ª “I am happy to announce that India’s merchandise exports during the month of July 2005 have registered a record increase of almost 27 % in dollar terms compared to July 2004.
ª With this, India’s exports during April-July 2005-06 have gone up to US $ 28.1 billion, which is 21.4 % higher than the level of US $ 23.1 billion during April-July 2004-05.
ª As per quick estimates sectors that have performed well in July are iron ore (81%); petroleum products (41%); marine products (41%); plastics & linoleum (40%); rice (37%); ready-made garments of all textiles (35%); basic chemicals (30%); engineering goods (25%); and gems & jewellery (17%).
ª With this trend in exports and our concerted efforts to sustain it, I am confident that we will reach and even surpass the export target of US $ 92 billion, which has been set for this fiscal.
ª In a further bid to boost our exports, we propose to discontinue almost Rs.100 crore of cess on exports. This will make our exports more competitive. We cannot subsidise exports like the developed countries, but at least let us not tax them! The cesses on exports sought to be abolished are:
· APEDA Cess: Rs. 50 crore per year
· MPEDA Cess: Rs. 20 crore per year
· Coffee Cess: Rs. 12 crore per year
· Spices Cess : Rs. 7 crore per year
· Tobacco Cess: Rs. 3 crore per year
ª Last year, as you are aware, our exports reached US $ 80 billion and our imports were US $ 105 billion.
ª Thus, our economic engagement with the world last year was US $ 185 billion. This year it should be 250 billion dollars. Within three years, we plan to take this economic engagement (exports and imports) to US $ 500 billion.
ª But dollars are only a means of measuring our achievements. What is important is not the dollars earned by these exports, but the employment generated, the economic activity that this stimulates in the Indian economy. It is only by stimulating economic activity that we can leap forward.
ª The preliminary findings of a study by the Research & Information System for Developing Countries (RIS) commissioned by us to analyse the relationship between exports and job creation have shown that 10 to 12 lakh jobs were generated in 2004-05 incrementally over the previous year as a result of the increase in merchandise exports I expect that the increase in merchandise exports during the current year will lead to a similar incremental direct employment in the country. (In the same study, the total number of persons associated with export activity during 2004-05 was estimated at 1 crore of which 86 lakh persons were directly employed in the export sector, and 17 lakh persons were indirectly employed in the logistics and related sectors).
ª There has been an increase in both oil and non-oil imports, as will be seen from the data. Non-oil imports have increased but it is noteworthy that the bulk of import growth is in capital goods, raw materials and intermediate goods, and not so much in consumer goods sectors. It is a happy augury that there has been a significant growth in manufacturing sector, alongside the increase in exports.
ª Thus, as per the quick estimates released by CSO, the overall growth in India’s industrial production shot up 11.7% in June 2005 against 7.3% in June 2004. The quarterly growth rate in the first quarter of 2005-06 thus stood at 10.3% against 7.7% in the same quarter of 2004-05. The manufacturing sector, which accounts for 79% of the index of industrial production increased by 12.5% in June 2005 against 8% in June 2004.
ª In fact, the sustained increase in the productivity of the Indian manufacturing sector (which accounts for around 78% of our total exports) has contributed significantly to the continuing growth of Indian exports. India is now the 10th largest industrial economy in the world and is fast establishing itself as a global manufacturing hub.
ª Contributing to close to a fourth of the GDP, India’s manufacturing sector has a diversified base of world-class facilities, using the state of the art technology.
ª My Ministry has been taking steps to reduce transaction cost through simplification of procedures etc., and a number of concrete measures were announced in the supplement to the Foreign Trade Policy to further enhance the competitiveness of the manufacturing sector in India.
ª Another important initiative is the setting up of 6 Free Trade and warehousing Zones through MMTC Limited. Six locations tentatively identified for Free Trade & Warehousing Zones are Kandla, NOIDA, Mumbai, Haldia, Kochi and Ennore, to be set up in phases. The estimated investment for each warehouse would be Rs.100 crore approximately. It envisages creation of world-class infrastructure for trading and warehousing of various products.
ª We are looking at a new initiative towards an Economic Cooperation Agreement with the Gulf Cooperation Council (GCC) member countries so as to bring the economies of the Gulf closer to India on a mutually beneficial basis.
ª The Foreign Direct Investment (FDI) inflows for the first quarter of the financial year 2005-06 (up to June 2005) are US $ 1.173 billion as compared to the inflows during the corresponding period of the previous year 2004-05 at US $ 0.797 billion. The inflows during the current financial year has been 47% higher than the previous year. This represents only the equity component of FDI. Cumulative FDI inflows into India since August 1991 are US $ 34.52 billion”.
SB/MRS