Sustaining High Export Growth
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FIEO Chief Mr. Ganesh Kumar Gupta says that the current economic boom achieved by the country largely owes to a sustained high export growth, estimated at 125 billion US dollars for the current financial year, but the contribution of export is hardly appreciated. In his address in the Board of Trade meeting held on 7th March 2007, Mr. Gupta said "In today’s’ context, export should no longer be viewed just as a mechanism for earning foreign exchange to improve balance of payments position but also as a supplementary development strategy for promoting our national objectives of economic growth, expansion of employment opportunities, removal of poverty and increase in productivity." He enumerates the measures to be taken by the government to make the current high export growth sustainable. Excerpts from his address in BOT meeting: |
Every news item about the wonderful export growth is generally followed by a story on revenue loss due to exports. This creates a wrong impression in the public mind that exports are happening at a tremendous cost and that the exporters are continuously pampered with sops. The North Block sometimes estimates that due to incentives given to the exporters the national exchequer is losing somewhat Rs. 40,000 crore every year. Perhaps that’s why the Union Finance Minister devotes merely two sentences to exports in his 100 minute long budgetary speech. This is an elementary logic which does not take into account the huge foreign exchange earned by exports and its impact on leveraging domestic production and employment.
Our exports today account for 17 percent of the GDP and only exports can lift our status as a powerful nation in the new world order. And for that, we need to sustain the high export growth that we have achieved in the recent years. With many handicaps, we exporters have been successfully taking on our global competitors, but we look forward to government support to continue doing so. While FIEO has a long list of suggestions to improve the competitiveness of our exporters, I want to list out a few of them where we need urgent attention of the government.
Sir, the first and foremost thing we look from the government is to improve our export infrastructure. Our ports are badly choked and are in no position to handle increased exports. Unfortunately, the Budgetary proposals do not take adequate note of this fact. We request that every possible incentive is given for developing ports on PPP basis. As regards power, the budget offers only solace in terms of ‘clearance’ of three ultra-mega power projects by December 2007 which in all probability would take another 3 to 5 years for completion. The irony is that despite this situation, industries in many states are not allowed to set up captive power plants or even install generators beyond a certain capacity.
Sir, the policy support that has been provided to us is fantastic, but frequent changes in the export policy often mess up our calculations. For example, Duty Neutralization Schemes have undergone several changes in the recent past due to reasons varying from occasional misuse by some unscrupulous elements to lobbying by some section of the industry or sometimes due to exaggerated fears of the Revenue Department about the revenue loss. These changes have not only brought us tremendous losses but have also upset our long-term planning. FIEO requests that all existing schemes in the current Five Year Foreign Trade Policy, including DEPB and DFIA, should be allowed to run their course and reviewed, if necessary, only after 2009.
We have similar experience in export of many agricultural commodities such as sugar or pulses. The switch-on-switch-off agri-export policy is bringing down the share of agricultural products in our total exports and today we are exporting more petroleum products than agri-products. Sir, it is a major cause of concern for us as better agri-exports can ensure better return to farmers and create employment in rural areas. We need a stable agri-export policy as sudden export restrictions drive away our buyers, which we create with continued long term efforts, to other countries.
Sir, in order to boost our agri-exports, which FIEO believes to be an utmost priority, we need to make additional efforts. There is an urgent need for heavy investment in cold storage for reducing wastage of agricultural products, especially food grains, fruits, vegetables and spices. Moreover, in order to realize full value of our agri-exports, we need to encourage food processing industries and attract corporate investments in agriculture. We also need to identify and support food processing clusters in the various parts of the country on the lines of industrial clusters.
Sir, we need some fine-tuning in the Foreign Trade Policy in view of the practical difficulties faced by the exporters. Firstly, the benefit under Focus Product scheme is available only if the products are shipped through EDI enabled ports while ironically the products covered under the scheme are mostly shipped through non-EDI ports. The scheme should be extended to non-EDI enabled ports also from the date of announcement of the scheme with retrospective effect.
Secondly, the DGFT vide Public Notice No.8 issued on 13 May 2005 has sought an additional document in the form of Appendix 23 in support of fulfillment of export obligation under Advance Licence. This additional requirement is obstructing the exporters in getting the case redeemed as they face difficulties in co-relating the production data with consumption data, especially when the same inputs are consumed in the manufacture of different products. Moreover, in many cases SIONs are fixed on average basis but the consumption at different batches fluctuate and get neutralized at the end of the year. FIEO seeks complete withdrawal of Appendix 23 for redemption.
Sir, last but not the least, exporters need to diversify their export market, both horizontally and vertically. This requires market studies, market surveys, product testing, warehousing and an aggressive promotion strategy. Australia under ‘Export Market Planning’ assists exporters to explore marketing opportunities and under ‘Market Development Support Scheme’ provides them assistance to develop their markets overseas by offsetting their cost of participation in specialized industry missions and approved trade exhibitions. The country also reimburses a sum of 5,000 Dollar per firm for research and travel through ‘Market Research Initiative Fund.’ Scotland provides financial assistance to exporters for undertaking overseas market research with market grant of 20,000 Pounds per application under ‘Export Marketing Research Scheme’. Canada provides financial assistance to exporters under Trade Assistance Programme and Services for Market Exploration, Trade Show, and Out-bound Missions. Malaysia has an MDA Scheme to assist SMEs enter export market and develop export marketing expertise and a sum of RM 40,000 is available for each project. In order to make Indian exporters compete with these countries, some kind of government assistance is required. FIEO proposes a Market Access Fund supplemented by an annual grant of approximately 0.5 to 1% of the country’s annual export earnings to augment the marketing efforts of our exporters, particularly the small and medium exporters.
Sir, we are ready to shoulder our responsibility of ensuring high export growth but we also look for your kind consideration of the issues raised by us to enable us doing so on a sustained basis.
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Proposed forthcoming International Events of FIEO
We invite you to be a part of above activities and get benefited. MDA facility for the above events is available as per the guidelines. Please fill in the slip below and send us back by fax (011-26148194) or email: fieo@nda.vsnl.net.in; anandpseth@fieo.org. FIEO will get in touch with you with respective details. Name of the Company __________________________________________ Name of the Representative ___________________ Designation ________ Address _____________________________________________________ Tel______________ Fax ________________ Mobile: _________________ Email ________________________________________________________ Products dealing in_____________________________________________ Name of the event(s) interested to participate in______________________ |
Meet Korean Importers FIEO is organising an Interactive Meeting with a delegation of importers from Republic of Korea on May 11, 2007 at New Delhi. The delegation is on a purchasing mission and FIEO intends to organize an interaction of its members with visiting importers. For details please contact the MRD Division, FIEO Head Office, Niryat Bhawan, New Delhi.
Tel: 011-46042222, 26150101-04; Fax: 011-26148194;
Email: fieo@nda.vsnl.net.in; anandpseth@fieo.org |
