The Hindu Business Line : ‘India must export what the world wants’

For export growth: The Union Minister for Commerce and Industry, Mr Kamal Nath, flanked by the Minister of State for Industry, Mr Ashwini Kumar (left), and the Minister of State for Commerce and Power, Mr Jairam Ramesh, during the release of the Annual Supplement to Foreign Trade Policy in the Capital on Friday.

G. Srinivasan

New Delhi, April 11 India should consciously go for a paradigm change on the export front and “we have to export what the world wants to buy but our mindset is that we export what we produce,” the Union Minister of State for Commerce and Power, Mr Jairam Ramesh, said.

Talking to Business Line here after the annual supplement to the Foreign Trade Policy was unveiled by the Commerce and Industry Minister, Mr Kamal Nath, here, Mr Ramesh cautioned that for survival and for increasing competitiveness “we have to export what other people want to buy”.

Giving instances of how the Indian exports could not find new markets and new products, Mr Ramesh said that “when the world wants orthodox tea, we export CTC (cut, tear and curl) tea. In leather, the world wants shoes for women but we export more of shoes for men and in textiles, the world wants synthetics but we export cotton”.

Stating that the annual policy supplement is a much-hyped event in the calendar to do some fine-tuning, Mr Ramesh said “we address some short-term concerns of exporters. I don’t think that export is policy-driven. The notion that the trade policy drives exports is not correct. It keeps the export promotion council and lobbies engaged.”

He said that while “export growth depends upon competitiveness, technology and marketing, there is a large constituency of exporters who have grown up only on incentives. I call the constituency “political exporters” but there are real exporters for whom exports might account 20 per cent, 50 per cent or even 100 per cent of production as in the case of Infosys. As such, the role of export incentives in driving exports is in my view highly exaggerated”.

However, Mr Ramesh hastened to add that though there has been a shortfall in export performance of $160 billion last fiscal, it is still “a commendable” one and the target of $200 billion set for the current fiscal is a “stiff”, given the global slowdown and uncertainties in the external front. He said the shortfall in export performance last fiscal has not been “as much as was originally feared”.

Services exports

Pointing out that services exports too gain in importance over and above India’s merchandise exports, Mr Ramesh said that RBI data shows India’s services export is touching close to $75 billion. Though RBI data seems to be at variance with WTO data on services imports with the world trade body putting India’s services exports and imports roughly on balance, Mr Ramesh said that RBI services trade data show that services exports of India are roughly two times more than services imports by India.

Data issues

He said that the difficulty and coverage in matching data need to be reconciled. Nevertheless, he said, “we are now talking about India’s export capability of anywhere between $200 and $230 billion (goods and services) which is 23 per cent of GDP, with services export accounting for half of merchandise exports,” he added.

Asked about constraints on the merchandise front, Mr Ramesh said that “we still have problems of labour-intensive manufacturing, which is the single biggest cause of worry. The leather industry is not aggressively capturing the market share, so also the handicrafts segment, but in carpets we have done well.”

More Stories on : Exim Policy | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page