The performance of Indian exports over the past few months has surprised not just analysts but even policymakers and entities engaged in overseas businesses. At a time when the global economy was slowing down, hitting even domestic factory output, exports bucked the trend to register all-time-high levels of growth. The euphoria created in the early part of the year now seems to be tapering off with real concerns emerging on the sustenance of India?s exports as the euro zone crisis remains as grim as ever and Americans bracing up for long period of sluggish growth. Minister of state for commerce and industry Jyotiraditya Scindia has tracked the developments on the trade front ever since getting into the ministry. In an interview with FE?s Timsy Jaipuria and Subhash Narayan, he highlights the threats and prospects of the sector, offering solutions that will take the country forward in the difficult period. Edited excerpts:
India?s exports have performed admirably well in the early part of the fiscal, but global developments now seems to be impacting its performance as evident from October data. How do you see the exports scenario in the rest of the fiscal?
We have been coming off a very low base and the base effect has started withering now. In the next five months of the fiscal, we hope to get an average exports of $20 billion per month. This will help us to end 2011-12 with a total export of $280 billion. This is still up 18% over the last years exports of $ 245 billion.
How wary are you of the euro zone crisis and the slowdown in US impacting country trade? And are you confident of achieving similar growth next year?
Yes, I must say they (the euro zone crisis and the slowdown in US) are very real. Though I am not a forecaster, all I can hope is that our efforts to create a facilitatory environment bears positive results even in difficult times. The foreign trade policy has given importance to diversification of the export basket and laid emphasis on channelising energies in the areas where the country enjoys core competence such as engineering, chemicals, pharmaceuticals and textiles. We have also offered incentives to sectors that have suffered the most due to the global developments and encouraged exporters to explore new geographies. These efforts have yielded results, which is why our exports to new geographies such as Oceania, South America, parts of Southeast Asia have grown by almost 60-95% in the last fiscal. The world environment is also changing and what used to be a very northern and southern hemisphere paradigm in terms of trade and economic relations is turning more to a south-south paradigm. I think trade and economic relations between economies in Latin America, Africa, parts of Southeast Asia will be the way forward in the next decade.
The engineering sector has excelled in terms of export performance but we are unable to see a similar growth in companies like Bhel and L&T. Where is this growth coming from when two of the largest engineering firms are under pressure to get new orders?
Yes, engineering has pulled up a very good growth. Its exports has clocked almost 100% growth, accounting for $ 60 billion out of $245 billion of total exports last year. But very few people are aware that close to 40-45% of our exports are posted by SMEs and most of the SMEs are not even listed. So you cannot compare the exports with the performance of the companies which are listed. We must realise that these SMEs only after a decade or so will grow up to billion-dollar companies.
Are you satisfied with the quality of the export data as there are sharp differences over the factory output and export performance?
I personally feel that there is scope for improvement everywhere. A lot can be done and there needs to be harmonisation between the IIP data and the exports collation data but since it is a tedious task so we need to give it time.
How concerned is your ministry over the industry-related issues like rising interest costs?
I think it is very important to make sure that the credit is available to the industry to grow. From our point of view, there have been talks about a logjam and a slowdown in the reform process. As far as we are concerned, we have tried to power that process through, whether it is the new changes in the foreign trade policy or giving a boost to investment. We have already eased the investment environment by collating 177 press notes into one and are updating these regularly. We have also introduced the new National Manufacturing Policy and are moving aggressively to bilaterally negotiate FTAs with a host of countries. So, in terms of my ministry, we have had a very accelerated road map of reform going forward.
What about policy liberalisation for an aviation sector that is bleeding and is in a serious debt crisis? Is the government thinking of opening up the sector for foreign airlines to pick up stakes in domestic carriers?
Well, in aviation, the nodal ministry is the civil aviation ministry, we only play a facilitatory role. It is our recommendation to look at a 26% cap for overseas airlines in domestic carriers. But as we have done in retail, we need to build a consensus and, therefore, talks are on with the aviation ministry and we are hopeful of a consensus soon. There were reservations by the aviation ministry and they wanted a 24% cap. The beauty of democracy is that some of the decisions may take time. But once consensus is evolved and decisions are taken, there is no looking back.
Does the present global scenario call for a change in India?s negotiating strategy at the WTO?
While multilateral negotiations would continue, our focus would be to build trade relations through bilateral talks and agreements.
