Indian commerce department readies strategy to double exports

NEW DELHI: The government will roll out a three-year plan to double the country’s exports to $400 billion as it looks to address growing concerns over the burgeoning trade deficit.

The commerce department is preparing a strategy paper that will focus on sectors with growth potential such as engineering goods, chemicals and pharmaceuticals, commerce secretary Rahul Khullar said. The paper is expected to be ready in two months.

“The estimated balance of payment gap of $125 billion for the current year is 10% of the GDP (gross domestic product), which needs to be brought down,” Mr Khullar said at the release of a study of engineering sector in India and China.

“The strategy paper will look at how, in three years from now, we can ramp up exports from $200 billion to $400 billion,” he said, adding exports need a strong boost to keep the deficit under check.

India’s exports may exceed the $200 billion target in the current fiscal year, after some key sectors recovered strongly in the last few months. Exports had suffered a big hit in 2008-end due to the global economic downturn.

The strategy paper will lay down policy measures to support strong growth.

“It is clear that we won’t get that kind of growth in sectors such as tea or coffee,” he said. The engineering goods sector holds promise with exports expected to touch the pre-crisis level of $45 billion this year.

“To maintain its share in total exports, engineering exports has to grow to at least $90 billion,” Mr Khullar said, adding that the government would look at suggestions given by the industry to help it improve competitiveness based on China’s experience.

Government support, high-quality infrastructure and a strong SEZ policy helped Chinese engineering industry to export $956 billion worth equipment in 2008, compared with $137 billion in 2001, said Aman Chaddha of industry body Engineering Exports Promotion Council.

Mr Khullar said the comparative study between China and India, done by the engineering exports promotion council (EEPC), will be examined by the China division in the commerce department.

Panel soon to ensure EoU charm stays

The commerce ministry will set up a committee to rework the export-oriented units (EOUs) scheme to ensure that it remains attractive even after the tax sops lapse at the end of this fiscal year. “EOUs should be remodeled because challenges and environment have changed.