Exhorting traders to push exports by cashing in on attractive exchange rate, Finance Minister P Chidambaram on Saturday said imports cannot be “compressed” too much as they are the lifeline of many domestic industries.
“The trade balance in April - October is $ 90.7 billion. You will remember I said last year that for the full year, the trade balance was $ 190 billion. This year we have just crossed $ 90 billion. That is in a period of seven months. We still have five months to go,” he said at an interactive meeting organised by Federation of Indian Exports Organisation (FIEO).
Noting that the second half of a financial year always offers “better” economic conditions, he said: “Let us assume that the trade gap grows a little more. As long as we are able to contain the trade deficit to about $150 billion, may be even to $155 billion, I think we are still on a good wicket.”
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“The point is we are open to suggestions … to make any corrections … to fine tune policies. But our goal must be the same. Our goal must be to maximise exports of this country and this is the best time to do. The exchange rate is quite attractive, competitive,” he said.
The rupee closed at 62.87 versus the US dollar on Friday.
The Finance Minister said there cannot be too much compression on imports and India would have to boost exports.
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Imports are the lifeline of several industries in India without which they would not flourish, he said.
“The key to containing the trade deficit is to increase exports. I sincerely hope that all of you (traders) put your best effort in the next 4 to 5 months and make sure that exports continue to grow,” he said.
Exports grew by 13.5 per cent in October, the fastest pace in two years.
On introduction of Risk Management Systems for exports this year, which allow faster clearing of customs by reducing “dwell time” of a cargo from several days to a few hours in a customs house, he said RMS would help most of the cargo.
“I am told that most of the 70 per cent of the cargo go across the customs. (With introduction of RMS facility) 70 per cent of cargo will go without any inspection and we will do a risk management of exporter, the cargo and customs station.”
“Every minute cargo either coming into India or going out of India dwells in the customs station, adds to your cost. We are fully aware that this cost has to be minimised in order to keep a competitive edge to our exports”, he said.