Wednesday, Oct 02, 2002
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By Our Special Correspondent
The strategy would be important particularly in the context of the imminent GATS (General Agreement on Trade in Services) under the World Trade Organisation (WTO) but industry and the exporting community had shown little awareness of and interest in the opportunities and threats faced by the service sector in world markets, Dr. Prasad said, addressing a meeting organised by the Confederation of Indian Industry-Southern Region (CII-SR). Dr. Prasad wanted industry to come out with analyses on the potential of particular categories of services with reference to particular destinations, as had been done by the government in the formulation of the medium-term export strategy for merchandise exports. He also asked them to list hurdles to service sector exports and make suggestions for protecting and improving the sector's export competitiveness. Industry should simultaneously look at the potential for export of goods linked with the use of particular services and export of services linked with the use of particular goods. The Adviser said the absence of export promotion councils (EPCs) in the service sector except in the case of one or two segments (like software) was a handicap in this juncture and pointed out that the government had announced its intention to set an EPC for manpower exports. He asked industry to identify international fairs that were relevant to the service sector and said the ITPO (India Trade Promotion Organisation) would "go all-out to organise services exhibitions.'' The General Manager of the Exim Bank of India, K. Muthukumaran, said the Indian software industry and other service exporters seemed to be complacent, unaware of the fact that global developments like U.S. negotiations to conclude a Free Trade Agreement of the Africas (FTAA) embracing the whole of North America and South America could undermine India's competitiveness in service industries. At the same time, there was a lot of potential for export in areas like super-speciality hospital and health services, shipbuilding and maintenance, quality assurance services and laboratory testing in view of the developed countries opening up their services more and more even while exerting pressure on developing countries to open up sectors like telecommunications, insurance and banking. "Our services sector is sleeping,'' he said, referring to the U.S. allowing up ship maintenance services in the "overseas consumption mode.'' "When I told the Cochin Shipyard about this, they followed up the matter and have now substantial orders,'' Mr. Muthukumaran said. Referring to the alertness with which the U.S. and other developed countries were preparing themselves for the GATS negotiations, he said in the case of some segments like satellite mapping, consultancy and hospital services, many developing countries, unlike India, did not have the expertise. Hence India could have a common interest in forming an alliance with developed countries in place of the normal South-South alliance for purposes of global negotiations on these services. Representatives of the IT sector complained that insurance companies refused to cover claims arising from loss of connectivity and professional liability. A representative of a leading placement agency called for conclusion of mutual qualification recognition agreements with educational institutions in other countries. In respect of ITES (IT-enabled services), it was suggested that stand-alone export promotion status on the model of electronic hardware technology parks (EHTPs) rather than on the EPZ/SEZ model would be more useful and that banks should include the cost of training in the project cost. The hospital industry suggested nil import duty and relief in excise duty on equipment in view of the increasing popularity of some Indian hospitals among patients in the U.S., West Asia and Southeast Asia, promotion of heath tourism and efforts to get developed nations grant formal recognition to alternative systems of medicine.
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