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Thursday, March 1, 2012

Yojana 01

From time immemorial, societies have prospered through trade and exchange of goods between far-flung areas and even between continents. In the modern day globalized world, global trade and exchanges have become inevitable. Countries are earning prosperity for their citizens by maximizing export of their products and minimizing the intake, i.e. imports. But as an emerging economy of the world, Indian foreign trade scenario is not very encouraging. India still has a very low percentage contribution in world trade. The second fastest growing country in GDP terms ranks 20th in merchandise export and 13th in merchandise import with only 1.44 percent share in total world export while import stands at 2.12 percent.

Countries are are looking for opportunities to expand their export markets through free trade agreements. This has gathered momentum over the last two decades. The urgency for improving the economic fortunes of domestic stakeholders, whether producers, consumers or intermediaries, is stronger in the developing world, as their trade liberalisation policies are becoming more and linked with economic growth and poverty reduction strategies – two most important items of their development discourse. As of November 2011, the number of Free Trade Agreements (FTAs) notified under the World Trade Organisation has reached 505. An FTA facilitates enforcement of legally binding commitments made by its member nations, either to sequentially reduce or completely eliminate various types of trade barriers facing each other, but keep those facing non-member nations intact. Thus, FTA members gain an advantage in accessing each other’s markets compared to non-members. The degree of coverage of barriers and traded sectors varies depending on the type of FTA formed. Most basic form is known as preferential trade agreements.

The country’s foreign trade scenario at the end of the final year of the Eleventh Five-Year Plan (2007-12) appears to be well on course, though the wholesome high export growth the country compassed in the first half of the fiscal 20011-12 may not be repeated for the full year. This is because since October, 2011 the pace of double-digit heady export growth has perceptibly slowed down, due to multiple reasons, the most important of which remain the halting recovery in the case of the United States and no growth in the crisis-laden Euro zone since both of them still account for substantial chunk of the country’s exports. Before a detailed analysis of the country’s foreign trade picture is made, it would be appropriate to trace the performance of the export sector particularly in the aftermath of the global financial meltdown in 2008. In fact when every country in the world was hit by one way or percentanother of this world crisis, Indian authorities converted the challenge of the crisis into an opportunity to wean itself away from traditional markets and traditional products to experiment with the boldest policy initiative that it put in place in the five-year Foreign Trade Policy (FTP) for 2009-14.

India is the world's largest producer across a range of commodities due to its favourable agro-climatic conditions and rich natural resource base. India is the world’s biggest producer of coconuts, mangoes, bananas, milk and dairy products, cashew nuts, pulses, ginger, turmeric and black pepper. It is also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables. Being a critical sector of the economy, agriculture does provide direct employment to about 60 percent of working population in the country and also forms the basis of vital industries including the textile, jute, and sugar industries. Agriculture and allied sector contribute about 17 percent to GDP and about 25 percent of India's cumulative exports belong to agricultural products category.Realising the importance of high value food products exports from the country, the government back in 1985 had set up a specialized body - Agricultural and Processed Food Products Export Development Authority (APEDA) through an act of parliament which functions under the commerce ministry. In the initial years, the focus was to support the exporters in areas of marketing and packaging and training and identify key thrust areas for exports. Some of the key areas identified were meat, fruits and vegetables, basmati rice, guargum etc.

Indian Handicraf t sector, one of the largest employment generating sectors in rural and semi-rural India, is passing through a very critical phase for the past four years. Instead of registering any noticeable growth, country’s export has come down from Rs 17,288 crore in 2006-07 to the expected export of Rs 10,533 crores for the year 2010-11. Interestingly, in 2006-07, the sector was projected to cross Rs 30,000 crore by 2010, but today it is lagging behind more than 66 percent from its projected target. Though one of the main reasons for the decline was global meltdown in 2008, experts from the Handicraft sector had not imagined that the situation would turn so worse and would take so long to return to its normal stage. The sector, which generates employment to about 70 lakh poor artisans from rural India, is apparently losing its sheen in the crafts International market. It is still struggling to come out of the 2008 global meltdown that has virtually reduced its export revenue to half. In 2006-07 when country’s handicraft export was at its peak (Rs 17,288 crore), government had projected the handicraft sector would touch Rs 30,000 crore in next four years. Today forget the projections, the sector has not been able to meet its 2006-07 export records.

Liberalization of economy has opened new outlook for the development of FDI in the Indian perspective. The introduction of foreign capital by the investors has been successful in bridging over the gap between requirement of retailers and retail sector. The merit is that customers of almost all branded categories appear satisfied with the quality of services made available to them. A paramount priority to the changing expectations of customers and an equivalent tailoring of financing inputs in tune with the changing business environment have awfully been helpful in increasing the market share of the investors. A transcendental priority to creativity while developing the financial resources has considerably helped them in sensitizing the impulse of prospects. The present study highlights the role of FDI in the retail sector in India.Perceptions and policies with regard to the role of foreign capital in the process of industrial and overall growth have changed in India since the beginning of economic planning. The Government.
 
   

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