What is our export vision for the coming decade and what needs to be done for realising the vision?
In April 2008, Kamal Nath, the then commerce minister, spelt out an ambitious target of securing 5 per cent of world trade in goods as well as services by 2020. In practical terms, this meant a four-fold increase in India’s percentage share in the next 12 years. Considering that world trade is itself increasing, this translated into an eight-fold increase in absolute terms, calling for annual average growth rate of 25 per cent consistently for the next 12 years. Nath announced setting up a Joint Task Force (JTF) to plan an integrated strategy to overcome structural problems and draw up a roadmap to achieve the objective.
The global economic slowdown and brief recession in rich countries meant the grandiose vision of Nath had to be abandoned. Nath’s successor, Anand Sharma, faced with uncertain global trading environment, came up with a short-term goal of reversing the declining trend of exports in 2009-10 and achieving a growth rate of 15 per cent in 2010-11. He sought to achieve that essentially through higher subsidies for import of capital goods, diversification of markets and export of select goods. He also announced direct export subsidy to status holders in select sectors. The latest figures show that exporters would achieve the target Sharma had in mind for 2010-11.
For the medium and long term, Sharma set less audacious targets than his predecessor. Sharma expected to double India’s exports of goods and services by 2014 and to double India’s share in global trade by 2020. For the three-year period 2011 to 2014, Sharma planned to come back on a high export growth path of around 25 per cent per annum. The JTF, constituted mostly of commerce ministry officials, was set up under the chairmanship of the commerce secretary to suggest measures to achieve the targets.
In its first meeting in May 2010, the JTF mainly talked about improving infrastructure, improved EDI (Electronic Data Interchange) connectivity, establishment of new manufacturing hubs, development of global services hubs in information technology, industrial design, knowledge process outsourcing, research and development and product testing, prioritising export-related projects in ports and airports sectors, initiating vendor development programmes to improve the value chain in manufacturing hubs and industrial clusters, greater focus on agri exports and food processing sector, greater engagement of small and medium-scale enterprises in export efforts, need for timely commercial inputs, integrated trade information system, skill upgradation in export chain, etc.
Export growth depends on a number of factors that include higher productivity, innovation, leadership, market access and global trading environment. The JTF plans to address some issues that may impact productivity. The commerce ministry is mostly preoccupied with trade agreements that will give better market access to exporters and export promotion schemes — mostly tax concessions/reliefs — that will help exporters become price competitive. These initiatives may financially help exporters somewhat and help achieve relatively modest targets but it is innovation and leadership that will help quantum jump in exports.
Indeed, Indian exporters should start focusing less on what the government does for them and see how they can help themselves. Various export subsidies take the attention away from innovation — the main factor that will give lasting competitive advantage in global markets.
Email : tncr@sify.com
