Over the years, India has been successfully diversifying in terms of its direction of trade. Currently, India is exporting to almost all the countries in the world including such places like Marshall Islands, Greenland, Barbados, Costa Rica, Nicaragua, Burundi and Somalia. Asia and ASEAN region is India’s largest trading partner. During the period April- February 2008-09, Asia and ASEAN region accounted for 58 percent of India’s trade (exports and imports). Europe and America, together, account for around 43 percent of India’s trade. The share of America (including North America and Latin America) has remained stable at around 12.5 percent. The direction of India’s trade and the trade balance with major regions of the world is shown in Chart 8.1 and Chart 8.2 respectively.

CHART 8.1

CHART 8.2

During the period April-February 2008-09, growth of India’s exports has decelerated to 6.6 percent as compared to 26.6 percent during the corresponding period last year. Trade with all the regions has been affected especially with America where the growth of exports has been only 2.8 percent during April-February 2008-09 as compared to 12.0 percent during the corresponding period last year. CIS & Baltic region has shown a jump of 78.8 percent in India’s imports during April-February 2008-09 as compared to 10.0 percent during the corresponding period last year. Chart 8.3 shows the growth rate of India’s trade with major regions during the period April-February 2008-09.

I. Trade with Asia

(A) South East Asia

East Asia and ASEAN - General

India’s trade with East Asia and ASEAN region comprising the ASEAN countries (viz. Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei, Vietnam, Myanmar, Laos and Cambodia), Australia, New Zealand and countries of Oceania stood at US $ 48.83 billion during the year 2007-08, registering a growth of 23.46% over the previous year. Traditionally, India has an adverse balance of trade in the region. Major destinations for India’s exports in the region are Singapore, Indonesia, Malaysia, Thailand, Australia and Vietnam Socialist Republic, while the major sources of imports are Australia, Indonesia, Malaysia, Singapore, Thailand and Myanmar.

Exports to the ASEAN region grew by 30.35 % during the year 2007-08 over the previous year and imports witnessed a growth of 25.33 % in the same period. Trade with ASEAN countries in 2007-08 and 2008-09 (April-February, 2008-09) are given in the next page.

India’s trade with Australia and New Zealand has shown robust growth in recent years. Trade with these two countries grew by 54.74% between 2005-06 and 2007-08. The details in this regard are also given in the next page

CHART 8.3

The principal commodities of exports are Petroleum Products, Oil Meals, Gem and Jewellery, Electronic Goods, Cotton Yarn/RMG Cotton, Machinery and Instruments, Primary/Semi-Finished Iron & Steel, Transport Equipments, Marine Products, Drugs/Pharma, norganic/Organic/ Agro Chemicals, Dyes/Intermediates etc.

 India’s Trade with ASEAN Member Countries 

(Value in US $ Million)

Source: DGCI&S

 India’s Trade with ASEAN Member Countries 

(Value in US $ Million)

Major Commodities of Export & Import – East Asia and ASEAN

The principal commodities of export include Petroleum Products, Oil Meals, Gem and Jewellery, Electronic Goods, Cotton Yarn/RMG Cotton, Machinery and Instruments, Primary/Semi-Finished Iron & Steel, Transport Equipments, Marine Products, Drugs/Pharma, Inorganic/Organic/ Agro Chemicals, Dyes/Intermediates, etc.

The major commodities imported from this region are Coal/Coke/Briquettes, Gold, Vegetable Oils, Electronic Goods, Organic Chemicals, Machinery except Electrical Machinery, Professional Instruments, Wood and Wood Products, Non-Ferrous Metals, Metaliferrous Ores and Metal Scrap, Raw Wool, etc.

Trade Promotion Activities

India has Joint Trade Committees with New Zealand, Myanmar, Fiji, Brunei and Thailand and a Joint Working Group on Trade & Investment with the Philippines. In addition, there is a Joint Commission with Australia at the Ministerial level (JMC). A Trade and Economic Framework (TEF) has also been signed with Australia for enhancing bilateral trade and investment on a comprehensive basis. During the year 2008-09, India-Australia JMC meeting was held on 20th May, 2008 in Melbourne.

India has Joint Business Councils (JBCs), established at the business level, with Singapore, New Zealand, Australia, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade. Such meetings also act as fora for businessmen to mutually interact and explore the potential for growth in trade and investment relations. During the year 2008-09, India –Australia JBC meetings were held on 18th May, 2008 in Sydney and 20th May 2008 in Melbourne.

