Foreign Trade in India, Dynamics of the New Foreign Policy
Prachi Agrawal
Hidayatullah National Law University, Raipur
ABSTRACT:
One
area which saw the cumulative impact of all these transitions in a powerful
manner was India’s nuclear diplomacy. After years of promoting idealistic
slogans such as universal disarmament, India by the late 1990s recognized the
importance of becoming a declared nuclear weapon power. Despite the steady nuclearization of its security environment over the
decades, India remained ambiguous about its attitudes to its national own
nuclear weapons programme. Even as it tested a
nuclear device in 1974, India refused to follow through with the nuclear
weapons project. By the late 1990s, though, India found it necessary to make
itself an unambiguous nuclear power. The economic growth of the decade gave it
the self-confidence that it could ride through the inevitable international
reaction to it. India was also right it betting that a country of its size and
economic potential could not be sanctioned and isolated for too long. Even more
important, India sensed that there might be diplomatic opportunities for
getting the great powers acknowledge if not legitimize its nuclear weapons programme and remove the high technology sanctions against
it. Within seven years after its second round of nuclear testing in 1998, India
signed the historic nuclear deal with the Bush Administration in July 2005
under which the U.S. agreed to change its domestic non-proliferation law and
revise the international guidelines on nuclear cooperation in favour of India.
India’s
new foreign policy was not all about “big power diplomacy”. It involved a
strong effort to find political reconciliation with two of its large neighbours—Pakistan and China. Since the end of the Cold
War, India had sought to cope with Pakistan in the radically changed context
that brought nuclear weapons into the bilateral equation and an increased
ability of Pakistan to intervene in the disputed state of Jammu and Kashmir
through cross-border terrorism. The diplomatic history of Indo-Pak relations in
the 1990s is a rich, if frustrating, tapestry that included every possible
development—from a limited conventional war to a total military confrontation
to many summits that struggled to define a new framework peace between the two
neighbours.1 A new peace process under way since 2004 has produced the
first important steps towards a normalization of Indo- Pak relations, including
a serious negotiation on the Kashmir dispute. At the same India is also
involved in purposeful negotiations to end the long-standing boundary dispute
with China. For the first time since its independence, India is now addressing
its two of most important sources of insecurity—unresolved territorial
questions with Pakistan and China. Both involve de-emphasizing territorial
nationalism, which in turn carry significant political risks at home. Yet, the
Indian political leadership now believes resolving either or both of these
problems would fundamentally alter India’s security condition.
During the 1990s Indian diplomacy had to
develop a new strategy to deal with the Islamic world. Even as it renewed its
engagement with Israel that was kept at arms length
for decades. India also sought to redefine its policies towards key Islamic
countries. The reality of a large Islamic population—nearly 150 million
today—had always been an important factor in India’s foreign policy2.
In the past it merely meant supporting various Islamic causes. But today, the
relationship with the Islamic world is being deepened on the basis of economic
and commercial cooperation, energy security and cooperation in combating
religious extremism and terrorism. This gave an unprecedented depth and breadth
to India’s ties to the Islamic world since the end of the Cold War.3
STATISTICAL DATA ON INDIA’S FOREIGN TRADE: August 2010:
A. EXPORTS (including re-exports):
Exports during
August, 2010 were valued at US $ 16644 million (Rs. 77509 crore)
which was 22.5 percent higher in
Dollar terms (18.0 per cent higher in Rupee terms) than the level of US $ 13586
million (Rs.65670 crore) during August, 2009.
Cumulative value of exports for the period April-August 2010 was US $
85273 million (Rs 392811 crore) as against US $ 66326
million (Rs. 322424 crore) registering a growth
of 28.6 per cent in Dollar terms and 21.8 per cent in Rupee terms over
the same period last year.
B. IMPORTS:
Imports during
August, 2010 were valued at US $ 29679 million (Rs.138211 crore) representing a
growth of 32.2
per cent in Dollar terms (27.4 per cent in Rupee terms) over the level of
imports valued at US $ 22449 million ( Rs. 108506 crore)
in August, 2009. Cumulative value of imports for the period April-August, 2010
was US $ 141894 million (Rs. 653828 crore) as against
US $ 106605 million (Rs. 518024 crore) registering a
growth of 33.1 per cent in Dollar terms and 26.2 per cent in Rupee terms over
the same period last year.4
C. CRUDE OIL AND NON-OIL IMPORTS:
Oil imports during
August, 2010 were valued at US $ 7795 million which was 12.4 per cent
higher than oil imports valued at US $ 6936 million in the corresponding
period last year. Oil imports during April-August, 2010 were valued
at US$ 40736 million which was 31.7 per cent higher than the oil imports of US
$ 30929 million in the corresponding period last year5.
