Topromote and grow international trade, India adopted a policy of formingRegional Trade Agreements. They were assumed as ‘building blocks’ towardsliberalization of trade. The variouslevels of agreements are FTA – Free Trade Agreement, PTA- Preferential TradeAgreements, and CECA – Comprehensive Economic Cooperation Agreements etc. Thefirst bilateral FTA was with Sri Lanka – the India-Sri Lanka Free TradeAgreement (ISLFTA) on March 2000. Along with many trade agreements with SouthEast Asian countries, India is examining the potential for cooperation in tradein goods and services, investments and other areas of economic cooperation witha number of Asian countries such as China and Indonesia. Along with ‘LookingEast’ policy, India has seriously begun efforts to develop preferential tradelinkages with developing countries in Latin America (MERCOSUR, Chile), WestAsia (Gulf Cooperation Council (GCC), Israel) and Africa (South African CustomsUnion (SACU), Mauritius).Below are some major bilateralco-operations India has entered into;1.
ASEAN– India Free Trade Area (AIFTA):Therelationship with ASEAN is a key pillar of our foreign policy. AIFTA is a freetrade area with 10 members of ASEAN and India which came into effect on 1st Jan2010.This has been growing steadily with ASEAN being India’s fourth largesttrading partner. India’s export to ASEAN has increased to US$ 31.07 billion in2016-17 and India’s import to ASEAN increased by 1.8% in 2016-17 stood at US$40.
63 billion. 2. WithSri Lanka – India-Sri Lanka Free Trade Agreement (ISFTA):ISFTA came into force on 1st March 2000,provides duty free concessions to a wide range of products traded between thetwo countries. India has now emerged as the largest and the most balancedtrading partner of Sri Lanka.
In 2012, imports from India stood at 19% of theoverall imports of Sri Lanka, which was the largest source of imports to SriLanka. While Sri Lanka’s exports to India stood at 5.8% of overall exports ofSri Lanka ,3rd largest destination, with total trade between the two countriesamounting to US$ 4.2 billion.
The ISFTA has made a substantial contribution inbringing this situation with over 70% of Sri Lankan exports to India movingunder the FTA and below 30% of the Indian exports to Sri Lanka moving under theFTA. At a time when Sri Lanka’s traditional markets in the West are showingslow recovery from the global economic crisis, the growing markets in Asia likethat of India provide a great opportunity for Sri Lankan exports via the ISFTA. 3. BIMSTEC- Bay of Bengal Initiative for Multi-Sectoral Technical and EconomicCooperation:International Organizations of Bangladesh,India, Sri Lanka, Myanmar, Thailand, Bhutan and Nepal. Agreements are under negotiations.
4. Thailand (separatefrom FTA agreement with ASEAN):EHS (Early Harvest Scheme) is between India andThailand signed in October 2003, wherein 83 products were identified to bereduced to zero in a phased manner. EHS is used as way to build greaterconfidence amongst trading partners to prepare them for bigger economicengagement.
5. SAFTA- South Asia Free Trade Agreement:AFree Trade Agreement among India, Pakistan, Nepal, Sri Lanka, Bangladesh,Bhutan and the Maldives searched on 6 January 2004 at the 12th SAARC summit inIslamabad, Pakistan. The member countries India, Pakistan and Sri Lanka shallbring down duties to 20% in first phase ended on 2007 and to zero by 2012.Othernations Nepal, Bhutan, Bangladesh, Afghanistan and Maldives have an additional3 years to reduce tariffs to zero. GovernmentSchemes to Boost Export/Foreign Trade:Exports are an important driver of economic growth andhelp create much needed jobs along with improving balance of trade in our favor.India need to work on logistics, labor laws, trade policies etc. to increasecompetitiveness in International trade.
To mitigate the adverse impact ofglobal recession and boost exports in general, the government has alwaysadopted positive policy measures, a few of them listed below:Pre Export Schemes: 1. AdvanceAuthorization Scheme – Allows duty free imports of Inputs along with fuel, oil,catalyst etc required for manufacturing export product. Available for physicalexports and deemed exports including intermediate supplies. 2. DutyFree Import Authorization (DFIA) – Active from May, 2006. To facilitatetransfer of the authorization or the inputs. Minimum VA of 20% is requiredunder this scheme.
3. Schemesfor Gems & Jewellery Sector – An employment oriented sector. Duty freeimport/procurement from nominated agencies allowed in advance. PostExport Schemes: 1. DutyEntitlement Pass Book (DEPB) Scheme – Neutralizes custom duty on all inputs fora product.2.
Duty Drawback Scheme –Refund of customs duty and excise duty on the inputs used in the manufacture ofgoods to be exported. Under GST, the duty drawback would only be available forthe customs duty paid on imported inputs or central excise paid on certainpetroleum or tobacco products used as inputs or fuel for captive powergeneration. VISHESHKRISHI AND GRAM UDYOG YOJANA:For employment generationin rural and semi urban areas, the Yojana has been expanded to includeagriculture produce and their value added products.
Duty credit scrip benefitsare guaranteed. FOCUSMARKET SCHEME (FMS):Exporters of all productsto notified countries shall be entitled for Duty Credit Scrip equivalent to 3%of FOB value of exports. The scheme covers a total of 110 markets. FOCUS PRODUCT SCHEME (FPS):Export of notified products to shall be entitled forDuty Credit Scrip equivalent to 2% of FOB value of exports. This is to incentivizeexport of products which have high export intensity and employment potential.