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A multi-dimensional mission is required to take India’s exports to $1 trillion by 2030, according to a new report by the Confederation of Indian Industry (CII). It calls for finalising free trade agreements with large markets, extending the remission of duties and taxes on export products (RoDTEP) to all exports, attracting global firms and addressing domestic manufacturing issues.
The report, titled ‘Achieving $1 trillion in merchandise exports: A Roadmap’, outlines products and destination markets that India should focus on and highlights a range of policy actions towards meeting the target. The need of the hour is for India to integrate closely with global value chains and to attract foreign direct investment (FDI) inflows in its key sectors, according to CII.
Based on the potential to gain global share, 14 products have been identified in the CII report as those that can contribute the most to the increase in exports. These include textiles, apparel, vehicles, electrical machinery and equipment, machinery, chemical products, plastics and pharmaceuticals.
A multi-dimensional mission is needed to take India’s exports to $1 trillion by 2030, says a report by the Confederation of Indian Industry. It calls for finalising free trade agreements with large markets, extending the remission of duties and taxes on export products to all exports, attracting global firms and addressing domestic manufacturing issues.
The report also identifies 41 countries where there is scope to expand exports which must be given special attention, according to a CII press release.
To ensure the rise in exports, nine key recommendations were made in the report encompassing market access on the demand side and domestic competitiveness on the supply side.
One, India must review its existing trade agreements and work towards new ones with its top markets. The government must strategise in choosing the right partners and the right markets, with shared complementarities, which in turn will help India to diversify and expand its export baskets, tap newer markets, and achieve higher export targets.
Two, there is a need for investment agreements to be well inked to trade arrangements, given the deep linkage between the two, stressed the CII report.
Three, as investment-led exports are a key feature of export capabilities, multinational companies must be encouraged to set up production base in India to enhance India’s presence in global value chains.
Four, India should set up a dedicated marketing agency for export promotion in key markets. The Market Access Initiative and Market Development Assistance schemes should have added funding to support marketing initiatives.
Five, the rates of the RoDTEP scheme need to be extended to all sectors and aligned to taxes and additional costs that are present in the manufacturing ecosystem, said the CII report. Exports of special economic zones and export-oriented units should be included in the scheme.
Six, manufacturing competitiveness must be built through a facilitative investment climate. It is important that the import duty structure encourages participation in global value chains. CII has suggested a three-slab structure with nil or minimal duty for raw materials, a low slab for intermediate goods and a standard slab for final goods.
Seven, ease of logistics movement and cost of movement of goods should be taken up at the policy level. There is a need for building export connectivity infrastructure and multimodal transport options, stated the CII report. Extra costs arising due to cross subsidies in freight and power must be reduced to make Indian exports competitive.
CII has also suggested an SEZ policy that is WTO compliant. Removal of Net Foreign Exchange (NFE) criteria for providing fiscal benefits to SEZ units is non-compatible with WTO norms and the quantum of incentives could be based on proposed investments, job creation, technology differentiation and priority industry criteria instead.
Manufacturing should be encouraged under the Manufacture and Other Operations in Warehouse Regulations (MOOWR) scheme for SME manufacturers in the domestic tariff area (DTA) to access export markets in an incremental manner.
Eight, there is a need for comprehensive trade facilitation measures such as risk management systems, direct port delivery, authorized export operators and digitalization of procedures.
Nine, progress in labour reforms, regulations for ease of compliance and education and skill development are required that will add to labour productivity and encourage competitiveness of manufactured goods, the CII report said.
Fibre2Fashion News Desk (DS)
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