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ShareIf a half measure is better than none, then the just announced Foreign Trade Policy, 2009-14, is to be welcomed; it contains a few sops but there is no rollback of incentives that have proved pivotal to our export drive.
But, what is unsaid in the policy statement is more important. Export growth is likely to be very modest during this year --- around 3% --- and may accelerate somewhat in 2010-11 and yet the rate may be well below what was witnessed annually between 2004-05 and 2007-08.
The upshot would be that the missed target for 2008-09 - $200 billion - may be realised only by March 2011.
Among the features of the policy are the quick disbursal of dollar credit needs of the exporters' community with a high-powered committee in place to facilitate this task; the implementation of an e-trade project to cut down procedural delays and the creation of a Directorate of Trade Remedial Measures; additional funds to boost exports through market development assistance and market access initiative scheme and the stipulation of a minimum of 15% value addition on imported inputs under Advanced Authorisation Scheme.
Interest rate subvention and Duty Entitlement Passbook Scheme to be continued as also Section 10A benefits to IT sector and Section 10 B reliefs to export-oriented units find a place in the policy statement. It also stresses the need to diversify the export market and to accord importance to employment intensive export sectors.
The overarching aim is to double India's share in global trade by 2020 and to this end, apart from the above measures, diversification of markets outside the traditional ones like Europe, United States and Japan is to be attempted. Shows to promote Brand India will be undertaken.
However, the question is: whether these steps will propel export growth to a high trajectory. Take the immediate time horizon first.
The last fiscal was undoubtedly a difficult one for our exports with recession and weak demand --- as well as protectionist sentiments --- acting as a heavy drag. In the event, export growth was a mere 3.4% n 2008-09. The statement does not visualise any better tidings this year too. The Union minister for commerce, Anand Sharma, was not quite forthcoming on this point.
In a rather ambiguously worded phraseology, he said that, "We would like to achieve an annual export growth of 15% over 2010-11, with an annual export target of $200 billion by March 2011.
In the remaining three years of this foreign trade policy, the country should be able to come back on the high export growth path of around 25%per annum"
What one is to infer from this? It may mean that he foresees no dynamism on the export front in the next two years. Since the figure of $200 billion is to be realised only during 2010-11, and since he mentions a growth rate of 15% in this context, it can be statistically deduced that, in the current year, exports can jump by only three per cent --- which is less than what it was in the preceding year --- to $174 billion from $169 billion.
A 15% jump next year will propel the value of exports to $200 billion. In other words, despite the latest sops, exports may languish with prospects of a recovery only two years hence.
Perhaps, the failure on the export front stems from a lack of what may be termed "export culture". Exports are not seen as an integral part of economic development but as a residual after domestic needs are met.
Quality standards, competitive pricing and adherence to delivery schedules as well the need to capture and nurture markets --- all these seem to be missing.
Foreign trade policy can act as a catalyst if exports are viewed as necessary, at the very least, to pay for our imports and debt servicing costs. Still, the exporters may something to be happy about the contours and thrust of the latest foreign trade policy pronouncement.
