Cre­ate favourable en­vi­ron­ment for for­eign trade

Maritime Gateway - - Contents - R Ram­prasad Editor and Pub­lisher ram­prasad@gate­way­media.in

It is a con­glom­er­a­tion of some of the fastest grow­ing economies at Jo­han­nes­burg as the 10th BRICS sum­mit un­folds on July 25. It is in­ter­est­ing time as In­dia’s EXIM com­mu­nity amid US and China trade war, looks with bated breath for ev­ery pos­si­ble safe haven. The shock­waves of tiff be­tween the two su­per­pow­ers are al­ready felt even be­fore on­set of the BRICS sum­mit with China align­ing mem­ber na­tions to send some strong mes­sage to the US.

Back home In­dia has lot to worry as govern­ment gets pre­pared to hold the freefall of MSME sec­tor who are yet to re­cover from the ef­fects of de­mon­e­ti­za­tion and GST. Though the over­all ex­ports from In­dia has grown but sec­tors like tex­tiles, hand­looms, leather and hand­i­crafts which are key to gen­er­a­tion of large-scale em­ploy­ment for skilled and semi-skilled la­bor has sent some alarm­ing sig­nals of de­cline in ex­ports. Any dent to In­dia’s ex­port ori­ented MSME sec­tor can have some se­ri­ous ram­i­fi­ca­tion on the econ­omy. Un­like large-scale players who have the band­width to take too many pol­icy flip-flops on their stride but smaller and medium scale op­er­a­tors will be pushed to the level of non-re­cov­ery. Pol­icy mak­ers are well aware of the grav­ity of the sit­u­a­tion and it should not sur­prise us if duty draw­back on GST is an­nounced sooner than ex­pected. In­dia with al­ready an im­port heavy trade bas­ket, can’t af­ford to any fur­ther dent in its ex­port vol­ume. May be it is the rea­son why there has been in­ter­ven­tion at the high­est level which has re­sulted in faster GST re­funds in the first quar­ter of this fi­nan­cial year.

Though it is heart­en­ing to see over­all ex­ports from In­dia to BRICS has reg­is­tered an up­swing of 7.5 per cent in the first quar­ter of 2018, and in the first quar­ter of cur­rent fis­cal, over­all ex­ports have been on a rise. In last fi­nan­cial year also the ex­port grew at a rate of 10 per cent to touch $300 bil­lion of to­tal mer­chan­dise ex­port. While it calls for some cel­e­bra­tion but if we look back to FY2013-14 the ex­port touched $313 bil­lion but it nose dived in sub­se­quent years.

Com­pared to other com­pa­ra­ble economies, like South Korea con­tri­bu­tion from ex­ports is 42 per cent to the coun­try’s GDP. Way back in 2006 when the Chi­nese econ­omy was flour­ish­ing at a rate of 13 per cent, ex­ports con­trib­uted an whoop­ing 37 per cent. But in case of In­dia, it is a mea­ger 12 per cent. And it is the time for in­tro­spec­tion that should we pat out back or sit tight and gear up to cre­ate an en­vi­ron­ment of Ease for For­eign Trade.

Though the over­all ex­ports have im­proved, sec­tors like tex­tiles, leather and hand­i­crafts have seen a de­cline.

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