1|Page

EXECUTIVE SUMMARY

The Project describes all about the World Trade Organization (WTO), its Introduction in the World Economy, the Objectives laid for the Organization, Functions that operates, EXIM Trade Policies, and Scenarios occurred with India Before the formation of WTO & the Benefits gained by India from the organization. The topic discussed in this project has a long history with India as one of the powerful member attached to it. Following the Uruguay Round Agreement, the General Agreement on Tariff and Trade (GATT) was converted from a provisional agreement into a Formal Organization known today as the World Trade Organization (WTO), with effect from January 1, 1995. There were 128 member countries in 1995, which has increased to 144, with India as one of the important member. The Secretariat of t h e WTO i s based in Geneva, Switzerland. According to the current status WTO now accounts for about 97 per-cent of international trade.

TRADE & INEQUALITIES

Where trade has contributed to increased inequality, its impact has g e n e r a l l y being minor to o t h e r s f a c t o r s , m o s t notably Technological Change.

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TRADE & STRUCTURAL ADJUSTMENT

If Trade reforms are introduced, economic changes need to b e m a d e . Importcompeting firms a p p e a r t o a d j u s t efficiency & often by reducing firm s i z e . by reducing mark-offs, increasing

TRADE & POVERTY

One of the biggest challenges facing the world community is to how to address poverty.

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2
Simply put:

INTRODUCTION

The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.

2-1

GATT
23 countries came into an agreement in Geneva on

In 1947,

multilateral Trade. This agreement was

termed as The General

Agreement on Tariffs and Trade (GATT) w h i c h came into e f f e c t on 1st of Jan 1948. These c o u n t r i e s s o u g h t to expand multilateral trade

among them. India was one of t h e founder members of GATT. Many countries signed of GATT to 124. this agreement in 1994 which resulted no. of members

The agreement consists of two main themes: 1) The agreement f o r m u l a t e d some regulations which were to be observed by the member countries. 2) The member countries were to comply with was the Most Favored Nation (MFN) clause.

GATT was not an organization but was a multilateral treaty, it had no legal status. It provided a platform to its member nations to

negotiate and enlarge their trade.

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2-1.1

OBJECTIVES OF GATT

The primary objective of GATT was to expand international trade by liberalizing trade to bring economic prosperity. GATT mentions the following important objectives.

1) Raising standard of living of the member countries. 2) Ensuring full employment through a steady growth of effective demand and real income. 3) Developing optimum utilization of resources of the world. 4) Expansion in production exchange of goods and services on a global level.

2-1.2

PRINCIPLES

1) Follow the Most Favored Nation (MFN) clause. 2) Carry on trade in a non discriminatory way. 3) Grant protection to domestic industries. 4) Condemn the use of quantitative restrictions or quotas. 5) Liberalize tariff and non-tariff measures through multilateral negotiations.

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2-2

THE URUGUAY ROUND

Uruguay Round (UR) is the name by which the 8 t h and the latest

round

of Multilateral Trade Negotiations (MTNs) held under the

auspices of the GATT popularly known in Punta Del Este in Uruguay launched in September 1986. The main issues in this round discussed wer e of Agricultural Subsidies, Mul ti Fiber Agreement (MFA), Trade in Services, Anti Dumping etc. These d i s c u s s i o n s w e r e resolved b y the then Director

General of GATT, Arthur Dunkel. Who came up or Draft of the Uruguay Round consisted of 28 agreements which spelt out the results of Multilateral Trade Negotiations (MTN).

Some of t h e main agreements of t h e Uruguay Round were as follows:1) Anti-Dumping Code: Dumping is to be condemned if it causes or threatens material injuries to an established domestic industry. A committee on anti-dumping practices should look into such matters related to dumping. 2) Trade Related Investment Measures (TRIMs): Refers to certain

conditions or restrictions imposed by a Government in respect of foreign investment in the country. TRIM is widely employed by developing countries. The agreement on TRIMs provides that no contracting party shall apply any TRIM which is inconsistent with GATT articles. An

illustrative list identifies the fallowing TRIMS as inconsistent:i. ii. iii. iv. Local content requirement. Trade balancing requirement. Trade and foreign exchange balancing requirements. Domestic sales requirements.

