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Grim export outlook

AS THE GLOBAL economic slowdown begins to bite, India's exporters are wincing. The weak foreign demand and low economic activity in the importing countries, especially the US and the European Union, which together account for nearly half of India's expor ts portend poor sales abroad.

The demand recession is such that India's dream of garnering a one per cent share of the world trade will remain only just that -- a dream. With 5 per cent growth in the April-May period, sharply down from the 20 per cent levels the previous fiscal, it i s understandable that the Government should scale down the export growth target for this fiscal to 12 per cent. And in a situation of declining global trade, even this looks forbidding.

There are no easy routes for the Government and the exporting community to sell abroad and strengthen the economy in the process. Uncompetitive as always, Indian products are regularly losing the price war. The standards of some markets cannot be met -- as happened in the case of Iraq's rejection of Indian wheat -- without creating world-scale infrastructure. It is the Government's job to create such facilities, backed by necessary policy support and incentives, for exporters to perform. That apart, exp orters face a major problem of transaction costs. This element, according to various export promotion councils, accounts for more than 22 per cent of the manufacturing cost. Corrupt officialdom and inefficient processes make terrible twins. To overcome t hem, exporters need official bounties; else they face reduced profits. Having said that, exporters must stop being sop-seekers always. They should be contributors too. While the Centre and the State governments must accord a right mix of incentives, fisc al and non-fiscal, to achieve price competitiveness, the onus is equally on the export industry to ensure quality levels that are second to none.

As for States' contribution, it has not been at desirable levels. It is a fact that States are very tentative when it comes to supporting export efforts. How to get them around? Should they get a share of the foreign exchange earnings, the States may fee l motivated to drive exports. The Centre can link assistance for development of infrastructure to their export performance. With the thrust given to promotion of farm exports, the States will have a larger role to play. One hopes the new schemes -- speci al economic and agro export zones -- that have been added to the existing ones will take off as planned and the States will help them soar. In this context, it is worthwhile to note that the Andhra Pradesh Government some time ago took the initiative of preparing competitive indices for the various crops produced in the State. Objective: To examine the price and quality competitiveness of its farm products vis-a-vis the international items, in the light of the WTO Agreement on Agriculture. The exercise is worth pursuing as it will certainly help governments formulate strategies. Export promotion must be a national effort.