Economic Survey for more stimulus to export sector

The pre-Budget economic survey today favoured providing further stimulus for the exports sector, arguing that the recovery prospects in global markets are still fragile.

It said that despite some improvement in global trade environment, the downside risks makes it imperative for the
government to reform policies concerning imports as well.

"The downside risks for world and the Indian trade lie in the fact that though the fall has been arrested, both output and trade recoveries are still fragile given the fact that the recovery has been pumped up by the stimulus given by different countries, including India," the Survey said.

Amid the debate on withdrawal of the stimulus, including speculation of a possible across-the-board roll back of cuts
in excise duty and service tax, the document suggested further
reduction in excise for export oriented industries.

For the merchandise sector, some fundamental policy changes are needed "...these include further tariff reforms by lowering the peak duties (custom) from the present 10%  to 7.5%, reductions of tariffs on all capital goods to a uniform 3% and further reduction in excise duties to make exports and industry competitive."

The government had cut excise duty from 14% to 8% and service tax from 12% to 10% in the wake of the global financial slowdown.

India's exports, after falling for 13 consecutive months since October 2008, turned positive from November 2009. But in April-December period, exports were down by 20.3%.