of the need for promoting balanced and equitable growth in the country. I am convening a meeting of the State Industry Ministers later this month in which we will work out a strategy for creating the right investment climate at the State level and to establish an institutional mechanism for a regular dialogue between the Centre and States for harmonizing procedures and creating the necessary synergies.
The policy of Special Economic Zones has withstood the test of time and in the last three years, the Government has given approval to 579 SEZs of which 338 have been notified. Since the enactment of the SEZ Act in 2005, over three lakh people have gained employment in the SEZs and 98 SEZs which have started functioning have attracted investment of over one lakh crore, contributing one lakh crore of exports. Exports have witnessed a remarkable growth of 620% in the last five years and even in the recessionary period last year, exports from SEZs grew by 50%. The SEZs have added considerable value in related economic activities, consumption pattern and social life in the adjoining areas.
Our plantation sector provides employment to over 17 lakh workers and sustains 14.5 lakh small growers. We are mindful of the structural challenges facing the plantation sector and we are taking measures to address the same. We have increased the financial outlay for plantation crops to 2330 crores in the 11th Plan from a level of 1201 crores in the 10th Plan period. A Special Purpose Tea Fund has been set up for funding the re-plantation and rejuvenation of the tea plantations. We also have similar schemes for cardamom and pepper. We have endeavoured to provide a transparent pricing mechanism and the E-auction system for tea has shown positive results. Similar system has also been introduced for E-auction for cardamom in Kerala and Tamil Nadu. The Government has also set up five Spices Parks and 5 Regional Quality Testing labs for giving a boost to the exports in spices. The Government has announced its decision to set up a Group of Ministers to look at the structural problems facing the plantation sector to make it internationally competitive and sustainable.
India is committed to the successful conclusion of the Doha Round for the establishment of a rule based multilateral trading regime which is fair and equitable. While striving for a balanced and ambitious outcome of this Round, we have emphasized that development remain at the core of the round and any outcome must respond to the aspirations of the people of the developing world.
India hosted a ministerial meeting in New Delhi on 3-4 September 2009 bringing together all shades of opinion and interests forming microcosm of the WTO membership, to give a determined push to the multilateral process. There was an unequivocal sentiment that the Doha Round must be concluded within 2010 which was later reiterated by the Heads of States in the G-20 Summit in Pittsburgh. To this end, Ministers agreed on the specific steps for resumption of negotiations in Geneva which came to an abrupt halt in July 2008. I am glad that India’s initiative is being acknowledged globally and since September 14, 2009 our senior officials of all the countries have been working with each other along with Chairs of the Negotiating Groups with an intensive work plan for the coming weeks. The Doha Round holds out the promise of correcting historic distortions in the global trade, particularly, the agricultural protectionism which has been rampant in many developed countries. I am of the firm view that substance and not the time line must remain the main driver of the round. I have impressed upon my interlocutors that in these challenging times, countries must resist protectionist tendencies which will only delay the recovery and prolong recession. I remain optimistic that collectively we would be able to harmonize our positions and arrive at a solution which is fair and honourable. I remain mindful of the fact that there are areas of divergence on which we have not yet been able to find a meeting ground, but, I am sure that a combined articulation of political resolve will ensure timely conclusion of this Round.
While we are engaged in the Doha Development Round, India has also been engaged with the regional trading blocs and bilateral agreements to complement a multilateral trading system. In line with India’s growing profile, India has concluded 7 free trade agreements and 6 preferential trading agreements so far and 10 free trade agreements are under negotiations. Most recently, we have concluded the Comprehensive Economic Partnership Agreement with South Korea and a Trade in Goods Agreement with ASEAN. These two agreements are in line with India’s Look East policy and will enable our enhanced access in these vibrant economic groupings which is playing a major role in the global economy.
In the last financial year, bilateral trade between India and ASEAN was $ 45 billion and we aim to reach $ 70 billion by 2012. In the agreement which has been negotiated, we have strived to strike a balance in protecting the interests of our domestic industry and interests of our exporting community. Through the Negative List, Sensitive List and Highly Sensitive list, we have especially protected those sectors of our economy which are labour intensive.
The Free Trade Agreement with Japan is at an advanced stage of negotiations and FTA with the European Union is proceeding at a steady pace. EU is the largest trading partner of India and offers enormous potential for growth in the bilateral trade. I am going to further discuss these matters with the EU Trade Commissioner tomorrow.
A globalised world offers enormous opportunities while also posing several challenges. We have been vigilant of the danger of dumping of cheap imports by certain countries and directions have been given to Directorate of Anti Dumping and Safeguards to initiate proceedings wherever necessary to project the genuine interests of our domestic industry. These are undoubtedly challenging times for the exporting community but the Government is fully committed to do all that is required for giving a push to our exports.”
