Govt To Relook Merchandise Export Policy Afresh, Devising New Strategy

Trade & Policy

Govt To Relook Merchandise Export Policy Afresh, Devising New Strategy

The Union government is currently in the process of preparing a strategy document in order to boost country's merchandise exports which lately have witnessed challenges in the wake of growing competition in the global market. The Union commerce and industry ministry has asked the exporting community to come up with detailed plans and strategies which will act as crucial inputs for the proposed strategy document.

The government has decided to relook country's export policy afresh and come up with comprehensive action plan which can not only help eliminate the existing gaps and anomalies but also provide a roadmap for the robust growth in merchandise exports.

"We need to have a concerted effort involving all stakeholders engaged from manufacturing to the entire supply chain. We have to put up a comprehensive strategy and action plan to boost our exports and towards this end I want the entire export community to come up with detailed strategies which can help us prepare a solid roadmap for the growth of our exports," says Suresh Prabhu, Union commerce and

industry minister, adding: "Our economy should follow export-driven growth and we have to indentify newer markets and newer products to provide the much-needed impetus to country's exports."

The commerce and industry ministry is working on different areas such as improving standards of products and identifying new markets and goods to promote the country's exports. As part of this, the ministry is also working on ways to promote shipments in Africa as the region holds huge potential.

The Centre is also involving states to help expand merchandise exports from the country. Moreover, ministry is also preparing a plan to attract overseas investments in the export-oriented sectors. Meanwhile, the ministry has also assured exporters of taking up the issue of GST refund with the finance ministry. Exporters are claiming that over 60 per cent of their refunds are still stuck with the government.

India's merchandise exports finished 2017-18 with a modest rise of 9.78% to US$ 302.84 billion. However, several sectors, including apparel have shown dip in exports. Apparel exports have dipped 4 per cent to US$ 16.7 billion in FY2018 as compared to US$ 17.4 billion in FY2017, even as the total textiles and apparel exports have marginally declined by 0.4% to US$ 35.4 billion. The dip in apparel exports happened due to continual month-on-month decline, beginning from a 39.30% fall in October 2017 and ending at 17.8% in March 2018.

So far as apparel exports are concerned, they are not only s stagnating, but also also heading towards a recession. This clearly indicates an ongoing shrinkage in the industry. External factors such as free trade agreements of competing nations with key markets like Europe, the UK and the US have already been posing a big challenge to garment exporters. GST in July 2017 resulted in blockage of funds for the export community. Further, export incentives such as duty drawback and rebate on state levies were reduced.

Experts are of the view that external factors have been rendering Indian exporters uncompetitive. While China vacated the apparel export space, India is unable to encash on the opportunity, unlike Vietnam, Bangladesh or Cambodia, who have FTAs. India is emerging as an expensive affair in the global apparel market. Backed by its duty-free access to the EU market, Bangladesh retains its position as the second-largest apparel exporter after China. Vietnam remains the fastest-growing among large apparel-exporting nations, maintaining its growth in the US despite the latter backing out of a proposed trade agreement.

Experts also believe that the recent events including GST have particularly impacted exports from such sectors where production is primarily in the SME segment, even as factors such as lack of infrastructure, inefficient logistics and supply chain and high cost of finance have continued to have adverse impact.

"We have to offset the adversities on the external front by addressing our internal issues. So far as sectors like apparel and leather are concerned, we have to improve our manufacturing base significantly so that we can not only produce our goods at competitive prices but also significantly improve our quality and the overall offering. We have already urged the government for some sort of bail-out package to address our manufacturing issues," says Khalid Khan, regional chairman (WR), Federation of Indian Export Organisation (FIEO).