The Hindu Business Line : Export revival to be slow

The Commerce Ministry sees “a general slow export revival as bit by bit and piece by piece things fall into place with January 2010 export promising to be better than 2009 January figure, though cumulatively exports would continue to be in the negative territory.”

Talking to Business Line here informally, the Commerce Secretary, Dr Rahul Khullar, is confident that export turnover this year would be $175 billion “with give or take five to 10 billion here or there, which basically depends on corrections and data entry that keeps coming later”.

He said that even now data gets updated, unless there is something in any particular sector or any downturn economically elsewhere then it is a different story. However, “my earlier estimate of $170-175 billion for the current fiscal would stay.”

Asked about the chorus of demand from exporters including revision in drawback rates to bail them out in the face of weak demand abroad or branching out to new frontiers, Dr Khullar found no “rationale at this point of time in increased drawback rates when duty rates have gone only one way – down! How can duty drawback rates go up?”

He said that just because competitors like China offer such higher drawback rates “which have fiscal space that we do not have and it is not possible for us to do that sort of heavy amount of subsidisation.”

Asked about any review meeting of export promotion councils and commodity boards being planned with the first half of the current fiscal behind, Dr Khullar said: “it is too early as we are basically still seeing negative growth.”

But he hastened to concede, “one thing we need to be careful about is don’t get carried away by one number here or two numbers there and start imagining that the crisis is over and you can withdraw the stimulus. Beyond that, I don’t think you can withdraw it. I don’t think you are going to get anything new.”

Sensitive items

On the paradox of general decline in import growth but sharp increase in import of sensitive items during the first half of the current fiscal, Dr Khullar explained the sensitive items cover agricultural items and largely edible which “we would end up importing close to seven million tonnes this fiscal. Sensitive items relate to those items which have some competitive impact on domestic market.”

To a question about the concerns of Special Economic Zone (SEZ) developers and units about the proposed direct tax code rolling back exemptions, Dr Khullar said: “They have been saying all sorts of things but at this point of time it is premature as the direct tax code has to be debated.”

He said most of the problems on the direct tax code front come from provisions pertaining to Section 10A/10B and the minimum alternativee tax (MAT) which is to be based on wealth rather than income.

He quipped “exporters in general are saying can you bring back 80HHC, when the whole spirit of the direct tax code is to do away with exemptions?”

He also stated that the number of parties withdrawing from SEZs is 8 to 10 when 600 units are well functioning. The initiatives and incentives for setting up SEZ will be a little dull now because business is dull, he added.

On the postponement of eGoM to take a call on increasing the minimum export price on basmati rice in view of the tight domestic supply situation, Dr Khullar said that the Commerce ministry is not in favour of any hike in MEP on basmati rice exports as it is premium quality rice purported for overseas markets.

The high return it commands gives higher price to such speciality rice growers of the country, he noted.

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