The Economic Survey has said that India’s foreign trade, which took a beating in 2009, is looking up with the prospects of recovery in the world output and trade volumes. But the Survey cautioned that while the fall has been arrested, both output and trade recoveries are still fragile.
“Given the fact that the recovery has been pumped up by the stimulus given by different countries including India, the effects may dry up if natural recovery does not follow,” it said.
Stating that the export sector needed a further push, the Survey said that while in the short-term stimulus measures have worked, some fundamental policy changes are needed. For the merchandise sector, tariff reforms are needed by lowering the duties from the present 10 per cent to 7.5 per cent.
The outlook for the merchandise trade has brightened in 2010 with the prospects of a recovery in world output and trade volumes, it said.
The Survey also said that the Dubai debt crisis is likely to have “some impact” on India’s exports and imports as the gulf region is the country’s largest trade partner.