Confederation of Indian Industry (CII) has urged the government to introduce policies to increase India’s share in global merchandise trade to 5 per cent and in services export to 7 per cent by 2025. It urged the government to follow the general principle of higher duties on finished goods and lower/minimal duties on intermediates and raw materials. According to the chamber, this will encourage imports of components, intermediates and other inputs for domestic manufacturing which can be exported after value addition.
The chamber further said there is need for a calibrated management of the exchange rate to promote exports with strong capital inflows as the 36-currency export-weighted real effective exchange rate for India stands at about 116 for June 2020, indicating overvaluation of the rupee.
Pointing out that India’s cost of doing business in areas like access to capital, gaps in logistics, higher power and freight costs, royalty, state level taxes is a key disadvantage for export promotion, CII said the proposed Remission of Duties and Tariffs on Exported Products Scheme (RoDTEP) needs to take into account multiple costs.
CII recommended setting up of an export task force headed by the commerce and industries minister to address all areas of export promotion with coordination of ministries, state governments, other organisations and industry bodies. It also called for a robust and overarching foreign trade policy when the current one expires in 2021. It should not be limited to incentives for exporters but extend across different areas for a holistic export strategy.