Major items of export to the region are Gems and Jewellery, Iron Ore, Primary and Semi-finished Iron & Steel, Plastic and Linoleum Products, Cotton Yarn, Fabric Made Ups and Marine Products. Major items of import include Electronic Goods, Machinery, Organic Chemicals, Pearls, Precious and Semi-Precious Stones, Coal, Coke, Briquettes, Iron & Steel and Transport Equipment. As far as trade between India and China is concerned, both these countries have agreed to endeavour to raise the volume of bilateral trade to US$ 60 billion by 2010. Trade with China has already crossed US$ 41.8 billion during 2008-09. Major items of Indian exports to China include Iron Ore, Primary and Semi-Finished Iron & Steel, Plastic & Linoleum Products, Processed Minerals, Inorganic/Organic/agro Chemicals, Minerals and Ores, Drugs, Pharmaceutical and Fine Chemicals. Major imports from China include Electronic Goods, Coal, Coke, Briquettes, Organic Chemicals, Machinery and Medicinal & Pharmaceuticals Products.

Indian exports to Japan registered a decline of 15.0% while imports from the country registered a decline of 29.8% during 2009-10 (April-September) over the corresponding period last year. Major items of export to Japan include Gems and Jewellery, Marine Products, Iron Ore, Petroleum, Crude & Products and Oil Meals. Major items of import from Japan are Machinery, Electronic Goods, Transport Equipment, Iron and Steel, Professional Instruments and Organic Chemicals. During Japanese Prime Minister’s visit to India in August 2007, it was agreed that the two countries would work towards achieving an annual trade volume of US $ 20 billion by 2010.

Exports to Hong Kong accounted for 4.5% of India’s overall exports during April-September, 2009-10. During this period India’s exports to

The Union Minister of Commerce and Industry, Shri Anand Sharma witnessing the signing of the MoU between JETRO (Japan External Trade Organization) & DMIC (Delhi Mumbai Industrial Corridor) in New Delhi on December 28, 2009.

Hong Kong amounted to US$ 3.5 billion registering a decline of 8.9% over the corresponding period last year. Imports from Hong Kong in the same period amounted to US$ 1.6 billion, recording a decline of 52.08% per cent over the corresponding period last year. The major items of exports to Hong Kong are Gems and Jewellery, Finished Leather, Electronic Goods, Marine products, Natural Silk Yarn, Cotton Yarn Fabrics Made Ups, Plastic & Linoleum Products and Petroleum: Crude & Products. The share of Gems and Jewellery in India’s exports to Hong Kong is about 80%. The major items of imports are Pearls, Precious & Semi-Precious Stones, Electronic Goods, Machinery, Gold, Silver and Cotton Yarn & Fabrics.

Indian exports to Republic of Korea during 2009-10 (April-September) amounted to US$ 1.3 billion registering a decline of 35.7% over the corresponding period last year while Imports from Korea during the same period amounted to US$ 3.6 billion registering a decline of 24.4%. Major items of exports are Petroleum Products, Cotton Yarn, Fabrics, Made Ups, Oil Meals, Minerals & Ores, Iron Ore, Primary and Semi-Finished Iron & Steel, Non-Ferrous Metals, and Drugs, Pharmaceuticals & Fine Chemicals. Major items of imports are Electronic Goods, Machinery, Transport Equipment and Iron and Steel.

India - Korea CEPA

A Comprehensive Economic Partnership Agreement (CEPA) between India and Republic of Korea was signed on 7th August, 2009. The CEPA has come into force from 1st January, 2010.

India - Japan EPA/CEPA Negotiations

During the visit of the Prime Minister Dr. Manmohan Singh to Japan in December 2006, it was decided to launch negotiations for conducting an Economic Partnership Agreement/Comprehensive Economic Partnership Agreement (EPA/CEPA) with Japan. A Joint Task Force (JTF) has been constituted for this purpose with Deputy Minister of Foreign Affairs, Japan, and the Commerce Secretary, Government of India as Chief delegates. So far, eleven meetings of the JTF have taken place. The 12th meeting is scheduled to be held in July 2009. The JTF has finalized the modalities for tariff liberalization for trade in goods. Negotiations on Services, Investment, IPRs, SPS & TBT issues are progressing.

During the visit of the Prime Minister Dr. Manmohan Singh to Japan in December 2006, it was decided to launch negotiations for conducting an EconomicPartnership Agreement/Comprehensive Economic Partnership Agreement (EPA/CEPA) with Japan. A Joint Task Force (JTF) was constituted for thispurpose with Deputy Minister of Foreign Affairs, Japan, and

the Commerce Secretary, Government of India as Chief delegates. So far, twelve meetings of the JTF have taken place. The 12th meeting was held in September 2009. The JTF has finalized the modalities for tariff liberalization for trade in goods. Negotiations are also being held on Services, Investment, IPRs, and SPS & TBT issues.

India-China Joint Task Force (JTF) for RTA Feasibility

This Joint Task Force (JTF) of India and China was constituted to study the feasibility and the benefits of a possible China-India Regional Trading Arrangement (RTA). The JTF finalized its report in its sixth meeting held on 21st and 22nd October, 2007. The Prime Minister visited China during 13-15 January, 2008 and discussed the findings of this report with the Chinese Prime Minister. Both the Prime Ministers decided to refer the report for consideration to the Joint Economic Group (JEG) headed by the Trade and Commerce Ministers of the two countries. The report of India-China JTF was considered by the two Commerce Ministers at the 8th Session of India-China JEG held on 19th January, 2010 in Beijing. No decision was taken on the recommendations of the JTF.

(B) South Asia and SAARC

Bilateral Trade relations with countries in South Asia

Afghanistan

India & Afghanistan signed the Preferential Trade Agreement on March 6, 2003 in New Delhi. This agreement would remain in force till either party gives to the other a notice for its termination. Under the Agreement, India has granted preferential tariff for 38 products from Afghanistan including Raisins, Dry Fruits, Fresh Fruits and Spices whereas Afghanistan granted preferential tariff to 8 items from India including Tea, Antisera and Medicines, Refined Sugar, Cement Clinkers and White Cement. Afghanistan was inducted as the eighth member of SAARC during the Fourteenth SAARC Summit held in New Delhi on 3-4 April 2007. India’s trade with Afghanistan has increased substantially from US$ 201.09 million in 2005-06 to US$ 520.47 in 2008-09. During April-September, 2009-10, India’s total trade with the country stood at US$ 277.27 million as compared to US$ 228.52 million during the same period last year. The trend in trade between India and Afghanistan is given in Table 8.4.

Table 8.4.

Bilateral Trade with Afghanistan

 * Provisional
Source: DGCI&S

Bangladesh

The Bilateral Trade Agreement between India and Bangladesh, renewed fromtime to time, provides for expansion of trade and economic cooperation,making mutually beneficial arrangement for the use of waterways, railways androadways, passage of goods between two places in one country through the territory of the other, exchange of business and trade delegations and consultations to review the workingof the Agreement at least once a year. The 6th meeting of the Joint Working Group (JWG) on trade between India and Bangladesh was held on August 27-29, 2009 in New Delhi  where the two sides had a detailed discussion on various bilateral trade issues. In the JWG meeting Indian side expressed its readiness to assist Bangladesh in strengthening the Bangladesh Standards and Testing Institute (BSTI). A road map was developed for recognition of Certificates issued by BSTI for their export into India. It was also agreed to expedite the meeting of Sub-Group on Infrastructure., for importing the infrastructure necessary for the existing LCSs and new LCSs. It was further agreed to start border for mutual benefit of the native people.

