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Growth Prospects of Thrust Areas of Indian Exports V1
Assignment A
1. Describe the composition of India's exports. Discuss India s the key objectives
and strategies of sIndia s Foreign Trade Policy 2009-2014?
2. What are the benefits and facilities provided to units located in Special Eco
nomic Zone (SEZ)?
3. Describe the avenues and prospects for India's leather and leather goods expo
rts. What are the
competitive advantages and disadvantages of leather and leather goods exports?
4. Explain the constraints that are hampering effective export promotion effort
in India.
5. What are the various items of agricultural commodities exporting from India?
Explain the
measures initiated by the government to enhance agricultural exports.
Assignment B
1. Write notes on the following:
a. MDA and MAI Scheme
b. India s export of services
2. Discuss the initiatives taken by the Indian government in promoting India s tra
de with Latin
American Countries?
3. Analyze briefly how India s trade has developed with European Union (EU) during
the last
decade. What are the likely implications of the expansion of EU on the Indian ex
ports?
Case Study: India s Food Processing Industry
Background
While the Indian economy s growth in the recent years, has been propelled by the g
rowth of the service
and manufacturing sectors, agriculture still plays a significant role by contrib
uting 17% of the GDP and
providing employment to 60% of the population. With the increasing focus and inv
estments from the large
national and international food and retail companies, the sector is bound to gro
w much faster in the
coming years. As this sector has a strong social implication, it has also been a
ccorded a high priority
status by the Government, which is facilitating its growth by charting favorable
initiatives at different policy
levels. The changing consumption dynamics coupled with the growth of modern reta
il, the processed food
industry offers tremendous opportunities for all stakeholders in the areas of pr
oduction, processing,
marketing, supply chain, infrastructure development, technology up gradation and
education.
Food Industry Overview
The size of the Indian food industry is estimated at about US$ 236 bn. It is gro
wing at about 5% year on
year (YoY) and will reach US$ 314 bn by 2015. The processed food segment s contrib
ution is currently at
about 43% i.e. US$ 120 bn, this is expected to grow much faster, and contribute

about 50% to the total

food market by 2015. The processed food industry is highly fragmented and is dom
inated by the
unorganized sector. The organized food processing segment contributes about 30%
of the market;
however with the entry of large players both domestic and international, the mar
ket is expected to
growing at 25% per annum and will account for 40% of the market by the next 5 ye
ars. At the moment the
Indian food market is still dominated by the staples like wheat, rice and pulses
followed by fruits &
vegetables and dairy products with minimal value addition before being consumed
by the masses.
Though India has a strong agricultural production base, the wastage in the secto
r is very high. The lack of
storage & processing facilities leads to significant wastage, especially in cate
gories like fruit and
vegetables with an estimated wastage of about 35% (estimated value of US$ 8 bn a
nnually). The level of
food processing varies considerably across sub-sectors in the country. In the ca
se of perishables like fruit
and vegetables, only 2% of production is processed, it is more than 90% of non p
erishable products such
as cereals and pulses. However, the processing in staples involves very little v
alue addition, and is mostly
confined to grading, cleaning, milling, and packing; with negligible use of addi
tives, preservatives, and
flavours etc.
Major Initiatives
Government Initiatives
The Ministry of Food Processing Industries (MoFPI) is the nodal agency establish
ed by the Government
to ensure development of the food processing sector in India. The key objectives
of the MoFPI includes
improving utilization & value addition of farm produce, minimizing wastage, tech
nology introduction &
upgrades, promoting R&D, initiatives for policy development and development of c
ritical infrastructure for
supply chain. With an intention to grow the food processing sector, the Governme
nt has made a sharp
increase in the plan outlay and expenditure in the last couple of years and has
approved outlays of over
US$ 1 bn in the 11th plan.
Policy Initiatives
To help promote the food processing industry, the Government has over the years
taken various policy
initiatives. Key policy initiatives include:
Exemption of most processed food items (except items reserved for SSI & Alcoholi
c Beverages)
from purview of licensing under the Industries (Development & Regulation) Act, 1
951
Food processing industry covered under priority sector bank lending
Foreign investments of up-to 100% allowed under the automatic route
Excise & Customs Duty reduction in processed items & plant and machinery
Income Tax holiday for certain categories of processing industries
Delegation of licensing powers to regional authorities
Infrastructure Initiatives
One of the major factors hindering the growth of the food processing industry re
lates to inadequate
infrastructure. To meet this challenge of inadequate infrastructure, the MoFPI i