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3) Trade related aspects of Intellectual Property Rights (TRIPs) One of the most controversial outcomes of Uruguay Round is the agreement o n Trade R e l a t e d aspects of I n t e l l e c t u a l Property Rights (TRIPs) including Trade in counterfeit Goods. According to GATT Intellectual Property Rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of individuals creation for a certain period of time. 4) Trade in services Bank, Insurance, Transport and

Communication, etc. are trade related services. The draft agreement proposed that all restrictions on such services should be waived.

Conclusion:
Following the Uruguay Round (UR) Agreement GATT was converted from a provisional agreement into a formal international organization known as World Trade Organization (WTO). The organization began its function from 1st Jan, 1995. It serves as a single institutional framework directed by a Ministerial Conference once every two years and its regular business is overseen by a general council. The WTO secretariat is based in Geneva, Switzerland. The membership of the WTO increased from 128 in July 1995 to 144 countries by Jan 1st 2002. The WTO members now accounts for o v e r 97 percent of the international trade.

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2-3

FROM GATT TO WTO

After World War II over 50 countries came together to create the International Trade Organization (ITO) as specialize agency of the UN to manage the business aspect of international economic co-operation. The combined package of trade rules and tariff concessions negotiated and agreed by 23 countries out of the 50 participating countries came to be known as the General Agreement on Tariffs and Trade. It came into force in 1948; well the WTO charter was still being negotiated. WTO came into effect from 1st January, 1995. The GATT was provisional for almost half a century but it succeeded in promoting and securing liberalization of world trade. Its membership increased from 23 countries in 1947 to 123 countries in 1994. The

membership of WTO increased from 128 in July, 1995 to 144 countries as of 1st January, 2002. During its existence from 1948 to 1994 the average tariffs on manufacture good on developed countries declined from about 40% to a mere 4%. GATT focused on tariff reduction till 1973. It was only during Tokyo and Uruguay Rounds that non-tariff barriers were discussed under GATT. With increasing use of non tariff barriers and the increasing significance of service sector in the economy the need was felt to bring non-tariff barriers multilateral trade. and intellectual property under the preview of

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2-3.1

OBJECTIVES OF WTO

The WTO has the following objectives: 1. To raise the standard of living in member countries by ensuring full employment and by expanding production and trade in goods and services. 2. To develop an integrated, viable and durable multilateral trading system. 3. To promote sustainable development in member countries by the optimal use of resources. 4. To help the developing countries to get a share in the growth in the international trade. 5. To reduce tariffs and other trade barriers among member countries and to eliminate discriminatory treatment in international trade relations. 6. To insure linkages between trade policies, environmental policies and sustainable development.

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2-3.2

FUNCTION OF WTO

The basic functions of WTO are as follows: 1. It facilitates the implementation, administration and operation of the trade agreements. 2. It provides the forum for further negotiations among member countries on matters covered by the agreement as well as the new issues falling within its mandate. 3. It is responsible for the settlement of the differences and dispute among its member countries. 4. It is responsible for carrying out periodic reviews of the trade policies of its member countries. 5. It assists developing countries in trade policies issues through technical assistance and training programme. 6. It encourages co-operation within international organizations.

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2-3.3

STRUCTURE OF WTO

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OBJECTIVE

1. To know about the structure, function and objective of WTO.

2. GATT and how it changed to WTO

3. Uruguay Round and its resolution

4. How WTO had its impact of India 5. India and WTO- Indias role in WTO, Indias commitment

6. How India was benefited before and after joining WTO

7. EXIM policy

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4
4-1

IMPACT OF WTO ON INDIA

AGRICULTURE

Globalization manifesting in progressive integration of economies and societies has assumed increasing significance in the lives of

common people all over the world. In the field of the trade the World Trade Organization (WTO) is the principal international institution responsible for laying down rules for the smooth conduct of trade in goods and services among nations in this globalized world. This is achieved by developing a set of rules of multilateral trading system which aims to remove, inter alia, trade barriers (tariff and non tariff) as well as reduce and eventually remove domestic support and system of export subsidies that distort international trade between nations. These problems of trade distortion are most conspicuous in agriculture sector.

