A bold approach

THE EXPORT-IMPORT policy for 2000-2001 announced on Friday by the Minister for Commerce and Industry, Mr. Murasoli Maran, is much more than the usual effort to streamline and debottleneck exports. It is a bold approach to the difficult imperative of placing India in the global mart as a player of no mean significance. There are two broad dimensions to the new policy. The first is the elimination of Quantitative Restrictions (QRs) on imports of 714 items ranging from fruits and vegetables to sewing machines, audio equipment and vacuum cleaners. This would leave only 715 items under QRs for removal by April 2001. The accelerated phase-out of QRs by 2001 is an inescapable part of the mandate of the WTO as pronounced by its appellate body. The second strand of the new policy is the prudential leveraging of India's enormous but mostly untapped potential for exports.

Ever since he assumed office as Minister for Commerce and Industry in the NDA Government, Mr. Maran has been making the point that our achievements on the export front compare poorly with the record of South-East Asian economies, not to speak of China which has made a success of an export-led growth strategy. He has also been expressing himself in favour of India emulating the Chinese model of Special Export Zones (SEZs) as a winning strategy. In the policy unveiled on Friday, Mr. Maran has announced that the Gujarat and Tamil Nadu Governments have come forward to promote an SEZ each with a dedicated land area of 880 and 1,012 hectares respectively. This apart, four existing Export Processing Zones (EPZs) - Santa Cruz, Kandla, Vizag and Cochin - are to be upgraded SEZs. Mr. Maran has, however, clarified that unlike the Chinese SEZs, the Indian clones will be governed by the same labour and banking regulations which are in force in the domestic tariff area. Which is not going far enough since the SEZs proposed will continue to be constrained by high interest costs as well as labour policies which do not recognise the critical need for flexible employment commitments and worker discipline, a crucial prerequisite for meeting export delivery schedules.

There is nothing inherently unrealistic about the expectation that the SEZs (as in China) will provide a magnet for drawing Foreign Direct Investment (FDI) on a largescale. The guarantee of operational freedom for units in the SEZs without bureaucratic interference and with complete exemption from all taxes and duties could well trigger the much-needed inflow of FDIs. Nevertheless the fact that under the influence of liberalisation, there has already occurred a marked narrowing down of differences in the tax burden as between units in the EPZs and those in the domestic tariff area could vitiate such an anticipation. Nor does India possess something comparable to the ``Hong Kong factor'' which helped China zoom into the Western markets.

A pragmatic initiative contained in the new policy is the Centre's willingness to enthuse the State Governments to participate in the export mission by funding export-related infrastructure development. The provision of Rs. 250 crores for this purpose in 2000-2001 to be followed by larger amounts in the future is tangible evidence of the resolve to synergise Centre- State partnership for endeavouring to achieve export growth at rates much higher than the 11-12 per cent estimated for 1999- 2000. Mr. Maran's policy announcement also addresses the need for catalysing export sectors such as gems and jewellery, leather, granite and the emerging knowledge-industries of pharmaceuticals and bio-technology, apart from computer hardware. All this, however, cannot remove the apprehensions of a long protected domestic industry that the new regime of global openness will take a heavy toll on the indigenous sector and particularly the small industry.

Send this article to Friends by E-Mail

Section  : Opinion
Next     : A clash of egos