Opening of warehouses exclusively for Indian products in major international trading hubs has been proposed by exporters as a new export strategy to offset the sharp drop in outbound trade.
Exporters feel that if the government allows major exporting and trading companies, non-resident Indians (NRIs) and overseas corporate bodies to set up such warehouses, it would not only improve the countrys export competitiveness, but help it reach out to new markets.
The recent drop of 2.63 per cent in export growth in dollar terms from a high of 21 per cent three years ago has shaken the government, which made liberal amendments last month to its export-import policy for 1997-2002. Exporters are generally happy with the new policies although they said the cost of finance and inputs has to be reduced.
The Federation of Indian Export Organisations (FIEO), whose members contribute 75 per cent to the countrys total exports, has asked the government to allow more Indian exporters to open warehouses abroad.
Commerce Minister Ramakrishna Hegde has already decided to allow private bonded warehouses onshore to import, stock and sell even items in the negative list which importers holding advance licences can utilise.
He said to facilitate bulk imports from India by large overseas buyers like departmental stores, his ministry has decided to allow private bonded warehouses for such exports. It would allow supplies to these warehouses against payment in foreign exchange through normal banking channels and these would be treated as exports.
FIEO President Ramu Deora said Indians should be encouraged to set up warehouses abroad by offering them tax breaks. The concept of warehouses abroad by Indian exporters could help in jump-starting exports, he told IANS.
We have suggested to the government that warehousing facilities by Indian exporters should be allowed in ports such as Rotterdam, Hamburg, Antwerp, Hong Kong and Singapore, he said.
Such warehouses would allow the domestic exporter to offer goods virtually off the shelf at very competitive prices, he said. It would also offer an investment opportunity for the NRIs, he said.
The new trade policy, Deora acknowledged, allowed bonded warehousing facilities in India that would help small and medium exporters, who contribute 40 per cent of direct exports and 60 per cent of indirect exports, to offer goods at competitive prices.
Deora, who has had his own bonded warehouse in Hamburg, Germany, for the past 13 years, said that his experience made him suggest to Hegde that such facilities overseas would be one way to address the issue of export sluggishness and quicken realisation of export proceeds. Because of his Hamburg warehouse, Deora said, he can offer even small consignments of one or two tonnes to European or even Latin American importers, he noted.
He said 80 per cent of Indian export and import cargo is still ocean-borne and there is delay in shipment because of poor port facilities and inadequate shipping services. One of the points that Deora has raised as part of the national agenda of exporters is setting up of offshore banking facilities and free ports on the lines of Singapore and Hong Kong.
Similar facilities should be set up in the Andaman and Nicobar islands in the Bay of Bengal to stimulate export growth, he felt.
Opening of warehouses in major trade hubs outside the country, especially by NRIs, should be encouraged through fiscal measures, he said. I dont want any government agencies to get involved in such projects, Deora hastened to add, saying that such experiments had been unsuccessful. The government should allow export houses or trading companies to open warehousing facilities overseas and allow them to find joint partners including NRIs, he said.
