Tuesday, Apr 02, 2002
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By Sushma Ramachandran
These were the products expected to lead the surge in export growth in the medium term. With its focus on the farm sector and cottage industries, the new five year Export-Import Policy for 2002-07 would help give a boost to export growth despite the global recession. Warning that export growth in the last two months of the current fiscal was likely to be ``horrible'', he said the situation was the same elsewhere in Asia with negative growth rates recorded in China and the ``Tiger economies'' of Singapore and Taiwan during January and February. In an interview to The Hindu, Mr. Maran stressed that despite the elimination of a controls regime, the Exim policy continued to play a role in giving a push to exports as well as to ensure that imports met quality and health standards. The policy measures were especially important in the current depressed economic scenario. On the need for sustained exports of farm products, he conceded this had been a problem in commodities such as sugar where cyclical production had led to erratic presence in the international market. An inter-ministerial committee had been set up to fix threshold levels of such commodities to ensure that exports continued in a sustained manner. He also noted that several commodities had now attained a ``critical mass'' where surpluses were available for export of sugar, foodgrains, steel, cement and petroleum products. Regarding the potential of the Special Economic Zones (SEZs), he said there had been an enthusiastic response from the State Governments and progress was rapid. But unlike China where land can be acquired immediately, legal procedures had to be followed which would take some time. The Gujarat SEZ based at Positra had already completed financial closure of Rs. 2,000 crores while the Tamil Nadu Government had acquired a considerable amount of land. Similarly, the SEZ in Maharashtra was at an advanced stage while Tatas had taken considerable interest in the Orissa-based SEZ. He said there was no question of allowing the overseas banking units (OBU) proposed to be set up in the SEZs to be used for money laundering. The OBUs would have to function like foreign banks and not as tax havens. The Reserve Bank of India (RBI) would shortly be issuing guidelines for their operations. Besides, a stringent money laundering legislation was in the process of being enacted. On the need to improve infrastructural constraints to exports, he said studies showed that Indian exporters had huge competitive cost disadvantages due to slow movement at ports. Transactions costs were extremely high with turnaround time at Indian ports averaging 6 to 7 days for ships as against two or three hours at Singapore. Highlighting the important role of the State Governments in promoting exports, he said the new policy had included a scheme to provide incentives to the States. An allocation of Rs. 350 crores had been made in the scheme initially and funds would be given on the basis of export performance initially. He said the cash-strapped States which relied on sales tax and octroi for revenues, were not expected to show interest in exports unless it provided some resources. The scheme had been devised to overcome this problem. On the challenge posed by China to Indian exports, he said the country had to improve competitiveness. But China had scored by its scale of operations while India was hamstrung by the problem of reserving products for small-scale production. It was just a question of time, he said, but most important was the need to change the mindset towards exports. On the new Focus Africa programme, he said a detailed market study had been carried out which identified the huge potential of this region.
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