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Export woes: Where the blame lies
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Bikky Khosla | 22 Sep, 2015
It is quite unacceptable. Exports fell 21 percent to $21 billion in August. It is the ninth straight month of decline and yet the government has failed to come up with a plan to prevent this freefall. There is a lot of talk, but little action. Recently, the commerce minister said that the Centre would soon come out with sops for the sector. This is a welcome decision, but I wonder what made our policymakers to wait for so long. Time and again, different sections of the industry have tried to awaken them from deep inaction, but succeeded little, and the situation continued to deteriorate with every passing month.
Over the recent months, slow global demand and low oil prices have been cited as major reasons behind the export collapse. There is no doubt that these factors played a negative role, but the government should have taken them as a challenge rather than an excuse. If proper measures were taken at right time to cushion the negative impacts, the situation we are facing today could be prevented to a great extent. As a result of inaction, our non-oil exports, which fell to $96.9 billion from $105.1 billion during the April-August period, also suffered. Now, even our traditional sectors such as engineering and garments are getting impacted.
And do we have a long-term strategy for the sector's future? Since the new government has come to power, there has been a lot of talk on manufacturing, which is a must for the country to realize its overall growth, employment and poverty alleviation goals, but I don't think double-digit manufacturing growth will be possible without recording double-digit expansion in exports, and therefore there is an urgent need to integrate all our manufacturing and reform initiatives with a concerted effort to achieve foreign trade expansion.
Finance minister Jaitley recently said that our GDP growth could outperform last year's 7.3 percent rate, but I think we have a lot to do to achieve that. Things aren't going well with many a sector, including infrastructure, real estate, mining, automotive, etc. Issues such as GST, land acquisition, bank NPAs, financial health of power companies, etc. are yet to be resolved. Path breaking reforms are still in the waiting. And finally, I want to reiterate that our export sector is badly in need of support. A 'wait and do nothing' approach will not just fasten exports downfall but eventually shatter the growth dream as well.
I invite your opinions.
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export down fall
Ankur | Sat Oct 3 06:52:21 2015
Great story about how exports down fall...can send the economy down under
Export Woes : Where the blame lies?
Girish | Sat Sep 26 04:06:33 2015
Fault lies with manufacturer exporters and not government. Learn to accept the fact.
India export will never improve unless...
Rob Grosche | Fri Sep 25 03:42:51 2015
...export red tape is removed and the Chinese model of free export under $5K and low-cost small shipment, are adopted.
Indian export is stuck because they use 1900 methods.
Export woes
Stephen | Thu Sep 24 20:04:27 2015
I like the style of your letter. Yes, this like all governments before, are failing the populace as their primary and time consuming focus is their own nest. The scene is set for individual enterprises to collectively [cooperatively] lift themselves though they might still face red tape and bureaucracy and tax and duty burdens and corruption in government bodies and agencies. Oh, India, who will deliver thee!
Manufacturing in India
Paul Becker, EarthPulse™ Product Developer | Thu Sep 24 12:11:37 2015
Though the landmass is smaller than china, if it was wise enough to ban GMO and concentrate on organic farming, they could be the organic breadbasket of the world. That's a market they've not touched much but for some organic companies like 24 Letter Mantra that deals in dry material not fresh.
Export and imports
jeeten | Thu Sep 24 11:15:01 2015
I am from Mauritius. I asked where is the Indian version of Ebay. I was sent to a website where you have to inquire to buy a shower head.
Now i keep receiving spam to enquire about a single shower head from a manufacturer.
Pull your acts together.we want to buy from India,but remove the quick transaction redtape.
Gowth
Abdussami | Thu Sep 24 07:39:00 2015
Sir calculated figures are not going to add for the growth of the country.
Accountability of individuals can make the difference.
Export and imports
TS Sahasranamam | Thu Sep 24 06:28:29 2015
Yes,your articles are exposed very clearly on today's status of our imports / indigenous market trend and we hope it will move forward soon for our future.
EXport Woes.
O,P.Khandelwal, Indore. | Thu Sep 24 05:29:00 2015
When ever there is a problems, Govt., and/or their mouthpiece ,immediate announce that "WE WILL SEE" WE WILL TAKE ACTION, & like that statement. Better to learn from the past & make a permanent policy and /or system, that whenever such type of problems arise, immediately take action according to the policy, in spite of announcement. Govt. must build a team to take immediate action, without any delay. Such action will not only help to GOVT., but also help to industries to grow more. if Govt. announce permanent solution /action , by way of policy, to be known by every concerned so that he may know that for this problem Govt will take such action.
IT is also true, that now a days there is a fashion, that for every problems, every one is looking to the Govt. Now our industries is not a child, it is, we can say YOUNG CHAP,& more responsible. So for small-small problems, not to see the Govt. side, but help to Govt. to fight jointly.
It is also well known facts that TECHNOLOGIES up gradation is continuing every day, so Industries must step in with new technology , to run the industries smooth with quality production, for which demand is arise more & more. No one now demand the things/ products manufactured by old technology. Industrialist are also think IMPORT SUBSITUTE , rather than IMPORT the RAW..This will also help to save precious foreign exchange & will make strong MAKE IN INDIA programme.
