After announcing his first foreign trade policy, commerce and industry minister ANAND SHARMA spoke to Sudheer Pal Singh and Jyoti Mukul on his “cautious and modest” approach in targeting a two-fold jump in the country’s exports in five years. Excerpts:
You have mentioned that our exports in goods and services will be doubled by 2014. How confident are you about these targets and how do you see this happening?
I am confident because I have full faith in the resilience of Indian industry. There are three-four factors which stand out. Continuity and stability in policy, technology upgradation, incentives, cutting transaction costs and the time-bound implementation of e-trade. The directorate general of foreign trade, ports and the customs are being connected for two-way messaging, e-filing of applications and e-payments. We have drastically brought down the application fees. Also, we have increased the incentives under various schemes. The policy gives a fillip to the labor-intensive sectors, like handicrafts and handlooms. The highest entitlement of five per cent has been given to them under the special products scheme.
The tea industry has been brought in for the first time. We have increased the entitlement for the jewellery industry. We have neutralised the duty tax incidence, by giving them full drawback for any duties paid. In addition to that, the entitlement they could take has been increased from $2 million earlier to $5 million. Even the personal entitlement for business promotion has been increased. We have doubled the financial assistance under the Market Access Initiative.
The new policy has announced access to new markets. Will these new markets be able to reverse the demand slowdown in the traditional ones?
At least, we will be able to get some additional orders. We are talking of 39 markets and many of them are big. Under the Market Linked Focus Product Scheme, 13 new markets have been identified. And it is not only additional markets, the incentives have also been increased. You have to recognise market expansion and diversification.
The new policy gives a sense that it lacks a five-year vision.
We are looking at where we will be in five years. I am being cautious and modest in my approach, to say that in five years we will double our exports in goods and services from the present volume. I am also talking of doubling India’s share in merchandise goods and services globally by 2020. Given the fact that the major markets and the developed economies are in contraction, they are going to register negative growth. In addition to that, we cannot overlook the harsh realities. If exports have been hit, it is not because of lack of effort, or incentives or support on the part of the government but because of the fall in demand. There are many cases where the goods have been shipped but the money has not been realised. If the exporters send something out and realisation does not happen, there cannot be any deductions expected. That is what we have said in the policy.
We have gone in for diversification to tap the new markets which have potential. At the same time, I could not have made a tall claim, when we are not sure when the turnaround in the major economies will take place to take them to the pre-recession level at least. The WTO projection is that there will be a contraction in global trade by 9 per cent. IMF says 12 per cent. So, even if I take the average of the two, it’s a huge fall.
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By your assessment, when is the revival likely?
In India, domestically, the turnaround is visible. That is why we are looking at these 39 new markets. This is not small.
Will the policy review happen only after two years?
In the fast changing economic order, you can never rule out a change. We have been in constant touch with industry and the export promotion council. We have the ability and responsibility to respond to any situation that arises.