n its 10th Plan has focused

on developing various food related infrastructure that include:
Food Parks - This initiative of the Government is targeted to provide common inf
rastructure for
the industry. As per the 10th Plan schedule a total of 56 Food Parks were planne
d. The 11th Plan
has a target of establishing 30 mega food parks across the country. The key obje
ctives of this
initiative includes providing infrastructure, support value addition of agricult
ural commodities,
establish raw material supply chain, induction of latest technology, integration
of complementary
resources and improved quality assurance.
Integrated Cold Chain Facility - This scheme is targeted to improve viability of
cold storages and
add capacity.
Packaging Centre - The Government intends to develop packing centers facilities
so as to help
enhance the shelf life of food products and bring international acceptability.
Value Added Centre - The value addition centre s are intended to bring about value
addition
leading to higher realization along with enhancing shelf life.
Irradiation Facilities - The meet the challenges brought about by infestation, t
he Government has
plans to setup irradiation facilities.
Modernization of Abattoir - For the 11th Plan, the Government is planning a comp
rehensive
scheme for modern abattoirs across the country.
Growth Drivers
The changes in the consumer preferences and inclinations have had a definite imp
act on the level and
directions of food processing. The reasons for the change in the Indian consumer
are:
Rising Income Levels - In India, the per capita income has almost doubled in the
last 7 years and
is now about US$ 1000 per annum. The consistent rise in the middle class income
has resulted in
a consuming class with higher disposable income.
Changing Food Habits - With growing affluence, the eating out incidences has inc
reased in the
urban India. The Young India is also experimenting with new tastes and preferences
and tastes
are getting diffused across geographies. Pan-Indian cuisines as well as cuisines
from other
countries have also found their way into people s kitchen across the country. Ther
e is a growing
trend towards balanced and health consciousness diet in the new generation of co
nsumers.
Growing Need for Convenience Food - Increased income levels, urbanization and a
greater
proportion of urban working women in India is leading to increased convenience-s
eeking
behaviour of Indian consumers. There has been an increasing demand for processed
&
convenience foods such as in ready-to-eat, ready-to-cook, ready-to-serve and rea
dy-to heat
categories.
Growth in Organized Retailing - The organized retail accounts for about 1.5% of
the total food &
grocery market in the country, however with growing investments in this sector,

it is expected that
the organized retail will account for more than 7.5% of the market by 2013. The
organized retail
with modern supply chain and temperature controlled stocking will lead to increa
sed distribution
of imported foods, branded foods and processed foods etc.
Challenges Faced
The Indian food processing industry currently faces a lot of challenges addressi
ng current gaps in the
value chain as well as leveraging on various advantages the country provides. In
vestors in the sector
need to be aware of these factors and build required capabilities in their busin
ess to ensure success.
Fragmented Supply Base - Indian agriculture is predominantly a production driven
market supply
instead of market driven production, leading to inconsistency in quality of prod
uce and supply.
With more than 70% of the landholding smaller than 1.5 hectares, the average lan
d holding in
India is very small leading to poor economy of scale for the farmers to apply mo
dern techniques
in their farms.
Poor Quality Control - Though Indian growers and exporters have now been able to
match up to
global standards, meeting these standards with up-scaled production will be big
challenge. The
challenge becomes much bigger where there are differences in standards and consu
mer
preferences across potential markets. The issues of traceability in fresh produc
e and poor
hygiene generated infections in packaged foods need to be addressed.
Inadequate Infrastructure and Supply Chain - While India is the leading producer
of many of the
crops in the world, nearly 25% to 35% of this production is spoiled due to the l
ack of inadequate
supply chain and poor infrastructure. Non-availability of core infrastructure li
ke high-tech
controlled production facilities, grading, packaging, cold chains, logistics, wa
rehousing, integrated
processing units, inefficient supply chain, poor transportation and erratic powe
r supply are the
major concerns in the country. Also, there are very few specialized distribution
companies,
providing refrigerated transport and warehousing for perishable produce/ process
ed food
products.
Food Regulations and Taxation Issues - Both the Indian food industry and the pro
cessing industry
are governed by multiple legislations. Though many initiatives have already been
taken by the
Government, there is still need and scope for harmonization of taxation norms an
d systems
across the country.
Limited Market Linkages - The food value chain in India is highly fragmented lea
ding to poor
quality, lower price realization and increased wastage of produce at the farm le
vel. Improvement
in the marketing infrastructure and also identification of new export markets fo
r their produce, are
the two major issues facing the industry.

