Monday , 19 November 2018
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‘Export prospects are good but protectionism is creeping in’

The effort is on to increase exports. In a brief interview Dhanajay Sharma, deputy director, Federation of Indian Export Organisations (FIEO) talks on various issues impacting exports. He talks to Shoma Patnaik on the overall trend and role of small industry in boosting exports.

Since Goa is a state with strong presence of small and micro enterprises (SMEs), how important are SMEs in India’s overall exports?

Even large companies source their products through SMEs. So they are a must for survival of large enterprises. Roughly 40 per cent of our exports happen through small units. And it is across sectors, viz. textiles, gems, jwellery,etc. More than contribution to exports, SMEs are employment generators. So overall they play a very important role in all sectors of the economy.

 

How can FIEO help Goa increase its exports?

Currently an export excellence study is underway by the FIEO for Goa. Through this study we will try to indentify thrust areas and new markets. So we are collecting information from different departments and the findings will be out in the next three-four months. The study will help the state government devise an export strategy. It is initiated by the Ministry of Commerce and FIEO as an organization under the ministry has been entrusted with the task of preparing the study.

 

What is your initial opinion on the state exports?

Our preliminary observation is that Goa has a pharma cluster of exports along with cashew and marine exports. Mining exports was a big thing which has now stopped. The state has a large agri-base but agri- exports are not adequate in comparison to the large base. Our recommendation is stepping up of agri-exports.

 

What are the core issues currently facing India’s exports?

Some of the biggest issues, as I see are that our export incentive schemes are not WTO compliant. With time the schemes have to be revised to fit into the discipline of the WTO. And while these schemes are being revised industry has to make the exports globally competitive. Our exports face a high-cost disability factor. The transaction costs are too high they need to come down. The cost of credit also is too high. GST refund is the most pressing problem facing exporters today. Many exporters are also facing bank related problems. These are the immediate and near future problems adversely affecting exports and they need to be cleared for long-term sustainability. If these problems are addressed we can expect in one-two years US $ 400- US 500 billion exports.

 

The total exports at US $ 300 billion in 2017-18 have reportedly been slow. Comment?

Not slow, it is in line with the world economy.

 

But industry is blaming the sluggishness on issues relating to slow refunds of GST?

We at FIEO have been taking up the issue even before the GST was launched. Six months before the launch of GST we had said that the policy of paying taxes and getting it refunded would put a lot of pressure on the machinery of the government. Instead we had suggested export exemption before paying GST. The refunds are being held up by the GSTN end due to software problems. For exporters whose refunds above Rs one crore is held up we have asked them to approach the GST officer in the jurisdiction requesting him to take up the case individually with the GSTN.

 

What is the export outlook for 2018-19?

The prospects are good but protectionism is creeping in world trade between China and other countries. Because of them we could face a dent in our exports. The Rupee depreciation could give a boost to exports for MSMEs recovering from slow GST returns. The export prospects depend on the global market and one of the concern is that  India is losing its competiveness against foreign competitors like Myanmar, Bangladesh and China.

 

Coming back to SMEs, why do they need to export when the domestic market is big enough?

Because being a domestic player is not the only option in the long run. The trend is of the economy opening up and sooner or later the domestic market will be thrown open to other countries. Currently a unit may find it easy to cater to Panjim or Mumbai market but in future many countries will be direct competition. Going international is the only way out and companies will have no choice in the matter.

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