TRADE POLICY REVIEWS INDIASavin Gabriela Andreea Grupa 930, ASE, REI

During the period under review (2007 to end-April 2011), India continued to reap the benefits fro the process of trade liberali!ation and structural refor initiated in the earl" 1##0s$ Annual real %D& growth averaged over '$() between 200*+07 and 2010+11, despite the effects of the global econo ic crisis, which onl" caused a ild slowdown$ ,he %overn ent conducted a ver" proactive polic" to face the crisis, introducing a large sti ulus pac-age consisting of increased spending, lower e.cise and custo s duties on so e products, and subsidies$ /owever, as the econo " started to get bac- on trac- and as inflation started to accelerate, the %overn ent reversed ost of these sti ulus easures$ As has been the case for so e "ears now, growth has uch been led b" services and anufacturing, the two largest sectors, with agriculture growing

ore slowl"$ India0s growth prospects re ain strong, as potential %D& growth has been esti ated at between ') and '$1)$ /owever, to achieve sustained growth at the potential rate, bottlenec-s will need to be eli inated and invest ent will be needed in infrastructure and education$ ,he business environ ent will also need to be si plified b" strea lining the regulator"$ India posts a structural trade deficit, partl" e.plained b" its large population and develop ent needs$ During the period under review, strong do estic de and and rising oil and food prices resulted in a widening of the trade deficit, leading to a current account deficit throughout the reviewed period$ ,he trade deficit reached 23411#$1 billion in 200'+0# (so e 10) of %D&) (,able I$(), before declining so ewhat in 200#+10$ &rovisional data for 2010+11 shows an increase in the deficit to 234 150$1 billion, lin-ed to higher growth rates and hence increased absorption, which translated into a substantial increase in i ports, which e.pansion in e.ports$ 6erchandise trade as a percentage of %D& continued to increase during the review period, to (0$5) of %D& in 200#+10 up fro 50$1) in 2001+0*$ ,his was despite the negative ore than offset the

effects on trade of the global econo ic crisis$ I ports continued to grow faster than e.ports, leading to a widening of the trade deficit$ In 200#+10, i ports totalled 2342''$( billion, up fro 2341'1$7 billion in 200*+07, e.panding at an annual average rate of 1'$#) during the period$ /owever, there was a decline in i ports in 200#+10 over 200'+0# (-1$1)) as do estic de and slowed down under the effects of the global crisis$ 7ver the review period, crude oil represented around one 8uarter of India0s total i ports, followed b" achiner" and transport e8uip ent, che icals, and gold (,able AI$2)$ In anufactures$ 23412*$( billion in 200*+07 to 23417'$' billion in 200#+10, 200', the share of pri ar" products in India0s total i ports e.ceeded the share of 9.ports increased fro

growing at an average annual rate of 11$() during the period$ /owever, in 200#+10, the" decreased b" 5$1) over 200'+0#, reflecting the effects of the global econo ic crisis$ 7ver the review period, the share of transport e8uip ent are the co anufactures in India0s e.ports re ained stable while the share of 55$#) to 55)$ :uel products and achiner" and ain e.ported ain co ponents of Indian e.ports, followed b" che icals (,able pri ar" products decreased slightl" fro

AI$1 and ;hart I$1)$ :ood products, clothing, and te.tiles re ain a ong the e.ports$

odities$ Dia onds and, in particular, <eweller" products have e erged as significant India is intent in pro oting e.port growth$ In :ebruar" 2011, the 6inistr" of ;o erce

and Industr" released a =3trateg" for doubling e.ports in the ne.t three "ears=, ai ed at increasing and erchandise e.ports fro an esti ated 234221 billion in 2010+11 to 234(10 billion in 2015+1($ ,o achieve this, the %overn ent intends to intensif" initiatives to diversif" products ar-ets, particularl" diversif"ing towards e erging econo ies$ ,he base of the strateg" is achiner" and transport e8uip ent, and to pro ote aggressivel" e.port growth of high value products that have a strong do estic anufacturing base, such as engineering, including che icals$ India does not publish official une plo" ent figures$ ,he latest available infor ation points to an une plo" ent rate of 7$5) in 200*+07$ 3ince then, the %overn ent has conducted surve"s toassess the conditions of the labour ar-et> no co plete e plo" ent figures are available$ ,he authorities have indicated that this is due to the relativel" large seg ent of nonorgani!ed (not for all" e plo"ed) wor-ers, and that onl" figures for organi!ed e plo" ent are

available$ ,otal organi!ed e plo" ent in 200' was 271$1 e plo"ed b" the public sector and #'$'

illion, of which 17*$7

illion were

illion b" the private sector$ # ,he ?inth @uarterl"

@uic- 9 plo" ent 3urve", conducted b" the Aabour Bureau, shows that, during 2010, organi!ed e plo" ent increased b" '70,000 persons> so e *0) of this increase was in infor ation technolog" and business process outsourcing$ Cith respect to the sectoral distribution of e plo" ent, it is esti ated that so e 22) of organi!ed labour is e plo"ed in the anufacturing sector$ Agriculture accounts for <ust over 1) of total organi!ed e plo" ent but this figure is isleading, as ost agriculture labourers are not unioni!ed or otherwise organi!ed$ It is esti ated that over 10) of India0s wor-force is e plo"ed in the agricultural sector$ 3ervices accounts for over *0) of organi!ed e plo" ent$