Road ahead for the Commerce ministry: Boosting exports, resolving trade issues key focus areas

The commerce ministry has its work cut out in the coming months, with issues such as a subdued outlook by the World Trade Organisation (WTO) on global trade, a widened trade deficit and a multitude of challenges on the bilateral and multilateral fronts confronting the new Narendra modi government. A downward slide in Foreign Direct Investment inflows and flagging merchandise exports are other areas of concern.

 

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Over the last five years, the previous NDA government focused on increasing exports, including through identifying newer markets it could tap. By the end of the 2018-19 financial year, the commerce ministry announced that the country had achieved a record high of around $331.02 billion in merchandise exports. Yet, it reportedly missed its own internal goal of crossing $350 billion.

 

The country also experienced a high trade deficit for merchandise goods at $176.42 billion and an overall trade deficit of $95.85 billion for that period. India had also taken measures to improve its ease of doing business ranking, managing to secure 77th position towards the end of last year, up from over 140 in 2015. It further tried to encourage foreign investment through schemes like ‘Make in India’ and by relaxing rules for Foreign Direct Investment (FDI) in several sectors.

 

Yet, recent government data shows that FDI fell for the first time in six years, dropping around 1 per cent to $44.4 billion in the 2018-19 financial year. The telecom sector, due to its stressed financial condition, and pharmaceuticals sector, due to uncertainty in regulations, took the highest hit.