Lok Sabha Question No. 1237 (UNSTARRED), answered on 2017-07-24
Subject: Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: JANARDAN SINGH SIGRIWAL

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 1237 TO BE ANSWERED ON 24 th  JULY, 2017

## TRADE DEFICIT

## 1237. SHRI JANARDAN SINGH SIGRIWAL:

Will the Minister of COMMERCE & INDUSTRY ( वािणÏय एवं उɮयोग मंत्री ) be pleased to state:

- (a) whether there has been a continuous rise in the trade deficit during each of the last three  years  and  the  current  year  and  if  so,  the  details  thereof,  year  wise  and  the reasons therefor;
- (b) the details of the targets fixed and achieved for import and export along with the details of the countries with which India's trade deficit has widened during the said period;
- (c) whether the Government has received representations from various trade organisations/export  promotion  councils  to  give  impetus  to  exports  and  if  so,  the details  thereof  along  with  the  steps  taken  by  the  Government  to  address  their concerns;
- (d) whether the Government has set up any Committee to suggest measures to boost exports and bridge the widening trade deficit and the rising current account deficit; and
- (e) if  so,  the  details  thereof  including  the  suggestions  made  by  the  Committee  along with the steps taken/being taken by the Government thereon?

## ANSWER

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## THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (INDEPENDENT CHARGE)

(SMT. NIRMALA SITHARAMAN)

- (a): The details of India's total trade deficit (merchandise and services) for the last three years and the current year are as follows:

| (in US $ Billions)   | (in US $ Billions)   |
|----------------------|----------------------|
| Years                | Trade Deficit        |
| 2014-15              | -61.17               |
| 2015-16              | -49.30               |
| 2016-17              | -42.56               |
| 2016-17 (Apr-May)*   | 0.57                 |
| 2017-18 (Apr-May)*   | -16.04               |

Source: DGCI&S, Kolkata (* Provisional)

The data in the above table reveals that trade deficit has a decreasing trend during the last three  years.  It  has    increased  for  the  period  2017-18  (Apr-May)  as  compared  to  the corresponding period of previous year.

(b): The value of merchandise export targets fixed and achieved is as follows:

|         | Export values (US$ Billions)   | Export values (US$ Billions)   | %Difference   |
|---------|--------------------------------|--------------------------------|---------------|
| Years   | Target fixed                   | Achievement                    |               |
| 2013-14 | 325                            | 314                            | -3.38         |
| 2014-15 | 340                            | 310                            | -8.82         |

Source: Annual Report of Department of Commerce

As  per  Foreign  Trade  Policy  2015-20,  the  Government  aims  to  increase  India's  exports  of merchandise  and  services  from  US$  465.9  Billions  to  approximately  US$  900  Billions  by 2019-20 and to raise India's share in world exports (Goods and Services) from 2% to 3.5%. The top 10 countries with which India's trade deficit has increased during last three years and current year is  given in Annexure-I .