Following is the text of the address of Shri Anand Sharma, Union Minister of Commerce and Industry, delivered at the ECONOMIC EDITORS’ CONFERNECE here today.
“It is a matter of privilege for me to have this unique opportunity to share with you the contours of policy which have been evolving over the last few months in the Ministry of Commerce and Industry.
The UPA Government has assumed office at a challenging time when the global economy is witnessing what is by far, the most severe economic recession in the last 7 decades. Countries across the world have been affected in varying degrees and all economic indicators including the industrial production, trade, employment and investment have taken a hit. WTO and IMF have projected a grim forecast for the global trade which is projected to decline anywhere between 9 to 11% in this financial year. This recessionary trend has also had a huge social implication and a billion people have been pushed in the poverty net.
Though the fundamentals of Indian economy remain strong and we have one of highest saving rates in the world, our exports have also witnessed a decline. The exports have been falling since October last year and the fall started @ 39% and this negative growth was a matter of grave concern. Steps were taken by Government through series of fiscal measures and stimulus packages, especially in the labour intensive sectors. The export data of September 2009 confirms that the negative growth has come down to 13.8% as compared to corresponding period last year and we are on the way to recovery.
The Government is mindful of the challenges faced by the Indian industry and stimulus packages were announced to boost the economy and the cumulative impact of these measures is already becoming visible. These were supplemented by the announcement of Five-Year Foreign Trade Policy in which we have provided a series of fiscal incentives for the promotion of exports. Under the new Foreign Trade Policy, we have covered 26 new markets under the Focus Market Scheme and 13 markets under the Market Linked Focus Product Scheme. We have also encouraged technological upgradation of the export sector through zero duty Export Promotion Capital Goods (EPCG). The incentives available to exporters under the DEPB scheme, interest subvention for pre-shipment credit and the income-tax exemptions for EOU and STPIs have also been extended.
I am confident that the declining trend of exports will be reversed very shortly and we will be able to achieve the target of doubling India’s exports of goods and services by 2014 and also doubling our share in global exports by 2020. It shall be our endeavour to make institutional changes for reducing transaction costs for making our exports globally competitive. The Government has given a special attention to labour intensive sectors which have been especially hit by the global recession. I have tasked the Commerce Secretary to conduct a review across sectors regarding the impact of the measures taken on various sectors and we are committed to provide additional assistance wherever it is warranted.
On the investment side, however, it is a measure of confidence that the foreign investors have demonstrated in the Indian economy that the Foreign Direct Investment has shown a positive trend this year and so have been the flows from foreign institutional investors. In the first six months of the current financial year, we received FDI inflows of US$ 15.3 billion and the cumulative FDI inflows has crossed the US$120 billion mark. Last year, we received FDI of $ 35 billion. The net FII inflow this year has been of the level of $ 10.27 billion. The performance of six core industries has shown a growth of 5% in the first six months of this year as compared to 3.4% for the corresponding period last year.
In the last few years, FDI Policy has seen enormous liberalization including simplification of procedures which has resulted in the higher equity flows in targeted sectors of economy. Most recently, we have removed cap on FDI in the small scale industry sector which is now subject to respective sectoral caps and I am sure this will see greater equity flows in this sector of economy and result in greater technology transfer.
It is a commitment of the UPA Government to accord a central role to manufacturing led industrial development as part of growth strategy for the economy. Our capital goods sector recorded a growth of 8.3% in August 2009 as compared to 0.9% in August last year, indicating a revival of the past growing trend. The consumer goods sector has picked up to 8.5% in August 2009 as compared to 6.4% in August last year.
In order to give a special thrust to industrial promotion and inviting foreign investment, a company “Invest India” has been set up in partnership with FICCI and State Governments. The mandate of this company will be to promote foreign investment in a focused manner and provide hand holding support for foreign investors in terms of rules and regulations and clearances.
We have also launched e-biz project which would provide a number of services to business users covering the entire life cycle of business and on line single window at national level for business users.
I am happy to say that Delhi-Mumbai Industrial Corridor project has gathered momentum and this ambitious project envisages over US$ 90 billion of investment, covering the states of Haryana, Rajasthan, Madhya Pradesh, Gujarat, Maharashtra and Uttar Pradesh. This project will also have industrial parks, investment regions, SEZs, agro-processing zones, knowledge hubs, ports and power plants etc. The project is being reviewed regularly at a high level and I am sure we would be able to see some visible early bird projects coming to fruition in the near future. The Government of India has been encouraged by the success of National Institute of Design at Ahmedabad and a decision has been taken to establish 4 additional institutes of similar pattern which would considerably strengthen the design education infrastructure in the country. We are also mindful of the need for promoting balanced and equitable growth in the country. I am convening a meeting of the State Industry Ministers later this month in which we will work out a strategy for creating the right investment climate at the State level and to establish an institutional mechanism for a regular dialogue between the Centre and States for harmonizing procedures and creating the necessary synergies.
