India needs collaborative effort from centre & state govts to boost exports: FIEO.

India's exports have declined in 2012 but prime reason for the same has been decline in world trade in most of the products. An analysis at 2 digit level of India's exports show that in respect of 17 products while the world trade grew, exports witnessed a decline. This is a serious cause of concern. Prominent among such product group includes fruits, value added meat and fish products, knitted fabrics, knitted garments, footwear, gems and jewellery, electrical and electronic equipments to name a few .

M Rafeeque Ahmed, president, FIEO said, "There is strong relationship in exports and manufacturing. Unfortunately in 7 out of 12 months in 2012, the IIP numbers were negative and only in 1 month it was over +5%. On the contrary , IIP data was positive in 11 out of 12 months in 2011 and in 7 months of 2011 it was over +5%. Unless manufacturing picks up in India, it will be difficult to push exports. Our focus should be to make manufacturing competitive and facilitate flow of investment in manufacturing which has basically dried up in recent times. We hope that NMP and NIMZ will facilitate investment in manufacturing thereby giving fillip to exports."

While Ahmed compliment minister for agreeing to demand to increase MDA threshold limit and entitlements, FIEO president hopes that additional funds would be made available to give effect to such announcement as our present allocation under MDA is based on pre- existing criteria. However, Ahmed would re-iterate plea to form a planned export development scheme for a period of 5 years with sufficient corpus equivalent to at-least 0.5% of country's exports to put focus on marketing which is seriously lacking in MSME exporters.

Africa and Middle East countries can be the thrust regions of India's exports looking at increasing purchasing power fuelled by agriculture and oil respectively. The two together account for USD 1,354 billion of imports. While India has been able to increase its share in both these regions, other countries with aggressive marketing, have taken a major share. India's exports to Africa has gone up from USD 23 billion in 2011 to USD 27 billion in 2012 ( 5.35% share), China's exports in the corresponding period went up from USD 72 billion to USD 85 billion increasing its share to 16.7%. France, US and Germany are also carving a large share.

"Similarly, India's exports to Middle East went up USD 60 billion to USD 65 billion in 2012, China's exports jumped to USD 109 billion acquiring 13% of the total imports. Both the Regions are looking towards India for increasing their economic engagements. Africa, in particular, wants to move away from China's domination and India can look for increasing its share to 15% of African imports in next 5 years. We may declare African Region as a priority region for next 5 years and aligns our strategies to achieve this objective," added FIEO president.

One of the challenges faced by exporters is the time taken in resolving problems adversely affecting exports. There is a need to put an effective mechanism to resolve such issues within a week. An inter-ministerial committee may be set up to solve such problem on fast track. For example, factory stuffing problem of excise at Ludhiana is impacting exports and the same remained unresolved despite representation more than a month back. The issue of bank guarantees for status holders for warehousing of own manufactured goods is jeopardizing production in many factories across India. While problems will always crop up but an effective time bound manner to resolve the problems through some institutional mechanism is very much required in the country. Look at reviving export promotion board chaired by the cabinet secretary which was very effective in addressing such problems.

States are required to play a very proactive role in exports as all factors of production are under their jurisdiction. The delays in VAT refunds, imposition of State taxes on exports all add to un-competitiveness of exports. "While our export activities are still concentrated to some select fields and regions, there are many states which are comparatively lagging far behind, some even lacking the least amount of awareness, without which no infrastructural facilities, export incentives or policy measures can hardly help. We need a collaborative effort from the centre and the state governments," Ahmed opined.

A thriving and competitive manufacturing industry needs an excellent infrastructure that would enable it to be competitive on cost, quality and supply chain, 3 important parameters that determine the success of the industry. However, most states do not provide grid power and the cost of captive power to grid is 1:3.

Every country in the world provides equal if not better opportunity for local manufacturing compared to imports. However, for many products, the taxation is so skewed that it is often easier and cheaper to import equipment than manufacture it locally. This is the biggest impediment for the growth of our manufacturing industry. Despite the high unemployment rate, an estimated 10 million manufacturing jobs worldwide cannot be filled due to a growing skills gap. And in India, even with a population of 1.2 billion, the struggle to find the right talent to help fuel industry growth remains. The skill set needed to fill these gaps is the need of the hour and thus skill development should be given a national priority and all support to be given to institutes and entrepreneurs engaged in the field.

Source : myiris.com