Spe­cial Ef­forts Will Help Ex­ports Get 5% of Global Pie

Eco­nomic Sur­vey II says change in tar­iffs, schemes and FTAs will help In­dia gain re­spectable share in world ex­ports amid ris­ing pro­tec­tion­ism

The Economic Times - - Economy & Companies - Our Bu­reau

New Delhi: Ra­tion­al­is­ing tar­iffs, phas­ing out some ex­port pro­mo­tion schemes and hav­ing “use­ful” free trade agree­ments with some ma­jor coun­tries will help In­dia gain a “re­spectable share” in world ex­ports, the sec­ond vol­ume of the Eco­nomic Sur­vey re­leased on Fri­day said.

In­dia’s ris­ing trade deficit and pro­tec­tion­ist ten­den­cies on the global front are ar­eas to watch for in the short term, it said as In­dia’s share in global ex­ports has stag­nated at 1.7 % from 2011to 2016 with in­ter­mit­tent drops to 1.6%.

Cit­ing ris­ing pro­tec­tion­ism, trade re­stric­tive mea­sures and risk of a back­lash against move­ment of per­sons adding to a sit­u­a­tion that is of grow­ing con­cern, the sur­vey said spe­cial ef­forts are needed to take In­dia’s ex­ports to a re­spectable share of at least 5% in world ex­ports from 1.7% in 2016, which is very low com­pared to China’s 13.2%.

Stream­lin­ing ex­port pro­mo­tion schemes as many du­ties have been sub­sumed un­der GST, de­mand-based ex­port bas­ket di­ver­si­fi­ca­tion rather than a mere sup­ply-based strat­egy and de­vel­op­ing world-class ex­port in­fra­struc­ture and lo­gis­tics on a war foot­ing, are some rec­om­men­da­tions of chief eco­nomic ad­vi­sor Arvind Subramanian-au­thored sur­vey.

It also said the fo­cus should be on in­creas­ing FDI-linked and value-added ex­ports, par­tic­u­larly high-tech ex­ports as in China and some Asean coun­tries. Re­fer­ring to the rise of anti-glob­al­i­sa­tion sen­ti­ment in re­cent years, the sur­vey said such ten­den­cies have surfa-

ced with de­vel­op­ments in the US dur­ing and af­ter elec­tions and the Brexit ref­er­en­dum.

Peo­ple are view­ing trade, im­mi­gra­tion and mul­ti­lat­eral en­gage­ments with some amount of scep­ti­cism and be­com­ing wary of ben­e­fits of glob­al­i­sa­tion, it said. On trade curbs, the sur­vey said there has been a rise in re­cent years of such steps in­clud­ing sev­eral types of non-tar­iff bar­ri­ers.

GREEN SHOOTS VIS­I­BLE

The sur­vey did con­tain some cheer for the ex­port sec­tor, say­ing that green shoots have started to ap­pear on the trade hori­zon with world trade growth pro­jected at 3.8% and 3.9% in 2017 and 2018, re­spec­tively, and In­dia’s trade growth also pick­ing up. “With the green shoots slowly be­com­ing vis­i­ble in mer­chan­dise trade, and ro­bust cap­i­tal flows, the ex­ter­nal po­si­tion ap­pears ro­bust, re­flected in­ter alia in ris­ing re­serves and a strength­en­ing ex­change rate," the Eco­nomic Sur­vey said.

Re­flect­ing the slowly im­prov­ing world eco­nomic sit­u­a­tion, In­dia’s ex­ports turned pos­i­tive at 12.3% in FY17 af­ter an in­ter­val of two years.

This, along with de­cline in im­ports of 1%, re­sulted in nar­row­ing of the trade deficit to $112.4 bil­lion (5% of GDP) in FY17 com­pared with $130.1 bil­lion (6.2% of GDP) in FY16.

In FY17, ser­vices ex­ports recorded growth of 5.7% with a pickup in some ma­jor sec­tors such as trans­porta­tion, busi­ness ser­vices and fi­nan­cial ser­vices along with good growth in travel. How­ever, as per the sur­vey, soft­ware ser­vices ex­ports, ac­count­ing for around 45.2% of to­tal ser­vices, de­clined marginally by 0.7%.

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