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Revitalizing exports the biggest need
Wed, 27 Jun Pre-Open

Exports are a key constituent of GDP growth. As other components that add to GDP have been sluggish, the commerce ministry is eyeing exports to prop up the economy. Strategywise, it makes sense as the steep slide in the rupee favours more exports. Also, it should help reduce the current account deficit to a certain extent.

However, recent statistics suggest that exports have shrunk by over 4% in May. This compares to a growth of 3% in April 2012. Ironically; this has happened just after the announcement of the amendment to foreign trade policy. All this means that the Commerce Secretary's initiative to switch from nil to 20% growth within 4 months is going to be challenging. There is a need to bring in some structural changes. Especially with respect to investment in ports infrastructure and ensuring round the clock customs and other regulatory facilities. This will facilitate smooth shipment of raw materials and export consignments. The Commerce Ministry also intends to push around 25 products for exports where the country has competitive advantage.

Revitalizing exports needs a turnaround strategy. Chances are that the focus will be more on lifting curbs on exports of several commodities rather than opting for sops like lesser taxes and cheaper credit. This makes sense as with slowdown in the US economy and the Euro zone crisis, the problem is not just internal. The over dependence on Western markets is weighing down on the country's exports. Realizing this, the Commerce ministry is now focusing on exploring new territories like Latin America and Africa.

Despite the best of intentions, a strategic turnaround is likely to face inter-ministerial hurdles. That said, the scope to amend is huge and it is time to make them. The right moves at the right time could boost international trade and be the panacea for an ailing economy.

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