Hope 2013: policy matters
The latest trade data for the month of November showed exports at US$ 22.3 bn with a dip of 4.17 per cent and cumulative export for April - November at US$ 189 bn with a fall of 5.95 per cent. Remarkably, IIP data for October 2012 showed 4.5 per cent growth, as against contraction in previous months. The same will be reflected in exports with a time lag of 2-3 months. Recently, Goldman Sachs, a global investment banking and securities firm, in a report predicted India’s economic growth up to 6.5 per cent in 2013, backed by favourable external sector demand outlook and a pick-up in domestic reforms.
Though, expecting the recovery of demand in the developed economies, India needs to maintain the focus of its trade policy on developing new export markets in the emerging and developing countries where growth prospects in the medium-term remain considerably better than in the developed countries.
In addition, there should be firmness and consistency in the government policies too. Exporters welcomed the recent announcement of some support for the export sector as the same will add to the competitiveness of exports. It is evident from the facts that with the slowdown in global trade, pricing has become a key issue, and extension of some fiscal benefit by the government will help the exporters to factor the same in their prices to procure such orders, which hitherto are being lost by them, either for wafer thin margins or for a loss.
On the service providers’ front, logistics companies need to restructure their products and services to reduce cost and pass it on to their customers. Moreover, it is important to keep reinventing to offer more value. Only tough decisions, both from government as well as industry people, can bring-in the fiscal discipline and wind of change in 2013.