With the presentation of India’s latest annual budget, the Narendra Modi government has finally woken up and started digging deep in the real issues troubling the regional giant. It’s hard to say whether it is a reaction to BJP’s loss in Delhi election or something else, but a host of reform-oriented moves have been initiated over the course of last two months: the aviation policy, land bill, the undisclosed foreign income and assets bill and now the latest Foreign Trade Policy (FTP) for 2015-20.
With the new policy, the Modi sarkar wants to almost double the Indian exports from $465.9 billion in 2013-14 to approximately $900 billion by 2019-20. This will increase India’s share in world exports from 2 percent to 3.5 percent. While the detailed policy document is not available as yet, the performance of India’s last FTP is worth looking at.
In the last decade, India has emerged as a serious player on global stage in so many ways. Even though India’s last FTP (2009-14) came in the midst of global financial crisis it has put the Indian exports on a right track.
Back in 2009 India’s exports stood around $180 billion. However, India’s exports now stand around $450 billion on the back of the initiatives taken under the FTP (2009-14). Keep in mind that the FTP (2009-14) had set a 2014 export target of $325 billion after scaling down the original target of $500 billion, which the Congress had then revised in the light of depreciation in Indian rupee, higher cost of credit and overall decline in industrial growth. Well, India managed to more than double its export even with all those troubles.
India’s last FTP is also responsible for her dramatic increase in agriculture exports. According to US Department of Agriculture (USDA) India is now the world’s sixth-largest net exporter of agricultural products. Indian agricultural exports have increased by 21 percent in last decade but the major chunk of this increase came in 2010 to 2013. Similarly in service sector India’s share has increased from 0.6 per cent in 1990 to 1.1 per cent in 2000 and further to 3.3 percent in 2013.
The previous policy has also been effective in raising India’s export to GDP ratio from 20 percent in 2009 to 24.8 percent in 2014, according to World Bank database. This, despite the global financial crisis, and the ensuing slowdown in the US and the EU speaks volumes about India’s export power.
BR Research would update its readers as and when India’s latest FTP document is released, but one can safely say that India’s latest FTP may even be better than the last since the global economy outlook is better than the 2009-14 period and also because the Modi government is more gung-ho than its predecessor. However, Modi and his trade minister will first have to deal with unreliable power supply, corruption and depilating infrastructure in India. How does India’s latest FTP exactly plan to tackle these issues remains to be seen?
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