Will consider extending full support after reviewing the situation, says Sharma.
The commerce and industry ministry will review the growth of the country’s export sector by the middle of this month to assess the need for extending further stimulus for the exporting community, particularly, the labour-intensive sectors. The country’s exports have been declining ever since the fall of Lehman Brothers and the onset of the global economic downturn in September last year.
“Once we assess the situation and depending on what is required, we will step in and not hesitate to give support,” Commerce and Industry Minister Anand Sharma told reporters on the sidelines of the India Economic Summit organised by the World Economic Forum and the Confederation of Indian Industry (CII).
Exports from labour-intensive sectors such as gems and jewellery, handicrafts, leather and small and medium enterprises were adversely affected during the slowdown since demand from the foreign markets dipped.
Sharma said the government was not looking at exiting from the easy monetary policy stance yet even as he maintained that the country is on a slow recovery track. “The decline in steepness of the fall had been reassuring. In the coming quarter it will go into the positive territory,” Sharma said.
India’s exports had been growing at a staggering rate of 30-35 per cent till July of last year. However, since October 2008 it went into the negative zone declining by about 13 per cent to about 34 per cent in May. The government has so far rolled out a slew of measures to boost exports. While the Reserve Bank of India (RBI) had resorted to pumping in greater capital into the banking system, the government reduced transaction cost and facilitated cheaper credit availability for the exporters in the Foreign Trade Policy of 2009-2014.
Sharma also highlighted the need to diversify exports into other markets such as Africa and Latin America, while demand in the traditional markets of US, EU and Japan picks up gradually, which account for 60 per cent of the country’s exports.
India has also been aggressively signing trade agreements with a number of countries, to diversify and promote its exports. It recently concluded comprehensive trade deals with Korea and Association of Southeast Asian Nations (ASEAN), while some of the other significant deals with EU and Southern African Customs Union (SACU) are in the pipeline.
On the issue of diluting India’s position in the global trade talks under World Trade Organization (WTO), the minister said: “We are very much conscious of the country’s interests, the livelihood interests of our farmers and poor. But to create a rule-based multilateral system, harmonisation is important. Harmonisation does not mean compromise.”
The minister also said the government will not be reviewing foreign investment ceilings on certain key sectors of the economy, particularly, retail and civil aviation even though he underscored the need for more foreign equity into the capital market.
“The new FDI (foreign direct investment) policy has made the process of calculating foreign investment simpler, more rationalised. Rationalisation does not mean we are revisiting the sectoral caps,” Sharma told reporters here on the sidelines of the India Economic Summit, organised by the World Economic Forum (WEF) and the Confederation of Indian Industry (CII).
Referring to his recent meetings with several global business heads like Indra Nooyi, chairman and chief executive officer, Pepsico, and Wal-Mart chief S Robson Walton, the minister said they have expressed confidence in the country’s growth and planning major expansion in the next couple of years.
A file photo of Prime Minister Manmohan Singh with UPA chairperson Sonia Gandhi.
The fiscal deficit for the current financial year has been pegged at 4.1% of the gross domestic product