Cre­ate Value Chains with Na­tions Get­ting US, EU Sops: Govt to Cos

Com­merce min­is­ter says man­u­fac­tur­ers should look at Loas, Myan­mar, Cam­bo­dia

The Economic Times - - Economy: Macro, Micro & More - Kir­tika.Suneja @times­

Jaipur: The gov­ern­ment is en­cour­ag­ing In­dian man­u­fac­tur­ers to cre­ate value chains with four South Asian coun­tries to ben­e­fit from the sops of­fered by the United States and the Euro­pean Union to the ex­porters of less de­vel­oped coun­tries. Cam­bo­dia, Laos, Myan­mar and Viet­nam or the CLMV group­ing gets ben­e­fits un­der the Gen­er­alised Sys­tem of Pref­er­ences (GSP) for de­vel­op­ing coun­tries, un­der which im­ports are al­lowed at less or zero duty.

“If In­dian man­u­fac­tur­ers set up busi­nesses in Myan­mar, they will get GSP ben­e­fits to ex­port in the EU and US,” com­merce and in­dus­try min­is­ter Nir­mala Sithara­man said at the Fourth In­dia-CLMV Busi­ness Con­clave or­gan­ised by the De­part­ment of Com­merce and Con­fed­er­a­tion If In­dian man­u­fac­tur­ers set up busi­nesses in Myan­mar, they will get GSP ben­e­fits to ex­port in the EU and US of In­dian In­dus­try in Jaipur.

This is par­tic­u­larly im­por­tant for the tex­tile sec­tor.

Many less de­vel­oped coun­tries im­port cot­ton yarn from In­dia and use it as an in­put for tex­tile prod­ucts which they later ex­port to the US and EU. By set­ting up some part of tex­tile man­u­fac­tur­ing out­side In­dia, do­mes­tic man­u­fac­tur­ers will be able to get the ex­port ben­e­fits and also cre­ate a value chain since they will im­port the yarn from In­dia.

More­over, de­vel­oped coun­tries have been threat­en­ing In­dia to end pref­er­en­tial tar­iffs be­cause of its ris­ing share in world ex­ports. This will pro­vide In­dian man­u­fac­tur­ers some cush­ion. In­dia’s to­tal trade with the CLMV coun­tries grew more than sev­en­fold from $1.4 bil­lion in 2005 to $10.3 bil­lion in 2015.

In­dia’s ex­ports to the bloc grew from $0.8 bil­lion in 2005 to $6.4 bil­lion in 2015. In­dia has a trade sur­plus with Viet­nam and Cam­bo­dia, and a deficit with Myan­mar and Laos.

An of­fi­cial said that with the US-led Trans Pa­cific Part­ner­ship agree­ment not work­ing out, it might be eas­ier for In­dia to de­velop these value chains even though the threat of GSP go­ing away re­mains. Viet­nam is part of the TPP.

The min­is­ter said that the move will be fast-tracked with the CII open­ing of­fices in Myan­mar and Viet­nam.

In­dia has been pump­ing in­vest­ment in the CLMV coun­tries to tap into their high growth mar­kets, low wage labour and re­serves of nat­u­ral re­sources, and has al­ready cre­ated a Rs 500 crore Project De­vel­op­ment Fund to boost in­vest­ments in the re­gion.

In April-De­cem­ber 2016, In­dia in­vested $33.5 mil­lion in the four coun­tries. The CLMV re­gion saw 7.1% growth on av­er­age in 2015 com­pared with the As­so­ci­a­tion of South­east Asian Na­tions’ av­er­age of 4.8%. The four coun­tries are part of the ASEAN bloc with which In­dia al­ready has a free trade agree­ment and is ne­go­ti­at­ing a broader Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship agree­ment that cov­ers 16 coun­tries. (The reporter was in Jaipur to at­tend the busi­ness con­clave on

the in­vi­ta­tion of CII)

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