Exporters need to up their quality of products instead of looking out for subsidies: Commerce Secy

Kher said Indian exporters have to acknowledge that they need to be competitive and not opt for the route of 'subsidies or doles'

A day after a foreign trade policy (FTP) was unveiled for 2015-2020, Commerce Secretary Rajeev Kher on Thursday said exporters would have to stop looking for subsidies and incentives eventually and concentrate on better branding and quality of products.

Addressing the Federation of Indian Chambers of Commerce and Industry (Ficci) on the new FTP, which came into effect on Wednesday, Kher said these subsidies and incentives would eventually have to be phased out in line with international commitments.

“This policy has tried to sensitise the industry on two accounts. These are extremely important. The global trading architecture is completely changing. Within two-three years, you’ll see a paradigm shift in global trading architecture. India has so far run on the competitive advantage of its products. In the past few years, this competitive advantage has suffered. We have not begun reviving or improving it. We have started the motion but the process to bring results will take its own time. Therefore, it is a challenge for us to become globally competitive,” said Kher.

He added Indian exporters should acknowledge that they have to be competitive “not through route of subsidies, not through the route of dole.”

“We have to acknowledge the institutional architecture, which is emerging, and in that context the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership have to be taken into account.”

This is because there would be preferential arrangement among the members of these mega trade pacts, while Indian exports would face trade erosion, he explained.  

Pravir Kumar, director-general of foreign trade, echoed similar views.

According to him, although the present policy has reduced the rate of incentives to 2-5 per cent from a level of 10 per cent earlier, in the coming years, even the two per cent level of subsidies will be done away with, owing to resource constraint as well as global factors. “In times to come, subsidies will have to be phased out,” he said.  The new FTP has been aligned with the government’s larger vision of promoting manufacturing, digitisation and making it more inclusive with greater involvement of states.

The FTP, unveiled after a gap of a year, has introduced a policy statement for the first time in its history. According to Kher, this will lead to more ownership of the policy by various departments of the governments.

“FTP statement is a flow of thought in the government on how India should evolve as a responsible foreign trading nation. This a first generation foreign policy statement, but many embellishments can continue to happen in this. One should take it with a composite strength of the government rather than just a commerce departmental document,” he said.