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CII advocates stronger focus to realise full potential for exports to the Saarc and Asean regions

The Confederation of Indian Industry (CII), in its latest ‘CII Policy Watch’ edition, has taken a closer look at export performance and the initiatives needed to reverse the declining trend. It is difficult to see something new in these suggestions but they are still worth saying. Also, as usual, quite a few of the suggestions relate to infrastructure and fiscal measures, beyond the commerce ministry’s purview.

CII gives interesting figures to celebrate diversification of our export markets. About 22.6 per cent of our exports go to West Asia and Northern Africa (Wana) and 16.8 per cent to Northeast Asia . Those to North America (10.7 per cent) and the European Union together account for less than 30 per cent.

CII advocates stronger focus to realise full potential for exports to the Saarc (2.85 per cent) and Asean (10.9 per cent) regions. Exports to the rest of Africa and Latin America account for an impressive 11.5 per cent, says CII. Although something seems amiss in these figures (as the same report shows exports to the US at 11.9 per cent and to North America at a lower 10.7 per cent), broadly CII seems to have got it right. 

It quotes many luminaries on what needs to be done. Past president Sunil Kant Munjal, of the Hero Group, seems more pointed in calling for focus on raising product and project exports to markets with a socio-economic profile similar to India’s and on moving up the value chain.

The stress on value addition seems timely, with export of petroleum products and gems & jewellery accounting for more than a third of our exports, making Gujarat (24.6 per cent) the top exporting state.

Creating a fiscal and regulatory policy environment conducive for export, facilitating this by reducing transaction costs and creating an industry-government strategy to penetrate global markets are priorities CII advocates. Sanjay Budhia, chairman of the its committee on exports, sees poor port infrastructure as the prime impediment. He wants an industry-friendly regulatory regime, overhauling of regulations on documentation, land acquisition, environmental clearance and taxation. To revive the Special Economic Zone scheme, he champions for benefits of Chapter 3 of the Foreign Trade Policy, abolition of Minimum Alternate Tax, a full income tax holiday over 10 years for units in operation and simpler procedures for procurement from Domestic Tariff Areas.

CII never tires of preaching to the government the virtues of cutting subsidies. However, for exports it wants an interest subsidy, freight subsidy, market development fund, special assistance to improve innovation, fiscal benefits for investment in new and more efficient plant and technology to reduce costs and to improve the quality. It also wants a stable export policy for farm produce, simpler laws and easier availability of finance and so on.

CII is silent on how states can do more to leverage the export opportunities. Maharashtra and Gujarat together contribute to 46 per cent of exports. With Tamil Nadu (9.3 per cent), Karnataka (5.4 per cent) and Andhra Pradesh (five per cent) together contributing another 19.7 per cent, all the other states contribute to less than a third of the total. CII is also careful not to talk of costs and delays that exporters incur in dealing with government officials in seeing their consignments through or getting their incentives, and ways to avoid these. True to its tradition, CII refrains from saying anything that might annoy the bureaucracy.