India and Australia set up a joint feasibility study of a Free Trade Agreement (FTA) between the two countries in 2008. The Joint Study Group is expected to submit its report in the second half of 2009.

India and New Zealand set up a joint feasibility study of a Free Trade Agreement (FTA) between the two countries in 2008. The Joint Study Group has submitted its report in February, 2009.

Engagements with ASEAN and South-East Asian countries

In order to address the economic content of the ‘Look East Policy’, a continuous dialogue is maintained with ASEAN and the countries of South-East Asia. Summit level engagements, Ministerial meetings and official level discussions are held in order to fulfill the ‘Look East Policy’ agenda.

During the year 2008-09, Commerce and Industries Minister and the Minister of State for Commerce and Industries held discussions with a number of visiting ASEAN and East Asian dignitaries. These interactions provided useful directions for addressing the various issues involved in enhancement of trade and investment relations.

Negotiations under the Comprehensive Economic Cooperation Agreement (CECA) with ASEAN for the Agreement on Trade in Goods between India and ASEAN have almost concluded and it is likely to be signed in the second half of 2009.

Negotiations under the Comprehensive Economic Cooperation Agreement (CECA) between India and Malaysia commenced in 2008 and are targeted to be completed by end-2009. The CECA would be negotiated as a single undertaking including agreements on trade in goods, services, investment and other areas of cooperation.

A joint feasibility study for finalizing a Comprehensive Economic Cooperation Agreement (CECA) between India and Indonesia was set up in 2007. The Joint Study Group is expected to submit its Report in August 2009.

(B) North East Asia

India’s trade with the North East Asian region comprising of China, Japan, Republic of Korea, Hong Kong, Taiwan, Democratic People Republic of Korea, Macao and Mongolia stood at US$ 71.2 billion during 2007-08, registering a growth of 40 per cent over the previous year. Exports to the North East Asia region were of the order of US$ 26.45 billion during 2007-08, registering a growth of 37 per cent over the previous year. Imports from the region amounted to US$ 44.75 billion during 2007-08, registering a growth of about 42 per cent over the previous year. India’s major trading partners in the region are Japan, Hong Kong, China and Republic of Korea. Trade with North East Asian countries from 2005-06 to 2008-09 (April-February 2008-09) is given in the table below:

Major items of export 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. Both India and China have agreed to endeavour to raise the volume of bilateral trade to US$ 60 billion by 2010. Trade with China has already crossed US$ 37.9 billion during 2007-08. Major items of Indian exports to China are 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.

Trade with North East Asian Countries

* Provisional
Source: DGCI&S

Indian exports to Japan registered a growth of 34.79 per cent while imports from Japan registered a growth of 37.7 per cent during 2007-08 over 2006-07. 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 account for about 3.8 per cent of India’s overall exports. During 2007-08, Indian exports to Hong Kong amounted to US $ 6.3 billion registering a growth of 34.8 per cent. Imports from Hong Kong amounted to US $ 2.7 billion, recording an increase of 8.8% per cent over the previous year. The major items of exports are Gems and Jewellery, Finished Leather, Electronic Goods, 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 per cent. The major items of imports are Pearls, Precious & Semi-Precious Stones, Electronic Goods, Gold and Cotton Yarn & Fabrics.

Indian exports to Republic of Korea during 2007-08 amounted to US $ 2.85 billion registering an increase of 13.5 per cent over the previous year while Imports from Korea during the same period amounted to US $ 6.04 billion registering a growth of 25.79 per cent. 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 Negotiations

A Joint Task Force was constituted to negotiate a Comprehensive Economic Partnership Agreement between the two countries. The negotiations were concluded in the twelfth meeting of India-Korea JTF held during September 22-25, 2008 in Seoul. The text of India-Korea CEPA was initialled by leaders of the two delegations on February 9, 2009. The matter is pending before the Cabinet for approval.

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.

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

This Joint Task Force (JTF) of India and China was constituted to study the feasibility of and the benefits that may derive from a possible China-India Regional Trading Arrangement. 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 PMs decided to refer the report for consideration by the Joint Economic Group (JEG) headed by the Trade and Commerce Ministers of the two countries.

(C) South Asia and SAARC

Bilateral Trade relations with countries in South Asia

Afghanistan

The Preferential Trade Agreement where India and Afghanistan signed on March 6, 2003 in New Delhi 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.

