With India’s export growth
picking up sharply in recent months and world trade expected to grow at
4.2 per cent and 4 per cent in 2017 and 2018, respectively, from 2.4 per
cent a year before, prospects for the country’s external sector seem
bright, the Economic Survey has projected.
Addressing the current
account vulnerability, though, requires raising the trajectory of export
growth. "Here, an important lesson is the need for macroeconomic policy
to support the development strategy," the Survey said.
Supportive
policies such as GST, logistics and trade facilitation policies of the
government could help improve prospects further, it added.
Logistic issues
Agreeing
with the Survey’s suggestion on improving logistics and trade
facilitation policies, the Engineering Export Promotion Council (EEPC)
pointed out that logistic problems lead to high costs and impact the
competitiveness of Indian products in the international market.
"The measures suggested in the Economic Survey like faster clearance
for setting up of container freight stations , introduction of high end
scanning equipment, online track and trace system would go a long way in
improving India’s Logistic Index further," said Ravi Sehgal, Chairman,
EEPC.
Echoing the woes of exporters on the issue of
non-reimbursement of embedded taxes, the Survey proposed that the GST
Council should conduct a comprehensive review of embedded taxes arising
from products left outside the GST (petroleum and electricity) and those
that arise from the GST itself. "This review should lead to an
expeditious elimination of these embedded export taxes, which could
provide an important boost to India’s manufacturing exports," it said.
According
to exporters body FIEO, increased duty draw back rates (rates for
reimbursing input taxes on exported products) which included embedded
taxes need to be announced soon to help exporters gain back their
competitiveness.
Manufacturing exports
Exuding
optimism for the future, the Survey said the behaviour of manufacturing
exports and imports in the second and third quarters of this fiscal year
had started to reverse. "The re-acceleration of export growth to 13.6
per cent in the third quarter of 2017-18 and deceleration of import
growth to 13.1 per cent , in line with global trends, suggest that the
demonetisation and GST effects are receding. Services export and private
remittances are also rebounding," the Survey observed.
India’s
balance of payments situation, which has been benign and comfortable
since 2013-14, continued to be so in the first half of 2017-18, despite
some rise in the Current Account Deficit (CAD) in the first quarter,
with a relatively lower CAD in the second quarter.