INTRODUCTION

 The Seventh Trade Policy Review of India is taking place at a time when the world is witnessing an unprecedented health crisis with the contagious COVID-19 hitting economies across the world in rapid succession. Global growth has been severely affected and substantial risks of more severe outcomes remain. In its June 2020 update, the International Monetary Fund (IMF) has projected that global output would contract by 4.9% in 2020-21.

After a brief period of moderation, the Indian economy had begun to regain momentum towards the end of 2019 with the Index of Industrial Production (IIP) rebounding from negative growth at the end of 2019 to 5.2% in February 2020, the highest level observed since July 2019. The pandemic and the preventive country-wide lockdown in late March 2020 however affected this revival, and has linked India's economic recovery to the containment of COVID-19, within its own territory as well as globally.

During the period under review, the Government has focused on carrying out structural reforms and ensuring inclusive growth. These reforms, along with a host of measures taken by the government after the outbreak of COVID-19, should enable the country to bounce back on its targeted growth path.

The fundamentals of the Indian economy are strong and this has ensured macroeconomic stability. Inflation is within limits and FDI inflows have increased substantially in the recent years with the highest ever FDI inflow of USD 74.39 billion during the financial year 2019-20. Improvement in the trading environment has enabled the country to better its position in the World Bank’s Doing Business ranking from 142 in 2015 to 63 in 2019. India’s position in the Global Innovation Index has also risen from 81 in 2015 to 52 in 2019, while its ranking in World Bank Logistics Performance Index changed from 54 in 2014 to 44 in 2018. These developments clearly suggest an improved confidence of the global business and trade in the Indian economy.

The Government envisions that India would be a USD 5 trillion economy by 2024-25. The ability to boost investments and an improved performance in trade would substantially contribute towards the success of this endeavour. India’s low debt leverage, progress made in financial inclusion and formalization of the economy can result in credit becoming a key contributor to driving the economic growth. Infrastructure development is a cornerstone of the Indian growth strategy, with its strong backward and forward linkages that can fuel the economy and improve the competitiveness of the country. As a part of infrastructure development, India has launched the National Infrastructure Pipeline on 31st December 2019 of ₹ 103 trillion (approx. USD 1.5 trillion). This initiative focuses on housing, access to clean and affordable energy, healthcare, world class educational institutions, railways, logistics and warehousing. Strategic disinvestment in public sector undertakings is aimed at further increase of private sector participation in the economy, creating efficiencies and generating revenue, which will, in turn, enhance the capacity of the Government to invest in developmental projects,

On the trade front, during the five-year period under review, exports grew at a compound annual growth rate of 4.5%, while imports grew by 5.7%. India’s share in global exports and imports registered a marginal increase from 1.6% & 2.4% in 2015 to 1.7% & 2.5%, respectively, in 2019. Total exports, inclusive of services, crossed half a trillion dollar mark for the first time to reach a new high of USD 538.1 billion in 2018-19. This feat was repeated in 2019-20.

The period under review also saw the multilateral trading system face unprecedented challenges. As a founding member of the WTO, India remained committed to the centrality of the WTO for an integrated global trading system and was an active participant in the efforts to safeguard and strengthen the WTO. In order to build a consensus towards this direction, India took the initiative to host two informal mini-ministerial meetings in New Delhi, in March 2018 and May 2019. In almost all interventions, a need to preserve and enhance the functioning and credibility of the rules-based multilateral trading system, which is transparent and inclusive, with development as the core objective, was highlighted. During this period, India also implemented India – ASEAN Services and Investment Agreement and expanded the coverage of Asia Pacific Preferential Trade Agreement (APTA).