Mumbai:
Indian exporters
cost-disability factor stands high at 18.65 per cent over global
standards, according to the Confederation of Indian Industry (CII).
Cost-disability factor is nothing but transaction cost. This simply
means that Indian exporters transaction costs are higher by
18.65 per cent in comparison to global transaction costs.
Two other bodies, the Export-Import (Exim) Bank and the Federation of
Indian Exporters (FIE), have also worked out the cost-disability
factor for Indian exporters. While the Exim Bank has worked it at
16.30 per cent, FIE has estimated it at 10.90 per cent. The findings
are significant because the current export-import policy will be over
by the end of the current fiscal and in its place a new policy, for a
five-year period between 2002 and 2007, will be formulated to guide
Indias exports.
The developments should also be considered significant in view of the
fact that in the first half of the current fiscal, exports declined by
2 per cent after registering a growth of 20 per cent in the financial
year ended 31 March 2001. Last month, a new committee, headed by
former commerce secretary P P Prabhu, was formed by the government to
help frame the new import-export policy.
The committee, which was apprised of the cost-disability findings by
director general of foreign trade N L Lakhanpal, has cited following
constraints in proper growth of exports:
- Lack of infrastructure
- Red tape
- Taxation issues
- Cost-disability factor
- High dwell time.
Clearly, the government is on
the lookout for formulating new strategies to help achieve higher
exports in the future. The new committee is expected to come out with
suitable incentives, some of which could be:
- Cheaper credits for
producers of export goods
- Incentives for domestic
sourcing of inputs
- Rewards for higher value
addition.
Giving
incentives for domestic sourcing of inputs has been thought of because
of the tendency of Indian exporters to over-rely on imported raw
materials and booking profits on import licenses by encashing the
premium on them. High-value exports essentially mean high-tech exports
and the same will be rewarded in view of the fact that high-tech
exports is expected to be the highest growing segment in the near
future.
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