Answer:

For 12 consecutive months from January to December in 2015, India’s total exports were significantly lower than previous year. The data for the period 2010-11 to 2014-15 reveals stagnation in the dollar value of exports, around $300 billion per annum. It also shows that, on average, exports were able to finance just two-thirds of imports, leading to considerable trade deficit. India’s export performance has been poor even in comparison with some other developing countries. Between July and December of 2015, months that India's exports were slumping, Bangladesh in fact saw exports grow by eight per cent year-on-year. Vietnam saw exports grow 9.2 per cent in 2015. This is a cause of concern for India's trade policy.

Following reasons can be identified in this context:

♤ Slump in the prices of various commodities has adversely impacted the value of Indian exports.

♤ Global economy slowdown- The Great Recession that followed the financial crisis of 2008 and the Great persists even now. Recovery in output is slow, uneven and fragile. The recovery in trade is just as slow.

♤ Demand constraints- There are demand constraints also for the exports of developing countries from their markets in slowing economies.

♤ Infrastructural constraints – Deficiencies in sectors such as Power, road, rail proved to be a drag on export competitiveness

♤ Non-price factors - Like quality, delay in delivery etc. also affects the competitiveness of manufactured exports.

♤ Overvaluation of the rupee which makes exports difficult and imports attractive, contributed to the stagnant export performance.

♤ Chinese economy slowdown - Imports from China have increased markedly following the slowdown in that country’s economy whereas exports, chiefly in raw materials, have declined.

The foreign trade policy 2015 offers the following measures:

♤ It introduces two new schemes, namely "Merchandise Exports from India Scheme (MEIS)" and "Services Exports from India Scheme (SEIS)". The 'Services Exports from India Scheme' (SEIS) is for increasing exports of notified services.

♤ These schemes (MEIS and SEIS) replace multiple schemes earlier in place, each with different conditions for eligibility and usage. Incentives (MEIS & SEIS) to be available for SEZs also. e-Commerce of handicrafts, handlooms, books etc., eligible for benefits of MEIS.

♤ Branding campaigns planned to promote exports in sectors where India has traditional Strength.

♤ No need to repeatedly submit physical copies of documents available on Exporter Importer Profile.

♤ Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months instead of 18 months

♤ Within manufacturing exports, the government will chart out a strategy to promote the key sectors of engineering products, electronic goods and textile exports.

♤ Within services, a host of incentives are likely to be rolled out to sectors such as tourism, hospitality, education, etc, which might be promoted in the form of project exports from India.