India?s exports are doing well. The $ 101 billion figure in 2005-06 represents 25 per cent increase over 2004-05 and with a higher base; a target of $ 120 billion has been set for 2006-07. This may be attained, since there have been four successive years of 20 per cent-plus dollar growth. These export figures are for merchandise trade, since most service exports do not enter the directorate general of commercial intelligence and statistics and commerce ministry figures. The commerce minister has made much of the fact that if one subtracts oil imports of $ 43 billion, India had a small balance of trade surplus in 2005-06. That is not entirely true, because there are oil exports also and those too should be subtracted. However, the point that despite increased non-oil imports (surrogate for industry doing well) the balance of payments is in decent shape is well taken. Exports are doing well because Indian manufacturing is more competitive, the exchange rate is favourable and because demand is buoyant. Indeed, thanks to demand, China and Russia have shown faster rates of export growth than India, a fact the commerce ministry glosses over. Constraints to higher rates of export growth in India, with a target of 1.5 per cent of global exports set for 2009, are largely infrastructural, something the commerce ministry can do little about, notwithstanding euphoria about better infrastructure in the special economic zones.

This raises a more substantive point. Why do we need a foreign trade policy, the second supplement to the 2004-09 version having just been announced? What do focus product and focus market schemes amount to, since fiscal incentives are out and concessional duties are increasingly becoming irrelevant, given overall customs duty reductions? The commerce ministry has yet been unable to evolve a World Trade Organization-compatible system of export incentives. The revenue tussle between the finance and commerce ministries contributes further to the mess, since North Block is concerned with BoP rather than export growth. The most welcome part of FTP should have been a non-issue to start with, the netting out of fringe benefit tax and service tax paid on exports. SEZ policy is yet another example of this uncertainty. An SEZ Act and associated SEZ rules were passed after several rounds of discussions; 150 approvals were granted. After this, thanks to the finance ministry?s fears of revenue leakage, the rules have again been passed on to the group of ministers for a re-look. This explains why SEZ pages in the FTP are blank ones. FTP seems to be necessary only to explain to exporters the current state of play between the finance and commerce ministries.