Business Today – August 25, 2019

some disruptions, but the country’s
share in global exports is so low that
it should focus on increasing market
share. Arguing that the current scenario
provides India with an opportunity to
enter global supply chains, he advo-
cates a closer look at the Surjit Bhalla
panel’s recommendations to improve
growth prospects. The panel gives nine
non-industry-specific recommenda-
tions and seven industry-specific ones
to revive Indian exports. Increasing the
capital base of the Exim Bank by an-
other 20,000 crore and that of Export Credit Guarantee Corporation by 350
crore, and increasing the bank’s borrow-
ing limit have been suggested to solve
the credit crunch faced by exporters.
Setting up an empowered investment
promotion agency, active engagement at
the World Trade Organization (WTO),
reducing corporate tax rates and cost of
capital, skilling of human resources and
optimising FTA negotiations are some
of the non-specific measures suggested
by the HLAG as well. Specific sugges-
tions to improve export performances of
electronics, textile, pharmaceuticals and
financial services have also been listed.
HLAG is not the only expert group
looking for remedies. Much like Prab-
hu, Goyal is also getting stakeholders’
feedback to give the right push. In
June this year, the Confederation of
Indian Industry (CII) released a dis-
cussion paper that mapped the prod-
ucts and destinations to take Indian
exports to a new level. It undertakes a
dual identification process – one that
outlines the top imported products
by top importers and another that
studies India’s current export profile
in those products. Using various fil-
tration factors, it has determined 37
products where India has production capabilities so that those
can be promoted extensively across the top 10 importing nations.
A similar exercise, carried out by the commerce ministry a few
months ago, led to the identification of a select set of products and
the details were passed on to respective export promotion coun-
cils for follow-ups. Additionally, the ministry has undertaken an
exercise to shortlist products, which may reap the benefits from
the China-US sparring. With China’s exports to the US contract-
ing and vice-versa, the field has been thrown wide open for trade
expansion. As a result, textiles, pharmaceuticals, meat and meat
products and soya bean products have seen better order books.
On July 31, Goyal addressed a special stakeholders’ meeting
in Delhi to capitalise on the opportunity emanating from the US-

China trade war. According to him, the gov-

ernment is working on a new WTO-compli-

ant scheme to replace the current product

subsidy scheme. Another new scheme called

the Rebate of State and Central Taxes and

Levies (RoSCTL), is already operational for

garments and clothing accessories. Goyal

wanted the industry to collect all relevant

data to get indirect tax and cess rebates via

RoSCTL. These will cover areas such as

power tariffs, coal cess and royalty paid on

mining to help reduce the cost of exports.

The minister also said that a review of all

existing FTAs is being carried out to assess

their impact on exports and manufacturing,

and new negotiations will keep industry and

consumer interests at the top of the agenda.

While Goyal’s endeavours may provide

relief to the merchandising and services sec-

tors, the IT sector is also looking for succour.

“The biggest challenge today could be the

restrictions slapped on the free movement

of people across geographies. The US regula-

tions regarding H1B visa, and similar restric-

tions soon to be imposed by the UK and other

European nations will hurt the industry. The

Indian government should work bilaterally

with other countries to waive such compul-

sions,” says V. Balakrishnan, former CFO of

Infosys. India cannot afford to overlook how

other countries are turning protectionists.

Sharad Kumar Saraf, President of the

Federation of Indian Export Organisations,

says that China has been able to manage its

currency, which depreciated by about 9 per

cent since the onset of the tariff war, and

blunted 25 per cent tariff disadvantage by

11-12 per cent. Meanwhile, the appreciation

of rupee by 4-5 per cent further eroded the

advantage for Indian exporters. The solu-

tion to currency problem may come from

allowing exchange rates to become more

realistic. If that happens, rupee is likely to

be devalued, making Indian exports more

competitive in the global market.

India can advocate multilateralism, but

its success depends on other countries. As of

now, helping industry segments turn com-

petitive and assisting them in creating glob-

al brands might be the most viable option,

although it is not a short-term goal. Mean-

while, implementing predictable policies are

the least that the government can do.

Additional inputs by Rukmini Rao,

E. Kumar Sharma and Sumant Banerji

@joecmathew

Poor turnaround time at

ports causes delays and

leads to order cancella-

tions

Logistics is key to export

competitiveness and lack

of good road infrastruc-

ture is a major hurdle

Inadequate power supply

plus high cost of power

make production

expensive

Skewed tax policies can

be counterproductive,

especially when import

tariffs on raw materials

are higher than import

duties on finished goods

Liquidity is important for

exporters and delays in

GST refunds make cost

of funds unsustainable

Weakening rupee is good

for exports, but RBI is

conservative in managing

the rupee

India’s Free Trade

Agreements with many

countries have been more

focussed on imports

WH

AT

AI

LS

IND

IAN

EX

PO

RT

S

August 25 I 2019 I BUSINESS TODAY I 55