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G. Srinivasan

New Delhi, Aug. 30

For the Indian exporters reeling under demand recession and thinning order books, there is scarcely any solace. Yet, nothing is lost for them, says the Minister of State for Commerce and Industry, Mr Jyotiraditya Scindia, as the five-year Foreign Trade Policy (FTP) unveiled recently by the Government is a “holistic strategy, driving export growth to new markets and addressing issues of labour-intensive export and transaction cost effectively”.

Talking to Business Line at his Safdarjung Road residence on Saturday, the young and articulate Minister is at ease in inveighing against inward-looking policy of trading partners. “Protectionism in this era of global recession is not going to augur well for any country. If we see history behind the Great Depression, in many ways it was the protectionist attitude that exacerbated the situation. We must not repeat that mistake”.

Goaded to set forth his agenda in the Ministry, Mr Scindia proclaims his “goal and commitment to ensure increased employment opportunities, address the issues of labour-intensive exports and also make more importantly doing business on the export front as convenient and trouble-free as possible by lowering transaction cost and facilitating the natural ability of exporters to do more business”.

Following are excerpts from Mr Scindia’s views on FTP:

On trade climate and export target: “The world has not witnessed in the last seven decades a situation as it has been in recent years and it is very important that the Government steps in to act as a facilitator to incentivise exporters to get them out of what I may call the tsunami.

Our policy in 2004 had two specific objectives: One, to increase India’s share in global trade and second to increase employment opportunities in the export sector. We won commendably on both the fronts over the last five years as the performance bears out.

But in Policy 2009, it would not be prudent to set only long-term target in an environment of uncertainty. In order to facilitate exports we have to set three targets. In the short-term we have to reach $200 billion, growing 15 per cent over the next two years and over 2011-14 double the exports of goods and services from the current level, growing at 25 per cent over the three years. There is the long-term objective of 2020 — in 11 years when we hope to double our share of global trade in goods and shares from 1.65 per cent to 3.2 per cent.

Policy 2009 concentrates on five specific main areas and it is in many ways different from what had been done in the past.

The first main pillar is stability and continuity in that it continued the existing DEPB scheme for one year, extended 10A/10B IT exemption to EOUs and to SITP units to one more year, also increased the EPCG coverage (i) to 95 per cent and (ii) increased the duration of the scheme over the next fiscal and extended the interest subventions of 2 per cent to the next fiscal.

Second pillar is on rationalisation of incentive schemes ranging from 1.25 – 7.5 per cent across eight groupings of incentives — we have rationalised that to four groupings of incentives such that giving a higher dose to areas where we need them more and on areas which got less increase them to a higher level.

The third pillar– labour-intensive export industries get the required incentives ranging from gem and jewellery, leather, textiles, handicrafts and handlooms. While the rate under the Focus Product Scheme has been increased across all products from 1.25 per cent to 2 per cent, in the case of handloom and handicrafts this has been increased to 5 per cent. Specific intervention within labour-intensive segments include setting up diamond bourses, duty drawback on gold jewellery exports and hike in value limits of personal carriage to promote gem and jewellery products exports.

Fourth pillar is technological up-gradation to let status-holders import duty-free capital goods with a sunset clause of two years — so advantages must be taken over the next two years.

The fifth pillar is market diversification to 26 new markets and 13 identified markets which hold tremendous potential for India. We must look at the world as a market and must look at areas where we have comparative and competitive advantages. It is important we must broaden and deepen our coverage – combination of both and that is what the policy is about.”

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