D. TRADE BALANCE:
The trade
deficit for April - August, 2010 was estimated at US $ 56620 million which was higher than the deficit of US $ 40279 million
during April -August, 2009.
|
DEPARTMENT
OF COMMERCE |
||
|
EXPORTS & IMPORTS : (PROVISIONAL) (US $ Million) |
||
|
|
AUG |
APRIL-AUG |
|
EXPORTS (including re-exports) |
||
|
2009-2010 |
13586 |
66326 |
|
2010-2011 |
16644 |
85273 |
|
%Growth 2010-2011/ 2009-2010 |
22.5 |
28.6 |
|
IMPORTS |
||
|
2009-2010 |
22449 |
106605 |
|
2010-2011 |
29679 |
141894 |
|
%Growth 2010-2011/ 2009-2010 |
32.2 |
33.1 |
|
TRADE BALANCE |
||
|
2009-2010 |
-8862 |
-40279 |
|
2010-2011 |
-13035 |
-56620 |
|
|
||
DISTRIBUTION OF IMPORT AND EXPORT SHARE IN INDIA:
Foreign
Investment Policies
· Majority
foreign equity, even up to 100%, is allowed in several sectors.
· Foreign
investment up to 51% in 35 high priority areas is eligible for automatic approval,
provided by Reserve Bank of India, within 2 weeks of application.
· Use
of foreign brand names and trademarks for sale of goods in India is allowed.
· Foreign
companies are allowed to open branch offices in India.
· Hotels
and tourism related industries are also eligible for automatic approval for
direct foreign investment with upto 51% equity.
· Foreign
Institutional Investors (FIIs) have been allowed to invest in the Indian
capital market. Foreign investment has been allowed in off-shore funds promoted
by Indian Financial Institutions. Indian companies have been allowed to float
Global Depository receipts (GDRs), which are traded in major international
stock exchanges.
· There
is now a market determined exchange rate for the rupee. Foreign exchange is
freely available for a number of purposes like payment of royalties, lump sum
fees, dividends, business travel abroad etc.6
HIGHLIGHTSOF
FOREIGN TRADE POLICY 2009-2014:
1. Higher Support for
Market and Product Diversification.
2. Technological Upgradation.
3. Support for Green
products and products from North East. Focus Product Scheme benefit extended for
export of ‘green products’; and for exports of some products originating from
the North East7
4. Stability continuity
of the Foreign Trade Policy
5. Agriculture Sector To reduce transaction and
handling costs, a single window system to facilitate export of perishable
agricultural produce has been introduced. The system will involve creation of
multi-functional nodal agencies to be accredited by APEDA.
6. Thrust to Value Added
Manufacturing.
To encourage Value Added Manufactured
export, a minimum 15% value addition on imported inputs under
Advance Authorization Scheme has now been prescribed.
7. Reduction of
Transaction Costs
8. EOUs
EOUs have been allowed to sell products
manufactured by them in DTA upto limit of 90% of
existing 75%, without changing the criteria of ‘similar goods’, within the
overall entitlement of 50% for DTA sale.
9. Simplification of
Procedures To facilitate duty free import of samples by
exporters, number of samples/pieces has been increased from the existing 15 to
50. Customs clearance of such samples shall be based on declarations given by
the importers with regard to the limit of value and quantity of samples.
10. Directorate of Trade
Remedy Measures
To enable support to Indian industry and
exporters, especially the MSMEs, in availing their rights through trade remedy
instruments, a Directorate of Trade Remedy Measures shall be set up.
CONCLUSION:
The innovations in India’s foreign policy
strategy since the early 1990s has resulted in the happy situation of
simultaneous expansion of relations with all the major powers, growing weight
in Asia and the Indian Ocean regions, and the prospect of improved relations
with important neighbours. Given its impending
relative rise in the internationalsystem, India is
bound to be confronted by a number of challenges. First the new focus on the
importance of power is not without problems. Despite being marginalized in
recent years, the imperatives of idealism and moralism
have not completely disappeared from. India's foreign policy. Since 1991, India
has moved from its traditional emphasis on the “power of the argument” to a new
stress on the “argument of power”. Given its noisy democracy, India cannot
build domestic political support to foreign policy initiatives purely on the
argument of power. It would continue to need a set of values and norms to
justify its actions on the world stage. As a consequence the tension between
“power and principle” would remain an enduring one in India’s foreign policy
strategy. Second, increased power potential will mean that India would have to
take positions on major international issues and regional conflicts. In recent
years, New Delhi has either avoided or merely substituted them with generalized
slogans. Just as Beijing is being pressed to become a “stake-holder” in the
international system, New Delhi too would come under greater pressure to stop
being a “free rider”. In other words, India would have to often find ways to
limit the pursuit of “national interest” in order to contribute to “collective
interests” of the international system.
Third, as India emerges as an important
element of future balance of power in the world, it would be pressed to make
choices in favour of one or the other great powers at
least on specific issues. The absence of great power confrontation in the last
few years has allowed India the luxury of converting the slogan of
“non-alignment” into an “independent” foreign policy.
REFERENCES
1. Oliver Stuenkel,
India’s National Interests and Diplomatic Activism: Towards Global Leadership?
2. India: Domestic Issues, Strategic Dynamics,
and U.S. Relations K. Alan Kronstadt, Coordinator
Specialist in South Asian Affairs
3. India’s New Foreign Policy Strategy, C.
Raja Mohan, Strategic Affairs Editor, The Indian Express, New Delhi
5. id
Received on 04.07.2012
Modified on 12.09.2012
Accepted on 25.10.2012
© A&V Publication all right reserved
Research J. Humanities and Social Sciences. 3(4): October-December,
2012, 497-500