Agriculture is of special significance for developing countries particularly the extreme poor (i.e. those living on one dollar or less per day). It has been estimated that three quarters of them about 900 million people live and work in rural areas, most of them as small farmers. Table 1 shows that where as agriculture contributes 3% to the GDP and employs only 4% of The population in developed countries the corresponding figures for developing countries are 26% and 70% respectively.

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Table 1: Key differences between agriculture systems in developed and developing countries
Parameters Developed Countries Developing Countries (including developed) Nature of Commercial/Export Oriented 3% to 8.3% 26% 27% Subsistence least

Agriculture System Share of GDP Contribution foreign exchange Population engaged agriculture in

4%

27%

Source: Green, D and Priyadarshi, S. (2001) Proposal for development Box in the WTO Agreement on Agriculture, CAFOD and

South Centre, Kaukab, R; (2002) Presentation at Agriculture and WTO Seminar, Ministry of Pakistan, Islamabad, August, Commerce, Government of 2002, Action Aid Food

Rights The WTO Agreement on Agriculture, 2003.

The agriculture was included in the multilateral trading system after the eighth (Uruguay) round of talks under GATT on demand of

developing countries who had a comparative advantage in this sector and its benefits were being denied to them. stretched from 1986-1994 This trade round

and concluded in establishment of WTO and

inclusion among others of agriculture in the discipline of WTO. This was achieved by developing countries only after paying a heavy price in the form concessions on many fronts especially intellectual

property rights and services. WTO policies impact agriculture principally through the following agreements:

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1. Agreement on Agriculture (AOA) 2. Agreement on Application of Sanitary and Phytosanitary Standards (SPS):(Dealing with Health and disease related issues) 3. Agreement on Technical Barriers to Trade (TBT): (Dealing with Regulations, standards, testing and certification procedures, packaging, marking and labeling requirements, etc) 4. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs): (Dealing with Patents and copyrights, plant breeders rights etc).

Activists cry foul that Indian agriculture, already reeling under severe drought and fall in cash crop prices, will die once the import curbs are removed and free flow of food items are allowed into India. "There is going to be 'madness' in the agriculture sector. Farmers will be hit hard by the WTO regime. What happens to our vegetable oils, rice, rubber, coconuts and fruits, if similar items can be imported cheaply from other countries," asks K Sundaran, a social activist espousing farmers causes in South India. He says c u r r e n t l y there is a m a s s i v e distortion in the

international trade in agriculture. Industrialized countries have been giving huge domestic subsidies to their agricultural sector that there is excessive p r o d u c t i o n , import restrictions and dumping of agriproducts in international markets.

But despite the concerns of farmers, many believe the WTO rules will not adversely affect the Indian agriculture as it is made out. Developed nations have committed to the WTO that they would reduce subsidies and tariff. So t h e n better overseas markets will be available for Indian agricultural products

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4-2

PHARMACEUTICALS

India has one of the most efficient pharmaceutical industries in the world. Pharmaceutical firms grew mainly thanks to the absence of patent protection of medical drugs in the country. For instance, Indian companies are now producing their own AIDS drugs, which are available cheaply, compared to the original products from foreign countries. But the imposition of the new WTO rules will begin to threaten India's achievements in the pharmaceutical field. The Indian Patents Act,

introduced in 1970, boosted Indian pharma companies. The Act allowed them to develop and patent alternative processes for products discovered and patented elsewhere. According to the Indian Drug Manufacturers' Association, self-sufficiency in Indian pharmaceutical sector is more than 70 per cent. "Worldwide, India is a country of very low prices for high- quality

