Working out and unveiling a new Foreign Trade Policy, working out
reforms to finetune the Foreign Direct Investment Policy (FDI), taking
a call on opening up of the retail sector for foreign investment and
giving a boost to the sagging exports are likely to be on top of the
agenda of the new Commerce and Industry Minister who takes office in
the new government. During the next few weeks, a five-year Foreign Trade
Policy will need to be unveiled. The details of the policy are being
finetuned now by the Directorate General of Foreign Trade (DGFT) in
consultation with industry stakeholders. The focus would be on making
Indian products competitive.
Official sources said that there could be further liberalisation of
FDI norms that were notified in February this year and had raised a
storm. "With China, Brazil and Russia welcoming FDI with open arms,
attracting FDI has become competitive. There would be changes in the
FDI norms so that foreign money inflow is made lucrative," a senior
official said. FDI inflows dropped in February to $1.4 billion, almost
one-fourth of the inflows witnessed in the same period a year ago, under
the impact of the global credit crunch. In February 2008, foreign investment
was $5.67 billion which has left planners a bit worried.
However, the main challenge before the new Commerce Minister would
be to give a big boost to the negative growth of exports for the last
almost eight months in a row. The aim of the new government would be
to ensure that Indian products become competitive in the global market
where merchandise demand has squeezed during the past six months leading
to exports slipping into the negative territory. Exports, which contribute
17 per cent to the gross domestic product (GDP), have seen a sharp decline
since October 2008-09 with recession in major global markets, mainly
the U.S. and Europe. Federation of Indian Export Organisations (FIEO)
President A. Sakthivel is hopeful that the new government will address
the issue head-on and do the needful to give a big thrust to exports.
Fast moving consumer goods (FMCG) companies, which have strong tie-ups
with retail chains, are hopeful that the new government will speed up
further investment in rural India. Experts are of the view that the
government should allow foreign players and FDI, without any restriction,
into the retail sector and also give the retail sector the status of
an industry.