Key Success Factors

Growth of Domestic Market - The overall penetration of processed foods in the do
mestic market
is low. This leads to a large untapped market with propensity to consume process
ed food.
Appropriate Product Concept - For any successful business, it is important to ha
ve the right
product concept that meets consumer expectations and the food industry is no exc
eption.
Innovative products, leading edge technology, fast hanging consumer needs and pr
eferences,
are all aspects that need to be focused.
Competitive Pricing of Products - Processed food companies need to understand th
e price
sensitivityof the Indian consumer. The market demand is for competitively priced
products with
multiple pack sizes & price points.
High Quality Raw Material with Sustainable Supply Chain - This is the first and
foremost
prerequisite to determining the final quality of a product. In the food industry
, the supply chain has
to be sustainable so that the right quality product reaches the consumer.
World Class R&D and Manufacturing Resources - In a global business environment t
o keep pace
with fast changing technology/ innovations, it is essential have a world class R
&D and
manufacturing facility. This is the key to building capacity.
A Qualified Manpower Resource - Adequate resource of qualified manpower is anoth
er aspect
ofcapacity building and is a very important asset for success in business.
Safe and Healthy Products - Consumption of food products pertain directly to the
health of
people. Hence, it is of utmost importance to have quality systems like Hazard An
alysis & Cuticle
Control Points (HACCP) to deliver safe and healthy products to consumers.
Continuous Investment in Training and Technology Up-Gradation - This is a vital
step to capacity
building and is applicable to the food industry as well.
Innovative Packaging - In a highly competitive business environment, innovative
packaging is
another important facet of capacity building that can provide a leading edge.
Conducive Regulatory Framework - In addition to the above, proactive support fro
m lawmakers to
amend and modify laws that accommodate new innovations Genetically Modified Orga
nism
(GMO),concepts (Nutraceuticals) etc is critical for capacity building in the foo
d industry.
Creating Appropriate Market Environment
To be a market leader, it is essential for the industry to create an appropriate
market environment for
selling products. These are exciting times for the food processing industry in I
ndia, and the opportunity to
enter the market is huge. The domestic market consumption is changing and the le
vel of processing will
increase significantly, and at the same time, India remains disproportionately a
small player in the export
market compared to its production capability in various raw products. The opport
unity is also huge for
back-end infrastructural companies, as product and brand companies looking at in
creasing investments in

