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Friday, Sep 20, 2002

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DFGT promises bigger role for States in exports

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THE office of the Director-General of Foreign Trade (DGFT) has launched a drive for drawing up State-wise export data, which would help in the process of apportioning funds under the scheme of Assistance to States for Infrastructure and Development of Exports (ASIDE) based on individual export performances.

This was announced by Mr L. Mansingh, DGFT, at a one-day interactive session on "Exim Policy as engines of growth'' organised jointly by Kerala Industrial Infrastructure Development Corporation (Kinfra), the Trivandrum Chamber of Commerce and the National Institute of Personnel Management (NIPM).

Mr Mansingh was responding to a few points raised earlier by Mr Gopalkrishna Pillai, Principal Secretary to the Chief Minister, who said that the State Governments have not been able to derive benefits out of what are largely Central initiatives such as the export promotion zones (EPZs) and special economic zones (SEZs) despite having "sacrificed" their own interests at the altar of the Central Government's conveniences.

Elaborating, Mr Pillai said that the States had provided land and other infrastructure for these mega projects and had even announced various tax and duty exemptions.

The States should be justifiably compensated for their effort even as the Centre stood to benefit from forex and other earnings out of trade routed through these special zones, he added.

In his reply, Mr Mansingh said that the ASIDE scheme was specifically meant to ensure a bigger role for States in the export promotion effort under which the country is targeted to turn in a cumulative figure of $82 billion by 2007.

India's share in world trade is expected to be raised from 0.67 per cent currently to a more respectable one per cent during this period.

For this, exports would have to grow at compounded average growth rate (CAGR) of 11.9 per cent.

At the current rate of growth, the year 2007 target looks eminently achievable, according to the DGFT.

Under the ASIDE scheme, 80 per cent of the funds are sought to be made available to States in direct proportion to their individual export performance.

State-wise export data is in the process of being drawn up for this purpose. Besides, the ASIDE scheme has also sought to empower the States by delegating decision-making power to the State-level Export Promotion Committees (SLEPC) headed by the respective Chief Secretary.

Progressively, a situation would be reached when the Centre's role in export promotion efforts would be brought down to a third and the States would empower themselves to account for the rest.

Simultaneously, the drive to automate approvals and clearances will be carried forward with added vigour, which is expected to bring down transactions costs.

In this connection, Mr Mansingh said that the Ministry of Commerce had recently commissioned KPMG to study the entire gamut of issues relating to the State's perceived sense of neglect as a rub-off effect from mega projects such as EPZ/SEZs.

The "sacrifices" made by the State Government and the impact on the local economy are also sought to be studied in depth.

Competition among States is the best fall-out of opening up of the economy. Good infrastructure and a congenial atmosphere are two factors that attract investors most to a State.

Mr Mansingh said that till 1991, only Gujarat and Maharashtra were in competition for investments.

But now, at least four others have entered the ring. Kerala, not known for its manufacturing sector, could focus on its core strengths of tourism and IT capabilities, he added.

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