Table 8.5.

Bilateral Trade with Bangladesh

 * Provisional Source: DGCI&S

Bhutan

The current Free Trade Agreement between India and Bhutan, namely Agreement on Trade, Commerce and Transit was signed in New Delhi on 28th July, 2006 for a period of ten years with effect from 29th July, 2006 Under this Agreement India also provides transit facilities to landlocked Bhutan to facilitate its trade with third countries and movement of good from one part of Bhutan to another through Indian Territory. The requirements of Bhutan are mainly met by imports from India. Commercial transactions are carried out in Indian Rupees and Bhutanese Ngultrum.

Table 8.6.

Bilateral Trade with Bhutan

* Provisional

Nepal

The Cabinet approved the Revision of Treaty of Trade and Agreement of Co-operation between India and Nepal in the meeting held on 1st October 2009. Subsequently, the Treaty of Trade and the Agreement of Cooperation between the two countries was signed on 27th October, 2009 at Kathmandu, Nepal, by Shri Anand Sharma, Commerce & Industry Minister, and Shri Rajendra Mahato, Minister for Commerce & Supplies, Government of Nepal. The Treaty aims at improving bilateral trade between the two countries by increasing the mutually agreed points of trade, expansion in the list of items included for preferential trade, simplification of trade procedures, improving Nepalese supply capacities, provision of two level institutional mechanisms for problem resolution etc.

Salient features of the Revised Treaty of Trade between Government of India and the Government of Nepal are given below:-

• Several new items of export interest to Nepal have been added to the list of primary products giving these items duty free access to India without any quantitative restrictions. These include floriculture products, atta, bran, husk, bristles, herbs, stone aggregates, boulders, sand and gravel.

• In the case of industrial goods produced in Nepal, article V of the treaty provides for duty free and quota free access (on a non reciprocal basis) except in the case of Vanaspati, Acrylic yarn, Copper products and Zinc oxide where a quota of 10,00,00 tonnes, 10,000 tonnes, 10,000 tonnes and 2,500 tonnes has been provided to provide protection to domestic industry.

• Criterion for calculating value addition for granting preferential access to India has been changed from ex-factory basis to FOB basis.

• Four additional Land Customs Stations (LCSs) will be established to facilitate bilateral trade, namely Maheshpur/Thutibari, Sikta-Bhiswabazar, Laukha-Thadi, and Guleria-Murtia.

• International Airport Routes connected by direct flights between Nepal and India (Kathmandu/Delhi, Mumbai, Kolkata and Chennai).

• India would assist Nepal to increase its capacity to trade through improvement in technical standards, quarantine & testing facilities and human resource capacities.

• The time limit for temporary import of machinery and equipment into India for repair and maintenance would be enhanced from three to 10 Years.

• Cross-border flow of trade would be facilitated through simplification and harmonization of custom, transport and other trade-related procedures and development of border infrastructure.

• Removal of discrimination in claiming tax rebates by Indian importers from Nepal on the basis of payment modalities/currencies used for payment of traded goods. This is expected to bring Indian currency at par in treatment with any other currency being used and once in operation and will make the duty refund procedure simpler.

• Inter-governmental institutional mechanisms at the level of Secretaries to the Government and Joint Secretaries to be set up.

• Revised Treaty and agreement of cooperation to control unauthorized trade for a period of 7 years for renewal as against five years earlier.

Re-export of goods imported by One Contracting Party from the Other Contracting Party to third Countries to be allowed even if no manufacturing activity is carried out by the importing Party.

Table 8.8.

Bilateral Trade with Nepal

(Value in US $ million)

* Provisional
Source: DGCI&S

Pakistan

India and Pakistan have no formal trade agreement. India has granted MFN status to Pakistan but Pakistan is yet to reciprocate. Pakistan maintains a list of importable items from India, called Positive List, as notified from time to time. The present Positive List consists of 1938 items. Both countries have set up a Joint Study Group (JSG) at Commerce Secretary Level for adopting a strategy to boost trade and economic cooperation between the two countries. Apart from JSG, Commerce Secretary-level discussions on trade and economic cooperation are held within the framework of Composite Dialogue between the two countries.

Cross LOC Trade from both Islamabad on the Srinagar-Muzaffarabad Highway & Chakkan-da-bagh on the Poonch Rawalkot axis from J&K on the Indian side to Chakoti and Rawalkote on the Pakistani side commenced from 21st October, 2008. A list of 21 items for trade was approved for trade from both sides. All these items have been allowed duty free passage.

Table 8.9.

Bilateral Trade with Pakistan

* Provisional
Source: DGCI&S

Sri Lanka

Sri Lanka has traditionally been an important export market for India. India-Sri Lanka Free Trade Agreement (ISFTA) was signed on 28th December, 1998, which has been in operation since 1st March, 2000. Under this Agreement, both countries agreed to phase out trade tariffs from each other within a fixed time frame except for those items in the Negative List of each other. A JSG was set up in April, 2003 to widen the ambit of ISFTA to go beyond Trade in Goods to include Services and to facilitate greater investment flows between the two countries. Report of JSG was submitted in October, 2003. Based on the recommendation and conclusion of the JSG, negotiations for a Comprehensive Economic Partnership Agreement (CEPA) were started in February, 2005 and concluded in July 2008, after 13 rounds. Both sides had agreed to sign the CEPA during the 15th SAARC Summit held in Colombo in 2008. However on account of some reservations expressed by Government of Sri Lanka, the Agreement is yet to be signed.

Table 8.10.

Bilateral Trade with Sri Lanka

(Value in US $ million)

* Provisional
Source: DGCI&S

SAARC

South Asian Association for Regional Cooperation (SAARC) with India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka as members was established at the first SAARC Summit held on 4-8 December 1985. Afghanistan became its eighth member during the 14th SAARC Summit held in April 2007. India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCSs) and Afghanistan, Bangladesh, Bhutan, Maldives and Nepal are categorized as Least Developed Contracting States (LDCSs).

The SAARC Preferential Trading Arrangement (SAPTA) provided a framework for exchange of tariff concessions and also for liberalization in para-tariff and non-tariff measures with a view to promoting trade and economic cooperation among the SAARC member countries. The Agreement on South Asian Free Trade Area (SAFTA) was signed during the Twelfth SAARC Summit held at Islamabad in January 2004 which came into force from 1st January 2006. SAFTA, inter alia, prescribes a phased Tariff Liberalization Programme (TLP) according to which all the member states would reduce their tariffs, at the MFN applied rate existing as on 1st January 2006, to zero to five percent within ten years of the agreement coming into force. This TLP would cover all tariff lines except those items kept in the Sensitive List by each country. With the SAFTA Agreement coming into force, there would be no more negotiations under SAPTA.

