Lok Sabha Question No. 2421 (UNSTARRED), answered on 2024-08-06
Subject: Widening Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: Thiru Dayanidhi Maran

## GOVERNMENT OF INDIA

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

## LOK SABHA UNSTARRED QUESTION NO. 2421 ANSWERED ON 06/08/2024

## WIDENING TRADE DEFICIT

## 2421.  THIRU DAYANIDHI MARAN:

Will the Minister of COMMERCE & INDUSTRY ( वाणिज्य एवं उद्योग मं त्री ) be pleased to state:

(a) the details of specific measures have been implemented to ensure the sustained growth of merchandise exports;

(b) whether it is a fact that the trade deficit widening by 9.4 percent in June and the details of strategies are being considered to address the growing gap between imports and exports;

(c) the details of the six key sectors and twenty countries that the Government is focusing on to boost exports alongwith the details of criteria were used to select these sectors and countries;

(d) whether  it  is  a  fact  that  Labour-intensive  sectors  like  handicrafts  and  jute,  have  seen  a decline in export values and the details of initiatives are being undertaken to support these sectors and reverse the decline;

(e) the details of electronics goods imports rising by sixteen percent and silver imports jumping 377.4 percent, the extent to which is the Government addressing implications of these trends on domestic economy and trade balance; and

(f) the  details  of  training  and  capacity-building  initiatives  are  being  undertaken  to  equip exporters in declining sectors to compete globally?

## ANSWER

## वाणिज्य और उद्योग मंत्रालय में राज्य मंत्री (श्री णिणिन प्रसाद)

## THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI JITIN PRASADA)

(a) The  Government  has  taken  following  measures  for  sustained  growth  in  merchandise exports:

(i)  New Foreign Trade Policy(FTP) has been launched with effect from 1st April 2023. The new FTP is to be dynamic and responsive to the emerging trade scenarios, wider Engagement with States and Districts to promote exports from the grassroots.

(ii)    Assistance  provided  through  schemes,  namely  Trade  Infrastructure  for  Export  Scheme

(TIES) and Market Access Initiatives (MAI) Scheme, to promote exports.

(iii)    Rebate  of  State  and  Central  Levies  and  Taxes  (RoSCTL)  Scheme  to  promote  labour oriented sector export has been implemented since 07.03.2019.

(iv)    Scheme  for  Remission  of  Duties  and  Taxes  on  Exported  Products  (RoDTEP)  provides reimbursement  of  taxes  which  are  incurred  in  the  process  of  manufacture  and  distribution  of exported products and are not being refunded under any other mechanism, at the central, state and local level.  A support to the tune of around INR 45,000 Crores has been provided to Indian exporters since the scheme implementation from January 2021.

(v)    Interest  Equalization  Scheme  on  pre  and  post  shipment  rupee  export  credit  has  also  been extended up to 31-08-2024.

(vi)  The new FTP also provides a framework for cross-border trade of goods and services from India in the digital economy and the promotion of E-Commerce and other emerging channels of exports from India.

(vii)   Districts  as  Export Hubs program has been initiated for identifying products with  export potential  in  each  district,  addressing  bottlenecks  for  exporting  these  products  and  supporting local exporters and manufacturers.

(viii)    Government  has  also  allowed  rupee  trading  through  Special  Rupee  Vostro  Accounts  to facilitate trade to promote international settlements in Rupees.

(ix)  India has signed a Free Trade Agreement with UAE, Australia and the European Free Trade Association (EFTA).

(x)    Role  of  Indian  missions  abroad  for  promoting  India's  trade,  tourism,  technology  and investment goals has been enhanced.

(xi)  Regular monitoring of export performance is undertaken with Commercial Missions abroad, Export Promotion Councils, Commodity Boards and Industry Associations for taking corrective measures from time to time.

(b) India's Merchandise Trade Deficit in June 2024 was USD 20,972.01 Million vis-à-vis trade Deficit  of  USD  19,189.24  Million  in  June  2023,  registering  a  growth  of  9.29  %.  Trade  deficit depends upon relative fluctuations in the import and export of different commodities and services due  to  global  and  domestic  factors  such  as  demand  and  supply  in  domestic  and  international markets,  currency  fluctuations,  international  prices,  etc.  The  Government  keeps  a  watch  on  the overall deficit and undertakes measures and strategies periodically to address it.

(c) The  six  sectors  which  hold  large  potential  to  increase  the  country's  exports  include Agriculture  &  allied  products,  Drugs  and  Pharmaceuticals,  Textiles  &  Apparel,  Chemicals, Engineering  and  Electronics  goods.  The  20  Countries  of  Significance  that  the  Government  is focusing  on  to  boost  exports  includes  USA,  UAE,  Netherlands,  China,  Russia,  Bangladesh, Singapore,  United  Kingdom,  Saudi  Arabia,  Germany,  Indonesia,  Brazil,  Turkey,  Italy,  South Africa, France, Australia, Vietnam, South Korea and Japan. These 20 countries import over 62% in each of the six focus sectors and were one of the criteria for selection of these sectors and countries.

(d) The  export  of   these  sectors  and  any  decline  is  dependent  on  several  factors  such  as geopolitical situation, international market trends, market dynamics etc. Meanwhile the Government is continuously monitoring export performance and taking various measures to boost production  and  exports.  The  Government  is  implementing  the  National  Handicraft  Development Programme (NHDP) for marketing & boosting handicrafts exports from the country. Under the subcomponent  Marketing  Support  and  Services  (MSS)  of  NHDP  Scheme  financial  assistance  is provided to eligible agencies on pan-India basis for marketing of handicraft products in domestic as well as overseas markets. The export performance of handicrafts in the last three years is as follows:

| Year    | Exports in INR Crores   |
|---------|-------------------------|
| 2021-22 | 49,893.11               |
| 2022-23 | 44,719.66               |
| 2023-24 | 48,289.30               |

(e) During April-Dec 2023,total imports of Silver recorded a decline of -57.59% and -52.65% in qty and value terms respectively which resulted in decline in imports of Silver during the FY 20232024 by (-) 10.05% in qty terms and a rise in value terms by 2.72% owing to rise in prices of Silver. The National Policy on Electronics 2019 (NPE 2019) has been notified on 25.02.2019 to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and  driving  capabilities  in  the  country  for  developing  core  components,  including  chipsets,  and creating an enabling environment for the industry to compete globally. To attract and incentivize large investments in the electronics value chain and promote exports, various schemes have been notified under the aegis of NPE 2019, which are as under :-

-  Program for Development of Semiconductors and Display Manufacturing Ecosystem,
-  Production Linked Incentive Scheme (PLI) for IT Hardware 2.0 was notified in May 2023 with a budgetary outlay of INR 17,000 Crores
-  Scheme  for  Promotion  of  Manufacturing  of  Electronic  Components  and  Semiconductors (SPECS) was notified in April 2020
-  Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme was notified in April 2020
-  Modified Special Incentive Package Scheme (M-SIPS)
-  Electronics Development Fund (EDF)
-  Phased Manufacturing Programme (PMP)
-  FDI up to 100% is permitted for Electronics Manufacturing
-  Exemption from Basic Customs Duty on Capital Goods
-  Simplified import of used plant and machinery

(f) The Government under the Niryat Bandhu Scheme under the Foreign Trade Policy (FTP) conducts  export  awareness  workshops,  provides  handholding  support,  and  collaborates  with industry  stakeholders  to  enhance  the  capacity  of  exporters.  More  than  1,15,000  individuals  have benefitted under Niryat Bandhu Scheme since its inception in year 2013.

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