Lok Sabha Question No. 95 (UNSTARRED), answered on 2019-02-04
Subject: Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: RAHUL RAMESH SHEWALE, BHARTRUHARI MAHTAB, S.P. MUDDAHANUMEGOWDA, SANJAY SHAMRAO DHOTRE

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

## LOK SABHA UNSTARRED QUESTION NO. 95 TO BE ANSWERED ON  04 th  FEBRUARY, 2019

## TRADE DEFICIT

## 95. SHRI RAHUL SHEWALE:

SHRI BHARTRUHARI MAHTAB:

SHRI S.P. MUDDAHANUME GOWDA:

SHRI SANJAY DHOTRE:

Will the Minister of COMMERCE & INDUSTRY ( वा ͨणÏय एवं उɮयोग मंğी ) be pleased to state:

- (a) whether the trade deficit  has  widened due  to  decline in net  export  of  the  country during each of the last four years and the current year and if so, the details thereof, Sector-wise and the reasons therefor;
- (b) the quantum and value of net export and its target set by the Government during the said period along with the country's share in world's trade and the details of imports during the period;
- (c) whether  such  decline  in  net  export  has  adversely  impacted  the  Gross  Domestic Product (GDP) of the country during the said period;
- (d) if so, the details thereof along with the reaction of the Government thereto;
- (e) whether the Government  proposes  to review the existing export promotion schemes/programmes  being  implemented  in  the  country  and  if  so,  the  details thereof; and
- (f) the other measures taken/being taken by the Government to improve net export and GDP of the country and bring down the trade deficit in the future?

## ANSWER

okf.kT; ,oa m|ksx ea=ky; esa jkT; ea=h ¼Jh lh- vkj- pkS/kjh½

THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI C. R. CHAUDHARY)

- (a) to (d) The values of  India's export, import, net export (the value of  total exports minus the value of total imports) and GDP at current prices during the last four years and current year  are as follows:

(Rs. in crore)

| Year   | Exports of Goods and Services (at Current Prices)   | Imports of Goods and Services (at Current Prices)   | Net Exports of Goods and Services (at Current Prices)   | GDP (at Current Prices)   |
|--------|-----------------------------------------------------|-----------------------------------------------------|---------------------------------------------------------|---------------------------|

RE:  Revised  Estimates,  AE:  Advance  Estimates,  Source:  CSO,  Ministry  of  Statistics  and Programme Implementation

| 2014-15           |   2863636 |   3235962 | (-)372326   |   12467959 |
|-------------------|-----------|-----------|-------------|------------|
| 2015-16           |   2728641 |   3044915 | (-)316274   |   13764037 |
| 2016-17           |   2946243 |   3208505 | (-)262262   |   15253714 |
| 2017-18 (RE)      |   3194507 |   3694286 | (-) 499779  |   16773145 |
| 2018-19 (1 st AE) |   3727937 |   4387991 | (-)660054   |   18840731 |

Due to different units of measurement, the total quantity of exports and imports is not additive. The data in the above table reveals that the net export decreased in the year 2015-16 and  2016-17  as  compared  to  the  corresponding  period  of  the  previous  years.  However,  it has increased in the year 2017-18 and 2018-19 as compared to the corresponding period of the previous years. Trade deficit depends upon relative fluctuations in the import and export of different commodities due to the global and domestic factors such as demand and supply in  domestic  and  international  markets,  currency  fluctuations,  cost  of  credit,  logistics  costs, etc. The decline in net export has very insignificant impact on the Gross Domestic Product (GDP) of the country.

The top 30 principal commodity-wise values of trade deficit for the last four years and the current year is given at Annexure-I .