During the fourteenth SAARC Summit held in New Delhi on 3-4 April 2007 India, inter alia, unilaterally announced that before the end of 2007, India would allow the LDC countries of SAARC duty free access to its markets, and India will also further reduce the Sensitive List of SAFTA for these countries. In pursuance of this, India has notified tariff reductions to zero per cent for SAARC LDC countries under SAFTA, with effect from 1st January, 2008. India has thus completed SAFTA TLP one year ahead of the stipulated three years from 1st January, 2006 for completion of TLP by the NLDCSs for LDCSs. India has also reduced its Sensitive List under SAFTA for these countries from 744 items to 480 items.

SAFTA Ministerial Council (SMC) consisting of Ministers of Commerce/Trade of the Member States is the highest decision making body of SAFTA and the SMC is supported by a Committee of Experts (COE) with nominees from member states. The fifth meeting of the COE and SMC was held on October 26- 27, 2009, and 28th October 2009 respectively at Kathmandu, Nepal.

The following major decisions were taken in the Ministerial Council Meeting:-

(i) Tariff Liberalization Programme (TLP)

• Tariff on 30% of the tariff lines outside the Sensitive Lists would be brought down to zero by all the Contracting States within a period of two years (to be confirmed by member States by December 2009.)

• Sensitive Lists of member States to be reduced by 120% of the tariff lines from existing Sensitive Lists. Reduction in Sensitive Lists would be done keeping in mind that the goods have substantial trade coverage so that this initiative results in trade creation.

Table 8.11.

India’s Trade with SAARC Countries

(Value in US $ Million)

II. Trade with North America Free Trade Agreement (NAFTA)

Trade with North America Free Trade Agreement (NAFTA)

The North America Free Trade Agreement (NAFTA), a free trade area among the United States of America, Canada and Mexico was signed in 1994. It is the largest and the most important trading block of the world. India’s bilateral trade with the NAFTA region is given below:

Table 8.12

Trade with the US

(Value in US $ million)

*Provisional

Source: DGCI&S

(A) India-US Bilateral Trade

In 2009-10 (April-September), USA was one of India’s largest trading partner and foremost export destination though exports to USA registered a decline of 25.3% over the corresponding period last year due to global slowdown. The bilateral trade between the two countries from 2005-06 to 2009-10 (April-September) is given in Table 8.12:

The major items of export to USA are Gems & Jewellery; RMG Cotton incl Accessories, Manufactures of Metals, Machinery and Instruments, Drugs, Pharmaceuticals & Fine Chemicals, Electronic Goods, Cotton Yarn, Fabrics, Made ups etc, Transport Equipments, Inorganic/Organic/Agro Chemicals etc. During 2009-10 (April-September), India’s imports from the USA were US$ 7393.11 million which marked a decline of 27.5% over the corresponding period of the previous year. The major items of import from USA include Fertilizers Manufactured, Machinery (except Electrical & Electronic), Transport Equipments, Electronic Goods, Professional Instruments (Except Electronic), Petroleum, (Crude & Products), Pearls Precious Semiprecious Stones, Chemical (Materials & Products), Organic Chemicals, Plastic Materials, etc.

Considering the size of the USA’s import market, there is an immense scope for expanding our export base. In light of China’s performance in the US market, it is felt that it should be possible for India to raise its market share from 1% to 2% in the US market in the next three years with the right medium term strategy.

India-US Commercial Dialogue

A document “India-US Relations: A Vision for the 21st Century” was released by the Prime Minister of India and the President of United States of America on 21st March, 2000 at New Delhi. To implement the Indo-US Commercial Dialogue envisaged in that document, the Union Minister of Commerce & Industry and Secretary, US Department of Commerce signed the India-United States Commercial Dialogue on 23rd March, 2000 at New Delhi. Under this dialogue, regular interactions including video conferences, have been taking place to sort out concerns of both sides. The validity of this Commercial Dialogue has since been extended up to 23rd March, 2010. In 2008, the Dialogue was expanded to include (i) Entrepreneurship Work Plan & (ii) US-India Standards Programme.

Ms. Indra K. Nooyi, Chairman, USIBC (US-India Business Council), along with a
delegation meeting the Union Minister of Commerce and Industry, Shri Anand Sharma, in New Delhi on November 09, 2009.

India-US Trade Policy Forum

India-US Trade Policy Forum (TPF), announced during the visit of Prime Minister Dr. Manmohan Singh to the US in July, 2005, is a part of the overall economic dialogue between India and the United States and is designed to expand bilateral trade and investment relations between India and the United States. The TPF is co-chaired by the Minister of Commerce & Industry and the United States Trade Representative. Discussions under the TPF are structured around five focus groups: Tariff and Non-Tariff Barriers; Agriculture; Investment; Services; Innovation and Creativity.

The sixth Ministerial meeting of the India-US Trade Policy Forum (TPF) was held in New Delhi on 26th October 2009. During the meeting the two Governments agreed to work together on a framework for promoting real and meaningful cooperation in trade and investment. They also agreed to work together to support greater involvement of small and medium enterprises in each others’ markets and to pursue initiatives in the further development of India’s infrastructure, collaboration on clean energy and environmental services, information and communications technologies (ICT) and other key sectors.

A Private Sector Advisory Group (PSAG) was created as an adjunct to the Trade Policy Forum at the Ministerial level meeting held on April 2007 in New Delhi. The objectives of the PSAG include – (i) Providing policy insights that couldassist TPF discussions and

infuse new ideas to strengthen overall bilateral trade and investment and (ii) Creating mechanism to promote transparency between the TPF and private sectors. The 2009 Trade Policy Forum Ministerial meeting also discussed the continued working of the US-India Private Sector advisory group (PSAG), which had been created under the TPF to provide strategic advice. It is expected that the work of Trade Policy Forum will benefit from the depth, breadth and diversity of expertise of the PSAG in trade and international affairs.

(B) India-Canada Bilateral Trade

The bilateral trade between India and Canada from 2005-06 to 2009-10 (April-September) is given in Table 8.13

Table 8.13

Trade with Canada

(Value in US $ Million)

Provisional*

Source: DGCI&S

India’s exports to Canada during 2009-10 (April-September) stood at US $ 529.09 million which marked a decline of 27.0% over the corresponding period previous year while India’s imports from Canada during the same period declined by 21.1%. The major commodities of export are Drugs, Pharmaceuticals & Fine Chemicals, RMG Cotton Incl. Accessories, Manufacturers of Metals, Gems and Jewellery, Machinery and Instruments, Cotton yarn, Fabrics, Made ups, Marine Products, Plastic & Linoleum products Transport Equipments etc. During the same period, India’s imports from Canada were US$ 935.09 million. The major items of import from Canada are:- Fertilizers (Manufactured), Pulses, Transport Equipments, Newsprint, Machinery (except Electrical & Electronic), Pulp And Waste Paper, Electronic Goods, Metalifers Ores & Metal Scrap, Silver, Plastic Materials, Etc.

The sixth India-Canada Trade Policy Consultations were held on 29th September, 2009 at Ottawa. The Indian side was co-chaired by the Commerce Secretary and the Canadian side was led by their Deputy Minister of International Trade. Both sides noted the significant growth in bilateral trade between Canada and India in the last year (2008-09), and emphasized the need to further strengthen this relationship whose potential remains largely untapped. A number of issues of concern between the two countries were discussed during the meeting.

