Friday, January 4, 2013

POLIY SUPPORT: EXPORT

Export driven industries need some basic changes to make the incentives work for them

In the short term, the first and foremost step should be the gradual but continuous removal of the high tariff and excise duty rates especially on the non-oil intermediary inputs for Indian industry.

Currently, India’s top 100 import items constitute 84% of total trade of which non-oil imports form 47% facing an average import tariff of 7.5 % while the gems and jewellery sector faces a 10% import duty on raw materials far higher than the sub 5 % rates existing in other emerging economies. Secondly, the Drawback and Duty Entitlement Passbook (DEPB) rates must be raised by 5 % to negate the fiscal stimulus efforts for exports in countries like China and Vietnam. Thirdly, for the current fiscal year, for export labour intensive, a service tax exemption must be put in place. Says A Shaktivel, FIEO, “Labour reforms are also needed urgently.”

In the long term, there is a critical need to have a uniform VAT structure.Secondly, the SEZ policy must be up and running as provisions like raising money from the foreign markets must be allowed.In essence, the transition from an export led economy to a consumer led economy can only take place if the people living in the lower strata of the society are given the opportunities to work and earn in the long run and hence, a constant rise in disposable incomes can take place which can only happen if our exports continue their upward trajectory. Hope the government is listening.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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