New Foreign Trade Policy to focus on job creation
New Delhi, Apr 6: Eyeing an export figure of 150 billion dollars by 2008-09, the Foreign Trade Policy (FTP) Review to be unveiled tomorrow will target to create millions of new jobs through trade and also help Indian exporters to compete in the global market by reducing their transaction costs.
The new edition of FTP 2002-07 would also aim at achieving foreign direct investment of 12 billion dollars in the fiscal 2006-07 through giving a new impetus to many of the big ticket schemes like the Special Economic Zones (SEZs), official sources said.
Some of the export-incentive schemes which have of late been misused may be replaced by new avatars. The Duty-Free Replenishment Certificate (DFRC) which covers about eight per cent of the merchandise exports may be scrapped and replaced with a transferable advance licence which would help exporters to import raw material in smaller lots.
Besides, certain new sectors would be identified and given a boost in the face of changing global market trends, said sources. The FTP would also be in sync with the draft recommendations of the National Manufacturing Competitiveness Council (NMCC) which wants India to be a global hub for manufacturing with particular emphasis on sectors like pharmaceuticals, leather products, gems and jewellery and automobile components.
Exporters from different segments like textile, leather, gems and jewellery and petroleum products are of the opinion that the 25 per cent consistent growth in India's exports has come largely from a sound world economy which is growing by an average of four per cent.
But for the Euro zone, India's major destinations like the United States of America, China, South American countries and South East economies are performing quite well, driven by consumer demand and investment.
However, one of the major issues facing the Indian exporters is prohibitive transaction cost which makes their merchandise uncompetitive in the world market. There are also issues relating to the labour reforms which have remained unattended due to political problems. After remaining soft for about three years, the interest rates are on the upswing again and the exporting community is feeling jittery.
While the foreign institutional investors are pumping in huge portfolio investment in the Indian stock market, its flip side is that it makes the rupee strong giving discomfort to the exporters.
The Policy, official sources, said is also likely to take a holistic view of India's total external engagements including export of services. There would also be a focus on the import-led manufacturing growth.
While the country's trade deficit has widened to over 33 billion dollars, it has not really caused much of a concern due to a high level of foreign exchange reserves of about 148 billion dollars and an impressive growth of services export.