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EVEN though the measures outlined by the Union Commerce Minister in his Exim Policy are "prima facie" in the right direction, experts here are apprehensive as to how these steps will lead to the intended results against the wider issues relating to globalisation.
The small industry sector as a whole is now subject to a serious crisis, which to a large extent is the outcome of policy shifts. "To what extent the peripheral steps under the Exim policy help to make an important change in the existing order of things? Such a discussion has to be made against the background of the recent experience in exports from the small industry sector," Mr P.M. Mathew, Director, Institute of Small Enterprises and Development (ISED), told Business Line.
Though there were apprehensions on the potential export scene in the context of the WTO stipulations, the export position of the SSI sector has generally been more or less constant, he said. But, the latest figures brought out by the Directorate-General of Commercial Intelligence and Statistics (DGCI&S) showed there was a reason for alarm, he said.
Therefore, the issues that need immediate attention relate to two main areas: The relative export capability of the SSI sector; and the export composition of this sector. In fact, these should be the cornerstone of any policy package in the years to come, he said.
The export curves of the SSI sector and the country's overall export showed significant growth, with a relative advantage for the SSI sector. But this in itself was not a necessary condition to be optimistic about the prospects of this sub-sector, he said. The curves both for the SSI sector as well as for total exports, converted in terms of dollar exchange, indicate only a negligible growth rate. The implication was that the pitiable overall export performance had been concealed by the enigma of exchange rates, said Mr Mathew, who is a member of the Consultative Group on the Unorganised Sector of the Prime Minister's Office, said.
He said from the point of view of export potential, what was actually needed was to enhance the relative export capability of the SSI sector. This was because, in a context of enhanced competition, the small sector was likely to be the greater victim both within the international and internal markets. "The crucial issue, therefore, is the question why the SSI sector which had a production of Rs 4,65,171 crore contributes exports worth only Rs 44,442 crore. This small share of exports in total SSI production itself demonstrates the weaknesses of the sector as a whole," he said.
The new Exim Policy had rightly highlighed the need for reduction of transaction time and cost, and several procedural simplifications introduced. "But the wider issues still remain. Are these policies closely integrated with the wider policy of industrial development, infrastructure creation and the priorities in industrial development?" he asked.
In fact, the country's industrial policy had to be fine-tuned to make exports and export competitiveness of production a built-in criterion. "If that be so, the Minister need not focus too much on the SEZs. A permanent solution to India's export sluggishness lies in bringing exports into the mainstream of industrial development policy. Infrastructure creation without proper integration will not help us achieve the Tenth Plan export targets," he said.
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