- (c) to (e): Representations/suggestions for reform of trade strategy are received from trade organisations/export promotion councils from time to time, which are taken into consideration as part of the regular ongoing process of review and reform of trade policy. As part of this process Government has taken the following steps to increase the competitiveness of India's exports and bridge the trade deficit:
- (i) The New Foreign Trade Policy (2015 -20) was  announced on 1 st April,  2015  with  a focus on supporting both manufacturing and services exports.
- (ii) The Merchandise  Exports  from  India  Scheme  (MEIS) has  been  introduced  in  the Foreign  Trade  Policy  (FTP)  2015-20  on  01.04.2015  with the  objective  to  offset infrastructural inefficiencies and associated costs involved in exporting goods/products which are produced/ manufactured in India and to provide a level playing  field  to  Indian  exporters,  especially  those  having  high  export  intensity  and employment  potential.  The  Scheme  incentivizes exporters in terms  of freely transferable Duty Credit Scrips which are transferable and can be used to pay certain Central duties/taxes including customs duties.  The Scheme covers exports of 7914 tariff lines at 8 digit levels to all countries.
- (iii) The Services Exports from India Scheme (SEIS) has been introduced in the Foreign Trade Policy (FTP) 2015-20 on 01.04.2015. The Scheme provides rewards at the rate of 3 to 5% on Net Foreign Exchange earnings, to service providers of notified services from  India  to  rest  of  the  world,  in  the  form  of  Duty  Credit  Scrips which  are transferable and can be used to pay certain Central duties/taxes including customs duties.
- (iv) The Government has implemented the Niryat Bandhu Scheme with an objective to reach out to the new and potential exporters including exporters from Micro, Small & Medium Enterprises (MSMEs) and mentor them through orientation programmes, counseling sessions, individual facilitation etc., on various aspects of foreign trade for being able to get into international trade and boost exports from India.
- (v) As  part  of  the  ' Ease  of  Doing  Business '  initiatives,  the  Government  has  launched Single Window Interface for Facilitating Trade (SWIFT) clearances project w.e.f 1 st April, 2016. The scheme enables the importers/exporters to file a common electronic 'Integrated Declaration' on the Indian Customs Electronic Commerce/Electronic Data Interchange  (EC/EDI)  Gateway  i.e.  ICEGATE  portal.  The  Integrated  Declaration compiles the information requirements of Customs, FSSAI, Plant Quarantine, Animal Quarantine,  Drug  Controller,  Wild  Life  Control  Bureau  and  Textile  Committee.  It replaces nine separate forms required by these 6 different agencies and Customs.
- (vi) Interest  Equalization  Scheme  on  pre  &  post  shipment  credit was  launched  to provide cheaper credit to exporters.
- (vii) A new scheme called Special Advance Authorisation Scheme for export of articles of Apparel and Clothing Accessories was introduced w.e.f. 1st September 2016 wherein exporters are entitled for an authorisation for fabrics including inter lining on preimport  basis  and  all  industry  rate  of  Duty  Drawback  for  non-fabric  inputs  on  the exports.
- (viii) Further, the Government continues to provide the facility of access to duty free raw materials and capital goods for exports through schemes like Advance Authorization, Duty Free Import Authorization (DFIA), Export Promotion Capital Goods (EPCG) and drawback / refund of duties.
- (ix) The  Government  launched  a  new  scheme  called Trade  Infrastructure  for  Export Scheme  (TIES) w.e.f.  15 th March,  2017  with  the  objective  to  enhance  export competitiveness  by  bridging  gaps  in  export  infrastructure,  creating  focused  export infrastructure, first mile and last mile connectivity for export oriented projects and addressing  quality  and  certification  measures.  The  Central  and  State  Agencies, including Export Promotion Councils, Commodities Boards, SEZ Authorities and Apex Trade Bodies recognised under the EXIM policy of Government of India are eligible for financial support under this scheme.
- (x) The Government has approved the proposal for notification of commitments under the Trade  Facilitation  Agreement  (TFA) of  World  Trade  Organization  (WTO), ratification and acceptance of the Instrument of Acceptance of Protocol of TFA to the WTO Secretariat and constitution  of  the  National  Committee  on  Trade  Facilitation (NCTF). The Trade Facilitation Agreement (TFA) contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures  for effective cooperation between  customs  and  other appropriate

authorities on trade facilitation and customs compliance issues. These objectives are in consonance with India's 'Ease of Doing Business' initiative.

***

| Trade Deficit of top 10 countries   | Trade Deficit of top 10 countries   | (Value in USD Million)   | (Value in USD Million)   |
|-------------------------------------|-------------------------------------|--------------------------|--------------------------|
| Countries                           | 2014-16                             | 2016-17                  | %Change                  |
| South Africa                        | -1194.52                            | -2258.77                 | 89.09                    |
| Iran                                | -4779.92                            | -8113.38                 | 69.74                    |
| Russia                              | -2152.21                            | -3620.26                 | 68.21                    |
| Canada                              | -1553.40                            | -2122.33                 | 36.63                    |
| Argentina                           | -1532.03                            | -1988.45                 | 29.79                    |
| Botswana                            | -968.42                             | -1230.27                 | 27.04                    |
| Japan                               | -4745.50                            | -5900.53                 | 24.34                    |
| Ukraine                             | -1889.95                            | -2170.83                 | 14.86                    |
| Australia                           | -7465.11                            | -8187.97                 | 9.68                     |
| China PRP                           | -48454.65                           | -51089.01                | 5.44                     |

Source: DGCI&S, Kolkata (* Provisional)