Nothing bright on the trade front

The outlook for the trade sector in 2009 is not very encouraging with the International Monetary Fund (IMF) projecting a negative growth in world trade volume of -11 per cent and a -1.3 per cent growth in global output of goods and services, according to the Economic Survey.

With falling import demand from major trading partners, India's export of goods and services is expected to be impacted. While a fall in petroleum and commodities prices could have a positive impact on the import side and for the industrial sector, the survey expects world trade volume to rise 0.6 per cent with a 1.9 per cent rise in global output projected by the IMF in 2010.

Amidst the subdued global outlook, the Survey has called for efforts at both the national and international levels to revive growth. It also emphasises the need to guard against protectionist measures originating from India's trade partners and by the country itself.

Besides short-term relief measures and stimulus packages, the Survey has called for some fundamental changes in the trade sector.

For the merchandise trade sector, the Survey calls for a continuation of the reduction in customs and excise duty to make India's exports and industry competitive, streamlining of existing export promotion schemes, giving special attention to export infrastructure along with rationalisation of port service charges, weeding out unnecessary customs duty exemptions and checking the proliferation of SEZs.

In the service sector, the survey calls for specific policies aimed at both overcoming the impact of the current global crisis and accelerating economic growth.

Total exports from the country, however, have been showing a steady and promising performance with relatively lesser support, the Survey noted.