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EXIM Policy 2000-2001
FULL TEXT OF SPEECH (EXIM POLICY 2000-01)
[Text of the speech delivered by Hon’ble Commerce
Minister on the occasion of release of the Exim policy is an important
document for all associated with financial sector.]
Let me first extend my warm welcome to all of you. The annual Exim Policy this year is somewhat special because it is the first policy of the new millennium and the first policy of the new government whose mission is to achieve a tremendous breakthrough in economic development in this decade, when the world is waking up to India’s crucial role as the largest democracy and as a dynamic economy, while the new technologies (especially information technology and biotechnology) are opening up new opportunities. Our trade policy reforms are aimed at creating an environment for achieving rapid increase in exports, raise India’s share in world exports and make exports an engine for achieving higher economic growth. If there has been one clear cut lesson of recent development experience, it is that rapid overall economic growth and increase in employment depend on rapid export growth and it is not surprising, therefore, that all fast-growing economies in the developing world are also export success stories because they recognise the importance of openness and they have either changed or are changing their trade policies accordingly.
Our strategy is –– and needs to be –– focussing on export-led growth which should be regarded as an integral and important part of our development effort and our central policy is the optimal exploitation of our country’s comparative advantage vis-a-vis the rest of the world. The growth rate of 11.3% achieved during April-January this year though looks good when compared with the last two years’ not-so-satisfactory export performance should not lull us into complacency. Even this growth is partly due to good growth in world trade and revival of South East Asian economies to which countries our export has shown an impressive increase this year –– 87% increase to Indonesia, 47% to Malaysia and 39% to Singapore, etc. Many countries have done better than us. China, achieved 41% growth in the first two months of 2000. Thailand’s exports grew by 23%. Most Asian countries have been clocking 20% plus growth during digit growth, I don’t think our world share will improve beyond 0.65%, quite insignificant for a country of our size and capabilities. It is clear that if we have to achieve sustained high growth of, say over 20-25% every year, we have to considerably diversify our export basket and direction, for which we need to radically rethink our policies and bring about a paradigm shift in our export policy and procedures and also in the related fields.
As is well known, there are many sectors in which we can make a mark given our skills and entrepreneurial abilities. The world trade is growing in sectors like office machinery and automatic data processing equipment, electrical machinery, auto parts, transport equipment and the entire electronic sector from simple telephone sets and fax machines to high tech items. In all these items, our share of world trade is 0.1% or less. The details are given in the recently circulated discussion paper of the Department of Commerce on the need for a radical strategy for merchandise exports of iron and steel, manufactures of metals, leather and manufactures, pharmaceuticals, dyeing, tanning and colouring materials, toys and in plastic sector, in all of which we can definitely do well. Even half-a-percent of world share of export in these sectors –– which cannot be considered an ambitious target –– should help us to generate additional export of a few billion dollars. In fact, I was just going through recently, the data on US general imports from our neighbouring countries such as Malaysia, Philippines, Thailand, Indonesia, etc, and I see that exports of items like toys, clothing, gift items, textiles, radio receivers, ordinary telecom equipment, etc., from these countries run into billions of dollars whereas our share has been quite insignificant.
A
number of policy changes will have to be initiated if we have to exploit
the vast opportunities in the global market. We have to also unshackle the
irksome procedures and do away with needless restrictions. Mere tinkering
with procedures, etc. will serve little purpose. I am convinced that de
novo thinking is necessary. For example, if we have to give a boost to
investment, especially FDI in electronic sector, we have to completely
alter our customs procedures, licensing system, duty structure, etc. Can
we think of, say, a zero import duty regime for all electronics inputs,
remove all customs procedures and checks and withdraw all regulations
concerning the sector? Will such a policy help to attract investment in
hardware electronics which is world’s largest trading sector? If I am
not taken to be sarcastic, I would say that the recent phenomenon of the
growth of software exports has been due to, apart from Indian’s talent
and knowledge in high-tech, "hands off" policy of the Government
towards the sector. Some critics say that it is because we did not get to
know much about this sector so as to device regulations which would have
stifled the growth; but the issue is why not a similar approach to
hardware electronics? I am, therefore, setting up a small Group (not a
committee in the conventional sense) to quickly look into the various
policy and procedural changes that are required to be introduced in the
various departments of Government so as to enable us to achieve this
objective.
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