Minister of Commerce & Industry, Government of India and Minister of International Trade and Minister for the Asia – Pacific Gateway, Government of Canada signed a MoU on 17th November, 2009 for establishing a Joint Study Group (JSG) consisting of experts from both the countries to examine the feasibility of a Comprehensive Economic Partnership Agreement (CEPA) between the two countries. First meeting of Joint Study Group (JSG) was held at New Delhi on 7th and 8th December, 2009.

(C) India-Mexico Bilateral Trade

Table 8.14:

Trade with Mexico

(Value in US $ million)

Provisional*

Source: DGCI&S

India’s exports to Mexico during 2009-10 (April-September), registered a decline of 38.8% over the corresponding period last year while India’s imports from Mexico during the same period declined by 56.3 %. During 2009-10 (April-September), India’s exports to Mexico stood at US$ 223.30 million. The major items of export to Mexico are Drugs, Pharmaceuticals & Fine Chemicals, Transport Equipments, RMG Cotton Incl. Accessories, Machinery and Instruments, Inorganic/Organic/agro chemicals, Manufactures of Metals, manmade Yarn, Fabrics, Made ups, Electronic Goods etc. During the same period, India’s imports from Mexico reached US$ 321.51 million. The major items imported from Mexico are: Petroleum (crude and products), Iron & Steel, Fertilizers (manufactured), Electronic goods, Gold, Transport equipments, Silver, Machinery (except electrical and electronic) etc.

A Memorandum of Understanding (MOU) was signed between India and Mexico on 21st May, 2007 at New Delhi by Minister of Commerce and Industry and Minister of Economy, Mexico for the establishment of a Bilateral High Level Group on Trade, Investment and Economic Cooperation. This MOU envisages establishing a Bilateral High Level Group (HLG) on Trade, Investment and Economic Cooperation that shall meet once a year alternately in each country. The functions of the HLG mainly include promoting bilateral cooperation, maintaining liaison in the economic, commercial, technical and other related fields and information exchange. Under the BHLG six Working Groups have been created – (i) Trade Promotion (ii) Investment Promotion (including infrastructure) (iii) Custom Cooperation (iv) Services Promotion (v) Tourism Promotion and (vi) Industrial dialogue with private sector participation (Chemical-Pharma, Textiles and Bio-fuels sectors.)

Measures taken for promoting exports to NAFTA

Dissemination of trade related information with respect to NAFTA partners is coordinated with the Apex Chambers of Commerce/Export Promotion Councils (EPCs). Emphasis is laid on the identified important sectors for expansion and consolidation of our trade. The analyzed trade data of NAFTA countries is regularly passed onto the Apex Chambers of Commerce and Export Promotion Councils for dissemination among their member exporters, who are also provided assistance for promoting exports, participation in fairs/exhibitions, identification of export products and potential market areas for exports, details of reputed buyers etc. The difficulties faced by the exporters in NAFTA countries are regularly taken up with the concerned authorities in these countries and the issues are resolved through correspondence, video conferences and bilateral meetings. The various legislations/steps taken by these countries and the possible impact of these measures on Indian exports are analyzed regularly and follow up action is taken in consultation with other Ministries/Departments and our Missions abroad.

European Countries account for about 20% of India’s total trade. During 2009-10 (April –September), India’s trade with Europe decreased by 31.7% as compared to the corresponding period last year with export declining by 30.9 % and imports by 32.28%. The top five items of India’s exports to Europe are Ready-Made Garments Cotton Including Accessories, Petroleum (crude & products), Gems & Jewellery, Machinery & Instruments and Cotton Yarn, Fabrics and Made ups. The top five items of India’s imports from Europe are Machinery (except Electrical & Electronics), Pearls/Precious & semi-precious stone, Electronic Goods, Transport Equipment and Iron & Steel. Trade between India and Europe during the last five years is given in Table 8.15.

Table 8.15.

Trade with Europe

(Value in US $ millio0n)

* Provisional
Source: DGCI&S

Union Minister of Commerce and Industry, Shri Anand Sharma addressing the second session of the India-Hungary Joint Commission on Economic Cooperation (JCEC) and Joint
Business Commission (JBC) meetings at Budapest on February 02, 2010.

(A) Trade and Investment Relations with European Union

The European Union (EU) presently consists of 27 countries viz. Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden and U.K.

The EU, as a bloc, is India’s largest trading partner and accounts for about 18% of India’s exports and imports. The relationship between the EU and India has matured substantially in recent years, from that of aid donor and recipient, to one of partnership with opportunities for mutual benefit. Today, the EU and India, as the global actors in a multi-polar world, share a strategic partnership, of which commercial interaction forms a key component. The frequency and intensity of India’s contacts with the EU have grown exponentially since 2000. India’s engagement with EU in trade in goods has increased by more than three times between 2000 and 2008.

Approvals for Foreign Direct Investment (FDI) from EU Member States during the period August, 1991 to October, 2009 were of the order of US$ 23.3 billion. UK, Netherlands, France and Italy are the major sources of FDI that has been approved. The share of EU in total FDI inflows in India is 18.75%. Top sectors attracting FDI inflows from EU (from April 2008 to October 2009) are Services Sector, Automobile Industries, Housing and Real Estate, Chemicals (other than Fertilizers) and Construction Activities. As far as technology transfer is concerned, 3807 technical collaborations have been approved with EU countries during August, 1991 to September, 2009.

India and EU have enjoyed healthy economic relations. These relations have been built on the foundations of (i) India-EU Cooperation Agreement on Partnership and Development which came into effect in August, 1994, (ii) India-EU Strategic Partnership Agreement (iii) Agreement on Scientific and Technological co-operation , 2002 (iv) Agreement on Customs Co-operation, 2003. India also has bilateral framework Agreements with a number of individual EU countries in areas of trade, investment and avoidance of double taxation. India has agreements for investment promotion and protection with 22 countries of Europe, including 16 countries of EU. Similarly, agreements for avoidance of double taxation exist with 26 countries of Europe, including 20 countries of EU.

India-EU bilateral relations are periodically reviewed at the official level by the India-EC Joint Commission, which had its last meeting on 28th October, 2009 in New Delhi. Three Sub-Commissions on Trade, Economic Cooperation and Development Cooperation and nine Joint Working Groups on agriculture and marine products, textiles, information technology & communications, consular matters, environment, steel, food processing industries, pharmaceuticals & bio-technology and TBT/ SPS issues are functioning. The Sub-Commission on Development Cooperation met on 16th July, 2009 at Brussels. The meetings of Sub-Commission on Trade and Sub-Commission on Economic Cooperation were held on 24th September, 2009 and 16th October, 2009 respectively.

India’s trade with the EU is hampered by sanitary and phytosanitary standards, technical barriers, complex system of quota/tariff, use of anti-dumping/anti-subsidy measures against Indian products. These issues which have a bearing on market access for India’s exports to the EU are regularly taken up in the Joint Working Groups and Sub-Commission on Trade. The EU market has stringent quality norms and standards. Indian trade and industry need to meet these norms to increase the market share of Indian products in EU. Issues affecting trade with individual European countries are also taken up at the bilateral fora in the form of Joint Commissions. This continuous dialogue helps in creating an environment for enhancing bilateral trade and investment flows. During the year 2009, Joint Commissions meetings were held with Belgium-Luxembourg (BLEU), Italy, Finland, Austria and Turkey.

