New Delhi, June 18 The country can achieve 7-8 per cent higher export growth in 2009-10 than the $168.7-billion it managed last fiscal, provided the forthcoming Budget comes out with a ‘good package’ to address the fundamental concerns of high interest rate, stagnant refund rates and inadequate market and product assistance to trade and industry.
The Federation of Indian Export Organisations (FIEO) President, Mr A. Saktivel, told Business Line that in recent days exporters have started getting queries and to convert these into firm orders is a daunting task. This was because India’s competitors such as China, Vietnam, Thailand and Bangladesh have been selling their products at lower prices, bolstered by support from their governments.
The tax refund rate from India’s competitors has gone up from 8-9 per cent to 15-17 per cent with their interest rates at 5.5 to 6 per cent. Against this, India’s export promotion schemes, such as drawback rates and the Duty Entitlement Passbook (DEPB) scheme, to neutralise the import duty suffered, remain very low, with VAT (value added tax) refund at 7.5 per cent and interest rates even with subvention ruling at 9.5-10 per cent, he added.
He said the minimum the government can do is to raise DEPB/drawback rates by 5 per cent and an across-the-board cut in interest rate at 7 per cent, particularly at a time when the rupee is gaining strength vis-À-vis the US currency, eroding export receipts in dollars. The Government should consider extending service tax exemption to exporters, abolishing the fringe benefit tax and re-introducing income-tax holidays which could boost exports.
Assistance
Deprecating the inadequate allocation of outlays for new markets and new products which amounted to Rs 200 crore on exports of $168 billion, Mr Saktivel said China has provided 80 billion yuan as market development assistance. He asked the Government to augment the assistance to Rs 5,000 crore if a foray into new markets and diversification into new products are to be made.
He said that at a `multi-product/home product' exhibition in Dubai recently, China had put up 150 stalls against India's mere 32 stalls, as the former was able to underwrite heavily on such foreign exhibitions to promote its products. He said the Commerce Ministry should have sufficient funds for development of products/markets if Brand India is to be promoted.
Asked about the job losses in the export market, he said this might be half a million and the exporters should try and reduce the working hours and working days to sustain the workforce and the situation could be salvaged if the Budget contains good support to sustain activity and keep job losses to the minimum.
The FIEO President said as most malls selling imported items in advanced countries have started refilling their shelves, India could push low-value products in the price range of $5 to $25 to occupy space by stepping up their exports.
Job guarantee
Pointing out that the Government should not view export as a foreign exchange earner but one that provides and sustains optimum level of occupation to skilled/semi-skilled/ unskilled workers, Mr Saktivel said the export industry could provide guaranteed employment for at least 250 days in a year with 60 per cent of such employment for women in rural areas if the basic demands for restoring competitiveness of the sector are met with urgently.
He said the time has now come to introduce "zero" duty export promotion capital goods (EPCG) scheme to augment production and exports of manufactured goods. This could be feasible, given the resolution of the concerns voiced by domestic capital goods industry by providing them deemed export benefits against indigenous procurement, he pointed out.
Source : Business Line