Bilateral Trade with Afghanistan

 * Provisional
Source: DGCI&S

Bangladesh

The Bilateral Trade Agreement between India and Bangladesh, renewed from time to time, provides for expansion of trade and economic cooperation, making mutually beneficial arrangement for the use of waterways, railways and roadways, passage of goods between two places in one country through the territory of the other, and exchange of business and trade delegations and consultations to review the working of the Agreement at least once a year. The fifth meeting of the Joint Working Group (JWG) on trade between India and Bangladesh was held on 5-6 November, 2007 in Dhaka, Bangladesh wherein two sides had detailed discussion on enhancing bilateral trade and improving trade imbalance of Bangladesh with India. A sub group on infrastructure established under JWG is, inter alia, discussing on strengthening the existing infrastructure at various Land Customs Stations (LCSs) and opening of new LCS.

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 28.07.2006 for a period of ten years with effect from 29.7.2006. Under this Agreement India also provides transit facilities to landlocked Bhutan to facilitate its trade with third countries and movement of goods 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. 

Bilateral Trade with Bhutan

* Provisional

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 1.1.2008.  India has thus completed SAFTA TLP one year ahead of the stipulated three years from 1.1.2006 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 fourth meeting of the COE was held on 4th and 5th November 2008 at SAARC Secretariat Kathmandu, Nepal.

The SAFTA members are currently negotiating for inclusion of Trade in Services also within the purview of SAFTA.  A draft Framework Agreement in this regard was prepared by India which is now under discussion by an Expert Group with representatives from all the SAFTA members. The second meeting of the Expert Group was held on 21-22 May, 2009 at SAARC Secretariat in Kathmandu, Nepal.  

The SAARC Committee on Economic Cooperation, headed by Commerce Secretaries of SAARC countries established in 1991, has been deliberating upon measures to be taken to promote commercial and economic interaction within the region.  The fourteenth meeting of the CEC was held on 10-11 February, 2009 in New Delhi. 

India’s trade with Mexico has grown consistently at a good pace over the years. The bilateral trade from 2005-06 to 2008-09 (April-Feb) is given in next page:

III. Trade with Europe

• 14th Session of the Indo-Russian Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held on 3rd December 2008 in New Delhi, under the Co-Chairmanship of Shri Pranab Mukherjee, Minister of External Affairs from the Indian side and Mr. Alexander Zhukov, Deputy Chairman of the Government of the Russian Federation from the Russian side.

• 14th Session of the Working Group on Trade & Economic Cooperation of the Indo-Russian Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held from 29th –30th September 2008 in New Delhi.

• 1st meeting of the India-Russia Joint Task Force (JTF) set up to monitor the implementation of recommendations of the India-Russia Joint Study Group (JSG) was held on 6th and 7th November 2008 in New Delhi under the Co-Chairmanship of Shri Neeraj Kumar Gupta, Joint secretary, Department of Commerce from the Indian side and Mrs. E. V. Danilova, Director of the Department of External Economic relations, Ministry of Economic Development of the Russian Federation, from the Russian side.

• 2nd meeting of the India-Russia Joint Task Force (JTF) was held from 26-27th March 2009 in Moscow under the Co-Chairmanship of Shri Neeraj Kumar Gupta, Joint Secretary, Department of Commerce from the Indian side and Mrs. E. V. Danilova, Director of the Department of External Economic relations, Ministry of Economic Development of the Russian Federation, from the Russian side.

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 2008-09, the following meetings were held:

Kazakhstan

• 7th Session of India- Kazakhstan Inter-Governmental Commission (IKIGC) on Trade, Economic, Scientific, Technological, Industrial and Cultural Cooperation was held in Astana, from 12-13 March 2009, under the Co-Chairmanship of Shri Murli Deora, Minister of Petroleum and Natural Gas from the Indian side and Mr. Sauat Mynbayev, Minister of Energy and Mineral Resources of Kazakhstan from the Kazak side.

Uzbekistan

Tajikistan

Other CIS Countries

Other six CIS Countries are Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Ukraine is India’s second largest trading partner in CIS region. During 2007-08, the following meetings were held:

Belarus

Trade Promotion Activities

Joint Commission with CIS Countries under Department of Commerce

IV. Trade with Countries in the West Asia (WA) Region

The West Asia (WA) region comprises 13 countries. These are (i) Gulf Cooperation Council (GCC) countries (i.e., Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates), and (ii) West Asian countries (i.e., Iran, Iraq, Israel, Jordan, Lebanon, Yemen and Syria).