At the 10th India-EU Summit held on 6th November, 2009 in New Delhi, India and EU recognised the importance of an effective multilateral system, as a key factor in tackling global challenges. They also considered climate change as one of the most important global challenges, and called for strengthening the ongoing global recovery through inclusive and global approach. Both sides underlined the importance of financial services reforms that have been implemented in India, and reconfirmed their adherence to the G-20 commitment to refrain from adopting protectionist measures in all its forms covering trade in goods and services, investments and financial flows. The Importance of successfully concluding multilateral negotiations at the WTO in 2010 was also underlined. EU and India confirmed the shared objective of concluding an ambitious and balanced Broad Based Trade and Investment Agreement, which will bring significant economic benefits to both sides and further strengthen the bilateral and economic relationships. The EU and India took note of the progress made so far and agreed to intensify the negotiations with a view to concluding the Agreement as swiftly as possible.

India is currently negotiating with the EU for concluding a Broad-based Trade and Investment Agreement (BTIA). The India-EU negotiations on a broad based Trade and Investment Agreement (BTIA) which commenced in June, 2007 continued during the year. Eight rounds of negotiations have been held so far. The sixth and seventh rounds were held in New Delhi and Brussels in March, 2009 and July,2009 respectively and the 8th round was held during January 2010, during which both sides engaged in substantial discussions on Trade in Goods, Rules of Origin, SPS and TBT, Trade in Services, Investment, Dispute Settlement, Intellectual

EU Trade Commissioner, Ms. Baroness Catherine Ashton meeting the 
Union Minister of Commerce and Industry, Shri Anand Sharma, in New Delhi on November 05, 2009.

Property Rights, Trade Facilitation and Competition. These discussions have enabled a clearer picture emerging on areas of convergence and on sensitivities of both sides.

In order to strengthen the trade and investment relations with European Free Trade Association (EFTA) countries comprising Switzerland, Liechtenstein, Norway and Iceland (non-EU member countries in Europe), an India-EFTA Joint Study Group (JSG) was established in December, 2006 to take a comprehensive view of bilateral economic linkages, covering among others, trade in goods and services, investment flows, and other areas of economic cooperation and to examine the feasibility of a bilateral broad based trade and investment agreement. The JSG recommended commencement of negotiations for a broad based Bilateral Trade and Investment Agreement. Based on this, the negotiations commenced in October, 2008. Continuing with the efforts of the previous years to strengthen the trade and investment relations with EFTA countries, four rounds of negotiations have been held so far. The fourth round of negotiations was held from September 22-24, 2009. Prior to this, an Experts Meeting was held in Geneva during August 19-20, 2009.

India-Serbia Joint Economic Committee (JEC) has been established under an Agreement on Trade and Economic Cooperation between the Government of the Republic of India and the Council of Ministers of Serbia and Montenegro, signed on 7 February, 2006. The first meeting of the JEC was held in New Delhi on 2 April, 2008. The 9th meeting of India-Croatia Joint Committee on Trade and Economic Cooperation was held at Zagreb, Croatia during 5-6 March, 2009. The seventh session of the Joint Committee of Trade and Economic Cooperation between India and Slovenia took place in Ljubljana on 29th September, 2009.

The first meeting of India-Turkey Joint Study Group (JSG) to explore the possibility of a Free Trade Agreement (FTA) between India and Turkey was held in New Delhi on January 6-7, 2010. The important points discussed in the meeting included bilateral economic linkages; existing regional trading arrangements of both countries with their respective trade partners; broad structure of the report of JSG; and detailed structure of each chapter of the report. It was agreed that JSG report would be finalized before December, 2010. Accordingly a work programme for the JSG was also worked out.

The sixth meeting of India-UK Joint Economic and Trade Committee (JETCO) took place in London on 4th February, 2010.

(B) Trade with Commonwealth of Independent States (CIS)

The Commonwealth of Independent States (CIS) comprises the Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan (the last 5 countries jointly referred to as the Central Asian Republics). Bilateral trade with these countries is as shown in CHART 8.3:

CHART 8.3:

Table 8.16

Trade with Commonwealth of Independent States 

(Value in US $ million)

Provisional
Source: DGCI &S

The CIS region had a share of 1.04% in India’s exports and 2.18% in its imports during 2008-09. The principal commodities of exports to the region include drugs and pharmaceuticals & fine chemicals, machinery & instruments, tea, transport equipments, RMG cotton including accessories, manufactures of metals etc. Important items of imports to India from this region are iron and steel, fertilizers, non-ferrous metals, petroleum, crude & products, silver, transport equipments, synthetic & reclaimed rubber, vegetable oils, newsprint, project goods, crude minerals, inorganic chemicals, metaliferrous ores & metal scrap etc.

Russian Federation

The Russian Federation, constituting a major portion of the former USSR, continues to be India’s most important trading partner in the region accounting for about 63% of India’s total trade with CIS region in 2008-09. During 2009-10, following meetings were held to discuss various issues concerning bilateral cooperation:

• 15th Session of the India-Russia Working Group on Trade & Economic Cooperation of the Indo-Russian Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held on 28th September 2009 in Moscow.

• 3rd Session of India-Russia Forum on Trade & Investment was held on 29th September, 2009 at Moscow, under the Co-Chairpersonship of Shri Anand Sharma, Minister of Commerce & Industry from the Indian side and Ms. Elvira S. Nabiullina, Minister of Economic Development from the Russian side.

• Within the framework of ‘Year of India in Russia’ in 2009, the Indian Trade Promotion Organization (ITPO) organized “India Show” at St. Petersburg in Moscow from 30th September to 3rd October, 2009.

• 15th Session of the Indo-Russian Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held on 21st October, 2009 in Moscow under the Co-Chairmanship of Shri S.M. Krishna, Minister of External Affairs from the Indian side and Mr. A.D. Zhukov, Deputy Prime Minister of the Government of the Russian Federation from the Russian side.

• 3rd meeting of India-Russia Joint Task Force (JTF) was held on 7th December, 2009 in New Delhi.

Union Minister of Commerce and Industry, Shri Anand Sharma with the Deputy PM of Russia,Mr. Alexander Zhukov and the Russian Minister for Economic development, Ms. E. Nabiullina,at Moscow on September 30, 2009

Central Asian Republics

Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, constitute the five Central Asian Republics in the CIS region. Department of Commerce is the nodal Department for the Inter-Governmental Commission (IGC) with Kyrgyzstan, Tajikistan and Uzbekistan. During 2009-10, following meetings were held to discuss various issues concerning bilateral cooperation:

• 3rd Session of the India-Turkmenistan Inter-Governmental Commission on Trade, Economic, Scientific and Technological Cooperation was held on 8th February 2010 in Ashgabat under the Co-Chairpersonship of Mrs. Preneet Kaur, Minister of State (External Affairs) from the Indian side and Mr. Rashid Meredov, Deputy Chairperson of Cabinet of Ministers of Turkmenistan, Minister of Foreign Affairs of Turkmenistan from the Turkmenistan side.

• 5th meeting of India-Kyrgyzstan Inter-Governmental Commission on Trade, Economic, Scientific and Technological Cooperation was held on 4th March 2010 in New Delhi under the Co-Chairmanship of Shri Jyotiraditya Madhavrao Scindia, Minister of State (Commerce & Industry) from the Indian side and Mr. Kurmanaliev Kapar Zarlykovich, Minister of Natura

Other CIS Countries 

Other six CIS countries are Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Ukraine is India’s second largest trading partner of the CIS region accounting for about 23% of India’s total trade with CIS region in 2008-09. Department of Commerce is the nodal Department for the Inter-Governmental Commission (IGC) with Azerbaijan.

