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On the sidelines of the announcement of the annual supplement to the Foreign Trade Policy 2009-2014, Commerce Secretary S R Rao tells Indivjal Dhasmana & Nayanima Basu that the trade deficit would be controlled. Edited excerpts:
In March, exports rose the most in 2012-13. Do you see the trend continuing this financial year?
Exports have fared well in the last few months. For this calendar year, WTO (World Trade Organization) has further scaled down trade growth. But we expect a positive movement in exports. The growth we have been seeing from December 2012 should continue. This financial year, we expect at least 10 per cent growth, with a set of incentives.
For special economic zones (SEZs), there was no relief from minimum alternate tax (MAT) and dividend distribution tax (DDT). Does this mean the government wouldn’t be doing anything further?
I would not like to comment on that. Yes, it is indeed a problem. But I think the export performance for SEZs was very good. MAT is a much larger issue, which the finance minister is aware of. Equilibrium of sorts has already been reached. Now, we have to look at other factors that contributed to the costs … we are trying to re-discover our export competitiveness. In 2012-13, the export performance of SEZs improved 30 per cent. So, MAT is clearly a disability, but it is not something that would pull us down.
Considering the measures announced today, what growth in SEZ exports do you expect this year?
We expect a greater improvement this financial year.
What would the package announced in the supplement to the FTP cost the exchequer?
It is difficult to estimate the amount. For exports, it is not necessary that everyone claims credit for the current year.
Trade deficit was the major factor behind the high CAD. Do you see any comfort on these fronts this financial year?
In 2012-13, the trade deficit rose 4.5 per cent compared to 2011-12, despite three quarters recording extremely poor export numbers. Now, exports have already started looking up. We expect the trade deficit to be controlled, purely on merchandise trade, as exports are now rising.
