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IF EXPORTERS WERE apprehensive that there might be an erosion in Government support, the Exim Policy has proved them happily wrong. The Union Minister for Commerce and Industry, Mr Murasoli Maran, has not only continued the benefits but the swathe of reforms he has outlined promises to cut some of the transaction costs that have been bugging exporters all along. Significant in Mr Maran's policy speech were the candid admission about the disadvantages the economy faces in infrastructure, interest rates, power tariffs and taxes, and his bid to "immunise at least the export sector" against these disadvantages. He left none in doubt that he was determined to cast off the lingering, vexatious rigours of a controlled economy that were cramping exporters.
In his sights is the target of raising India's share of world trade from 0.67 per cent — no higher than the Philippines' — to a respectable 1 per cent by 2007. The context is more favourable now than five years ago: From an economy of shortages it has transformed into one of surpluses in many goods, chiefly grains, sugar, cement, and steel. Exports are no longer the means to gain dollars to fund essential imports, they are now imperative to keep the domestic hearth burning: Jobs are at stake not just in industry but in farms across the country as capacities idle and inventories build. But domestic surpluses do not necessarily turn into exports; they must be competitively produced and marketed, which is where the export effort has to be re-tuned. Mr Maran has tried to address the question of cutting costs by removing the numerous restrictions on trade. Farm goods export has been largely freed; no more do cotton traders have to trudge to Delhi to win quotas. With so much surplus wheat and rice, every opportunity has to be used to sell stock abroad, and every reduction in cost will count. The removal of import duties on rough diamonds, on fuel for captive power generation, on trims for leather exporters, should make products that much cheaper to make.
Mr Maran has reaffirmed his faith in the concept of special economic zones that will allow the best of domestic talent to produce exportable goods with the best of global raw material without the hassles of the domestic environment. The introduction of the overseas banking units should provide finance at international rates. The tax incentives are to be pronounced later in Parliament but the point to note is that one need not be over-friendly in the tax regime; waiving taxes permanently is not a great idea. It only benefits the foreign consumer. SEZs will succeed better if they have an efficient economy behind them in the hinterland. As Mr Maran has acknowledged, the policy environment still does not make for a healthy growth of businesses. Regulations continue to be a maze, and wavering policies that change direction like winds around a cyclone, are hurting business prospects. If these are being changed for exporters, it follows that they must be changed for the rest of the economy as well. Consumers at home are as important as those overseas.
Mr Maran's reforms must therefore apply to the Government as a whole. That the Directorate-General of Foreign Trade is seeking an ISO 9000 certification as a facilitator after being years as the "dyed-in-the-wool regulator" is an interesting example of the desired change. If the new policy is implemented right, exporters can cut some of their costs and thereby win more market on price; but the biggest and sustainable wins will come if they can be innovative with their products too. That is a job the Government cannot do for them.
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