Indian exports continue to be in the negative territory for the tenth consecutive month but the 7% growth of exports in Germany in July and the A Sakthivel expansion of the European economy augurs well. Yet, it is too early to forecast the export trend for next few months.
On the positive side, the downturn in the global economy has forced entrepreneurs and the government to show a sense on urgency on diversifying exports. The Foreign Trade Policy 2009-14 by identifying 26 new countries under Focus Market Scheme and additional 13 under Market Linked Focus Product Scheme provides a trail to the industry. The increase in the duty free benefit under focus market scheme from 2% to 3%, the rise in outlay under Market Development Assistance and the Market Access Initiative schemes and the plan to organise Made in India show in at least six countries will encourage exporters to explore untapped markets. These measures will help to increase our exports to Latin America, CIS, ASEAN and Africa to realise their full potential.
The grant of 1% Status Holders Incentive Scrip for imports of capital goods and availability of zero-duty Export Promotion Capital Goods scheme for specified sectors will encourage expansion and modernisation of manufacturing units. However, the denial of Status Holders Incentive Scrip to those units that are availing Technology Upgradation Fund Scheme (TUFS) seems to be little harsh. In many cases, the benefit under TUFS will only be a fraction of benefit that these units may have to forgo. Reduction in the threshold for recognition of premier trading house from Rs 10,000 crore to Rs 7,500 crore will encourage star trading house to strive for higher recognition. However, similar reduction in threshold in other categories of status also would have been in line with general decline in exports.
The sector specific measures for handlooms, handicrafts, gems and jewellery, marine, leather and electronic hardware will impart some competitiveness to these sectors. The computation of duty on fuel in calculation of DEPB rates will result in higher benefit and partly address our concern for rebating of duty on fuel for export production. Non availability of credit in free foreign exchange at LIBOR+350 basis points was a serious concern for MSME. The setting up of a committee to monitor the same is a welcome move and we hope that the committee will direct bankers to give due weightage to MSME exporters over corporates.
Exporters are looking forward to e-trade project which will connect all the 13 agencies involved in exports/imports through Electronic Data Interchange and will dispense with the need of filing the same information with different agencies. If digital signature is also incorporated, it will pave the way for a totally paperless transaction.
However, that would require constant and effective monitoring so that e-trade project is executed within the specified time. The initiatives to make India a hub for production and exports of green products and technologies are welcome move and they will open new vistas of opportunity in the green movement. Apparel exporters are concerned over non-extension of Market Linked Focus Product Scheme for garment sectors for exports to US and EU beyond 30 September 2009. I am sure that the commerce minister will not disappoint them.
Source : The Economic Times