Net Exports (Trade Deficit)

Exports are domestic goods and services that are sold to

buyers in other nations. Net exports are the difference between a country's total value of exports and total value of imports. Depending on whether a country imports more goods or exports more goods, net exports can be a positive or negative value. A trade deficit occurs when one country buys more foreign goods than it sells to other countries. When imports exceed exports, the result is a trade deficit. An individual firm or industry will benefit when its exports increase, and suffer when competitive imports increase.

Current situation in India

From January of this year India have experienced a rise in their trade deficit.

i.e increase in their imports as compared to their exports. Indias trade deficit increased up to $184.9 billion, almost 10.6 percent of GDP which is higher than the expected The exports rose up to 21 percent but the imports went up to 32.15 percent. So the gap between the imports and exports grew to 56 percent

How to control import

The country is aiming to boost production of domestic oil and gas. But existing

fields are ageing and recent exploration has been disappointing. Private refiner Essar Oil Ltd. and state-run Mangalore Refinery & Petrochemicals Ltd. expanded refining capacities last year. The refinery capacity expansions meant fuel product imports fell 14% to 14.92 million tons in the year to March 31, while product exports rose 2.4% to 60.52 million tons, the data showed. But those exports were small compared to the massive amount of crude imports needed to fuel the refineries. The refinery capacity expansions meant fuel product imports fell Congress recently passed legislation to decrease our dependence on oil by increasing Corporate Average Fuel Economy (CAFE) standards on new cars and trucks models by year 2020. This could reduce our petroleum use by 25 billion gallons by 2030. Developing advanced vehicle Technologies that use energy more efficiently Creating new energy sources that can replace petroleum cleanly and costeffectively.

Reining in Import Growth Through Domestic Policy

Complimentary Measures to Rein the Import Growth through

Domestic Policy Crude Oil : production of domestic oil and gas. Agriculture : We are importer of Pulses Edible oils & other Commodities, Need to Increase yield & domestic Production Electronics & Engineering : Need to focus on Semi- conductor industry Gold : Increase on import duty on Gold (standard & non Standard) but might lead to imports through illegal Channels Coal : Acquire of coal mine in abroad, Private Enterprises can import rather than Government led Petroleum : Need to developed sufficient Processing capacity Fertilizers :

 Reduce the Import & Increase the Exports Government should increase the import duty on Crude Oil

For example, the inability to raise domestic fuel prices only acts as an incentive to increase consumption of hydrocarbon products, most of which are imported. The difficulties in getting green clearances for new coal mines is forcing domestic power companies to buy from abroad

In actual high growth of Import is unavoidable

Focus on higher Export Growth
The deficit could be bridged with increasing exports Devise strategy for rapidly increasing merchandise export

(Goods & Services) Provide marketing support to micro and small enterprises through Export Development Fund. Provide Additional support to those sectors that had been face slow down for past 2 year

Strategy to Increase the Exports in India in next 2 years

Product Strategy Market Strategy Technologies & R &D Reining in Import Growth Through Domestic Policy Essential Support

Product Strategy
India is leading exporter of below goods, so first we will try to increase the Export for the current products which have high market share in international market Engineering Goods : Export is continuously increasing , Government should have arrange for Industrial Park Chemicals : Organic & Inorganic chemicals, should support to small Chemical companies, India Government should have own Chemical Inventory. Pharmaceutical : Dominated by Generic Products, India can become Pharmacy of World Electronic Goods : Joint Venture with Chinese companies as they have mfg strength & also market share Agricultural & Marine Products : Good Agricultural Practices, Good storage/cold storage condition Leather Products & Textiles : High value added products, instead of exporting finished leather should export leather shoes means high value added product Gems & Jwellery :

Market Strategy : Explore new Market

Demand in the Traditional Markets of the developed western world North

America & Europe is slowed down Core of the market strategy i) Retain Presence & market Share in our Old Developed country Markets ii) Move up the value chain in providing products in these old developed country Market iii) Open up New Vistas both in terms of New Market & New Products in these new markets. Focus on Market in Asia ( Including ASEAN), Africa & Latin America South America and Southeast Asia. These were increasingly emerging as attractive destinations for Indian exports.

Building a Brand Image

Thrust for quality up gradation. Expanded certification of export products encouraged, where

needed. Brand India promotion campaign for key export products

Rapidly changing Technology

Technologies and R & D

Areas that hold out promise for high technology exports

Pharmaceuticals , Electronics, Automobiles Computer and software based smart engineering. Environmental products; green technology and high-value engineering products. High end areas in electronics, aerospace, and engineering products.

Essential Support From Government

Stable Policy Environment Access to New Market Reduce Transaction cost

Better Infrastructure
Speedy Clearance Quality Education Facilities Trade barriers Procedural bottle necks Infrastructure so the government should provide lower rate of credit to exporter Essential policy support needed to realize the ambitious export targets for 2013-14 and beyond is:

Stable policy environment: Continuation of existing incentive schemes Preferential access to new markets: putting in place conducive trading arrangements Reduction in transaction costs: Implementation of recommendations of Task Force Substantial step up in overall Plan support .
Priority strengthening of trade related infrastructure

Preventive actions
Government should go for all out domestic policy reforms. Whether it

is GST or DTC or banking sector reforms Speed up the Trade agreement with the European Union. Exports of merchandise will get a boost in terms of getting improved market access in products like textiles, engineering, gems & jewellery Give concessional credit to exporters Reduce the steps getting the export License Improve the drawback rates so that taxes on raw material are not exported Improve trade & political relation with neighboring countries like Pakistan & Bangladesh. India can get increased market access at a lesser cost in terms of Proximity of destinations Support Industry initiatives for aggressive marketing & organizing of Trade & Industrial exhibition abroad.

Summary
Its is very difficult to control on Import, so if India Focus

on the increase of Export can help to balance the Trade. Improvement in Infrastructure related to exports, reducing Transaction cost & providing full refund for all indirect Taxes & Levies Government should provide all possible support to increase the Export

Thank You