India’s exports turned negative with a 1.1% drop in October. There is fear that it could fall further in November with exporters finding it difficult to comply with GST.
Faced with stagnating export growth, India has decided to offer more incentives to exports from labour-intensive and micro, small and medium enterprises (MSMEs) dominated sectors even as it launched initiatives like the use of trade analytics to identify new markets for its products.
On Tuesday, commerce minister Suresh Prabhu announced new measures to boost the country’s sagging exports as part of a mid-term review of the existing 2015-2020 trade policy. He also offered solace that issues related to the implementation of the Goods and Services Tax (GST) would ease soon.
“Export is a strategic part of our economic policy,” said Prabhu, to assure exporters that the government was seriously looking into problems flagged by the industry.
India’s exports turned negative with a 1.1% drop in October. There is fear that it could fall further in November as exporters turn away new orders due to difficulties of complying with GST.
The government has already increased incentives under the Merchandise Exports from India scheme (MEIS) by 2% for ready-made garment exports. Now it has extended the same sop to exports from other labour and MSME dominated sectors including gems and jewellery, leather and leather products, carpets and agriculture.
The government has also increased incentives for services exports by 2%.
The commerce ministry has also brought a new trust-based self ratification scheme to allow duty-free import of inputs for exports. Exporters can import necessary inputs under duty-free scheme through self declaration instead of having to secure ratification from the Norms Committee that the raw materials will indeed be used in the manufacture of export items.
The government has also decided to open a logistics division in the commerce department to formulate and coordinate the implementation of an action plan for the integrated development of the logistics sector.
The new division will create an IT backbone and develop a national logistics information portal which will also act as an online logistics marketplace to bring together various stakeholders.
Commerce secretary Rita Teotia clarified that the division will in no way duplicate the work already being done by other ministries in the infrastructure sector.
The existing trade policy, which came into effect on April 1, 2015, envisages increasing India’s exports of goods and services to $900 billion by 2020.
It also aims at increasing India’s share of world exports from 2% to 3.5%. India exported goods worth $274.6 billion in 2016-17, 4.7% higher than $262.2 billion in the previous year.