(MENAFN- MENAFNPress) Abu Dhabi-UAE: 15 September 2015 – A new report published by the UAE Ministry of Economy titled ‘Trade Policy Review of The Republic of India’ has pointed out that India’s real GDP achieved a 6.9% growth in 2013-14 and is expected to surge further to 7.4% in 2014-15 while the GDP per capita registered US$1500 in 2013-2014. The report also indicates that the country witnessed an inflation rate of 5.9% between July and September 2014 and has become more moderate in recent years as a result of declining oil prices and the sustained efforts of the Reserve Bank of India to curb inflation.
Hind Al Youha Director of Foreign Trade Policies at the UAE Ministry of Economy pointed out that the report clearly shows that if India is to continue to achieve its goal of economic consolidation within the present regulatory environment the Indian government must reduce its fiscal deficit to 3% by 2017-2018 and increase taxation through introducing the goods and services tax (GST). Al Youha also noted that the services sector is the main driver of economic growth in India and accounts for more than 50% of the country’s GDP.
The report further suggests that the volume of trade (exports and imports) in services and goods accounts for about 53% of the total GDP. Trade surplus for the services sector meanwhile registered 3.9% in 2013-2014. The report adds that the current account deficit for the period has been compensated by large capital inflows from foreign direct investments
Pointing out that the manufacturing sector’s contribution is low and accounts for only 13% of the total GDP the report reiterates that the Indian government issued a new manufacturing policy in 2011 with a view to increasing the sector’s contribution to 25%. The government also launched the ‘Make in India’ campaign in 2014 to promote the country’s manufacturing sector and attract investments.
The report shows an improvement in the agricultural sector that has contributed about 18% to the GDP since 2011. This was one of the key objectives of the government’s public policy and its aim to accomplish food security and price stability.
Bilateral trade and agreements
The report notes that as an active member of the World Trade Organization (WTO) India is a strong advocate of the multilateral trading system and an important party in a number of regional trade agreements. It adds that one of the key objectives of current trade policies is to make India a major player in international trade and increase the country’s share of world exports to 3.5% by 2020.
On the subject of bilateral trade relations with the United Arab Emirates the report notes that non-oil trade between India and the UAE reached about US$37 billion in 2014 with the Republic of India among the UAE’s top trading partners.
Foreign direct investment
In an effort to attract greater inflows of Foreign Direct Investment (FDI) the Indian government lifted restrictions on foreign ownership in some sectors such as insurance and transportation. To further complement FDI growth the government implemented organizational changes in the financial services telecommunications and transportation sectors. These included establishing fully-owned subsidiary banks and raising the foreign equity in the insurance sector to 49% in addition to amending the Securities Act and adopting a National Telecom Policy.
The report observes that India is continuing its efforts to liberalize and facilitate trade by introducing self-assessment in import customs clearance and by cancelling the commercial requirements imposed earlier on some agricultural products. In addition the Indian government is working on other structural reforms including the reduction of FDI restrictions in some sectors and the deregulation of diesel prices.
Milestones
Following India’s efforts to step-up trade and its introduction of self-assessment in customs clearance in 2011 nearly 97.6% of all imports are now cleared through a set risk management system. This has been evidenced in the report along with suggestions that the India’s import system remains complex particularly with regard to licensing and tariffs.
The report highlights that as a leading member of WTO; India has imposed anti-dumping measures and opened more than 80 anti-dumping investigations against 23 trading partners.
The report additionally indicates that the Indian government provides direct and indirect support to various sectors mostly agriculture through subsidies on fertilizers and petroleum products. In addition the country has in place price regulations on essential goods such as petrol natural gas kerosene and agricultural products for the benefit of both the farmers and the public.
Furthermore India has followed a national food security scheme since 2013 that provides food grains at subsidized prices. The report states that this initiative is set to have a significant impact on the overall government support provided to the agricultural sector.
Additionally India continues its efforts to enforce intellectual property rights through the amendment of the copyright law according to the WIPO Copyright Treaty. The government has issued guidelines on the patenting of biological material and enforced a compulsory license for certain anti-cancer drugs in March 2012.
The report is part of an ongoing initiative by the UAE Ministry of Economy to publish country trade reviews of different trading partners and stakeholders.
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