Exports
of a country are important for sustained economic growth. Many of the fastest
growing economies of the past few decades have recorded high exports growth.
Exports
have many positive effects on the domestic economy as well. Apart from
increasing foreign exchange reserves, exports bring many benefits to the
economy such as boosting competitiveness, promoting investments, generating
linkages with the global economy, increasing employment, and also in upgrading
skills.
CII,
in partnership with the Government, Industry and other key stakeholders, works
extensively to strengthen India’s exports status. As a part of this endeavour, CII
has come up with several research reports, to facilitate a better understanding
of India’s foothold in the exports segment across all key industries. It has
also provided recommendations for the forthcoming Budget 2020-21 to promote the
sector.
According
to CII, exports are important enough to merit a national task force with
representation from all line ministries as well as trade facilitation bodies.
This could be led by a top Government wing such as the Prime Minister’s Office.
With exports stagnant since 2011-12 and, on the other hand, many new
opportunities coming up, a strong push can accelerate job creation and
contribute to economic growth.
In
this context, a High Level Advisory Group was formed on exports in 2019 which
brought out several key strategies that India could adopt.
- Promoting
Existing SEZs – With the objective of attracting foreign investments and
overcoming gaps in infrastructure, the Special Economic Zones (SEZs) Policy was
announced in April 2000.
Currently
there are 419 approved SEZs out of which 351 have been notified. As of 30 June
2019, 234 of these SEZs are operational. SEZs have attracted an investment of
about INR 5 lakh crores, generating employment for more than 21 lakh persons.
SEZs exported to the tune of INR 7 lakh crore in 2018-19.
- In
the current policy, as per the sunset clause on the Income Tax benefits to SEZ
units, the units which become operational on or after 1st April 2020 will not
get Income Tax benefits. The Committee suggests the extension of the sunset
clause for another 5 years to boost exports.
- The
developer incentives and tax holidays could be extended to all SEZs approved by
31 March 2017, instead of to only those notified till 31 March 2017.
- Reducing
Cost of Export Credit – Government of India offers an interest rate
equalisation scheme to MSMEs offering an interest rate subsidy of 5 percent on
pre and post shipment credit. The buyers in the international markets do not
differentiate between MSME exporters or large exporters, but go by quality,
cost and credibility. Therefore, the same scheme could be extended. Also, the
subsidy should be linked to global rates, instead of fixed 5 per cent.
- Shipping
Regulator – Exporters face hardships due to arbitrary increases in shipping
freight, especially to USA, Canada and European markets. To regulate the
shipping freight rates in a fair and transparent manner, the Government could
consider announcing a National Shipping Regulatory Body on the lines of IRDA
and TRAI.
- Market
& product specific targeted strategy for exports – The analysis presented
in its report ‘Indian Exports – The Next Trajectory: Mapping Products and
Destinations’ identifies key products that India can export to these top import
destinations. The report can be accessed at https://www.mycii.in/KmResourceApplication/63506.INDIANEXPORTSReport3July2019.pdf
along with the
details of the country-wise products that India could look at for exports.
CII has
come out with some specific recommendations keeping in mind the upcoming Budget:
- Coastal
Economic Zones (CEZ) should be accorded high priority in the proposed
infrastructure spend of INR 102 lakh crores over the next 5 years.
- To
empower industrial clusters through building competitiveness, it is important
to identify products with export potential, and strengthen industrial clusters
where these goods are manufactured, along with related infrastructure and port
connectivity.
- Attracting
FDI and integrating with Global Value Chains – The key global value chain
opportunities could be identified and policies to attract investments could be
looked at. The Budget could announce setting up a task force under the
Department of Commerce to identify and strategize India’s participation in such
global value chain opportunities in consultation with industry.
- As
far as market promotions go, there could be a special cell for market
promotion. This could focus on the following:
- Dealing with Non-Tariff Barriers
- Tailored export strategies for top markets
- Activities for product promotion and brand building
- The government could look at announcing
setting up centres in top international markets on the lines of UK Trade and Investment
(UKTI), Buy USA, etc. for exports promotion.
With
global trade expected to slow down, India needs to place special policy
attention in the Budget to enable exports as a key engine of growth.
- Cii Blog
