Dinesh Kamath's Editorial 'Robust foreign trade policy needed' that was published in Newsband

Robust foreign trade policy needed

Employment generation in India through exports of manufactured goods has been a key objective of the Foreign Trade Policy FTP. Recently, the FTP has outlined ambitious plans for the diversification of exports, both in terms of the range of products and the destination countries. Yet India’s export performance remains below par.

The new government’s orientation to trade cannot be really different from that of its predecessor. Prime Minister Narendra Modi has called for a “Make in India” movement, which has the potential to turn India into a global manufacturing hub.

In order to boost exports we need to strengthen our Micro, Small and Medium Enterprises (MSME). Even though the government provides various incentives, subsidies to boost up manufacturing, the basic issues at ground level such as lack of proper training, poor awareness, corruption and other issues comes in the way of leveraging the maximum benefits out of such schemes.

The government should focus on implementing effective measures to tackle such issues with strict laws in place. A high level committee can be formed to study the working of similar enterprises in other countries and also on the policies of the government which focuses on manufacturing and exports.

FTP without quality and competitive products can never boost India's export. A good number of exporters misuse the export incentives. In many cases the minimum export price is less than the domestic market price. Such exports are only creating scarcity and price rise in domestic market.

Duty-free Chinese goods are flooding the nook and corner of India. The unscrupulous Indian businessmen are smuggling and selling the sub-standard Chinese goods everywhere.   

FTP or Foreign Trade Policy of the NDA government is expected to have audacious steps for expanding exports and having a consistent framework for imports. India urgently needs to follow procedures relating to country of origin to avoid its local market being flooded by goods of other companies. FTP is not necessary to boost exports. Extent & Nature of execution of policy make all the difference to its effect on exports.

One of the steps the government can take up is Educating (or rather, Skilling) MSME exporters in monitoring international standards. PM Modi touched the nerve of economy by saying "Make in India". To consolidate exports, India must focus on MSME as these make maximum contribution to national GDP. Most of the small scale or cottage enterprises are not getting any assistance, so government must frame revival policy. India has to focus on imparting industrial level training facility to make young employed. Government has to provide all basic facility like proper electricity, water facility with affordable tariffs.

The most important thing is the quality of products. India is capable enough to block Chinese product (cheap and inferior) by producing the same in our country. This will generate employment and consolidate economy a well.

India already has all the requisites to embark on a growth path based on exports, but standard economics is where India has failed. The other crucial aspects seldom given attention are human resource and environmental resources, as well as depreciation of all these resources. A robust policy should keep all of these under consideration.