During 2008-09 (April – February) exports to the West Asian Region (including GCC) from India touched the figure of US$ 31,644.97 million. The imports during this period were US$ 78,369.34 million. Oil exports to West Asian countries (including GCC) during the year 2008-09 (April-February) amounted to US$ 7,940.84 million. Similarly, the oil imports during the same period amounts to US$ 60,849.87 million.

Our principal export products to West Asian Region comprise of gems & jewellery, plastics & linoleum products, manufactures of metals, manmade yarn, fabrics, made-ups, machinery and instruments, RMG cotton including accessories, basmati rice, transport equipments and primary & semi-finished Iron & steel, etc. Our principal imports from this region consist of petroleum (crude and products), pearls and precious/semi-precious stones, gold, organic chemicals, inorganic chemicals, metalliferrous ores and metal scrap, fertilizers manufactured, electronic goods, fertilizers crude, transport equipment, artificial resins, plastic materials and non-ferrous metals etc.

India-West Asia (including GCC) Trade

(Values in US$ Million)

Source: DGCI&S

India-West Asia (including GCC) Trade excluding oil

(Values in US$ Million)

Source: DGCI&S

Analysis of India’s trade with West Asian countries between 2007-08 and 2006-07 suggests that while exports from the West Asian Region to India and Indian exports to the West Asian Region have both increased, imports from the West Asian region have grown much more in terms of value on account of particularly increase in crude oil and petroleum products. Including oil, the trade balance is overwhelmingly in favor of the West Asian Region.

Institutional Arrangements

Issues pertaining to trade and economic cooperation between India and WANA countries are regularly reviewed in Bilaterals, Joint Commission Meetings or Joint Trade 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. 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  

(i) Follow up on the Israel-India Joint Study Group Report’s recommendations.

On the basis of the recommendations of Joint Study Group in 2005, a study was conducted in 2007 by the Indian Institute of Foreign Trade (IIFT) on the Need and Feasibility of India’s bilateral Free Trade Agreement. 

(ii) FTA with GCC Countries

The 2nd round of negotiations was held in Riyadh during 9th – 10th September, 2008. 

(iii) Memorandum of Understanding on Trade and Technical Cooperation with Egypt

India and Egypt signed a Memorandum of Understanding on Trade & Technical Cooperation during the visit of the H.E. President of Egypt from 17th – 19th November, 2008 in New Delhi. The Indo-Egypt Business Council Meeting was also held. 

(iv) Elevation of Ministerial level of India-Jordan JCM

To boost the bilateral trade, the India-Jordan Joint Commission was elevated to the Ministerial level. 

(v) High Level visit to Oman and Qatar

Hon’ble Prime Minister of India visited Oman and Qatar during 8th – 10th November, 2008. His visit provided impetus to the bilateral trade between India and these countries. 

(A) India’s Trade with GCC

The total trade with GCC Countries during 2007-08 amounts to US$ 66722.60 million (inclusive of oil). The total trade (excluding oil) amounts to US$ 25558 million. Compared to 2006-07, exports (excluding oil) have gone up from US $ 12659.91 million to US$ 16504.46 million. Similarly, the total imports during this period went up to US $ 9053.79 million from US $ 6193.29 million. The oil imports during 2007-08 have increased to the tune of US $ 35927.79 million from US $ 24815.52 million.

Analyzing the trade with GCC during 2007-08, United Arab Emirates ranked first among the destinations for India’s exports in the WA Region in general and among the Gulf Cooperation Countries in particular. Our exports to this country amounted to US$ 15,626.91 million during 2007-08 indicating thereby a growth of approx 30% in Dollar terms over the previous year. The other major destinations in the WA region include Saudi Arabia, Iran, Israel, etc.

(B) Trade with West Asia excluding GCC

The total trade with West Asia excluding GCC countries during 2007-08 amounts to US$ 27321.92 million (inclusive of oil). The total trade excluding oil amounts to US$ 7295.36 million. The exports excluding oil amount to US$ 4226 million. Similarly, the total imports during this period viz. 2007-08 are US$ 21355.30 million of which the oil imports is to the tune of US$ 18285.92 million.

Trade with Gulf Cooperation Council (GCC) Countries

(In US$ Million)

Source: DGCI&S

Trade with West Asia excluding GCC countries

(In US$ Million)

Source: DGCI&S

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 the table below.