medicines," points out the IDMA president Nishchal H Israni. But now the rules of the game in the pharmaceutical industry will change as India has committed to toe the WTO line on product patents. Product patent rules and Exclusive Marketing Rights (EMR) under the WTO could affect a paradigm shift in India's pharma majors. As per the EMR provision, a product for which original patent was granted prior to 1995, is not fit for an EMR in the country. This has forced nine leading domestic pharma companies to form the Indian Pharmaceutical Alliance that has demanded a more transparent WTO regime for EMR grants. How will the WTO rules affect 500,000 employees working in roughly 20,000 pharma firms in the country? Well, many expect a spate of mergers, acquisitions and alliances in the domestic pharmaceutical industry in the coming years, as the impact of WTO regulations kick in, Indian pharma players are learning to collaborate and consolidate to grow. If the industry is to be believed, the Matrix-Strides merger is only the beginning of the shakeout that the pharma sector in a few years.

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4-3

THE SERVICE SECTOR

As per the WTO rules, two obligations apply to all services. They are the Most Favored Nation (MFN) treatment and transparency by way of

publication of all laws and regulations. Which in other words means that areas like banking, insurance, investment banking, health, and many other professional services that are opened up will be bound by the WTO commitments? India will have to open up its services sector to other WTO member countries. The result is many overseas service providers will enter into the services sectors in the country, thereby reducing the chances of domestic enterprises.

But experts believe India need not be frightened of the WTO rules on services because the country at present has a distinct competitive

advantage in many areas that include health, engineering construction, computer software and other professional services.

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4-4

TEXTILES AND CLOTHING

The WTO agreement on textiles and clothing states that the Multi-Fibre Agreement (MFA) will eventually be eliminated. MFA at present groups the major importer countries-- the United States, Austria, Canada, the European Community, Finland and Norway -- who apply restrictions by way of quota. Exporting countries like India are a part to the MFA. The phasing out of MFA will boost textile exports from India. It will also increase investment in textiles and joint ventures. But the risk is that as India opens up its market from next month, import of textiles and clothing will considerably increase Indonesia. This will force many textile manufacturers to modernize their mills and improve quality. from countries like China, the Unites States, Taiwan and

4-5

INFORMATION TECHNOLOGY

Under the Information Technology Agreement signed under the WTO, Indian hardware and software companies can become major players in the value-added arena. Availability of high-skilled of IT personnel and low cost of labour and operation will allow India to compete in the international market.

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5
5-1

INDIA AND WTO

INDIAS ROLE IN THE WTO

India is a founding member of the GATT (1947), it actively participated in the Uruguay Round Negotiations, and is a founding member of the WTO. India strongly favors the multilateral approach to trade relations and grants MFN treatment to all its trading partners, including some who are not members of WTO. Within the WTO, India is committed to ensuring that the sectors in which the developing countries enjoy a comparative advantage are adequately opened up to international trade. It also has to see that the different WTO Agreements are translated into specific enforceable dispensations, in order that developing countries are facilitated in their developmental efforts. India feels that the multilateral system would itself gain if it adequately reflected these concerns of the developing countries, so as to create the necessary impetus to enable developing country members to catch up with their developed country counterparts.

5-2

INDIAS WTO COMMITMENT

Under the Uruguay Round India has bound 67% of all its tariff lines, whereas prior to that only 6% of tariff lines were bound. The bindings range from 0 to 300% for agricultural products from 0 to 40% for other products. Under the Uruguay Round manufactured products were bound at 25% on intermediate goods and 40% on finished goods.

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5-2.1 Balance of payments

Under the exceptional provision of Article XVIII: B of GATT, India has some residual quantitative restrictions on imports maintained for balanceof- payments purpose. These aggregate to 2,714 tariff lines at the eightdigit level of the Indian Trade Classification. In May 1997, India presented to the WTO a plan for the elimination of these restrictions in, imports, including those on consumer goods. This plan was considered at the consultations with India of the WTO Committee on Balance-of- Payments Restrictions in June-July 1997. At the request of the United States, a panel was constituted on 18 November 1997 to examine the US allegation that the continued maintenance of quantitative restrictions on imports by India is inconsistent with India's obligations under the WTO Agreement.

