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Provide more relief to exporters: Survey

Special Correspondent

Need for policy changes to arrest fall in exports of business services

Suggests measures for merchandise trade sector
‘Check proliferation of special economic zones’

NEW DELHI: “The outlook for exports in 2008-09 may not be as bright as in the past few years with lower projections in world GDP and world imports and exchange rate developments,” said the Economic Survey 2007-08 released on Thursday.

Asking the Government to provide more relief to exports to counter the impact of appreciating rupee, it said trade deficit would continue to widen in the current year based on the trends in the first six months of the current financial year and other indicators.

Two developments

“Two developments, which need to be monitored, are the fall in export growth to the U.S. in general and fall in textiles exports in particular to the U.S. and even the European Union.

“The second being the fall in exports of business services, though import growth of these services has also fallen. This calls for fundamental policy changes besides relief measures already given,” the Economic Survey added.

Trends in trade

Between April and December 2007, India’s exports stood at $111 billion, registering a growth of 21.6 per cent, while the target fixed for this year is $160 billion.

The survey said though exports to the US have already been slowing in 2006 and 2007, a further slowdown may be unavoidable, but may be relatively modest.

The slower Indian economic growth in 2007-08, relative to 2005-06 and 2006-07, may also have a temporary dampening effect on capital inflows.

The survey has suggested measures for the merchandise trade sector that include continuation of reduction in customs duty resulting in low import duty, weeding out of unnecessary customs duty exemptions, abolishing export schemes that are redundant with fall in import duties and streamlining existing schemes.

Market access

The economic survey further said there is a need to check proliferation of special economic zones (SEZs), evolve a clear cut policy for beneficial comprehensive economic cooperation agreements (CECAs) even with some developed countries instead of just free trade agreements (FTAs) and preferential trade agreements (PTAs) which should be well integrated with our economic and trade policy reforms.

Services trade

For services trade, the major areas where reforms can help sustain export growth are domestic regulations and reforms and market access for services, the Survey document said.

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