The Hindu : States told to think big on export promotion

Online edition of India's National Newspaper
Sunday, Jan 26, 2003

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States told to think big on export promotion

By Our Special Correspondent

CHENNAI Jan. 25. The Commerce Minister, Arun Shourie, today suggested that States should think big on export promotion and not be satisfied with allotment of just a few hundred acres as export zones.

Participating in an open-house session organised by the Federation of Indian Export Organisations, Southern Region (FIEO-SR), Mr. Shourie said schemes such as the ASIDE plan of the Centre for assistance to States to develop infrastructure in export clusters were only small beginnings. Too many "small beginnings" and leaving things unfocussed did not help meet the challenge of achieving global competitiveness.

Pointing out that the export processing zones (EPZs) and special economic zones (SEZs) were mainly intended to overcome the constraints imposed by the "inability to carry through economic reforms on a nationwide scale" by exempting investments in designated areas from national laws and regulations, he said despite the open-door policy for foreign investment in general, little investment had flowed (into the domestic tariff area) because of the constraints. Thus the special zones should be taken advantage of to attract investments.

The present comfortable foreign exchange reserves of more than $70 billion should not be any cause for complacency because it represented partly the attraction of higher interest rates prevailing in the country. If the interest rates in India came down further (or if the rates were raised in the U.S.), much of the foreign capital might flee back to the U.S. If, instead, forex reserves continued to mount, it would strengthen the rupee and reduce the global competitiveness of India's exports. Thus the solution lay in achieving competitiveness in the global market (in terms of cost and quality) through massive investments to face the WTO trade regime. The Government, for its part, would continue to fight for national interests vis-à-vis protectionism of its trade partners.

Mr. Shourie asked exporters to work with the State Governments, which held the key to further liberalisation and infrastructure development. He said they should remember that States were becoming increasingly bankrupt and would try to protect and augment their sources of revenue. The export community should coordinate with the Central and State agencies to get their problems solved. In this context, he said the Commerce Ministry would consider schemes under ASIDE if the industry concerned was prepared to fork out the share of project costs that the respective State Government was unwilling or unable to provide.

He agreed to a suggestion made by the Council for Leather Exports (CLE) that the power for certification of the hazard-free nature of imported inputs in certain conditions for use in re-exports should be vested with the council.

The Minister said the export-import policy statement (due on March 31) would make a specific commitment that wherever necessary, procedural simplifications would be made on a continuing basis even beyond that date, though other types of changes required to deal with any anomalies arising from the policy and having revenue implications for the Central Government would have to await the Government's "budget cycle".

He conveyed to exporters of gems and jewellery his impression that the imminent Union budget might have some special package for their sector. He said he would visit Tirupur, the hosiery cluster, after the next session of Parliament to see what types of projects, including road links, would be necessary to enable this "exemplary success story of Indian enterprise" to reach its full potential.

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