Outcome Budget 201011


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GOVERNMENT OF INDIA OUTCOME BUDGET 2010-2011 DEPARTMENT OF COMMERCE MINISTRY OF COMMERCE & INDUSTRY CONTENTS Sl. No. Executive Summary CHAPTER-I CHAPTER-II CHAPTER-III CHAPTER-IV Introduction Financial Outlays and Quantifiable Deliverables – Physical Outputs & Final Outcomes Reform Measures and Policy Initiatives Review of Past Performance i. Assistance to States for Development of Export Infrastructure and Allied Activities(ASIDE) ii. Special Economic Zones (SEZs) iii. Tea Board iv. Coffee
    GOVERNMENT OF INDIA OUTCOME BUDGET 2010-2011 DEPARTMENT OF COMMERCE MINISTRY OF COMMERCE & INDUSTRY  CONTENTS Sl. No. Contents Page No. Executive Summary 1-5 CHAPTER-I Introduction 6-19 CHAPTER-IIFinancial Outlays and Quantifiable Deliverables –Physical Outputs & Final Outcomes 20-33 CHAPTER-III Reform Measures and Policy Initiatives 34-46 CHAPTER-IV Review of Past Performance 47-96i. Assistance to States for Development of ExportInfrastructure and Allied Activities(ASIDE)47-49ii. Special Economic Zones (SEZs) 49-54iii. Tea Board 54-55iv. Coffee Board 55-56v. Rubber Board 56-58vi. Spices Board 59-62vii. Tobacco Board 63-64viii. Marine Products Export Development Authority(MPEDA)65-67ix. Agricultural and Processed Food Products ExportDevelopment Authority (APEDA)67-68x. Marketing Development Assistance (MDA) 69xi. Market Access Initiative (MAI) 69-70xii. National Export Insurance Account (NEIA) 70-71xiii. Export Credit Guarantee Corporation of India(ECGC)71xiv. Price Stabilization Fund Scheme(PSF) 72-73xv. Crop Insurance Scheme (Proposed) and OtherInitiatives for the Plantation Sector73-74xvi. Footwear Design & Development Institute (FDDI)74-75xvii. Modernization & Upgradation of DGFT 75Annexure-A, B, C, D & E 76-96 CHAPTER-V Financial Review 97-106 CHAPTER-VIReview of Performance of Statutory andAutonomous Bodies 107-128  1 |Page  EXECUTIVE SUMMARY The basic role of the Department is to facilitate the creation of an enabling environment andinfrastructure for accelerated growth of exports and trade. In consonance with the Government’svision of making India a major player in world trade, the Foreign Trade Policy (FTP) is announcedevery five years. It provides the basic policy framework of translating this vision into specificstrategies, goals and targets. The two basic objectives of the Foreign Trade Policy (FTP), 2004-09were doubling of India’s share in global trade in the next five years and making trade an effectiveinstrument of economic growth by giving a thrust to employment generation. The Policy, withclearly enunciated objectives and strategies and necessary initiatives taken by the Governmentduring the last five years, has been very effective in putting India’s exports on a higher growthtrajectory. Indian exports grew from US$ 83.5 billion in 2004-05 to US$ 185.3 billion in 2008-09,registering an average annual growth rate of 24%. With a view to augment employmentgeneration in key areas, labour intensive sectors coupled with significant export potential wereidentified and specific initiatives undertaken.The year 2008-09 was marked by an unprecedented global economic slow-down. All majoreconomic activities like industrial production, trade, capital flows, employment, investment andconsumption took a hit. Though India was able to withstand the adverse effects of the globalslowdown relatively well compared to the developed economies of the world, its exports wereadversely affected, especially during the second half of 2008-09. India’s GDP growth came downto 6.7% in 2008-09 as compared to the average annual rate of 8.8% registered during the period2003-04 to 2007-08. The contraction in overseas demand also adversely impacted growth of India’s exports with the growth rate coming down to 13.6% in 2008-09 from a high of 29.1%achieved during the previous year.India’s exports continued to remain under pressure during the first seven months of the year 2009-10. During the period April-December 2009-10, exports stood at US $ 117.6 billion as against US$ 147.6 billion during the corresponding period of the previous year, showing a decline of 20.3%.However, with a marked improvement in the global economic environment from the secondquarter of 2009, India’s exports have started to recover. After declining consistently for the firstseven months of the year 2009-10, India’s exports have registered positive growth for