Improve terms to increase global market share
India must aim to achieve a 5% share in world merchandise exports and 7% in services exports by 2025, says a report by the Confederation of Indian Industry (CII).
India’s goods exports declined to US$313 billion in 2019-20. Its share in global merchandise exports is 1.67%, with a low share in top globally traded items. In services, it has a 3.54% share.
The report, ‘Re-orienting India’s Export Endeavour in the Covid-19 World’, has outlined a 10-point agenda for increasing India’s exports of goods and services in line with the Prime Minister’s vision of an “Atmanirbhar Bharat”.
“The pandemic situation has impacted world trade negatively. However, it also provides a big opportunity for India to better engage with the world and boost its export performance,” stressed Banerjee.
“This is an opportune time for India to strengthen its domestic manufacturing through a strong partnership between the Government and Industry”, he said.
“As more and more countries are looking at realigning their trading strategies and diversifying their import sources post the Covid-19 outbreak, India must leverage the present situation to emerge as an alternative destination for sourcing cost-effective, quality products”, stressed Banerjee.
“A key point in India’s export strategy must be to strengthen its participation in Global Value Chains (GVC)”, he added.
CII has outlined 10 areas where the action is required to boost exports.
One, an open and facilitative import environment is required to attract global companies and ensure competitive access to intermediate goods.
In general, higher duties on finished goods and lower duties on intermediates should be applied.
Two, the Foreign Trade Policy should be brought out at the earliest to establish a stable and predictable export policy regime.
Three, export finance must be expanded. The Interest Equalisation Scheme should be extended for another two years for all exporters, including the non-MSME sector. It called for fast-tracking GST refunds which hold up working capital. Cesses should be removed.
The capacities of the Export-Import Bank and the Export Credit Guarantee Corporation need to be strengthened to raise resources and lower risks.
Four, trade facilitation can be strengthened through digital tools for faster movement of goods at the border. It recommended reducing physical examination of goods, widening the Authorised Economy Operator program, and ensuring Direct Port Delivery system.
Over the longer term, new risk analysis tools such as machine learning and AI should be used and all databases integrated. Port dwell time can be reduced through the mechanisation of port infrastructure.
Five, the Trade Infrastructure for Export Scheme (TIES) must be extended and included under the National Infrastructure Pipeline. In the medium term, it is essential to draw up a comprehensive strategy for hinterland connectivity.
Six, Ease of Doing Business reforms need to be carried out by the state governments for enhancing competitiveness with monitoring at the Chief Secretary level. Time-bound approvals and effective on-ground implementation of single window system across all states are required.
Further, allowing industries to directly purchase land from farmers, rationalization of stamp duty, increasing threshold limits of certain labour laws, and setting up of a single labour authority in the state for all inspections, among others, are recommended.
States should also strategize for exports based on their strengths and develop export clusters.
Seven, adequate funding for meeting quality standards and providing certification facilities is necessary to strengthen enterprise competitiveness.
Eight, on the external front, India needs to leverage existing free trade agreements for exports and enter into FTAs with large market nations. India must also diversify its export basket to include more goods that are traded globally, such as electronics and machinery.
Nine, for strengthening India’s participation in GVCs, the CII paper suggests an openness to FDI for technology transfer. It also stresses on the liberalization of the services sectors as services are embedded in manufactured goods. Gaps in standards and technical regulations must be bridged with more awareness and better facilities for exporters.
Ten, marketing promotion in top markets is essential. CII suggests promoting ‘Brand India’ and setting up a dedicated marketing agency for key markets as well as expanding the Market Access Initiative and Market Development Schemes.
The CII report includes specific measures for 9 manufacturing sectors such as automotive, chemicals, electronics, steel and textiles etc. Education and healthcare are covered under services. In the agriculture and allied sector, CII has brought out recommendations for Agri produce, fruits and vegetables, marine products and processed foods. fiinews.com
