Page 372 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes more attention toward improving the quality of rice and wheat procured so that it can fetch a good
price in the international market.
EXIM Policy has laid great emphasis on Special Economic Zones (SEZs) which is a new incarnation
of the Export Promotion Zones (EPZ) and Export-oriented Units (EOUs) promoted earlier. But the
experience of the EPZ and EOUs has not been very happy. Together they account for only 12% of
total exports. Too many procedural hurdles have prevented them from performing better. It would
be very wise if the Special Economic Zones are not saddled with such excessive bureaucratic hurdles
and are enabled to capture export markets. It may be noted the Special Economic Zones in China
account for over 40 per cent of Chinese exports. India should learn to improve the performance of
SEZs.
EXIM Policy made some concessions to help cottage and handicraft sector and small scale units
which account for nearly 35 percent of the country’s exports. But ironically, the policy did not pay
adequate attention to the most important aspect of increasing bank credit to this sector.
Table 1 : Exports and Imports of Gems and Jewellery : India
(US $ million)

Gross Exports Imports Net Exports 3 as % of 1
(1) (2) 3 = 1-2

1995-96 5,275 2106 3169 60.1
1999-00 7,550 5346 2114 28.0
2000-01 7384 4838 2546 34.9
2001-02 7306 4623 2683 36.7
2002-03 9030 6063 2967 32.9
2003-04 10,573 7129 3444 32.6
2004-05 13,761 9422 4339 31.5
2005-06 15529 9134 6395 41.2
2006-07 15977 7487 8490 53.1
2007-08 19657 7975 11682 59.4
2008-09 27,955 16,554 11,401 40.8
2009-10 29,000 16,164 13,836 47.7
2010-11 40,791 31,262 9,529 23.4
Source : Computed from the data provided in Economic survey (2003-04) and (2005-06), RBI,
Handbook of Statistics on the Indian Economy 2009-10. Economic Survey 2009-10.
The policy allowed import of rough diamond duty free. But if we examine the proportion of net
exports of diamonds in total exports of gems and jewellery, it becomes evident that this share has
declined from 60.1 percent in 1995-96 and 28 percent 1999-2000, but later on it improved again to
59.4 percent in 2007-08. In 2009-10 it was 47.7 per cent, which again fell to 23.4 percent is 2010-11. We
note a decline in this proportion of net export of gem and jewellary which may be attributed to global
slowdown. This underlines the fact that mere reduction of import-duty does not provide the much
needed elasticity to exports.
To sum up, it may be mentioned that Commerce and Industry Ministry alone cannot create an
environment to boost exports. For this purpose, it has to co-ordinate with the Ministry of Power and
Transport so that the delays in handling of goods for export can be taken care of. Similarly, the Commerce
Ministry has to pursuade the Ministry of Finance to allocate more resources for infrastructure
development. Not only that, the Centre and State Governments must co-ordinate to fulfil the objective
of increasing exports. This can be done by making our exports more competitive. This requires an
improvement of technology in the export sector and the development of an efficient infrastructure.

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