The first meeting of India-Azerbaijan Inter-Governmental Commission on Trade, Economic, Scientific and Technological Cooperation was held on 26th November, 2009 in New Delhi under the Co-Chairmanship of Shri Jyotiraditya Madhavrao Scindia, Minister of State (Commerce & Industry) from the Indian side and Mr. Husseyngulu Baghirov, Minister of Ecology & Natural Resources from the Azerbaijan side.

Trade Promotion Activities

• “Focus: CIS Programme” launched in 2003-04 has now been extended to cover all CIS countries. The programme seeks to increase interaction between the business entities of the two regions by identifying areas of bilateral trade and investment. The focus is on major product groups/ services for raising India’s exports to this region. The exports to the region are to be enhanced through combined efforts of various institutions of the Government of India and various Trade Promotion Organizations.

• There is a regular exchange of delegations with CIS countries through participation in trade fairs of mutual interest and exchange of trade related information.

• Bilateral trade and economic cooperation between India and these countries is regularly reviewed through the meetings of Joint Commissions / Working Groups and Joint Business Councils.

• There is a regular interaction at the Governmental level for enhancing bilateral trade and economic cooperation.

• Taking note of positive trends in bilateral trade between India and Russia, it was agreed to by both the sides to achieve a bilateral trade target of US$ 20 billion by 2015 during the 15th session of the India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation held in Moscow on 21st October 2009.

• Shri P.K. Chaudhary, Additional Secretary, Department of Commerce participated in the meeting of Shanghai Cooperation Organization (SCO) held on 10-11th September, 2009 at Bishkek.

IV. Trade with Countries in the West Asia & North Africo (WANA) Region

West Asia and North Africa (WANA) region comprises 18 countries. These are (i) Six Gulf Cooperation Council (GCC) countries (i.e., Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates), (ii) Six West Asian countries (i.e., Iraq, Israel, Jordan, Lebanon, Yemen and Syria) and (iii) Six North African countries (i.e., Algeria, Egypt, Libya, Morocco, Sudan and Tunisia).

The total trade with WANA countries has gone up from US$ 89,498.65 million in 2007-08 to US$ 116991.78 million in 2008-09. While the exports have gone up from US$ 28,427.58 million to US$ 39,160.26 million, the imports have increased from US$ 61,071.07 million to US$ 77,831.52 million during the same period, showing growth rates of 37.3% and 25.3% respectively. During April-September, 2009-10 India’s exports to the WANA region stood at US$ 17,713.9 million showing a decline of 28.2%. Imports have also decreased to US$ 28,074.12 million from US$ 51,976.73 million over the same period showing a negative growth of 43.9%. This trend is mainly due to global melt down.

United Arab Emirates (UAE) ranked first among the destinations for India’s exports in the WANA region and among the Gulf Cooperation Countries. The other major destinations in the WANA region include Saudi Arabia, Israel and Egypt etc. The details of bilateral trade between India and countries of WANA Region during 2008-09 and 2009-10 (April-September) are given in Table 8.17.

Table 8.17

India’s Trade with WANA Region

The principal export products to WANA Region comprise Gems & Jewellery, Petroleum (crude & products), Rice-Basmati, Machinery and Instruments, Manufactures of Metals, Electronic Goods, Manmade Yarn, Fabrics, Made ups, Transport Equipments, Readymade Garments (cotton) including Accessories etc. The principal imports from WANA region consist of Petroleum (crude and products), Gold, Pearls and Precious/Semi-Precious stones, Fertilizers Manufactured, Inorganic Chemicals, Organic Chemicals, Metalliferrous Ores and Metal scrap, Artificial Resins Plastic Materials, Electronic Goods, Fertilizers Crude, etc.

Institutional Arrangements

Issues pertaining to trade and economic cooperation between India and WANA countries are regularly reviewed in Bi-laterals, Joint Commission Meetings or Joint Trade & Economic Committee Meetings. Apex trade bodies like CII, FICCI, FIEO, ASSOCHAM etc. sponsor business delegations to various countries. Joint Business Council (JBC) arrangements also exist between FICCI on the Indian side and counterpart organizations in WANA countries on the other side. CII has similar arrangements in the form of Joint Business Group (JBG) with counterparts from the Region

Recent developments/initiatives in the field of trade and economic co-operation with countries in the WA region include  

(a) Free Trade Agreement (FTA) with Israel

The Trade and Economic Relations Committee has considered the issue of initiating negotiations with Israel for entering into Free Trade Agreement with Israel.

(b) Indo-Saudi Arabia Joint Commission Meeting

8th Session of India-Saudi Arabia Joint Commission Meeting was held at Riyadh during 30th October to 1st November, 2009. The Indian side was led by Hon’ble Finance Minister.

(c) Visit of Hon’ble Commerce & Industry Minister to Egypt

Shri Anand Sharma, Hon’ble Commerce & Industry Minster visited Cairo during October 28-30, 2009, and held detailed meetings with Prime Minister and the Trade Minister of Egypt to promote bilateral trade relations with that country.

(d) Free Trade Agreement (FTA) with GCC Countries.

So far, two rounds of negotiations were held for FTA with GCC countries. The 2nd round of negotiations was held in Riyadh during September 9-10, 2008.

V. Trade with African Countries

Since independence, India has had cordial and friendly trade relations with Africa in general. Trade relations have expanded considerably since 1947, particularly after the transition into the 2nd millennium. India’s trade with Africa since 2005-06 is given in Table 8.18

Table 8.18

India – Africa Trade

(Value in US $ million)

* Provisional
** Including Petroleum Product Exports from India
Source: DGCI&S

CHART 8.4

Total trade with countries in Sub-Saharan African Region during 2008-09 amounted to US$ 30295.16 million with exports amounting to US$ 11390.81 million and imports at US$ 18904.35 million. The total trade during April-September, 2009 stood at US$ 13568.95 million with exports at US$ 4912.34 million and imports amounting to US$ 8656.61 million. The corresponding figures during April-September 2008 were US$ 18706.19 million (total trade), US$ 6745.16 million (exports) and US$ 11961.03 million (imports) respectively.

Bilateral trade with West African countries was US$ 14,536.45 million during 2008-09 as compared to US$ 13,188.25 million during 2007-08, indicating a growth of 10.22%. Transport Equipments, Drugs, Pharmaceuticals & Fine Chemicals, Rice (other than Basmati), Manufactures of Metals and Machinery and instruments were the major items of export. Metalifer ores & Metal Scrap, Cashew Nuts, Wood and Wood Products, Inorganic Chemicals and Fertilizers and Crude were the major items of import. Nigeria was the top most trading partner within this region with a trade of US $ 10,429.61 million during 2008-09 as compared to US $ 8,697.43 million during 2007-08, reflecting a growth of 19.91%.

