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India opens markets to global trade

EXIM POLICY

With the lifting of import restrictions on more than 700 products ranging from automobiles to watches, India has opened its markets to global trade.

The move, announced as part of India's 2001-2002 trade policy, was aimed at complying with a World Trade Organisation ruling (WTO).

"To join the other countries of the world, from today onward we are removing quantitative restrictions (on imports)," Commerce and Industry Minister Murasoli Maran told a news conference in New Delhi.

He said the country aimed to achieve export growth of 18 per cent in 2001-2002, the same target it set for the previous year but added the slowdown in the United States, India's key export market, could pose problems.

"(There are) demand constraints beyond our control like the apprehended slowdown of the two biggest economies, the USA and Japan, which accounts for 46 pct of world output."

At the same time, Maran said that the government would act to ensure that the India did not face a flood of imports.

"The removal of quantitative restrictions does not mean throwing the gates wide open," he said. "Eternal vigilance is absolutely essential to guard against the opening of the floodgates of imports."

As part of a move to protect the automobile industry under the new liberalised trade regime, the minister said India would ban the import of second hand cars older than three years.

Maran said that India, the world's second most populous nation, would seek to seek to grab one percent of global trade by 2004-05, up from 0.64 per cent currently.

India lifted quantitative restrictions on the import of more than 700 items last year as a first step toward complying with the WTO ruling.

Analysts say the latest move lifting restrictions on the import of 715 items ranging from food, stationery, textiles, vehicles to electronic goods, will mean tougher competition but that domestic industry is unlikely to suffer much.

In an event, trade analysts say WTO mechanisms provide enough scope for protection of industry against any import surge.

"The World Trade Organisation agreement provides enough safeguards against unfair imports and governments can increase tariffs even beyond permitted levels," Indian Institute of Foreign Trade dean B Bhattacharya said.

India has five-year-long Export-Import (Exim) policies -- the current one runs from April 1997 to March 2002. But it fine-tunes the policy every year. China is seen as the main threat to Indian goods followed by Taiwan and Indonesia, trade officials say.

India began liberalising its trade policy when it launched its economic reform programme in the early 1990s. But it maintained restrictions on imports of 1,429 items, citing balance of payments problems.

But after the United States complained about the restrictions, the WTO ruled against India and ordered it to end the curbs on all the items by April 1, 2001, saying the country's balance of payment situation had improved.

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Union Budget 2001-2002: Full coverage

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