5-2.2

AGRICULTURE

The only commitment India has undertaken under the Agreement is to bind its agricultural tariffs. This commitment has been fulfilled by India binding its tariffs for primary agricultural products at 100%, processed food products at 150% and edible oils at 300%. India's prevailing

agricultural tariffs are well within the bound rates. Under the Uruguay Round, whenever we have bound tariffs on agricultural commodities at zero or very low-levels, renegotiation of tariff bindings have been sought under Article XXVIII of GATT. The Agreement on Agriculture was designed to improve world trade, raise prices of agricultural products and ensure higher standards of living for farmers.

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5-2.3

TEXTILES

As per the obligations under the Agreement on Textile and Clothing (ATC) to integrate this sector into GATT 1994 in stages, the Indian Government moved cotton and wool yarn, polyester staple fibre and 20 other industrial fabrics on to the list of freely importable goods in 1995. India is concerned about the fact that repeated anti-dumping

investigation by certain trading partners on the same product lines, without giving full effect to the special dispensation provisions of Article 15 of the Anti-dumping Agreement has resulted in trade harassment for its exporters of textiles.

5-2.4

INTELLECTUAL PROPERTY

India is availing itself of the transition periods due to her under Article 65 of the TRIPS Agreement to meet her obligations under the seven areas covered by the Agreement. India's achievements in this field have been in the passing of TRIPS plus legislation in the field of Copyright Law. The 1994 amendments to the Act of 1957 provides protection to all original literary, dramatic, musical and artistic works, cinematographic, films and sound recordings. The most recent changes bring sectors such as satellite broadcasting, computer software and digital technology under Indian copyright protection.

5-2.5

TRADES RELATED INVESTMENT MEASURES

already been made to the where foreign foreign

Substantial modifications have

investment regime, increasing the number

of sector

investment can take place and also increasing the foreign equity limit on these investments. India has already notified the trade- related

investment measures maintained by it in terms of Articles 2 and 5 of the TRIMs Agreement and Agreement. the illustrative list annexed to the TRIMs

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5-2.6

ANTI-DUMPING

Anti-dumping and countervailing duties are imposed under the Customs Tariff Act 1975 and the Rules made there under. The Act and Rules are on the lines of the respective GATT Agreement on anti-dumping and

countervailing duties. The time limits and the procedures prescribed under the Indian laws/GATT Agreement is strictly followed d e s i g n a t e d authority. With the increasing number by the the

of cases,

Government of India proposes to set up a Directorate General of Antidumping and Allied Duties for expeditious disposal of anti-dumping and countervailing duty cases.

5-2.7

SERVICE SECTOR
about 40% of India's GDP, 25% of

The services sector accounts for

employment and 30% of export earnings. Recognizing the importance of the services sector in achieving higher economic growth, the

government is giving added emphasis to improving services such as telecommunications, shipping, roads, ports and air transport. The foreign direct investment regime has been liberalized to attract foreign investment in the services sector. India actively participated in the negotiations and made commitments in 33 developing countries. In basic

Uruguay Round services

activities as compared to an average of 23 for India also participated in the

spill- over negotiations.

telecommunication services, India has undertaken commitments in the areas of voice telephone service for local and long-distance (within the service area), cellular mobile services and other services such as

circuit switched data transmission sources, facsimile services, private leased circuit services as per details given in the schedule of

commitments.

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While developed countries have surplus capital to invest, most of the developing countries have surplus of skilled, semi- skilled and unskilled workers. We have a large pool of well- qualified professionals capable of providing services abroad. As developed comparative similarly advantage in exporting countries capital intensive have a

services, in

developing countries

have a comparative

advantage

exporting labour intensive services involving movement of persons. In Article IV of GATS, there participation Agreement of also developing recognizes is a clear obligation to increase the countries the basic in trade in services. The the level of

asymmetry in

development of

the services sector

in developed and developing

countries and a commitment concrete measures aimed sector access of developing

that the developed countries will take domestic effective service market

at strengthening the countries and providing

in sectors

and modes of supply of export interest to developing

countries.

5-2.8 INFORMATION TECHNOLOGY

India participated in the negotiations on the Agreement from the early stages and after examination of the implications of the proposed agreement and extensive discussions with trading partners joined as a participant on 1 April 1997. India is committed to phasing out the import tariffs on the products covered by the ITA as scheduled.