Bilateral trade with countries in Southern Africa was US$ 10,357.56 million during 2008-09 as compared to US$ 8,437.07 million during 2007-08, indicating a growth of 22.76%. Transport Equipments, Drugs, Pharmaceuticals and Fine Chemicals, Machinery and Instruments, Primary and Semi Finished Iron and Steel and Rice (other than Basmati) were the major items of export. Gold, Metalifers Ores & Metal Scrap, Inorganic Chemicals, Coal and Non-ferrous Metals were the major items of import. South Africa was the top most trading partner within this region with a trade of US$ 7,493.86 million during 2008-09 as compared to US$ 6,266.10 million during 2007-08, reflecting a growth of 19.59%.

Union Minister of Commerce and Industry, Shri Anand Sharma with HE Chief Babtunde Fashola, Governor Lagos State representing Nigeria, Mr. Achike Udenwa, Commerce and Industry Minister of Nigeria during the India-West Africa Business Seminar, in Nigeria on January 15, 2010.

Bilateral trade with countries of East Africa was US$ 4,863.22 million during 2008-09 as compared to US$ 4,535.29 million during 2007-08, indicating a growth of 7.23%. Primary and Semi Finished Iron & Steel, Machinery & Instruments, Drugs, Pharmaceuticals & Fine Chemicals, Sugar and Manufactures of Metals were the major items of export. Cashew nuts,

CHART 8.5

CHART 8.6

Pulses, Metalifers Ores and Metal Scrap, Inorganic Chemicals and Spices were the major items of import. Kenya was the top most trading partner within this region with a trade of US$ 1,444.27 million during 2008-09 as compared to US$ 1,671.27 million during 2007-08, reflecting a decline of (-)13.58%.

Bilateral trade with countries of Central Africa was US$ 537.93 million during 2008-09 as compared to US$ 306.94 million during 2007-08, indicating a growth of 75.25%. Drugs, Pharmaceuticals & Fine Chemicals, Machinery & Instruments, Transport Equipments, Manufactures of Metals and Plastic and Linoleum Products were the major items of export. Metalifers Ores and Metal Scrap, Pulses, Cotton Raw, Tea and Non Ferrous Metals were the major items of import. Uganda was the top most trading partner within this region with a trade of US$ 237.1 million during 2008-09 as compared to US$ 168.92 million during 2007-08, reflecting a growth of 40.36%.

PTA with SACU

The Southern African Customs Union (SACU), the oldest Custom Union of the world, comprises of South Africa, Lesotho, Swaziland, Botswana and Namibia. India and SACU have expressed their intent to enter into a Preferential Trade Agreement (PTA) with the aim of promoting expansion of trade between the two parties and providing mechanism to negotiate and conclude a comprehensive Free Trade Agreement within a reasonable time. India and SACU have commenced negotiations for PTA in October, 2007 and four meetings of the negotiating teams have taken place so far. Fourth round of negotiations on India-SACU PTA was held in Pretoria on 7-8, October, 2009. This was further discussed during the Geneva Ministerial on 2nd December, 2009 where all the Trade Ministers of India, SACU and MERCOSUR Countries agreed to initiate a India – MERCOSUR – SACU Trilateral Trading Arrangements.

CECPA with Mauritius

A Comprehensive Economic Cooperation and Partnership Agreement (CECPA) between India and Mauritius aimed at boosting bilateral trade, investment and general economic cooperation is being negotiated.

Focus Africa Programme

The “Focus Africa” Programme was initially launched with focus on seven countries of Sub-Saharan African (SSA) Region, viz., South Africa, Nigeria, Mauritius, Tanzania, Kenya, Ghana and Ethiopia. With a view to further widen and deepen India’s trade with Africa, thescope of this Programme was further extended to include Angola, Botswana,Ivory-Coast, Madagascar, Mozambique, Senegal, Seychelles, Uganda, Zambia,Namibia and Zimbabwe, along-with the six countries of North Africa, viz., Egypt,Libya, Tunisia, Sudan, Morocco and Algeria. Under this Programme, the Government extends assistance to exporters and Export Promotion Councils etc. to visit countries in Africa and organize trade fairs and also sponsors African trade delegations to visit India. A number of export promotion activities were conducted by various Export Promotion Councils and ApexChambers with grant under MDA and MAI Scheme. The Focus Africa programme is continuing during the year 2009-10.

Bilateral Cooperation

Issues pertaining to trade and economic cooperation between India and African countries are reviewed through Joint Commissions and Joint Trade Committees. Business to Business interactions have also been encouraged between Apex Indian Chambers and their African counterparts with a view to further enhance trade & investment relations between India and African Countries. High level bilateral meetings and visits by trade and industry delegations are also organized with a view to strengthening trade and economic partnerships between India and African countries.

Two such high level delegations led by the Commerce & Industry Minister visited South Africa during August 20–24, 2009 for bilateral meetings and Nigeria during January 13-16, 2010 in connection with FICCI’s programme titled “Namaskar Africa 2010”. During the visit to Nigeria, CIM participated in the First India-West Africa Business Seminar, which was attended by more than 300 business persons. CIM along with his Nigerian counterpart inaugurated the ‘Made in India’ exhibition with participation from 50 Indian companies. CIM also held a bilateral meeting with his Nigerian counterpart and delivered a keynote address on “Significance of Africa-India Partnership in Emerging World Order” at the Nigerian Institute of International Affairs.

VI. Trade with Latin American and Caribbean Countries 

Trade with Latin American and Caribbean Countries

The Latin American and Caribbean (LAC) region comprising 43 countries, accounts for about 3.67% of world trade. Though India is not a significant trading partner, there is much scope for enhancing two-way trade between India and the LAC region. In recent years, our exports have been showing a continuously rising trend as is shown in Table 8.19.

Table 8.19.

Trade with LAC Region

(Value in US $ million)

*Provisional
Source: DGCIS

India’s trade with the region increased from US$ 5656.22 million in 2005-06 to US$ 15752.47 million in 2008-09 with a growth of 291% during the last five years. India’s exports to the region have gone up from US$ 2160.71 million in 2004-05 to US$ 6008.33 million in 2008-09 showing a growth of 178%. During 2009-10 (April-September), India’s exports to LAC region registered a growth of 3.1% while India’s imports registered a growth of 2.8% as compared to corresponding period last year.

The important items of Indian exports to LAC region are Petroleum (Crude & Products); Drugs, Pharmaceuticals & Fine Chemicals; Transport Equipments; Machinery and Instruments; Inorganic/Organic/Agro Chemicals; Manmade Yarn, Fabrics, Made-Up; Cotton Yarn, Fabrics, Made-Up Etc; Manufactures of Metals, Plastic & Linoleum Products, Primary & Semi-Finished Iron & Steel; Rubber Manufactured Products Except Footwear. Besides, India also exported Handicrafts Items, Sports Goods, Electronic Items, Gems & Jewellery and Spices etc. to LAC. India’s major imports from LAC region are Metalliferrous Ores & Metal Scrap; Crude Petroleum & Products, Vegetable Oils Fixed (Edible); Transport Equipments; Wheat, Electronics Goods, Machinery Except Electrical & Electronics; Iron & Steel, Primary Steel, Pig Iron Based Items; Non Ferrous Metals etc.

Three product groups viz. Textiles, Engineering Products and Chemical Products constitute over 60% of India’s exports to this region. In the Textiles Sector, Readymade Garments, Made-Ups, Fabrics, Yarn, Carpets, Handicrafts etc. are fast moving export items. In the Engineering Sector, Automobiles, Auto Components, Electrical Appliances, Machinery, Computer Software have good scope for exports.

