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Introduction –

The Sixth Trade Policy Review of India is taking place at a time when the prognosis for India's growth prospects is robustly optimistic as reflected in various forecasts. Several significant steps have been taken to re-energise the economy and there is a strong focus on accelerating growth, enhancing investment and passing on the benefit of the growth process to the common man.

The Government's emphasis is on developing infrastructure, creating a roadmap for reforms, promoting ease of doing business, ramping up investment, rationalizing subsidies, creating a competitive, predictable, and clean tax policy environment, and accelerating disinvestment. Coupled with large outlays on the social sectors to provide a safety net, these measures will have a significant impact on boosting demand and generating investment. This, in turn, will spur growth in trade, industry and exports.

Foreign trade today has begun to play a significant part in India's economic development. India's two-way merchandise trade crossed US$760 billion in 2013-14 or 44.1% of the GDP. If services trade is added, India's trade reached nearly US$1 trillion. This has been achieved despite the global contraction and is indicative of India's resilience and increasing integration with the global economy. During the four-year period under review (2010-11 to 2013-14), exports grew at a compound annual growth rate of 8.0%, while imports grew by 6.8%.

Reports present a mixed picture on the external environment. According to the IMF, global growth will receive a boost from lower oil prices – a result mainly of higher supply – but while the recovery in the United States was stronger than expected, economic performance in all other major economies, particularly Japan, fell short of expectations. The euro area growth projections are weaker. Slower growth in China and the recovery in the US will have significant repercussions on India's trade.

Economic Environment –

Recent Growth Record

According to the latest indicators, emerging from the recently revised estimates of national income brought out by the Central Statistics Office, economic growth, measured by growth in Gross Domestic Product (GDP) at constant market prices, is estimated at 5.1% and 6.9% respectively during 2012-13 and 2013-14. Growth for the year 2014-15 is likely to be 7.4%.

The estimates at disaggregated level (Table 1) indicate that growth in agriculture and allied sectors – including crops, livestock, forestry and logging, and fishing – picked up in 2013-14. The manufacturing sector registered a growth of 6.2% and 5.3% respectively in 2012-13 and 2013-14. The services sector triggered the growth momentum in 2013-14. Services such as trade and repair services, rail transport, communication and broadcasting services and miscellaneous services achieved double-digit/close to double-digit growth during the year.

Growth in GVA(Gross Value Added) at Constant (2011-12) Basic Prices %

 

2012-13

2013-14

2014-15

Agriculture, forestry & fishing

1.2

3.7

1.1

Industry

2.3

4.5

5.9

Mining & quarrying

-0.2

5.4

2.3

Manufacturing

6.2

5.3

6.8

Electricity, gas, water, supply & other utility services

4

4.8

9.6

Construction

-4.3

2.5

4.5

Services

8

9.1

10.6

GVA at basic prices

4.9

6.6

7.5

GDP (at market prices)

5.1

6.9

7.4

The services sector continues to account for more than 50% of the Gross Value Added in the country and its share has been slowly increasing over the years. However, the share of the agricultural sector is witnessing a gradual decline, with its share estimated to be 19% in 2014-15 . The share of industry has declined since 2011-12 and accounts for a little more than 28% of GDP in 2014-15.

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