India's share in world trade during 2014 to 2017 is given as follows:

|   Years |   India's Share in World Merchandise Plus Services Exports (%) |   India's Share in World Merchandise Plus Services Imports (%) |
|---------|----------------------------------------------------------------|----------------------------------------------------------------|
|    2014 |                                                           1.99 |                                                           2.45 |
|    2015 |                                                           1.98 |                                                           2.32 |
|    2016 |                                                           2.03 |                                                           2.27 |
|    2017 |                                                           2.1  |                                                           2.6  |

Source: World Trade Organisation

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%.

(e) & (f): The Government carried out mid-term review of the Foreign Trade Policy 201520, which was released on December 5, 2017.  In order to boost India's exports and bring down the  trade  deficit,  the  Government  has  taken  several  measures  through  Foreign  Trade  Policy 2015-20 launched on 1 st April 2015, its Mid-term Review released on December 5, 2017 and other policy measures taken from time to time. The key measures include:

- i. FTP 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in line with the 'Make in India', 'Digital India', 'Skills India', 'Startup India' and 'Ease of doing business' initiatives.
- ii. The main policy objective is to enable India to respond to the challenges of the external  environment  keeping  in  view  the  rapidly  evolving  international  trading architecture  and  make  trade  a  major  contributor  to  the  country's  economic growth and development.
- iii. The policy provides the framework for promotion of exports through schemes of incentives  on  exports and  duty  remission/exemption  on  inputs  for  export production.
- iv. The Merchandise Exports from India Scheme (MEIS) was introduced in the Foreign Trade  Policy  (FTP)  2015-20  on  April  1,  2015  with the objective to offset infrastructural  inefficiencies  and  associated  costs  involved  in  exporting  goods/ products  which  are  produced/  manufactured  in  India.  Duty  credit  scrips  issued under MEIS and the goods imported against these scrips are fully transferable.  On the  demand of  the  industry,  at  the  time  of  mid-term  review  of  the  FTP  in  Dec 2017,export  rewards  under  MIES  were  increased  by  2%  across  the  board  for labour  intensive,  MSME  sectors,  ready-made  garments  and  made  ups.  Later, rewards  to  some  agricultural  products  such  as  Bengal  Gram,  Milk  and  Milk Products, Soya de-oiled cake and Non Basmati rice have been provided/enhanced under MEIS for a limited period in the year 2018-19 to boost the exports of these agriculture sector items. As on date, The MEIS scheme covers 8057 tariff lines at 8 digits level, and provide rewards.
- v. The  'Services  Exports  from  India  Scheme  (SEIS)'  was  introduced  in  the  Foreign Trade  Policy  (FTP)  2015-20  on  April  1,  2015  for  increasing  exports  of  notified services.  At  the  time  of  mid-term  review  of  Foreign  Trade  Policy  2015-20,  the rates  for  all  the  notified  services  have  been  increased  by  2%  for  exports  with effect  from  01.11.2017,  leading  to  additional  estimated  annual  rewards  of  Rs 1,140 crore to promote exports of notified services.
