| Who takes up the reins will decide India's trade & investment policy | |
| Rituparna Bhuyan / New Delhi May 18, 2009, 1:42 IST | |
Policy-related momentum expected to carry on if Congress keeps the portfolio.
The new minister will have to represent India’s interests at the World Trade OrganiZation. Current minister Kamal Nath was known for his hawkish stand on protecting ‘livelihood security’ of farmers of developing nations.
India’s trade and investment policy for the next five years is likely to be influenced by the party in the United Progressive Alliance (UPA) which gets the commerce ministry portfolio, say government officials.
External merchandise trade, which is a little less than half of India’s output, is badly hit because of the ongoing economic crisis, with exports in the negative territory for six consecutive months till March.
“If the commerce portfolio goes to the Congress, then one can expect the policy-related momentum seen earlier to carry on. But if the new minister is from a non-Congress party, then it would be interesting to see how the policy-related matters will shape,” said a government official involved in the sector.
Special Economic Zones (SEZ), the tax-free industrial enclaves, will be one area. The anti-SEZ protests in Nandigram is cited as one key factor in the Trinamool Congress’ (a key UPA ally) success in West Bengal.
“If the SEZ-related policies are to be taken to the next level, one would require a finance minister who understands the benefits of the zones,” another official added.
The industry will also look at a possible extension of the Export-oriented Unit scheme, which will provide tax benefits till March 31, 2010. The scheme is already under a 12 month extension.
Another crucial call the new commerce minister will have to take is on the foreign trade policy. The five-year policy is on an ad-hoc extension, as it was set to expire in March. The Directorate General of Foreign Trade has already started the process of laying down a new policy, but a final call will be taken by the next minister.
The trade policy has a slew of measures meant to provide incentives to exporters. The ministry will have to synchronise the trade policy with the Goods and Services Tax (GST) regime, expected to be operational by April, 2010.
“One can expect faster fine-tuning of policies, as the need of the hour is already understood by the UPA, under which the global economic crisis hit India,” said KT Chacko, director, Indian Institute of Foreign Trade (IIFT).
The new minister will also have to represent India’s interests at the World Trade Organization. Current minister Kamal Nath was known for his hawkish stand on protecting “livelihood security” of farmers of developing nations Talks in Geneva are likely to start shortly and a mini-ministerial to take stock of the progress is expected in late 2009.
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