New Delhi, Aug. 26 Even as the Commerce Ministry is set to unveil its medium-term Foreign Trade Policy (FTP) for 2009-14 here on Thursday in the face of gloomy global trade situation, the policy would have more to do with overcoming short-term constraints than laying out any future strategy to rev up exports.
Sources in the Government told Business Line here that a continuous spell of export contraction has been inevitable since October 2008.
Export growth might return to double-digit numbers as early as next year if the sprouting green shoots noticeable in certain areas of the global economy turn into sustainable recovery as the months go by, they say.
Given the constraints the exporters face such as declining overseas demand and lack of continuous orders to carry on business without laying off workers in certain labour-intensive segments such as textiles, gems and jewellery and agri and marine products, the FTP might extend the earlier relief measures for a further spell and ensure trade finance and insurance at an affordable cost.
Drought situation
What has exacerbated the woes of exporters is the drought situation prevailing in various States.
This might prompt the authorities to impose a temporary ban on outbound sales of food items for the rest of the year, even as the ban on export of rice, wheat, pulses and edible oil imposed in the wake of flare-up in their prices in 2007-08 had to be continued till date.
As the situation on the export front is likely to stabilise only from next year, the FTP might be focused on fire-fighting measures for certain identified segments in a bid to safeguard the livelihood security of workers employed in such export industries.
There may be an announcement to complete the electronic data interface (EDI) between DGFT and the Customs side of the Revenue Department so as to bring down the transaction cost to trade and industry, besides pruning a plethora of procedures to make life easier for exporters.
According to the Ministry of Commerce Director, Foreign Trade, Mr Ajay Srivastava, the country’s export sector could, with a few “smart initiatives”, become a significant export and manufacturing base for the global companies, make a marked contribution to economic growth and offer better life to millions.
Spelling out Vision 2015 in a new study, updating his earlier work on achieving superlative export promotion, to deal with the crisis in the times of global export meltdown, Mr Srivatsava said India should scale up its aspiration to increase exports of merchandise goods and services from $250 billion in 2008 to $685 billion by 2015.
Low export to GDP ratio
Mr Srivatsava contends that Indian exports suffered less in the current global downturn because it has a low export to GDP ratio, a weakening rupee, growing cost, capability and country advantage in both manufacturing and services sectors and the numerous growth opportunities in individual sectors and burgeoning sectoral competitiveness and expanding global reach of Indian mini multinational companies.
He cited the cases of companies in the automobiles, auto parts, metals, chemicals, pharmaceuticals and electronic sectors which had drawn up ambitious plans for expanding and diversifying their manufacturing activities.
Alongside, MNCs from abroad have been stepping up their investments from the limited IT and automotive sectors to other sectors such as auto parts, engine turbine, speciality chemicals and processed food, he added.
Source : Business Line