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5-2.9 REGIONAL TRADE AGREEMENTS

India attaches significance to her participation in regional agreements within the framework of multilateral rules. India has been instrumental in setting up the South Asian Association for Regional Cooperation (SAARC), whose major achievement in 1995 was the conclusion of the negotiations on trade preferences within the framework of the SAARC Preferential Trading Arrangement (SAPTA). SAPTA became operational on 7 December 1995 and includes preferential tariff concessions on 226 items and product groups. A second round of S A P T A t r a d e negotiations w a s India granted

launched i n January 1996 to broaden t a r i f f concessions. concessions on 902 tariff lines, effective 1 March 1997.

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6
6-1

COMPARISON OF INDIAS FOREIGN TRADE BENEFITS

BEFORE BECOMING THE MEMBER OF WTO

Its agreed that India was one of the founder member of WTO; it faced problems in Foreign Trade grounds. The problems that India faced before the formation of WTO were the following: (1) Absence of Anti dumping. (2) No Subsidy Facilities (3) Absence of TRIMs & TRIPs (4) Lac of Market Scenario &

Strategies

6-2

AFTER BECOMING THE MEMBER OF WTO

material injury to an established industry. A product is considered as dumped when its export price becomes less as compared to the normal price in the exporting country plus a amount profits. Anti dumping measures can be employed only if dumped imports are shown to cause serious damage to the industry in the import industry. domestic reasonable

(1)Anti-Dumping - Dumping is condemned if it causes or threatens

for administrative, selling and any other costs and for

The measures are not

allowed if the margin of dumping is de minimize. (2)Subsidies - The draft agreement d e f i n e d certain specific subsidies which would be subjects to various disciplines. Certain types of subsidies would other fall under prohibited category.

(3)Technical barriers to trade - Technical regulation and standards along with testing and certification procedures should not create unnecessary obstacles to trade.

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(4)Right of m a r k e t -The m a in i s s u e i s to reduce t a r i f f and other trade restriction in case of commodities like agricultural

goods, textiles etc. (5)TRIMs (Trade related investment measures) - Widely employed by developing countries. Refers to certain conditions imposed by government in respect of foreign investment. The agreement of

TRIM provides the following inconsistent TRIMs. a) Local content requirement b) Trade balancing requirement c) Trade and foreign exchange balancing requirement. d)

Domestic sales requirements. (6) TRIPs (Trade Related Aspects of Intellectual Property Rights-It i s defined a s information w i t h commercial v a l u e . Intellectual Rights h a v e been characterized and creative expression. Property as a composite of ideas, inventions

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7
71 7-1.1 IMPORT

EXIM POLICY

Indian Import Policy

Import is the antonym of export. In the terms of economics, import is a n y commodity brought i n t o one c o u n t r y f r o m another c o u n t r y i n a legal way. The economic needs of t h e country, effective use of foreign currency are the basic factors which influence India's import policy. There are mainly 3 basic objectives of the import policy of India: a) To make the goods easily available. b) To simplify importing license. c) To promote efficient import substitution.

7-1.2

Current Scenario of Imports in India

There are few goods which cannot b e imported namely tallow fat, animal rennet, wild animals, unprocessed ivory etc. Most of the restrictions are on the ground of security, health, environment protection etc. Imports are allowed free of d u t y for e x p o r t production. Input output norms have been specified for m o re than 4200 items. The norms tell about the amount of duty free import of inputs allowed for specified products. There are n o restrictions o n imports o f capital g o o d s . Import o f second

hand capital goods whose minimum residual life is of five years is permitted. Export Promotion Capital Goods (EPCG) scheme p r o v i d e s import exporters t o

capital goods at a concessionary custom rates. In the p a s t

3 0 years I n d i a n imports have r i s e n quite dramatically. At present imports accounts for 17% of the GDP. Capital goods h a v e been

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continued to be imported and in the last three years, their share has fallen from 25% to 22%.