- vi. An  Action  Plan  on  Champion  Sectors  in  Services  has  been  approved  on  28 th February  2018,  whereby,  nodal  Ministries/Departments  of  the  identified  12 champion  services  sectors  have  been  directed  to  undertake  sectoral  initiatives aimed at, inter alia , enhancing services exports.
- vii. Government has been organising various events including the Global Exhibition in Services,  Advantage  Health  Care  India,  and  Higher  Education  Summit  etc.  to showcase India's strength in services sector.  Government has also been participating in international fairs/ exhibitions relating to services sector.
- viii. In the various bilateral/ pluri-lateral/ multilateral trade negotiations, Government has  been  seeking  commercially  meaningful  market  access  for  India's  services exports.
- ix. The  policy  includes  measures  to  nudge  procurement  of  capital  goods  from indigenous  manufacturers  under  the  EPCG  scheme  by  reducing  specific  export obligation from 90 percent to 75 percent of the normal export obligation.
- x. The policy provides issue of Advance Authorisation to allow duty free import of inputs,  which  is  physically  incorporated  in  export  product  within  a  specified timeline.
- xi. Interest Equalization Scheme on pre and post shipment rupee export credit has been introduced from 1.4.2015 to help exporters in accessing credit at reduced rates.
- xii. 'Niryat  Bandhu  Scheme'  has  been  galvanised  and  repositioned  to  achieve  the objectives of 'Skill India' and trade promotion/awareness.
- xiii. Trade facilitation and enhancing the ease of doing business measures have been taken with special focus on moving towards paperless working. The Government has launched a Single Window Interface for Facilitating Trade (SWIFT) clearances project with effect from 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.  India  also  ratified  the  WTO  Agreement  on  Trade Facilitation (TFA) in April 2016 for enhancing trade facilitation.
- xiv. A  new  scheme  called  'Trade  Infrastructure  for  Export  Scheme  (TIES)'  has  been launched  from  1 st April  2017  to  address  the  export  infrastructure  gaps  in  the country.
- xv. The Mid-term Review of Foreign Trade Policy 2015-20 launched on 5 th December 2017 provides more incentives for export promotion.
- xvi. In  order  to  double  farmers'  income  by  2022  and  provide  an  impetus  to agricultural exports, the Government has launched a comprehensive 'Agriculture Export Policy' on 6 th December, 2018 which would also integrate Indian farmers and agricultural products with the global value chains. Objectives of the Agriculture Export Policy are as under:
17.  To  double  agricultural  exports  from  present  ~US$  30+  Billion  to  ~US$  60+ Billion by 2022 and reach US$ 100 Billion in the next few years thereafter, with a stable trade policy regime.
18.  To  diversify  our  export  basket,  destinations  and  boost  high  value  and  value added agricultural exports including focus on perishables.
19.  To  promote  novel,  indigenous,  organic,  ethnic,  traditional  and  non-traditional Agri products exports.
20.  To  provide  an  institutional  mechanism  for  pursuing  market  access,  tackling barriers and deal with sanitary and phyto-sanitary issues.
21.  To strive to double India's share in world agri exports by integrating with global value chain at the earliest.
22.  Enable farmers to get benefit of export opportunities in overseas market.

