Fanning the Trade Winds
Exports could boost growth, but first they need policy clarity and incentives
The Journey So Far
The commerce ministry has circulated a cabinet note to phase out the Merchandise Exports from India scheme. It will be replaced by one more compatible with World Trade Organization rules.
The government has raised customs duties on several items by 2.5-10 percentage points. These items together accounted for an import bill of Rs 86,000 crore in FY 2018. This is expected to rein in the current account deficit and boost the rupee.
The SEZ Amendment Bill allows any entity to set up a unit in special economic zones. This is expected to boost exports.
Is It Enough?
Whether one considers the increase in import duties or the lack of proactive measures to take advantage of the USChina trade war, the lack of policy coherence (and structural issues) continue to bog down the sector
The Unfinished Agenda
Lower import duties. Several sectors, such as pharmaceuticals and auto components, are import dependent. Data suggests India has benefited from lower import tariffs— brought down from 300400 per cent in 1991 to about 7 per cent until last year
Clearly spell out India’s policy stance on the rupee
ALL ON DECK? Container ships at the Nhava Sheva port near Mumbai