years, instead of five.

In 2004 our exports stood at a little over US $ 63 billion. In 2007-08, they have exceeded US $ 155 billion; our exports are not just double what they were 4 years ago, but 21/2 times that. We have managed an average cumulative annual growth rate (CAGR) of 23%, year on year, way ahead of the average growth rate of international trade. Our total merchandise trade - exports and imports together - will be almost US $ 400 billion this past year, accounting for nearly 1.5% of world trade.

If the trade in services is added to this, our commercial engagement with the world would be in the region of US $ 525 billion.

We have delivered on our second objective as well: that of fashioning trade into an instrument of economic growth and employment generation. Our total trade in goods and services is now equivalent to almost 50% of our GDP. This is unprecedented in India’s modern economic history.

On the issue of employment, it is our estimate that during the last 4 years increased trade activity has created 136 lakh new jobs. I have always maintained that exports are not just about earning foreign exchange but about boosting our manufacturing sector, creating large scale economic activity and generating fresh employment opportunities.

What is more remarkable about all these achievements is that they have been accomplished in the face of appreciation of the rupee (by more than 12% in the last year alone), high interest rates, spiralling oil prices, withdrawal of some GSP benefits to India by other countries and general international economic slowdown in some of our major trade markets. In spite of all this our exporters have shown great resilience. For this, they deserve our congratulations.

It is in this context that I am happy to present the final Annual Supplement to the Foreign Trade Policy for 2004-2009. In this Supplement, we have proposed several innovative steps, which include the following:

i) To promote modernization of our manufacturing and services exports, the import duty under the EPCG scheme is being reduced from 5% to 3%.

ii) Refund of tax on a large number of services relating to exports has already been announced by the Government. A few remaining issues regarding refund of service tax on exports would also be resolved soon.

iii) Income tax benefit to 100% EOUs available under Section 10B of Income Tax Act is being extended for one more year, beyound 2009.

iv) Sports and toys are mainly produced by our unorganized labour insentive sector. To promote export of these items and also to compensate disadvantages suffered by them, an additional duty credit of 5% over and above the credit under Focus Product Scheme is being provided.

v) Our export of fresh fruits and vegatables and floriculture suffers from high incidence of freight cost. To neutralize this disadvantage, an additional credit of 2.5% over and above the credit available under VKGUY is proposed.

vi) Interest relief already granted for sectors affected adversely by the appreciation of the rupee is being extended for one more year. vii) The DEPB scheme is being continued till May 2009. We still face many structural problems, which need to be addressed. We have to plan an integrated strategy to tackle these issues. We need to develop world class infrastructure. We need to encourge