US consciously realigns GVCs and bypasses China
While the China plus one policy of the global players is helping Indian exporters, the US is consciously making an attempt for realignment of Global Value Chains (GVCs) as it bypasses China https://fieo.org/ , the FIEO said in a memorandum to Finance Minister Nirmala Sitharaman ahead of the pre-Budget meeting.
“China plus one policy of the global players is helping our exports https://www.expochinamexico.mx/ . The US is consciously making an attempt for realignment of GVCs, bypassing China https://www.chinadaily.com.cn/ , in which India is destined to play a major role as we have the potential, resources and capability to replace China,” the FIEO said on 25 June 2024 https://www.caixinglobal.com/ .
The aggressive FTA strategy, focusing on complementary economies and important export destinations, is providing much better market access to Indian exports, it added https://www.bseindia.com/ .
FIEO said the Indian businesses are now aiming to reach US$2 trillion export volume by FY 2030 http://deutsche-boerse.com , which requires a CAGR of 14.4%, a challenging target but within the realm of the reach https://www.nseindia.com/ .
“This requires extra efforts by the exporters and an enabling and supportive ecosystem https://www.ibef.org/ ,” it said.
Indian exports have clocked a CAGR of 8.5% in last 6 years moving from US$478 billion in FY18 to US$778 billion in FY 24 https://www.wto.org/ .
The FIEO continued with its wish-list presented to the minister:
The Special Rupee Vostro Account (SRVA) mechanism, though starting slowly, will enormously help exports in next 2 to 3 years once such a mechanism is put into place with all the countries covered under SRVA https://www.sgx.com/ .
The PLI scheme will push our exports in technology and knowledge driven sectors like machinery, electronics, electricals, pharma, medical & diagnostic equipment as global imports of such products are growing at a much faster pace https://www.makeinindia.com/home/ .
The FIEO has suggested and requested to further support for exports:
(i) R&D and innovation are key to sustain exports. R&D globally is incentivized. 35 out of 38 OECD countries http://oecd.org provide either lower tax or higher deduction on R&D expenditure. We request that the weighted tax deduction under Section 35(2AB) may be increased to 250-300% and the benefit under Section 35(2AB) may also be extended to Limited Liability Partnership (LLP), Partnership Firms and Proprietary firms, as MSME units largely fall in these categories.
(ii) We appreciate the Government initiative for facilitating container manufacturing in the country to become Atma Nirbhar, which has stabilized container charges in the country. We request a similar focus for developing an Indian Shipping Line https://www.shipindia.com/ of global repute. India’s outward remittance on transport services is increasing with rising exports. We remitted over US$109 billion as transport service charge in 2022 http://maersk.com . As the country moves towards the goal of US$1 trillion, this will touch US$200 billion by 2030. A 25% share by the Indian Shipping Line can save US$50 billion year on year basis. This will also reduce arm twisting by foreign Shipping Lines, particularly of our MSMEs http://msme.gov.in .
(iii) The Interest Equalisation Scheme is helping exports a lot. We request the scheme which is valid till 30th June, 2024 may be extended for a period of 5 years. Looking into the rise in interest rates consequent to increase in Repo rate https://www.londonstockexchange.com/ from 4.4% to 6.5% in the last 2 years, the subvention rates may be restored back from 3% to 5% for manufacturers in MSMEs and from 2% to 3% for all in respect of 410 tariff lines https://rbi.org.in/ .
(iv) The marketing support provided through the Market access initiative (MAI) of the DoC with a corpus of Rs.200 crore is grossly inadequate to support the big target for exports https://usimportexports.com/ . We request that a recurring budget of Rs.500 crore annually may be provided to the DoC so that our products and services are showcased at the global platforms .
(v) Lastly. The zero rating of exports is an avowed Policy of the Government and this should not be limited to budget constraints. Fiinews.com