this sector
Questions:
a) Agriculture sector contributes approximately 17% to the GDP of India. It is h
ence one of the thrust
sectors for promoting exports. Discuss the nature and composition of exports fro
m your
respective country?
b) The article above mentions several growth drivers for India s food processing I
ndustry. Briefly
describe the factors that are likely to influence the growth of food processing
industry in your
respective country?
c) Outline the challenges faced by Indian food processing industry?
d) Discuss the initiatives taken by Indian government to promote the growth of f
ood processing
industry?
Assignment C
1) The Foreign Trade Policy in India is announced by
A. Ministry of Finance, Government of India
B. Ministry of Commerce, Government of India
C. Ministry of External Affairs, Government of India
D. Director General of Foreign Trade
2) Which of the following is NOT a part of the European Union?
A. France
B. Germany
C. Iceland
D. Slovenia
3) Focus LAC programme lays emphasis on India s major trading partners. The major
trading partners
include:
A. Brazil, Venezuela, Chile
B. Argentina, Peru, Colombia
C. Bahamas, Trinidad, Ecuador
D. All of the above
4) Export Promotion Capital Goods (EPCG) Scheme is for:
A. Import of Raw Materials by Manufacturers
B. Import of Capital Goods by Manufacturers and Merchant Exporters
C. Export of Capital Goods by Manufacturers only
D. Export and Import of Capital Goods by merchant as well as manufacturers
5) APEDA is associated with:
A. Promotion of agriculture and improving agricultural practices
B. Promotion of exports of packaged products from India
C. Promotion of exports agricultural and processed food products
D. Promotion of exports of organic agricultural products from India
6) Foreign Trade (Development and Regulation) Act, was introduced in:
A. 1991
B. 1992
C. 2002
D. 2004
7) DGCI&S is:
A. Director General of Commercial Intelligence and Statistics
B. Directorate General of Commercial Intelligence and Statistics
C. Director General of Central Improvement and States
D. None of the above
8) The objectives of Foreign Trade Policy 2004-2009 were:
A. To double India's percentage share of global merchandise trade by 2009; and
B. To act as an effective instrument of economic growth by giving a thrust to em
ployment
generation, especially in semi-urban and rural areas
C. Both A and B

D. None of the above

9) MDA refers to _______________:
A. Market Development Assistance
B. Market Discovery Assistance
C. Marketing Development Assistance
D. None of the above
10) The objectives of MDA are to:
A. Assist Export Promotion Councils (EPCs) to undertake export promotion activit
ies for their
product(s) and commodities
B. Assist Focus export promotion programmes in specific regions abroad like FOCU
S (LAC), Focus
(Africa), Focus (CIS) and Focus (ASEAN + 2) programmes.
C. Assist approved organizations/trade bodies in undertaking exclusive nonrecurr
ing innovative
activities connected with export promotion efforts for their members
D. All of the above
11) Which of these is the eligible activity for assistance provided under MAI sc
heme?
A. Assist exporters for export promotion activities abroad
B. Residual essential activities connected with marketing promotion efforts abro
ad.
C. Opening of Showrooms & Warehouses
D. Assist approved organizations in undertaking exclusive nonrecurring innovativ
e activities
connected with export promotion efforts
12) Under MAI scheme, financial assistance MAY NOT be provided to:
A. Export Promotion Councils
B. All individual exporters
C. Registered Trade Promotion Organisation
D. Commodity Boards
13) Which of these countries is NOT a part of Focus LAC programme?
A. Barbados
B. Guyana
C. British Virgin Islands
D. Fiji
14) FOCUS LAC programme is to promote India s trade with:
A. Least-developed African countries
B. Latin American Countries
C. Both A and B
D. None of the above
15) Which of these commodities is NOT a principal commodity exported by India:
A. Gems & Jewellery
B. Textiles
C. Pulses
D. Engineering Goods
16) Which of these is a thrust sectors for exports , as identified by the Governmen
t of India include:
A. Leather and Leather goods
B. Chemicals
C. Education Services
D. Petroleum products
17) There are 9 Commodity Boards for all EXCEPT one of the following commodities
:
A. Coffee
B. Tea
C. Rubber
D. Wheat
18) Which of these is NOT an incentive provided to units in an SEZ?
A. Duty free import/domestic procurement of goods for development, operation and

