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Concerned over the slowdown in the country’s exports and the rising current account deficit, the Government is working on a long-term plan to spur India Inc’s global competitiveness.
The Commerce Ministry is preparing a background note ways to boost exports and manufacturing. It is expected to hold an inter-Ministerial meeting to frame a specific roadmap for change, a Commerce Ministry official told Business Line .
Top officials from the Finance Ministry, Ministry of External Affairs, Department of Industrial Policy and Promotion, Planning Commission and Economic Advisory Council to the Prime Minister will be part of the core group that would frame the agenda, the official added.
“We will be looking at how to position India strategically in the global value chain so that exports grow fast. For that, we have to identify what our strengths are and how these can be nurtured. We also have to address our problem areas, including lack of adequate infrastructure, reliable power supply and high transaction time and costs,” the official said.
The manner in which India gives incentives to its exporters also needs to change as many of the existing sops may not be compatible with World Trade Organisation norms.
In fact, subsidies given to the textiles industry will soon have to go, as exports have overshot the threshold of 3.25 per cent share of world trade beyond which the global trade body does not permit subsidisation.
Fall in exports “We will have to re-engineer the schemes so that these conform to international laws to which we are party,” Commerce Secretary Rajeev Kher said at a recent export summit organised by industry association CII.
India’s exports fell 1.8 per cent to $300.4 billion last year due to a slowdown in global demand. In the on-going fiscal, exports posted a low growth of 5.7 per cent, to $257 billion in the April-January period.
Although India’s current account deficit (CAD) narrowed to $4.2 billion (0.9 per cent of GDP) in the third quarter of 2013-14 from $31.9 billion (6.5 per cent of GDP) in the comparable period of the previous fiscal, the decline has been mainly due to curbs on gold imports.
“CAD can be checked on a sustainable basis only if we manage to increase our exports substantially,” the official said.
It is important to keep the CAD within limits to maintain a healthy balance of payments which, in turn, is required to avoid a payments crisis.
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