Do we need more strategy making?

In the past few months, the Trump administration in America States has raised tariffs on many goods

About 10 days earlier, the commerce minister interacted with exporters at a meet organised by the Federation of Indian Export Organisations (FIEO). He had sought their suggestions on a strategy for raising annual export by $100 billion.

It was only last December that he had released the detailed Foreign Trade Policy (FTP) Statement. It has spelt out a vision, mission, objectives and strategy for making India a significant participant in world trade. The 72-page document dealt with the backdrop to the global economy, India’s trade performance, dynamic global context, domestic challenges, anchoring trade policy in the domestic policy framework, the multilateral trading system, phasing out of export subsidies, the mega trade agreements, market strategy in each region, India’s free trade agreements, product-specific strategies, services sector, infrastructure, trade eco-system and so on.

The executive summary of this document runs into 44 paragraphs. Further discussion runs into 289 paras. It s a comprehensive assessment of the challenges ahead, what must be done and how to go about the task. Why the commerce minister wants to junk this document and make a new one is not clear.

The FTP Statement says extensive consultations were carried out with a cross-section of stakeholders while preparing the mid-term review document of the policy and the FTP statement. The minister now says he has already held two rounds of discussion with secretaries of key ministries for preparing sectoral export strategies. And, that states are also being consulted for preparing state-specific strategies. FIEO was asked to prepare a strategy for an increase in annual export by $100 billion in the short term. Exim Bank has given a report on market research for export. So, what has changed in the past seven months to warrant another strategy for boosting of export?

In the past few months, the Trump administration in America has raised tariffs on many goods, especially those originating in China. China has retaliated by raising tariffs on goods originating in the US. Export promotion schemes in India have been challenged at the World Trade Organization (WTO) as prohibited or actionable subsidies. The tariff concessions to Indian-origin goods under the Generalised System of Preferences (GSP) are being reviewed. Oil prices have gone up, following political developments in Iran, Russia and West Asia. The rule-based multilateral trading system is under threat. In the FIEO meet, exporters had flagged all these uncertainties as serious concerns. The minister assured them that the government was addressing these concerns.

At home, bankers have turned risk-averse and are reluctant to lend, out of fear that they will be jailed if the loans go bad. Interest rates are on an upward trend. The commerce ministry is unable to take up effectively with the finance ministry the problems that exporters face in the Goods and Services Tax (GST) regime. Currency volatility has also gone up.

So, the strategies do need to be reviewed by taking into account the latest developments but, I think it is also better to focus on implementation than on preparing a new strategy, especially when the minister knows the action points.

E-mail: tncrajagopalan@gmail.com