maintenance of
units
B. Exemption from export commitments
C. Exemption from Central Sales Tax
D. Exemption from Service Tax
19) Which of these is the correct combination for minimum area requirements for
setting up a SEZ?
1 IT/ITES/handicrafts SEZ Bio-technology/ nonconventional
energy/gems and jewellery Sector
A 100 hectares
2 Sector Specific SEZ B 40 hectares
3 FTWZ C 1000 hectares
4 Multi Sector SEZ D 10 hectares
A. 1A; 2B; 3C; 4D
B. 1D; 2A; 3B; 4C
C. 1C; 2A; 3D; 4B
D. 1A; 2D; 3B; 4C
20) Export Credit Guarantee Corporation (ECGC) provides the following types of c
over to the exporters?
A. Standard policies
B. Special policies
C. Financial guarantees
D. All of the above
21) The functions of India Trade Promotion Organisation (ITPO) include:
A. Providing information and market intelligence to the business community
B. Issuing insurance policies to exporters
C. Financing India s imports and exports
D. Providing financial guarantees to banks against the risks involved in providi
ng credit to exporters
22) Indian Institute of Foreign Trade (IIFT) is located in?
A. New Delhi
B. Kolkata
C. New Delhi and Kolkata
D. None of the above
23) The products covered by APEDA include all, EXCEPT:
A. Meat and meat products
B. Seafood and marine products
C. Poultry and poultry products
D. Dairy products
24) There are 19 Export Promotion Councils. The products which are not covered b
y Export Promotion
Councils are?
A. Basic Chemicals, Pharmaceuticals and Cosmetics
B. Gems and Jewellery, Leather and Leather goods
C. Coffee, Tea, Spices
D. Electronics & Computer software Engineering
25) The objectives of the Export Promotion Council for EOUs and SEZs (EPCES) are
:
To promote exports from India and to earn more foreign exchange for the country.
To facilitate interaction between the exporting community and government both at
the Central and
State level
To canalize financial assistance rendered by the Central Government to members f
or assisting
their export market development efforts.
All of the above
None of the above
26) Asia's first Export Processing Zone (EPZ) was set up in:
A. Mumbai in 1965
B. Kandla in 1965

C. Chennai in 1965
D. Kolkata in 1965
27) Which of these are the purposes of setting up EOU s/ SEZs:
A. Promotion of investment - from domestic and foreign sources
B. Creating employment opportunities
C. Developing infrastructure facilities
D. All of the above
E. None of the above
28) Exports and Imports come under the purview of:
A. Ministry of Finance
B. Ministry of Commerce
C. Ministry of External Affairs
D. Ministry of International Affairs
29) Which one of the following is not a cause but a consequence of Globalisation
?
A. Deregulation abroad
B. Integration of Markets
C. Greater institutionalization abroad
D. Greater Risk Exposure
30) An OBU set up in SEZ by a bank in India is subject to:
A. CRR/SLR stipulation of RBI
B. No Capital Adequacy Norms
C. No CRR/SLR stipulation of RBI
D. No restrictions from Government of India.
31) If a country is having more exports than imports in value terms, it can be s
aid that the country is
having:
A. BOP crisis
B. Deficit under BOT
C. Surplus under BOT
D. Surplus under BOP
32) An appreciation of the Rupee relative to the US Dollar would be expected to
have which of the
following effects?
A. Increase US exports to India
B. Increase US imports from India
C. Raise the cost to Americans for Indian imports
D. Create Balance of Payments surplus for India
33) India is among the 15 leading exporters of agricultural products in the worl
d. It had a share of ____
per cent in world trade in agriculture in 2008.
A. 1.2
B. 0.76
C. 1.6
D. 1.8
34) The largest importer of agricultural products in 2008 was ____________?
A. European Union (27)
B. United States
C. Japan
D. China
35) The largest exporter of agricultural products in 2008 was ____________?
A. European Union (27)
B. United States
C. Brazil
D. Canada
36) Consumer food industry does not include:
A. packaged foods
B. packaged drinking water
C. alcoholic beverages
D. fresh fruits and vegetables

37) Challenges faced by India s gems and jewellery sector are:

A. Unorganized sector
B. Low level of R&D and product development
C. Possible Threats from China and from Other Countries Producing Diamonds
D. All of the above
38) Which of these is the strength of Indian Leather and Leather goods sector?
A. World-class institutional support for Design & Product Development, HRD and R
& D
B. Presence of support industries like leather chemicals and finishing auxiliari
es
C. Presence in major markets
D. All of the above
39) Which of these is NOT a focus product group for enhancing India s exports to t
he Latin American
region:
A. Textiles including ready-made garments, carpets and handicrafts
B. Engineering products and computer software
C. Chemical products including drugs/pharmaceuticals
D. Gems and jewellery
E. All of the above
40) The state with the major share in production of leather and leather products
is_________?
A. Tamil Nadu
B. Kerala
C. Manipur
D. Assam
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