15 Jul 2019, 15:30 — 4 min read
Background: The Union Budget was presented on 5 July 2019 - the maiden budget of the re-elected government. Padmanabhan R R opines that the vision for India to become a 5 trillion dollar economy can be realised if India’s exports increase.
The grand vision of the Union Government is to achieve a 5 trillion dollar economy by 2030. If this vision is to succeed, Indian exports should go up. There must be both direct and indirect measures to augment exports. Measures like marketing assistance, brand promotion, working with other countries in removal of both tariff and non-tariff barriers are off shore while on shore measures like working to reduce transaction costs, reducing the interface with the customs and other government agencies, increased digitization like RFID (radio frequency identification), focused approach to augment exports of India’s unique offerings to the world are to be undertaken simultaneously and immediately on war footing.
If the 5 trillion dollar economy vision is to succeed, Indian exports should go up. There must be both direct and indirect measures to augment exports.
I was perusing the budget 2019 for such measures. Any budget is simply a statement of account, meaning income and expenditure. Both income and expenditure are of capital and revenue types. Revenue types refer to recurring activity whereas capital types refer to creation of asset over a period of time. That being the case, somehow, in Indian budgets apart from the figures of income and expenditure, the practice of announcing policy and wish statements crept in. Many budgets over the years contained such wish statements that remained at that.
Also read: Budget 2019: Highlights for startups & MSMEs
India’s aim is to reach an export target of US$ 325 billion merchandise contributing to 3.5 % of world trade. As of now, Indian exports constitute 1.6%. Surprisingly, there has been no direct measure to enhance India’s competitiveness in the world market. We have to take solace in the fact there are certain measures that are bound to make indirect impact through certain sectoral initiatives like:
1. The proposal to create a separate Fisheries Board to take Blue economy is a welcome one. This will increase Indian capability in fisheries sector. Export of both fresh and processed seafood will go up. Currently, the marine exports are in the region of $7 billion and we can expect them to grow beyond $10 billion.
2. Digitisation of Exim trade through RFID technology will help track movement of cargo inland to the port.
3. 2% Interest subvention for MSME sector and Re. 1 Crore credit in 59 minutes will enhance liquidity in the hands of exporters
4. Single window clearance for shooting films will earn foreign exchange and especially help the animation sector.
5. Exports may be counted as local sourcing for e commerce giants.
On the other hand, duty cut on the export raw leather hide would actually stifle the finished leather industry. Already, tanneries are suffering from want of raw leather. The export duty cut would divert the leather meant for finished leather to export markets. All this at a time, our neighbour and competitor Bangladesh made raw hide export uncompetitive for the local industry and instead diverted the same for finished good export for higher realisation.
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Posted byPadmanabhan R R
International Business legal services for exporters and importers
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