Total trade (including oil) with Africa during 2007-08 amounted to US $ 34693.74 million with exports amounting to US $ 14196.09 million and imports at US $ 20497.65 million. The oil inclusive trade turnover during April 2008-February, 2009 has been US $ 35710.57 million with exports at US $ 12857.06 million and imports amounting to US $ 22853.51 million. The corresponding figures during April 2007- February 2008 were US$ 31505.65 million (total trade), $ 12716.42 million (exports) and $ 18789.23 million (imports) respectively. If oil is factored out, India enjoys a positive trade balance with Africa.

During 2007-08, the total commodity trade (excluding oil) between India and African countries was US $ 16,586.60million as against US $ 12,445.36 million in 2006-07, thereby registering a growth of 33.27%. India’s exports to the African countries increased by 33.42% from US $ 7,668.81 million in 2006-07 to US $ 10,231.75 million in 2007-08. India’s imports from the African countries increased by 33% from US $ 4,776.55 million in 2006-07 to US $ 6,354.85 million in 2007-08.

The graph below indicates trade matrix with African countries, taking into account non-oil as well as oil trade. 

India – Africa Trade

(Value in US $ million)

Source: DGCI&S
* Including Oil in Import figures
** Including Petroleum Product exports from India

India’s trade with Africa (Region-Wise) during 2007-2008 with trade percentage of each region is reflected in the following diagrams:

Commodity trade turnover with West African countries was US $ 4507.19 million during 2007-08 as compared to US $ 3214.89 million during 2006-07, indicating a 40% growth. 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 $ 1162.89 million during 2007-08 as compared to US $ 978.40 million during 2006-07, reflecting a growth of 18.85%.

Commodity trade with countries in Southern Africa was US $ 6014.24 million during 2007-08 as compared to US $ 4600.12 million during 2006-07, indicating a growth of 30.74%. 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 $ 5200.09 million during 2007-08 as compared to US $ 3906.73 million during 2006-07, reflecting a growth of 33.10%.

Commodity trade with countries of North Africa was US $ 3418.77 million during 2007-08 as compared to US $ 2748.79 million during 2006-07, indicating a growth of 24.37%. Transport equipments, manufactures of metals, machinery & instruments and non ferrous metals were the major items of export. Fertilizers, manufactured, organic chemicals, inorganic chemicals, Metalifers ores and metal scrap were the major items of import. Egypt was the top most trading partner within this region with a trade of US $ 1438.85 million during 2007-08 as compared to US $ 951.15 million during 2006-07, reflecting a growth of 51.27%.

Commodity trade with countries of East Africa was US $ 2341.83 million during 2007-08 as compared to US $ 1650.83 million during 2006-07, indicating a growth of 41.85 %. 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, 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 $ 748.68 million during 2007-08 as compared to US $ 541.24 million during 2006-07, reflecting a growth of 38.32 %.

Commodity trade with countries of Central Africa was US $ 304.48 million during 2007-08 as compared to US$ 230.72 million during 2006-07, indicating a growth of 32%. 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 $ 167.51 million during 2007-08 as compared to US $ 110.85 million during 2006-07, reflecting a growth of 51 %.

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 three meetings of the negotiating teams have taken place so far. India and SACU signed a Memorandum of Understanding, an enabling instrument to facilitate negotiations, during the third round of negotiations held in New Delhi on 25th – 27th November 2008.

CECPA with Mauritius

A Comprehensive Economic Cooperation and Partnership Agreement (CECPA) aimed at boosting bilateral trade, investment and general economic cooperation between India and Mauritius 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, the scope 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 Apex Chambers with grant under MDA and MAI Scheme. The Focus Africa programme is continuing for the seventh year during 2008-09.

Bilateral Cooperation

Issues pertaining to trade and economic cooperation between India and African countries are reviewed through Joint Commissions and Joint Trade Committees. The second meeting of the India- Namibia Joint Trade Committee was held at Walvis Bay (Namibia) on 18-19 February, 2008. The fifth meeting of the India-Ethiopia Joint Trade Committee was held in Addis Ababa on 7th October, 2008 and the fifth meeting of the India-Kenya Joint Trade Committee was convened in New Delhi on 16-17 December, 2008. India and Zambia held a bilateral meeting on 17 September 2008 in New Delhi to review the trade and economic cooperation between the two countries.

Business to Business interactions have also been encouraged between Apex Indian Chambers and their African counterpart Chambers 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 multi-disciplinary high level delegations visited Angola and Namibia during March-April, 2008 and the Democratic Republic of Congo during June, 2008.

