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India's Ministry of Commerce and Industry recently released its new Foreign Trade Policy for 2009-14, effective august 27th The policy seeks to encourage exports through a mix of measures including fiscal incentives, institutional changes, procedural rationalization, diversification of export markets and focus on labour intensive sectors The immediate priority of the policy is to arrest and reverse the declining trend in exports. India's merchandise exports had fallen short of the target set for 2008-09 and were valued at $168.7 billion, up merely 3.4 percent over $163.13 billion in the year before. Exports were also down 31.3 percent in the first quarter of this fiscal. India's share of global goods and services exports now stood at 1.53 percent, as opposed to 0.92 percent in 2003, while its share of global merchandise export was at 1.28 percent. The government has set an export target of $200 billion for 2010-11 with a growth of 15 percent over the next two years, with an overall medium-term objective of 25 percent annual growth thereafter. The highlights of the policy which includes special sops for labour-intensive sectors and zero duty on capital goods import are.

The Market Linked Focus Product Scheme has been expanded to 13 new markets , including Africa, Latin America, Vietnam, Cambodia, Australia and New Zealand and 1700 products, including pharmaceuticals, synthetic textiles, certain iron and steel products, aluminum. Duty credit has been raised to 2 percent from 1.2 percent on FOB value of exported goods. The Focus Market Scheme seeks to touch uncovered export destination . 26 new markets have been added added, mainly from emerging Asia, Africa and Latin America. Entitlement for duty credit certificates were increased to 3 percent from 2.5 percent of the FOB value of the export. Focus Product Scheme now includes auto and engineering components, and duty credit has been raised to 2 percent from 1.25 percent of FOB value of the exported goods, and to 5 percent for special focus products. Under the Served From India Scheme hotels, restaurants and other service providers in the tourism sector are entitled to duty credit of 10 percent of the free foreign exchange earned in each fiscal year. Exporters across the nation broadly welcomed the new foreign trade policy hoping that it will help the recession hit sector in diversifying export business and developing new export destinations.

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