Financial Daily from THE HINDU group of publications
Monday, Jul 12, 2004
Exports & Imports
Industry & Economy - Exports & Imports
`Goods, services exports can top $200 billion'
New Delhi , July 11
INDIA'S exports of merchandise goods and services, which currently hover around $100 billion, could surpass even $200 billion in the medium-term - provided New Delhi hones its trade policy to favourably sway the outcome of negotiations on non-agricultural market access and on agriculture and services in the WTO.
This is the crux of the study by the Economic Advisor in the Ministry of Commerce and Industry, Dr H.A.C. Prasad (in his personal capacity). The study was published by the Academy of Business Studies and released by the Minister of State for Statistics and Programme Implementation, Mr Oscar Fernandes, here.
The Minister said that India could easily get an export turnover in both goods and services close to $150 billion if it adopts a bold policy in new areas like services to cash in on the current boom in global trade in services exports.
Dr Prasad said market access for Indian exports was greatly hit by tariff and non-tariff barriers (NTBs) from major trading partners. He said that the more competitive India was in a particular item, the greater were the barriers. Dr Prasad deplored that what was once limited to merchandise goods in NTBs has now spread to services exports. He cited the case of the outcry against business process outsourcing to Indian firms in the United States. He said India's export of items to the US which faced NTBs formed around 34 per cent of US imports from India in 2002.
On the tariff front, he said instead of duty exemptions, if duty was loweredfor as many items as possible , India would gain mileage in the WTO negotiations.
He also favoured a coherent strategy for market access negotiations which should consider WTO bindings and tariffs. It should also take into account market access in the existing free trade areas (FTAs) for FTA members which affect India, proposed FTAs of India and their timing, and the tariffs of India's competitors and their negotiating stance.
On agricultural negotiations, Dr Prasad said the provisions in the agreement on agriculture (AoA) contain three broad areas of trade and agriculture policies covering market access, export subsidies and domestic support.
"The outcome in all these three areas of negotiations would have an impact on market access of agri exports of India, though the ultimate factor in our agri exports would be our ability to export agri items substantially," he said.
Dr Prasad said export subsidies on farm goods of developed countries remain high with OECD per capita subsidies for cows and cotton being higher than OECD per capita aid for sub-Saharan Africa.
He said that in the export of commercial services worth $1.76 trillion in 2003 globally, India's share was 1.4 per cent with a value of $24.9 billion.
In the world imports of commercial services, the major importers include the European Union, the US and Japan.
Giving an illustration of the actual trade barriers for services, Dr Prasad noted that in business services, access to the US market - where licensing of professional service suppliers is generally regulated at the State level - was non-transparent and unsatisfactory.
Dr Prasad underlined the need for greater synergy not only between trade strategies and WTO negotiations but also between growth and development strategies and WTO negotiations.
He said there was a need for a core negotiating team, which should include representatives from different economic ministries, Ministry of External Affairs, senior economists, legal experts, WTO experts and representatives from trade and industry on a permanent basis.
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