7-1.3
facility

Major Indian Imports

of zero import d u t y under EPCG scheme. Some of t h e

There are facilities available for t h e service industries to enjoy t h e

major imports of I n d i a are edible oil, newsprint, petroleum and crude products, crude rubber, fabrics, electronic goods etc.

7-1.4

Problems due to Large Import of Products

trend o f imports i s of some concern. The regular

The recent

imports of oil reflect upon the fact that India is not able to produce the quantity of oil required in India. Moreover the increase in the imports of products also highlights the fact that the Indian domestic industries need to be developed. It also creates pressure on the economy as the money ultimately has to be bearded by the people.

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7-2

EXPORT
Export means the transferring of any good from one country to

another

country in a legal way for the purpose of trade. Export goods

are provided to the foreign consumers by the domestic producers.

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7-2.1
The history

Indian Exports: A History

of Indian exports id very old. During prehistoric times

India exported spices to the other parts of the world. India was also famous for its textiles which were a chief item for e x p o r t in the 16th century. Textiles and cotton were exported to the Arab countries from Gujarat. During the Mughal era India exported various precious stones such as ivory,

pearls, tortoise stones etc. But during the B r i t i s h era, I n d i a n exports declined as the East India Company foreign trade of India.

Indian Exports: Current Scenario

Every year I n d i a e a r n s billion of dollars by exporting various goods and items. The Indian government has outlined certain export policies. The e x p o r t policies t e l l about the products to be exported and the countries to whom exports are to be done. The government of India works with the Federation of Indian Export Organization, the leading export

promotion organization of In d i a . Exports are the major focus of India's trade policy and most of the items can be freely exported from India. A few items are subject to export control to prevent their shortage. The profits from exports are exempted f r o m income tax. Indian exports contribute nearly 12.4% in the GDP.

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7-2.3

Leading Export Items of India

In the past ten years, exports have grown at a rate of nearly 2 2 %. Some commodities h a v e enjoyed f a s t e r e x p o r t growth than ot hers . Some of I n d i a s m a i n e x p o r t items a r e cotton, textiles, jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved vegetables etc. India exports its goods to some of leading countries of the world such as UK, Belgium, USA, China, Russia etc.

7-2.4

Restriction on the Exports of Items

However there a r e some restrictions on the export of goods. Under sub section (d) of section 111 and sub section (d) of section 113, any good

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exported or attempted to be exported, contrary to any prohibition imposed by or under the customs act or any other law is liable for confiscation.

7-2.5

Problems of the Indian Export Sector

But there are few problems which need to be solved before India makes a mark for itself in the export sector. The Indian goods have to be of superior quality. The packaging and branding such be such that countries are interested to export from India. At t h e same time I n d i a m u s t ,

look for potential market to sell t h e i r g o o d s . The government should f r a m e policies which gives boost to the export

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CONCLUSION

The developed countries want that the underdeveloped countries observe some restrictions relating to labour employment and ecological balance. Their argument is that the underdeveloped countries use child labours or their social security measures are very poor. Further, these countries do not take measures to control pollution or to maintain ecological balance. As a result, cost of production in such countries is low. So, the developed countries should be allowed to impose tariffs or imports from underdeveloped countries until the developing countries improve the developed

condition of l a b o u r and do not employ child labour. Thus, the

countries tried to impose many restrictions on the production process of the underdeveloped countries. Thus, if the developing countries try to

protect their interest as a group, they may stand to gain from the WTO system. If we consider both sides of a coin then we can conclude that the developed countries export of cost Indias if

liberalise their import of agricultural goods, goods in will increase. India of has a

agricultural advantage

co m par at i v e

the

production

agricultural

commodities. Hence Indias of such commodity is expected to increase. On the other side according to the agreement of T r a d e Related Investment Measures (TRIMs), there should not be any discrimination between foreign and domestic investments. As a result, it will very difficult to control the restrictive activities of the following investors. This agreement will a l s o f a v o u r the investors of the developed countries.

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9
www.wikipedia.org www.exprasspharma.com www.wto.org Annual Report 2007 Trade Policy Reviews 2002

BIBLOGRAPHY