Economy

To cut imports, Ministries to come up with sectoral plans to increase production

Our Bureau New Delhi | Updated on October 04, 2018 Published on October 04, 2018

Trade deficit to be checked by reducing dependence on imports

Key Ministries and Departments including steel, coal, electronics & IT, industry, commerce, petroleum and mines will make short-term and long-term plans to ramp up domestic production in order to reduce dependence on imports and check the growing trade deficit.

Commerce Minister Suresh Prabhu, who chaired a meeting on increasing domestic production and export capacity on Thursday, also stressed on the need to increase the capital inflows in addition to increasing domestic production, an issue to be handled by Department of Economic Affairs and Reserve Bank of India.

“It was recognised by all participants that the government could not go on increasing import tariffs to check imports. Instead, adequate domestic capacities have to be created and production increased to reduce demand for imports and for import substitution,” a government official told BusinessLine.

The meeting was attended by Secretaries and senior officials of 16 Ministries and Departments where the participants discussed steps to increase domestic production through better capacity utilisation and capacity creation and expansion in the short and medium to long term.

Pointing out that India imported 87 per cent of its domestic crude requirement, Prabhu said the option of importing oil on barter system from Iran, Russia, Venezuela and other nations with sanctions on them, need to be looked at seriously, the official said.

The representative from the Ministry of Electronics and IT (MEITY) pointed out that it was important to give incentives to attract investments. Vietnam, for instance, gave a 10-year tax holiday to mobile makers, which resulted in investments moving there from China, where labour is expensive, to Vietnam. The Finance Ministry had ignored a similar proposal for tax holiday made by the MEITY, the representative said.

Although exports grew over 16 per cent in the April-August 2018-19 period, the government wants to increase it to a higher trajectory and also cut down imports to make a dent in the rising trade deficit which crossed $80 billion in the first five months of the fiscal compared to $67 billion in the same period last year.

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Published on October 04, 2018
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