Create favourable environment for foreign trade
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.