The policy of Special Economic Zones has withstood the test of time and in the last three years, the Government has given approval to 579 SEZs of which 338 have been notified. Since the enactment of the SEZ Act in 2005, over three lakh people have gained employment in the SEZs and 98 SEZs which have started functioning have attracted investment of over one lakh crore, contributing one lakh crore of exports. Exports have witnessed a remarkable growth of 620% in the last five years and even in the recessionary period last year, exports from SEZs grew by 50%. The SEZs have added considerable value in related economic activities, consumption pattern and social life in the adjoining areas.
Our plantation sector provides employment to over 17 lakh workers and sustains 14.5 lakh small growers. We are mindful of the structural challenges facing the plantation sector and we are taking measures to address the same. We have increased the financial outlay for plantation crops to 2330 crores in the 11th Plan from a level of 1201 crores in the 10th Plan period. A Special Purpose Tea Fund has been set up for funding the re-plantation and rejuvenation of the tea plantations. We also have similar schemes for cardamom and pepper. We have endeavoured to provide a transparent pricing mechanism and the E-auction system for tea has shown positive results. Similar system has also been introduced for E-auction for cardamom in Kerala and Tamil Nadu. The Government has also set up five Spices Parks and 5 Regional Quality Testing labs for giving a boost to the exports in spices. The Government has announced its decision to set up a Group of Ministers to look at the structural problems facing the plantation sector to make it internationally competitive and sustainable.
India is committed to the successful conclusion of the Doha Round for the establishment of a rule based multilateral trading regime which is fair and equitable. While striving for a balanced and ambitious outcome of this Round, we have emphasized that development remain at the core of the round and any outcome must respond to the aspirations of the people of the developing world.
India hosted a ministerial meeting in New Delhi on 3-4 September 2009 bringing together all shades of opinion and interests forming microcosm of the WTO membership, to give a determined push to the multilateral process. There was an unequivocal sentiment that the Doha Round must be concluded within 2010 which was later reiterated by the Heads of States in the G-20 Summit in Pittsburgh. To this end, Ministers agreed on the specific steps for resumption of negotiations in Geneva which came to an abrupt halt in July 2008. I am glad that India’s initiative is being acknowledged globally and since September 14, 2009 our senior officials of all the countries have been working with each other along with Chairs of the Negotiating Groups with an intensive work plan for the coming weeks. The Doha Round holds out the promise of correcting historic distortions in the global trade, particularly, the agricultural protectionism which has been rampant in many developed countries. I am of the firm view that substance and not the time line must remain the main driver of the round. I have impressed upon my interlocutors that in these challenging times, countries must resist protectionist tendencies which will only delay the recovery and prolong recession. I remain optimistic that collectively we would be able to harmonize our positions and arrive at a solution which is fair and honourable. I remain mindful of the fact that there are areas of divergence on which we have not yet been able to find a meeting ground, but, I am sure that a combined articulation of political resolve will ensure timely conclusion of this Round.
While we are engaged in the Doha Development Round, India has also been engaged with the regional trading blocs and bilateral agreements to complement a multilateral trading system. In line with India’s growing profile, India has concluded 7 free trade agreements and 6 preferential trading agreements so far and 10 free trade agreements are under negotiations. Most recently, we have concluded the Comprehensive Economic Partnership Agreement with South Korea and a Trade in Goods Agreement with ASEAN. These two agreements are in line with India’s Look East policy and will enable our enhanced access in these vibrant economic groupings which is playing a major role in the global economy.
In the last financial year, bilateral trade between India and ASEAN was $ 45 billion and we aim to reach $ 70 billion by 2012. In the agreement which has been negotiated, we have strived to strike a balance in protecting the interests of our domestic industry and interests of our exporting community. Through the Negative List, Sensitive List and Highly Sensitive list, we have especially protected those sectors of our economy which are labour intensive.
The Free Trade Agreement with Japan is at an advanced stage of negotiations and FTA with the European Union is proceeding at a steady pace. EU is the largest trading partner of India and offers enormous potential for growth in the bilateral trade. I am going to further discuss these matters with the EU Trade Commissioner tomorrow.
A globalised world offers enormous opportunities while also posing several challenges. We have been vigilant of the danger of dumping of cheap imports by certain countries and directions have been given to Directorate of Anti Dumping and Safeguards to initiate proceedings wherever necessary to project the genuine interests of our domestic industry. These are undoubtedly challenging times for the exporting community but the Government is fully committed to do all that is required for giving a push to our exports.”
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