Agricultural and allied products exports from India witnessed moderate growth of half percent during the financial year 2016-17 at UDS 24.66 billion and their share to India’s total exports touched 8.92 percent, according to an analysis of Export trend by Federation of Indian Export Organisations (FIEO).
The FIEO study said that India needs to focus on exports of top 200 tariff lines. India’s global share in top 200 products was 1.43 percent and for all products it was at 1.62 percent. “ The trend points to good potential to increase our exports, if we push our exports in these top 200 tariff lines. FIEO has put these products in four categories, Ajay Sahai, Director General & CEO, FIEO said, while presenting the analysis in New Delhi on Wednesday.
Majority of agri and allied products fall under category 1 which has 119 tariff lines. Semi-milled or wholly milled rice, frozen, boneless meat of bovine animals, frozen shrimps and prawns, parts of tractors among other are included in this category.
Talking to reporters, FIEO President GK Gupta said, “ Indian exports are on upward trend in last few months. We have ended up with export of USD 275 billion in last fiscal and are on our course to achieve a new milestone of USD 325 billion in 2017-18.”
“ We have also shared the details of the presentation with Ministry of Commerce suggesting that while support to all sectors of exports may continue, additional support may be given to products figuring in top 200 products of global imports at 6 digit level. Our share in these 200 products is presently at 1.43 percent and an increase of share by 0.5% can add to over USD 80 billion in country’s exports.”
The export sector welcomes the introduction of GST as its spin off effect would benefit both the manufacturing and export sector. The logistics cost is expected to come down to help the exim sector.
The quick refund, as against delayed refund of VAT, will also help the export sector. However, we are worried with the liquidity issue as the refund mechanism would require payment of GST first and its refund subsequently. The additional cost of credit to manage the liquidity should be borne by the Government, if present exemption is not brought forward in the GST.
“On a rough estimate, export sector would be losing export competitiveness by about 2 percent and the same needs to be off-setted to the export sector,” Gupta added.
FIEO acknowledged the positive role played by Rupee appreciation in Indian economy particularly, as it helps in containing import led inflation. However, it does affect competitiveness of Indian exports. The impact of Rupee appreciation varies from sector to sector. Some of the sectors with high import intensity like Gems & Jewellery, Petroleum products, certain Electronic goods do not suffer much on account of such appreciation but traditional sectors of exports like Handicrafts, Carpets, Handlooms, Textiles, Leather, Agro-products, Marine goods, etc. face huge competitiveness issue on account of such appreciation.
FIEO urged that the government should look into the matter and provide some support to export sector based on the net foreign exchange criteria so that those sectors having large imports are provided less support while sectors having little or no imports are given higher support.
The review of Foreign Trade Policy 2015-20 is due on October 1, 2017. Since GST will be rolled out from 1st of July, 2017, FIEO has requested the Ministry of Commerce to prepone the announcement so as to coincide with the rolling out of GST.