Export woes
Vijayaraghavan T | Thu Sep 24 03:43:25 2015
We have to understand that by weakening the rupee thinking that it will boost export is a wrong notion. The importers are very wise and clever they demand a price reduction once the rupee weakens thereby we are getting only our old prices but we are the final loser because our import bill goes up. We are not considering the fact that we are a net importer than exporter. We should focus on lesser imports like investing heavily on alternative energy sources, become very non dependence on oil imports. We have a large internal consumption. We should rather strengthen our rupee instead. Our major exports are IT services apart from spices etc where we can continue to get an export market even if the rupee appreciates because of our strength.
What the Government can do to prevent free fall in Export ?
Tarunendra Nath Banerjee | Thu Sep 24 03:08:26 2015
The views expressed in the said article of Bikky Khosla of 22 September 2015 is a true picture of the Export front of our country.
Now the role what the Manufacturer Exporters want the Government of India to do is financial support to these Manufacturer Exporter to the extent the bilateral agreements exist between the Importing Countries with India for the items of Export the Manufacturer Exporters are holding in stock for drop in demand of those items from the importing countries.This will be interest free and the goods would be in the custody of the Manufacturer Exporters jointly with the Banks through which the payment would be made. The interest amount would be the export subsidy when these items would be exported to the importing countries when the situation improves.This would release the pressure the Manufacturer Exporters are subjected to currently due to fall in demand from the importing countries of these items.Regards.
India's slow exports
alan5008844@gmail.com | Thu Sep 24 02:31:05 2015
I am an importer and wholesaler I am a UK citizen but permanent resident of USA.
To start with. India makes it quite difficult for me to visit India to buy. There is a lot of red tape and you only give me a 6 month visa. It is expensive and takes up one whole page in my passport. China is much easier and so I end up buying more from China.
This is quite easy to correct if someone has the interest to help India's exports.
There are other reasons but this would be a start.
Export Woes
Deepak | Thu Sep 24 01:51:22 2015
Interest rate subvention, VAT refund, Export Incentives, Container transport subsidies, etc etc are all sops - the baby cries and give a lollipop.
These are not strategy and thus policy to implement.
Tax benefits that existed till 2003-04 are the only reality that will work
Export Woes
Deepak | Thu Sep 24 01:41:33 2015
The reality is staring us in the face despite the rhetoric:
For exports to take place, there has to be a "comparative advantage":
1) Our major advantage had been cost of production . BUT that advantage is not there anymore simply due to a higher" actual" cost of labour which is the labour cost divided by productivity.
Productivity is far below any international norms due to a poor work culture- a consequence of complicated and impractical laws, a tangled web of infrastructure constraints at each stage from transportation to communications to energy deficiency to corruption arising from regulatory control to a host of factors which the Government cannot control in a short span since it will take years to untangle the web of deceit and sleaze that has now been built into our culture through decades of misuse by those in control. This "misuse" was only facilitated by deliberately drafted bad laws and thus controls.
2)A plethora of revenue related laws that create dissonance for those wanting to grow. Laws under the guise of acceptable objectives but with ill intent.
3) Lower cost of Raw material: This is simply not there any more due to various reasons
4) Locational advantage: This concept has been neutralised by others, including China, with effecient systems.
In the present circumstances, there is only one solution:
BRING BACK THE TAX FREE REGIME that existed till 2003-04.
Compare the revenue loss with the advantages.
OTHERWISE EXPORTS ARE DOOMED FOR THE NEXT TEN YEARS
Export & import strategy
Kameswara Rao | Wed Sep 23 15:31:53 2015
Manufacturing of goods have become costly. Even domestically. Why ? The manufacturing cost has increased. Reduce the cost then internationally export will be possible.
Manufacturing in India
Paul Becker, EarthPulse™ Product Developer | Wed Sep 23 13:25:21 2015
Though the land mass is smaller, India should set it's sights on just doing a better job than China. In manufacturing, this is going to require manufacturers upgrading accepted tolerances to true export quality. I've manufactured electronic health systems called EarthPulse™ in Bangalore since 2000. Have worked with the same people always because they are trustworthy. The busier we get the more mistakes are made. Not necessarily by them, but in turn by their suppliers. I remember one story where the PowerPlate™ full body vibration guys wanted to manufacture in India. They did 10,000 membrane keypads for their first run of systems and they were printed horribly. The powerplate guys said never again and went to china or stayed domestic at that time and later went to china. I constantly deal with no email returns from staff. A FedEx office that once it takes a package is impossible to recall until it has been exported. A customs duty agency that considers goods we exported longer than 90 days ago, an import triggering duty. Making it very difficult or impossible to do parts and labor service on systems once they've left the factory. The list is so much longer but that's just a short one off the top of my head for a small manufacturer who exports about 50K USD per month. India is a lovely country and enjoy my time here but simply wish it were more efficient and cost effective. It seems I waste more time on fixing screw-ups than I do concentrating on growing my business.
