The world economy is truly at a crossroads as recent events bear out. The global trade war has escalated in recent past and its effects have been percolated across the entire global economy. The news is slight better in India as after a period of contraction, the exports exhibited a growth rate of 8.75 per cent in 2018-19 standing at $330.06 billion. This is indeed encouraging.
But, two events in the recent past can have a knock off effect on our exports growth. First, it now appears that India’s existing export incentive scheme will be revamped. The very notion and impression about the word “Incentive“ needs to be corrected. It is basically not subsidy or incentive which the exporters look for. We are to export goods and services and not taxes and duties. Hence it is vital here that whatever changes are being made, they must be made in a manner conducive to offset the cost disadvantages and logistic challenges.
Second, the withdrawal of the Generalized System of Preferences (GSP) by the US will hurt sections of Indian exporters. India must seriously start looking at preferential agreements to ensure that its exports face no tariff barriers for unhindered market presence.
Along with these measures, the country also must take measures to make exports competitive. Trade facilitation, trade related infrastructure and logistics should be seriously examined and proactive actions and discussions should be fast-tracked to boost our export competitiveness.
Export financing is another vital area which needs clear policy intervention. Despite being identified as a sector for priority lending, its allocation of bank credit has been small and has declined in recent past. This needs to be fixed. With the new government in place, there are various areas in which concrete attention is required. Industry is very optimistic that in the forthcoming budget, and going forward, various challenges facing the exporters will be suitably redressed and concrete action would be taken.