the monthsof November and December of 2009. It is expected that India’s exports would continue to show apositive growth in the coming months also.It is against this backdrop of a global economic crisis and faltering exports that the new ForeignTrade Policy (FTP), 2009-14 was unveiled by the Government on 27th August, 2009. The newPolicy clearly spells out both the short term and the long term objectives of the Government. Theshort term objective of FTP (2009-14) is to arrest and reverse the declining trend of exports and toprovide additional support especially to those sectors which have been hit badly by recession in thedeveloped world. The Policy also aims to achieve an annual export growth of 15% with an exporttarget of US$ 200 billion by March, 2011. The medium/long term objectives of the Policy include(i) achieving an export growth of about 25% per annum in the remaining three years of the FTP(2009-14), (ii) doubling of India’s exports of goods and services by 2014 and (iii) doubling of India’s share in global trade by 2020.  2 |Page  Improvement in infrastructure related to exports, bringing down transaction costs and providingfull refund of all indirect taxes and levies would be the three pillars which are expected to providethe required support to achieve the targets set in the policy. Besides other measures, the importantinitiatives announced in the Policy include strengthening the Focus Market Scheme (FMS) andFocus Product Scheme (FPS) by increasing the incentives available under the schemes andbringing more products and markets under these schemes; extending the Duty EntitlementPassbook (DEPB) scheme till 31.3.2010; extending interest subvention scheme till 31.3.2010;continuing the income tax exemption to 100% EOUs and STPI units for the financial year 2010-11and introduction of EPCG Scheme at zero duty and 1% duty credit scrip for status holders with aview to aid technological upgradation of our export sector.Subsequent to announcements made in FTP (2009-14), short term sectoral performance review of the exporting sectors was carried out and additional measures were extended in January, 2010 tosectors still showing significant decline in exports. Some of these measures are: ã   112 new products added under FPS at 8 digit level; ã   113 new products at 8 digit level given higher benefit @ 5% of FOB value of exports underspecial FPS; ã   1837 new products added under Market Linked Focus Product Scheme (MLFPS) at 8 digitlevel; ã   Two new major markets; viz. China and Japan, with which we have major trade deficit,have been added under MLFPS; ã   New products, viz. sesame seeds and minor coconut products added under Vishesh Krishiand Gram Udyog Yojna (VKGUY); ã   A new market viz. Timor Leste added under FMS.Development of Special Economic Zones (SEZs) is a major initiative of the Government. This isaimed at generation of additional economic activity; promotion of exports of goods and services;promotion of investment from domestic and foreign sources; creation of employment opportunitiesand development of infrastructure facilities. As on 31.12.2009, a total of 573 formal approvalshave been granted for setting up of Special Economic Zones, out of which 346 SEZs have beennotified and are in various stages of operation. SEZs in India provide direct employment to over4.90 lakh persons (as on 31.12.2009). The Special Economic Zones notified under the SEZ Act,2005 have already made an investment of Rs. 124349.54 crore in the very short span of time sincethe coming into force of the SEZ Act in February, 2006. A total of 101 SEZs are alreadyexporting. The exports in the current year i.e 2009-10 from the SEZs have been to the tune of Rs.151785 crore (as on 31.12.2009).Plantation crops have been the traditional exports of India providing employment to millions of workers. Ageing bushes/ plants which results in low productivity, high cost of production, lowvalue addition, lack of strong build up of ‘brand India’ and volatility of international demand andprices are the major constraints facing this sector. With a view to ensure healthy growth andimproved productivity of the tea gardens, the Government set up a Special Purpose Tea Fund(SPTF) in 2007. The objective is to cover 2.12 lakh hectares over a fifteen-year period. The majorachievements during the year 2008-09 include replantation in 4020.20 hectares, rejuvenation in
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