V. Trade with Latin American and Caribbean Countries 

Trade with Latin American and Caribbean Countries

The Latin American and Caribbean (LAC) region comprising 44 countries, accounts for about 5 per cent 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 shown below:

India’s trade with the region has increased from US$ 2331.48 million in 2003-04 to US$ 12215.60 million in 2007-2008 with a growth of 424 % during the last five years. India’s exports to the region have gone up from US$ 1138.81 million in 2003-04 to US$ 5657.75 million in 2007-2008 showing a growth of 396 %.

The important items of Indian exports to LAC region during 2007-08 were Petroleum (Crude & Products), Drugs, Pharmaceuticals & Fine Chemicals , Transport Equipments , Machinery And Instruments, Inorganic/Organic/Agro Chemicals, Manmade Yarn Fabrics Made Ups, Cotton Yarn Fabrics Made Ups Etc., Manufactures Of Metals, Plastic & Linoleum Products, Readymade Garments Cotton Inclusive Accessories, Rubber Manufactures Products Except Footwear, Dyes/Intermediates & Coal Tar Chemical, Primary & Semi-Finished Iron & Steel, Electronic Goods, Iron &Steel Bar/Rod Etc, Cosmetics/Toiletries etc. During the same year, India’s major imports from LAC region were Metaliferrous Ores & Metal Scrap, Petroleum, Crude & Products , Vegetable Oils Fixed (Edible) Transport Equipments , Wheat , Electronic Goods , Machinery Except Electrical & Electronic, Iron & Steel, Primary Steel, Pig Iron Based Items, Non-Ferrous Metals , Silver , Organic Chemicals, Wood And Wood Products , Other Crude Minerals , Inorganic Chemicals etc.

Trade with LAC Region

(Value in US $ million)

Source: DGCIS

Three product groups viz. textiles, engineering products and chemical products constitute nearly 60 % of India’s exports to this region during 2007-08. 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 etc. have good scope for exports. In Chemical Products Sector, Bulk Drugs, Pharmaceuticals, Dyes and Intermediates, Agrochemicals, Plastic Products, Naphtha, Resins, Essentials Oils, Molasses and Tyres for Automobiles & Bicycles are the important items.

Focus: LAC Programme

An integrated programme “Focus: LAC” was launched in November, 1997 which has been extended upto March 2011 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 Market 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 “Focus: LAC” programme aims at focusing on the Latin American region, with added emphasis on the 10 major trading partners of the region, viz. Brazil, Mexico, Argentina, Chile, Peru, Venezuela, Colombia, Ecuador and Trinidad & Tobago and Panama. These countries constitute 90 per cent of the total trade of India with the LAC region during 2007-08.

“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

India has set up Missions in 13 major countries in the LAC region. However, there was no commercial post in any of these Missions, to exclusively look after the trade related matters. Posts of one Marketing Assistant each in ten Missions in the LAC region have been provided. 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.

Actual Progress during 2008-09

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 August, 2007. Due to some internal considerations, the Agreement entered into force in India on 11th September, 2007.

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 the other side 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. Meanwhile, 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 and 16, 2006 wherein India presented a wish list of 626 additional products. MERCOSUR too in December 2006 had presented its wish list.

Other

Mr. Luis Guillermo Plata, Minister of Commerce, Industry and Tourism of Colombia along with a business delegation visited India during 26-30, April, 2008 and held a bilateral meeting with Commerce Industry Minister on issues pertaining to trade and commerce.

Cuban Deputy Foreign Trade Minister, Mr. Eduardo Escandell along with a business delegation visited India during 17-18 May, 2008 and held a bilateral meeting with Commerce Secretary on opportunities of promoting bilateral trade.

Mr. Miguel Jorge, Brazilian Minister for Development Industry and Foreign Trade had a bilateral meeting with Commerce & Industry Minister when former was in New Delhi in October , 2008 in connection with 3rd IBSA Business Summit

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 20.03.2009, 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 thirteen lines of credit to banks/Governments in the LAC region. These are given in the next page.

Waiving off outstanding dues on Cuba

Indian companies namely PEC Ltd, CIMMCO Birla Limited, EXIM Bank etc. had not received 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 by Cuba was taken up for discussions at various fora like Indo-Cuban Trade 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 to waive off outstanding dues on Cuba and reimburse to the respective Indian companies to revive and strengthen the bilateral trade and commercial relations between India and Cuba. Recommended amount has been released to the concerned Indian companies.

Lines of Credit Extended by the Exim Bank (as on 30.11.2008)