FIEO in emerging global trade scenario

THERE IS a fresh wind blowing on the Indian export scene. After nearly 3-4 years of decline, exports are again on the rise. The first seven months of the current fiscal witnessed a surge of 22 per cent in exports. The Government has set a target of 18 per cent for the year but the expectations are that this will be exceeded by a considerable margin. It may be noted that there is always a jump in exports in the last quarter of every fiscal.

What is it that puts us in an upbeat mood? First, it is the overall progressive Exim Policy of the Government and the effort on the part of many export-related agencies to free exporters from the innumerable administrative and operational hassles. But, export growth cannot be driven solely by a conducive Exim Policy and procedures, and a supportive Government. It has also a lot to do with the conditions and behaviour of the global markets and, to a greater extent the enterprising spirit of the Indian exporter.

It is the last that has enabled the Indian exporter to take the various handicaps in his stride. The exporter pays a high transaction cost because of inadequate infrastructure - in terms of dependable and efficient transportation, communication, ports, availability of cargo space in shipping and airlines and many others.

It is estimated that with an extensive and high quality infrastructure in place, Indian products would have been cheaper by 14 to 18 per cent in the international market than they are at present. This can be taken as the burden of the transaction cost on every product exported. Then, there is the cost of credit. This is high not only in terms of the rate of interest, but also in terms of the delivery time. While there has been considerable improvement in credit delivery its price continues to be high, and is many times what exporters in neighbouring countries pay.

Exporters also have to contend with a progressive annual reduction in the tax exemptions on export profits and a recent directive of the RBI to reduce their holdings in EEFC account. Though the latter measure is said to be temporary, it has done enough damage to the overall production and marketing plans of a number of exporters. To that extent, export returns are bound to be affected.

Despite these developments, the morale of the Indian exporter remains high, and the Federation of Indian Export Organisations (FIEO), the apex export promotion body, manifests this spirit in its entirety. The FIEO, which is 3-1/2 decades old now, is a vital instrument to protect and promote the interests of exporters. The Federaiton's members, comprising mostly high performing professional firms, have consistently worked to maximise export earnings both from sales of merchandise and services. In fact, the capabilities of these professional firms have earned them a special status as Government-recognised Export Houses, Trading Houses, Star Trading Houses and Super Star Trading Houses according to a set scale of performance.

These exporting houses are entitled to a number of procedural and other benefits which enable them to concentrate wholly on producing, marketing and selling merchandise and services abroad. The commitment and professionalism of these members is such that together they are contributing very year 74 per cent of India's total exports.

Its members not only have a predominant share in the country's exports, they also represent the production and sales activity of more than one lakh small and medium exporters and importers. In fact, because of FIEO, a large cross-section of the tiny, cottage, small and medium scale industries in the country have found a voice in export forums set up by the Government. It may be pointed out here that the small and medium scale industries together contribute more than 35 per cent of India's exports directly, and almost 55 per cent indirectly by way of inputs to products and services exported by larger exporters. Thanks to FIEO's intervention, the Government has recently announced a number of measures to help the SSIs. These include doubling of the excise exemption limit to Rs. 1 crore, 12 per cent capital subsidy for investment in certain sectors, raising the composite loan limit to Rs. 25 lakhs, and also floating a Rs. 477-crore scheme to support the khadi and village industries. Besides the Government has decided to give them priority status in the matter of lending to industry-related services and business enterprises with a maximum investment of Rs. 10 lakhs.

The Federation is also assisting and guiding the different States, especially in regions where the export culture is non- existent or weak, to take to exports in a big way. It has, in this direction, guided some States by carrying out studies on their overall export potential as well as individual or groups of products in them which can do well in the international markets. The Federation regularly organises workshops and seminars with State governments and exporters to create export awareness, and encourage export activity in a big way.

On the international front the FIEO has embarked on a special programme to extend the reach of Indian exports to Latin American countries, and is also encouraging exporters to venture out to CIS countries, North West and West Africa, and Southeast Asia where the scope for expansion of trade is still vast.

Consultancy organisations

An area on which the FIEO is turning its focus is that export of services. India has more than 15,000 consultancy organisations and over 80,000 professionals with expertise in areas ranging from education, administration, finance, management and agriculture to the entire spectrum of engineering, telecommunications, railways, nuclear power and computer hardware and software. The FIEO is the designated nodal agency for export of consultancy services and, over the last decade, it has successfully projected India's capabilities in supplying the whole range of services to the world by sending delegations of experts to Southeast Asian countries, the CIS Republics, West Asia, and major African countries.

As the share of services in the GDP is rising rapidly, the FIEO has take upon itself the responsibility to aggressively promote India's capability and capacity to provide high quality services. In fact, FIEO welcomes service providers already earning foreign exchange, or desiring to venture into international trade to become its members. Its membership is open to service providers - individuals as well as firms - engaged in any field - software, advertising, renting, leasing, communication, construction related engineering, education, finance, banking, health-related activities, tourism and travel.

The FIEO offers exporters of goods as well as services all guidance and assistance, and all facilities required, including marketing development assistance (MDA). It is the agency authorised by the Ministry of Commerce for receiving and processing applications for MDA, and disbursing grants under this scheme.

With the WTO in place, and a fully free trade regime emerging progressively, the international trade scene will see intense competition, bringing with it immense challenges as well as opportunities.

Navratan Samdria

President, FIEO

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