Insights | About |
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1-What Government is doing to promote exports in addition to signing FTAs | GOI is quietly making laws and systems to build a robust industrial and export base. Here are eight key initiatives |
2-Myths surrounding the FTAs | GTRI’s findings on the eight common myths surrounding FTAs and the true picture. |
3-China sends Global shivers | From the nine percent year-on-year growth for more than four decades to less than three percent now, China braces for an unprecedented slowdown |
4-Nothing So Great about India’s FTA with UK | A frank evaluation |
5-Volume trends in India’s exports | Exports in 2022 saw a healthy trend with products covering 63% of export value saw an increase in quantity of export |
6-GST-Agenda for next phase of transformational growth | Critical changes needed for growth |
7-Meaning of budget led Customs duty changes | Import duty changes focus on policy continuity and support Make in India |
Topic | Link to Press Reviews |
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1-FTAs: Fabulous, Futile, or Flawed? | Click |
2-How can India’s Textiles and other Labour Intensive exports benefit from the new FTAs? | Click |
How Government is building capacities for sustained export growth amid Global
Economic Slowdown fears
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By Ajay Srivastava |
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India’s FTA with Australia would be unique. It would be
India's first FTA, where the partner country has agreed to eliminate import
duties on all products exported from India. In contrast, India would cut duties
on about 70% of product lines.
Speaks about the tenacity of Indian negotiators led by the
Commerce Minister. Australian parliament ratified the FTA on November 22. It
will soon become operational.
But negotiating FTAs is not the only ambitious agenda, GOI
pursuing. It is quietly making laws and systems to build a robust industrial and
export base. Here are eight key initiatives:
Enabling more firms
to export. India has more than 20 Lakh firms that produce quality products and
services, but less than a lakh of these export. Major product categories
include: Handicrafts, jewelry, ethnic wear, decorative paintings, and Ayurveda
are key product groups. Considering India's artisanal expertise, each product
group can become a billion-dollar-plus category. GOI is implementing the
District as export hubs scheme to support and handhold them.
We hope to see the number of firms doing commercial export
transactions going up from an estimated one lakh to five lakhs in three years.
Today, just three states Gujrat, Maharastra, and Tamilnadu,
do half the exports. The District as export hubs scheme would push others to
catch up.
Flexible labor
policies. Labour laws apply to only formal workers, just 8% of all workers. Many firms
employed fewer workers to avoid complex labor law compliances. The four new
labor codes focus on reducing the number of compliances and replacing
inspectors' visits with online filing. The Industrial Disputes Act would apply
to factories with more than 300 workers. The number was 100 earlier. When
implemented by all states, the changes will nudge millions of small firms to
hire more. The new Labour codes will help set up many medium and large-scale
units.
Supporting
manufacturing of high-tech products. India's share in
global exports of many items that sell in high value is low. Consider share of
few product groups. Machinery 0.9 percent, electronics 0.4 percent, Integrated
circuits (0.03 percent), computers (0.04 percent), solar cells (0.3 percent),
and LED TV (0.02 percent). GOI has introduced PLI schemes in 15 product sectors
to make India a vital production center in these product groups. As firms enter
production mode, we expect to see a jump in India's exports from next year.
Making Commercial
courts efficient. Court delays in settling commercial disputes stunt industrial
growth. Indian Textiles' example is revealing. Till the late 1980s, India and
China were exporting less than $5 billion of textiles and apparel. Later, as the
global Textile market expanded, the buyers demanded a timely supply of
agreed-quality products. The system worked through a series of contracts between
the buying and sourcing agents, who were the links between buyers and sellers.
Due to India's weak contract enforcement system, the agent system could not
develop adequately, leading to a loss of connection with buyers. The system in
China worked fine.
Today, China's textiles and apparel exports are $320
billion, while India struggles at $40 billion. Weak contract enforcement is a
crucial reason for most woes of the Indian textile industry. The example applies
to most sectors.
GOI made a series of interventions. From introducing new
laws to automating courts. The results were visible. The time taken to settle a
case has come down from 1445 days in 2019 to 700 in the commercial courts in
Mumbai and Delhi. Work is on to improve further.
Introducing
WTO-compatible export schemes. The government has
abolished WTO non-compatible export schemes. The most important one was the
Merchandise Exports from India Scheme, which distributed over Rs 40000 Crore
annually to over 40000 firms. It was discontinued in 2020. In its place, GOI
introduced Remission of Duties and Taxes on Export Products (RODTEP) and Rebate
of State and Central Taxes and Levies (ROSCTL) schemes which are WTO compatible.
Exporters can use these schemes without fearing retaliatory action in
destination countries.
Improving product
quality through regulation. Many Indian products fail quality tests due to traces of
pesticides, pathogens, illegal dyes, etc. India needed to redesign its quality
infrastructure to help firms reach higher standards and protect the country from
substandard imports. GOI has issued Quality Control Orders (QCOs) and Technical
Regulations (TRs) for electronics, safety glasses, toys, microwaves, tyres,
LCDs, CFLs, etc. Quality consciousness will help Indian products to match the
global standards and export products at higher values to developed nations.
Diversifying
Services sector. The IT and services sector, which brings over half the revenue, dominates
India's Services exports sector. GOI is working to diversify exports through a
push in twelve service sectors under the Champion Services Sector initiative.
Important new sectors are Tourism and Hospitality Services, Medical Value
Travel, Audio Visual Services, Legal Services, Communication Services,
Construction and Related Engineering Services, Environmental Services, Financial
Services, and Education Services.
Activating Indian
trade mission abroad. The government has taken steps to energize Indian missions
abroad to promote Trade, Tourism, Technology & Investment goals. Missions have
been tasked to promote India's exports in the respective countries, alert export
promotion councils/exporters to opportunities for promoting the export of
specific goods and services, and facilitate buyer-seller events.
The world is already slowing down. The finest way to push
exports during such times is by focusing on fundamentals. The measures suggested
are concentrating on just that. They will help create jobs, increase exports,
reduce imports, and widen the economic base.
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Link to Article:
https://www.livemint.com/opinion/online-views/our-free-trade-agreement-with-australia-is-unique-in-its-details-11669572229899.html
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