Focus: LAC Programme

An integrated programme “Focus: LAC” was launched in November, 1997 which has been extended upto March 2014 in order to consolidate the gains of the previous years and significantly enhance India’s trade with the LAC region. The main objective of the programme is to increase interaction between the two regions by identifying potential areas of bilateral trade and investments. Various incentives and export promotion measures have been designed and incorporated in this programme, viz. double weight for the purpose of recognition as Export /Trade Houses and enhanced support under the Marketing Development Assistance (MDA) scheme for participation in fairs/exhibitions, buyer - seller meets, etc. by way of reimbursement of travel expenses & stall charges etc. to the exporters. The programme aims at focusing on the Latin American region, with added emphasis on the 10 major trading partners of the region, viz. Venezuela,  Brazil, Chile,  Argentina,  Peru, Trinidad, Colombia, Panama, Ecuador and Costa Rica . These countries constituted approximately 93% of the total trade of India with the LAC region during 2008-09.

“The Focus: LAC” programme aims to focus on the following major product groups for enhancing India’s exports to the Latin American region:

• Textiles including ready-made garments, carpets & handicrafts;

• Engineering products including computer software;

• Chemical products including drugs and pharmaceuticals.

Institutional Mechanism

The following institutional arrangements already exist in relation to the countries of the Latin American region:

• Indo-Argentine Joint Commission

• Indo-Argentine Joint Trade Committee

• Indo-Mexican Joint Commission

• Indo-Brazilian Commercial Council

• Indo-Cuban Joint Commission

• Indo-Cuban Trade Revival Committee

• Indo-Suriname Joint Commission

• Indo-Guyana Joint Commission

• Indo-Venezuela Joint Commission

• India Brazil Trade Monitoring Mechanism

In order to have increased frequency of interaction with important trading partners in the LAC region, efforts are made to hold the meetings of the Joint Commissions on a regular basis.

Commercial Staff in the Indian Missions

At present, thirteen Indian Missions are functioning in the Latin America region. Since there are no commercial posts in any of these Missions, ten posts of Marketing Assistant in nine Missions in the LAC region have been provided to exclusively manage the trade related matters and to respond queries of exporters and importers interested to undertake business with Latin America and vice versa. Efforts are being made to further strengthen these Missions for commerce and trade.

Sponsoring of Trade Delegations/ Organising Seminars/ Conferences/ Trade Fairs/ Exhibitions

The CII, FICCI, and Export Promotion Councils (EPCs) are sponsoring trade delegations for promotion of trade in the region, organizing seminars/ conferences and sector/ product specific seminars in different cities for the benefit of the local exporters and to sensitise about the trade opportunities available in the LAC region. Vigorous efforts are also made to ensure participation by EPCs, etc. in trade fairs to be held in Latin American countries since trade fairs act as an important tool for trade promotion.

Implementation of India-Chile PTA

A preferential Trade Agreement (PTA) between India and Chile was signed on March 8, 2006. The Parliament of Chile approved it in April 2007 and President of Chile signed the decree on August 16, 2007 implementing the PTA in Chile.The PTA came into force with effect from 17th

Union Minister of Commerce and Industry, Shri Anand Sharma along with the Minister of Trade and Industry, South Africa, Dr. Rob Davies and the Minister of External Relations, Brazil, Mr. Celso Amorim, during the IBSA meet, in New Delhi on September 04, 2009.

August, 2007. The Agreement entered into force in India on 11th September, 2007 after completion of laid down formalities. Under this PTA, India has offered tariff preferences on 178 tariff lines at the 8 digit level to Chile with margin of preference (MoP) ranging from 10%- 50% and Chile has offered tariff preferences on 296 tariff lines to India at the 8 digit level with MoP ranging from 10%- 100%.

India-MERCOSUR PTA

A Preferential Trade Agreement (PTA) between India and MERCOSUR (a trading bloc of Argentina, Brazil, Paraguay and Uruguay in South America region) was signed on 25th January, 2004 and annexes in this Agreement were incorporated on March 19, 2005. By this PTA, India and MERCOSUR have agreed to give tariff concessions, ranging from 10% to 100% to each other on 450 and 452 tariff lines respectively. Government of all member countries of MERCOSUR (viz. Argentina, Brazil, Paraguay and Uruguay) have ratified India- MERCOSUR PTA. A formal Custom Notification in respect of India- MERCOSUR PTA has been issued implementing the Agreement from 1st June, 2009.

Meanwhile, through IBSA Declaration made by the Heads of India, Brazil and South Africa on September 13th 2006, it was agreed that India-MERCOSUR PTA would be expanded by increasing the number of products covered and increasing the tariff concessions agreed by each side. A preliminary discussion to work out the modalities of the future negotiations was held at New Delhi during November 15-16, 2006 where India presented a wish list of 626 additional products. MERCOSUR too in December 2006 had presented its wish list.

ECGC Cover

The ECGC has undertaken a comprehensive review of the grading of the countries based on the methodology of risk scoring. As per ECGC’s country risk grading and cover policy as on 20th March, 2009, fifteen countries of Latin American & Caribbean region have been placed in low risk categories of ‘A1’ and ‘A2’. No country has been placed in very high-risk category of ‘D’.

Lines of Credit

EXIM Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from EXIM Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. Details of Lines of Credit are available at website of EXIM Bank: www.eximbankindia.com.

The EXIM Bank has currently extended fifteen lines of credit (as on 10.11.2009) to banks/Governments in the LAC region as given in Table 8.20:

Warehouse facility at Sao Paula (Brazil)

With the objective to set up infrastructure in the Latin American Region tosupport our exporters to enhance our trade with Brazil and other countries of LAC region, the Government extended assistance under MAI Scheme to UPICO to hire space at Sao Paulo (Brazil) in Sept, 2007 to set up a warehouse cum showroom centre and to market and display products/goods of Indian exporters in three Departmental stores.

Waiving off outstanding dues on Cuba

Indian companies namely PEC Ltd, CIMMCO Birla Limited, EXIM Bank etc. had notreceived their dues in respect of exports to Cuba for over the last fifteen years.The issue of non-payment of outstanding dues of Indian companies byCuba was taken up for discussions at various fora like Indo-CubanTrade Revival Committee, India-Cuba Joint Commission but the matter could not be resolved. This issue of non-payment was being perceived as deterrent in growth of bilateral trade between two countries. Thus, in May, 2008, Government of India decided

Table 8.20

Lines of Credit Extended by the Exim Bank (as on 10.11.2009)

waive off outstanding dues on Cuba and reimburse the respective Indian companies to revive and strengthen the bilateral trade and commercial relations between India and Cuba. Recommended payment has been made to the concerned Indian companies by ECGC in March, 2009.

Setting up of Business Centres in Indian Missions in LAC

To help business fraternity and promoting bilateral trade and economic relations with LAC, Business Centres was set up in Indian Embassy, Buenos Aires in June, 2008 and a Centre in High Commission of India, Port of Spain was set up in June 2009 under MAI scheme of this Department. These business centres would provide facilities like conference hall for meeting, communication equipments, presentation accessories etc to various Indian business & trade delegations visiting to LAC region.