India’s exports shrank 17.84 per cent during the seven month period between April and November this year, triggering serious concerns as exports from most Asian countries have in contrast to India been rising. Vietnam’s exports grew by 12 per cent in the last three months, while China saw exports by over 11 per cent in October and South Korea saw its outbound shipments rise by four per cent in November.
India’s imports, too, declined at an even steeper rate of 33.56 per cent, which saw the trade deficit coming down. Officials said that the biggest drop in exports came from gems and jewellery, petroleum products, engineering goods and electronics.
Commerce ministry mandarins are worried by the trend and are hoping that the new Remission of Duties or Taxes on Export Products Scheme (RoDTEP) will remedy the situation. Something which analysts do not agree with.
The RoDTEP scheme will simply pay back to exporters all duties or taxes including embedded duties they have already paid on their exports and was brought in as the USA had filed and won a case at World Trade Organisation (WTO) against India’s existing MeIS incentive scheme for merchandise exports as an unfair incentive.
“We need to improve the terms of trade for exporters by facilitating their financing, production, shipment and marketing. Lack of trade facilitation and costly capital is adding to export costs and turning the tide against us in the global market. In contrast, Vietnam and Bangladesh, our main rivals in the garments business for instance have been hand holding their exporters in a far better manner,” pointed out Prof Biswajit Dhar of JNU, former Member of the Board of Trade.
The sectors where India has been doing well are mostly raw materials — iron ore which saw an increase in shipments by 62 per cent and rice which saw a 39 per cent surge in exports during the April-November period. One of the few value-added sectors which performed well was pharmaceuticals, which witnessed a 15 per cent increase during the period.
“We need to push the exports of Indian value-added products such as textiles, engineering and project exports. Our trade negotiators need to have a proactive approach and try to get trade concessions for these sectors. It is better to allow cheap French wine into India in return for duty free export quotas of garments to the European Union,” Dhar said.