Government Policy

In India, exports and imports are regulated by the Foreign Trade (Development and Regulation) Act, 1992, which replaced the Imports and Exports (Control) Act, 1947, and gave the Government of India powers to control it. This aims to facilitate sustained growth in exports of the country so as to achieve larger percentage share in the global merchandise trade. But while there have been many export incentives, Government policy continues to be indecisive – further discouraged by a lack of infrastructure and leadership and a lot of red tapism.

Thus it is not incredible that while India is the largest exporter of cotton, second only to America, it’s Government policy on exporting cotton and cotton products is unstable and has fostered a bad business environment. In 2010, the Government introduced a quota that led to the prices of cotton reaching the highest ever. The recent ban on Indian cotton typifies poor policy decisions lacking foresight and planning, leaving businesses in the lurch.

In the energy sector (oil, wind, solar) too; there is no strong policy or decision to facilitate the use of renewable energy in India. Leather exporters, however, often find support from the Government in the form of export incentives and focus market schemes. The iron industry too has been included in the list of `high priority’ industries for automatic approval for foreign equity investment. Yet the Indian export business has performed well.