Exports will now start rising slowly and steadily, says Commerce Minister

Encouraged by the improved performance of exports in May, the government is optimistic that outbound shipments will now rise “slowly and steadily’’ propelled by additional incentives.

“It is a time when help will have to be extended in the form of interest subvention or any kind of incentives for exports. We have been looking at (the need to extend incentives) sectorally,” Commerce & Industry Minister Nirmala Sitharaman told reporters on Friday.

The Minister called for strengthening of the free trade agreement between India and South Korea through an intensive review of the pact, at the seminar on Korea-India Infra and Industry Forum organised by industry chambers FICCI and Korea Trade-Investment Promotion Agency.

Sitharaman said both countries would review the free trade agreement, formally known as the Comprehensive Economic Partnership Agreement (CEPA) on Saturday.

The pact was implemented in 2010 and led to increase in exports from both countries.

“We hope to do an intensive exercise so that it can be concluded in favour of both the countries. It will require quite a few assessments of the benefits derived from both the countries under the existing CEPA,” she said.

According to Korean Minister for Trade, Industry and Energy Hyunghwan Joo, the India-South Korea CEPA suffers from low utilisation rate due to complex rules of origin and low level of concessions.

He proposed that both sides should enhance their institutional foundations of trade and investments “most notably by upgrading the CEPA.” Around 62 per cent of items from Korea are eligible for concessional duties under the CEPA and there was a lot of scope for the numbers to go up, the Minister said.

The Indian industry, however, has demanded that steel products should be excluded from the ambit of CECA with Korea as inflow of cheap steel items was hurting the domestic producers.

India’s imports from South Korea in 2015-16 were $13 billion while exports were only worth $3.5 billion.

On the outlook for India’s exports, Sitharaman said that the small 0.79 per cent fall in shipments in May indicated that the decline had been arrested. “The bottoming out has happened. From now, it will be a slow recovery and a steady pick-up,” she said.

India's goods exports declined for the 18th consecutive month in May at $22.17 billion, down 0.79 per cent in dollar terms.

In 2015-16, exports had fallen 15.85 per cent to $261.13 billion – the second year of fall.

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