Fundamental policy changes needed for merchandise trade sector
NEW DELHI: Cautioning that global meltdown, particularly in the U.S. and European Union, could impact India’s export growth during 2009-10, the Economic Survey has stated that the government should cut excise and customs duties, streamline export promotion schemes and pay special attention to infrastructure to overcome the contracting exports.
The Economic Survey, which was tabled in Parliament on Thursday, states that with import demand falling from our major trading partners, India’s exports of goods and services are expected to be impacted.
India’s exports, after registering a healthy growth rate of over 30 per cent in the first half of 2008-09, turned negative from October 2008.
In the last fiscal, exports grew by a meagre 3.4 per cent to $168.7 billion.
It states that besides short-term relief measures and stimulus packages, some fundamental policy changes are needed for the merchandise trade sector.
The measures include continuing to reduce customs and excise duties to make our exports and industry competitive, streamlining existing export promotion schemes and giving special attention to export infrastructure.
In addition, the Survey has also pointed to weeding out unnecessary customs duty exemptions and rationalising the tax structure, including specific duties, in a calibrated manner taking into account the specific duty levels in our trading partner countries.
There is also a need to check the proliferation of special economic zones, evolve clear-cut policy for beneficial Comprehensive Economic Cooperation Agreements even with some developed countries which should be well integrated with our economic and trade policy reforms and the blueprint for possible changes due to WTO negotiations, it states.
The Survey emphasised on the need to desist from any protectionist tendencies and proceed on the reform path. On the services trade, the survey said a roadmap of specific policies needed to be drawn not only to overcome the impact of the current global crisis, but also to accelerate the growth of the economy and total exports. “A more systematic approach could increase our dividends from this sector manifold,” it states.
“Domestic regulations perform the role of tariffs in regulating service trade. Streamlining domestic regulations like licensing requirements and procedures, technical standards and regulatory transparency can help in the growth of services. Similarly, negotiating for streamlining domestic regulations in our major trading partners could help in increasing India’s market access,” the Survey said.