Export woes: Where the blame lies
A.V. Chandran | Wed Sep 23 07:30:41 2015
This could be reviewed towards improvement in Export and Corrective Action Process thereon on war footing. To start with Import could be reduced to the maximum extent till the position improves in Exports by virtue of continuous views and review mechanism. There must be a controlling and monitoring mechanism wherein mix of fast and slow could be applied enabling to have a viable credit in Balance of Trade to make the Country healthy and Rich. All safeguard measures could be applied in all respects to keep up BOT.
Export woes: Where the blame lies
Naval Sakhalkar | Wed Sep 23 07:18:12 2015
Today, no nation is an island! Remember the fundamental principles of economics: DEMAND AND SUPPLY & FREE MARKETS. If purchasing power is reduced (like in Southern Europe), the choices by spenders are more discerning. The FM cannot influence that. Those with adequate purchasing power already have enough choice of products (of much better quality than Indian ones), so these markets are automatically inefficient for India.That leaves the "emerging" markets like Africa & Latin America. We stand a chance to increase our share ONLY if our products are CONSISTENTLY comparable in QUALITY with those from other nations. But we are aware that this is not the ground reality. More important, HOW CAN THE GOVERNMENT ENSURE that our exporters maintain the quality desired by their customers, consistently? So, the onus is on the manufacturer/exporter to keep his customers happy. How are the sops offered by the FM going to increase the demand in other countries? And why can the manufacturers not manufacture products to substitute the enormous imports coming in today, even in low tech areas? It is because the imports are cheaper. Our land, labour and transport (delay & uncertainty) costs are higher than other countries. Yes, here the GOI can help by reforming the laws. But will they?
Export Woes where the blame lies
Raj Mohan | Wed Sep 23 03:45:35 2015
It is not somebody or something to be blamed. Overall business encouragement is there with the Government policies lack clarity and unthoughtful actions on various fronts. It is not one zone, every aspect of business support mechanism has disconnect. Corporates try to support freshers and SMEs in the name sacrificing for the sake of Corporates. Agro-based industries are to be promoted, and importance need to be given to agri-sector, then only the exports will improve. India is trying to sell all its assets and natural wealth to the industrial world abroad. They also know, if Indians protest, they will be in trouble, that is the reason the FDI is not improving and export orders as well.
economy
tapan sur | Wed Sep 23 03:06:28 2015
Your article is good & issues have been highlighted.Instead of going into pages & pages of story,here is a short reflection why we cannot do good when it comes to economy.The smallest & honest tax payer has to declare how much cash he is holding in different bank accounts.This must have been prompted by some babu,who has no idea of how difficult it is to meet daily needs of a family with so many indirect taxes.These are absurd info's as most bank accounts of a small tax payer is empty.When it comes to high net worth investors,they feel it is better to invest in property worth 100 of crores,& provide further good life to their family rather than allow hawk's to eye their wealth & take it away in some form or the other.Take realty sector,it is in a pathetic state in the metro's.With almost 20% given away to the govt.in different taxes & then stay in those flats paying high maintenance,with no roads,no electricity,water or pay very high for them,buyer's are better off not buying a flat.That is why there is a high inventory in the market,& whatever sale there is, it is either reinvesting selling old one or buying a bigger one selling smaller.This is going to get very acute by 2017,& if govt.thinks they are going to make huge profits,they are mistaken as the whole economy slowly will take a spin going down.Is there hope,well life has become like the stock market,you live on waves,rise & fall with it?I predict a restless India post 2017,hope somebody is listening?
Export woes: What is solution
Ashwin Shah | Wed Sep 23 00:38:55 2015
Dear Sir, Good to find blame on the Govt, but what is the solution ?
What is action required by the Govt and the Exporters ? ?A few suggestions
1. Interest Subvention
2. Increase Export Incentives
3. Make Export profits free or taxation, which will multiply exports, and bring more employment, the employers will pay direct and Indirect taxes.
4. The proposed GST should have a provision that Purchases and Services for Export would be exempt from GST, as getting refunds block funds
5. Banks should be liberal in giving loans to exporters.
6. ECGC should change its policy and go very aggressive.
7. Factoring of Export Receivables in Foreign Currency by EXIM bank to be introduced.
8. Conversion of Agricultural Land for setting up Export manufacturing units should be done on demand and free of cost by States.
9. Prime Minister should call for a Open House meeting with Exporters and announce solutions on the spot, not wait for Finance Ministry Bureaucrats to take ages to decide
Thanks
Export vs. import substitution
Dilip Jhaveri | Tue Sep 22 19:34:52 2015
It will be good to increase our exports. But India has very few things to offer and export in traditional item are facing competition as well as shrinking world trade. The government could promote import substitution including defense. The government could define industries we can succeed in short, medium and long range. We are doing some progress on mobile phones. We could aggressively help large importers in select industries to Make in India. Import substitution policies will have immediate effect and will promote other industries.
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