At a time when the country's exports have shown some positive trends over the three months ending January after 13 months of consistently declining growth, exporters are asking for more relief or a continuation of the stimulus measures. In a candid assessment of the export situation, the Commerce Secretary, Dr Rahul Khullar, spoke to Business Line at his Udyog Bhawan office on what his Ministry is pitching for to improve the situation.
Excerpts from the interview:
On export trend in 2009-10.
Since October 2009, I have been telling that exports this fiscal will be $165-170 billion. With exports during April-January at $133 billion, my guess is that the export figure will be $14-14.5 billion each in the next two months with an additional $5-6 billion as missing entries. Still, we are not going to get to the over $180 billion which we achieved last year. We will end up at 8-10 per cent below this level.
In the first six months, we were almost 30 per cent below last year's figures and if we end up 8 per cent less, it would mean a huge improvement in the second half of the year.
My feeling is that what happens in 2010-11 will depend critically on what happens in the first quarter, as typically the first quarter of any year is the leanest.
So only when the June numbers come in July we will have a better sense of whether the recovery is firmer or not. Now we need to wait for the Budget. We have requested for a number of measures. We have also asked for the continuation of the export-related stimulus — as to how much of that stays depends on the fiscal constraints. Once that announcement is made, then I have to start working backwards.
Essentially, if there is any cutback in our budgetary provisions, then we have to start planning what to do from April 1, because the cutbacks become effective from that day. Then I have to reconfigure to whom to give what.
For instance, at that point it may be more important to focus on textiles because the sector will be readying for the summer season and will want to get more products out for the export market.
But I know for sure if there is any curtailment or downsizing in my budgetary envelope, I have to take stock. When taking stock we will do exactly what we did this year, which is to figure out which sector has done well or which has not; textiles, engineering and leather are all in trouble. Engineering is the most badly hit and we will have to see how to fix that.
Within textiles, yarn and manmade fabrics are doing well. Readymade garments are doing a little better now, unlike in the recent past. So we have to think of something for this sector also.
But I don't want to anticipate anything at this point of time. But I will get the exercise done in March and come April I should be ready to announce measures for the affected segments.
On transaction cost.
The DGFT (Directorate General of Foreign Trade) Committee, chaired by Mr R. S. Gujral and steered by the Minister of State for Commerce and Industry, Mr Jyothiradhitya M. Scindia, is working on the subject.
There is not so much of a problem here, but the real transaction costs are in terms of dealing with other infrastructure-related agencies — customs, shippers, civil aviation, customs agents and container freight stations — along the export chain, and especially when exporters run into problems and have to deal with them.
The first big thing that we could do is to get the EDI (Electronic Data Interchange) project going . I have written to the Revenue Secretary about this project slipping year after year.
I would be most disappointed if it does not get implemented completely when I am here.
Once the EDI is in place, there is the task of integrating various partners onto an electronic platform so that the exporters do not have to be physically present.
The other issues are more in the nature of irritants such as paperwork at DGFT offices. If I have taken an import licence how do I prove that I have discharged my export obligation? So exporters, instead of concentrating on their business, start spending time doing paperwork?
A solution to this is computerisation or a drive to clear this sort of irritants once and for all. I don't want to prejudge what the Committee will say.
On services exports.
We don't have to do more on services export as it pretty much gets done on its own and is growing rapidly.
Occasionally, I think it runs into problems , such as when some State governments in the US started saying no to outsourcing or when they change the visa rules which prevent the free movement of our independent professionals or contractual service-providers — these sort of things hinder our services export.
On Doha talks.
It is pretty stuck because there is nothing much happening — they are going through the motions with all the negotiating teams going to Geneva and getting the technical work done. But technical work is no solution for negotiations which require hard ‘give and take'.
If you are going to refine your technical knowledge you can do it for the next 20 years and you are never going to get a solution. That is the real problem in the Doha talks.
For nine years negotiations have been going on. Not one of the protocol headline issues — agriculture or NAMA modalities, for instance — has been discussed thoroughly and if they cannot be negotiated how can you get progress?
Source : Business Line