***

## Annexure-I

Statement referred to in reply of part (a) of Lok Sabha Unstarred question no. 95 for answer on 4 th February 2019.

Trade deficit during 2014-15 to 2018-19 ( Apr-Nov) for 30 Principal commodities having highest trade deficit in the current year

Value in Million USD

|   Sr. No: | Principal Commodity            | 2014-15     |   2015-16 |   2016-17 |   2017-18 |   2017-18 (Apr-Nov) |   2018-19 (Apr-Nov)* |
|-----------|--------------------------------|-------------|-----------|-----------|-----------|---------------------|----------------------|
|         1 | PETROLEUM: CRUDE               | - 116442.86 | -65923    | -70705.4  | -87372.3  |           -52575.5  |            -80061.6  |
|         2 | GOLD                           | -31562.03   | -26197.2  | -21396.6  | -31263.5  |           -21115.6  |            -21749.6  |
|         3 | COAL,COKE AND BRIQUITTES ETC   | -17666.05   | -13507.1  | -15595.4  | -22733.4  |           -14204.1  |            -17482.9  |
|         4 | PETROLEUM PRODUCTS             | -13624.08   | -14521.9  | -15528    | -20645.5  |           -13853.4  |            -11921.4  |
|         5 | GOLD AND OTH PRECS METL JWLERY | -3502.82    |  -5272.77 |  -6618.27 |  -8043.47 |            -5023.23 |             -8719.77 |
|         6 | DRUG FORMULATIONS, BIOLOGICALS | -10526.92   | -10412.1  | -10776.5  | -11549.6  |            -8120.87 |             -6687.14 |
|         7 | MOTOR VEHICLE/CARS             | -6899.66    |  -7143.71 |  -6631.98 |  -7879.31 |            -5232.18 |             -5947.73 |
|         8 | RMGCOTTON INCL ACCESSORIES     | -6714.53    |  -6330.2  |  -6301.06 |  -7453.9  |            -5128.68 |             -4668.66 |
|         9 | MARINE PRODUCTS                | -6289.39    |  -6965.95 |  -4205.43 |  -4553.71 |            -3438.07 |             -4306.79 |
|        10 | COTTON FABRICS, MADEUPS ETC.   | -4414.93    |  -5023.52 |  -4734.99 |  -5137.48 |            -3393.81 |             -4265.38 |
|        11 | COTTON YARN                    | -3507.40    |  -3919.88 |  -4054.67 |  -4884.19 |            -3245.79 |             -3728.18 |
|        12 | RICE -BASMOTI                  | -5947.33    |  -4764.8  |  -5034.67 |  -5286.11 |            -3581.53 |             -3644.14 |
|        13 | BUFFALO MEAT                   | -3314.03    |  -3450.03 |  -3408.33 |  -4016.6  |            -2765.9  |             -3154.65 |
|        14 | RMG MANMADE FIBRES             | -3810.67    |  -3818.91 |  -3219.66 |  -3786.96 |            -2587.85 |             -3152.66 |
|        15 | RICE(OTHER THAN BASMOTI)       | 122.35      |   -819.15 |   -776.46 |  -1093.75 |             -792.46 |             -2891.13 |
|        16 | RMGOFOTHR TEXTLE MATRL         | 1451.80     |  -1024.72 |  -4990.71 |  -5412.42 |            -3952.58 |             -2786.56 |
|        17 | MANMADE YARN,FABRICS,MADEUPS   | -4517.83    |  -3735.38 |  -1827.88 |  -3203.59 |            -2265.51 |             -2759.69 |
|        18 | SPICES                         | -6178.16    |  -4705.59 |  -3867.75 |  -5805.2  |            -3705.38 |             -2478.93 |
|        19 | TWO AND THREE WHEELERS         | -2306.51    |  -2294.56 |  -2369.04 |  -2732.42 |            -1762.96 |             -2092.62 |
|        20 | DYES                           | -1790.58    |  -1518.11 |  -1804.84 |  -2067.5  |            -1226.97 |             -1982.16 |
|        21 | PRODUCTS OF IRON AND STEEL     | -3657.63    |  -5759.33 |    444.13 |    812.52 |              259.07 |             -1965.6  |
|        22 | FOOTWEAR OF LEATHER            | -1675.98    |  -1583.02 |  -1403.43 |  -2034.63 |            -1344.39 |             -1779.54 |
|        23 | GRANIT, NATRL STONE AND PRODCT | -3594.84    |  -2732.06 |  -2045.7  |  -2055.65 |            -1341.22 |             -1503.68 |
|        24 | AGRO CHEMICALS                 | -7024.93    |  -8166.36 |  -7924.77 |  -2365.77 |            -1505.56 |             -1441.53 |
|        25 | AUTO TYRES AND TUBES           | -2087.60    |  -2115.25 |  -1573.53 |  -1579.86 |            -1249.08 |             -1145.02 |
|        26 | CARPET(EXCL. SILK) HANDMADE    | -1384.57    |  -1223.07 |  -1384.05 |  -1827.83 |            -1261.58 |             -1074.39 |
|        27 | LEATHER GOODS                  | -1895.00    |  -2984.73 |  -1915.02 |  -2090.88 |            -1242.82 |             -1019.87 |
|        28 | OIL MEALS                      | -177.90     |   -570.78 |   -559.65 |   -496.23 |             -427.7  |             -1011.77 |
|        29 | COTTON RAWINCLD. WASTE         | -1048.94    |  -1059.35 |   -939.65 |  -1181.14 |             -901.58 |              -994.68 |
|        30 | HANDCRFS(EXCL.HANDMA DE CRPTS) | -383.51     |   -633.15 |   -632.25 |   -969.73 |             -608.33 |              -977.6  |