Amid the government’s move to increase tariff on some imports, industry body CII has suggested calibrating import duties carefully. It has asked for policies to increase the country’s share in global merchandise trade to five per cent and in services export to seven per cent by 2025.
“The general principle of higher duties on finished goods and lower/minimal duties on intermediates and raw material should be followed. Stability of policies is critical,” CII said in its paper on export strategy. .
A key point in the export endeavour is India’s participation in global value chains (GVC), it said, adding this necessitates an open and facilitating import environment that will encourage imports of components, intermediates and other inputs for domestic manufacturing which can be exported after value addition.
“Attracting global companies into this venture is critical for investments, employment and global linkages, and India’s large and growing markets are a central factor. Therefore, an open and facilitative import environment, on the lines of ASEAN, will serve as a significant inducement for India’s export mission,” it said.
The chamber 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, CII said.