Clearly, An EXIM Policy That’s More About EX Than IM

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: of 3.25% world market share and the prohibition on export subsidies doesn’t apply to India. However, given the non-transparent indirect tax structure, legitimate export incentives can be interpreted as export subsidies and become actionable by trading partners. The DEPB scheme is a case in point. Had VAT been introduced from April 1, 2002, as was originally intended, perhaps the cleaning up would have happened. But with VAT postponed till next year, the mess also continues.

So what does the policy do? With general liberalisation, Exim policy becomes irrelevant. But since general liberalisation runs into the usual political economy problems, the policy continues to harp on the selective sectoral approach. Harp on 20 agri export zones and regional rural motors.

Agriculture and agricultural reforms are indeed important. But honestly, does the government have any business to decide whether pineapples should be grown in West Bengal and gherkins in Karnataka? However, since genuine agricultural reforms have got stuck thanks to the states, perhaps one can selectively develop transport and other infrastructure. Harp on the cottage sector and handicrafts. Give them funds from the Market Access Initiative (MAI). Relax EPCG and Export House norms for these. With import duties declining, how relevant is the EPCG? And what incrementa incentive does one obtain from Export House status? Ditto such schemes for Khurja, Tirupur, Panipat and Ludhiana. Harp on gems and jewellery and reduce value addition norms for jewellery.

Why do we need value addition norms at all? Harp on Special Economic Zones (SEZs). Give them IT concessions (details not yet known), greater capital account convertibility and relaxation from CRR and SLR norms. Is the SLR relevant any more? Obviously, one can’t have easier labour laws for SEZs, although the speech does mention differential treatment for EOUs. SEZs can indeed be magnet and glue, but the idea is perhaps 20 years too late. Harp on Assistance to States for Infrastructural Development for Exports (ASIDE). Do we have reliable figures on exports according to states? Harp on Electronic Hardware Technology Parks (EHTPs). Harp on the critical mass of small and medium enterprises (SMEs).