The government may prune the goods and services shipment target of $900 billion fixed for 2020 when it unveils a mid-term review of India’s foreign trade policy later this year, exporters’ body FIEO said today. The downward revision may be to the tune of around $700 billion as India’s exports performance has been dismal in the last couple of years owing to global factors.
“If we are looking at an export of $900 billion which was initially in the foreign trade policy, we record a compounded annual growth rate of around 27 per cent and this is definitely a very challenging figure so I am pretty sure that when the mid-term foreign trade policy review is done, the government may revisit the export target also and looking into the global factors they may reduce the export target also,” FIEO Director General Ajay Sahai told reporters here.
Sahai said a more achievable scenario of shipments growing at a compounded annual rate of 15 per cent will lead to exports clocking $700-750 billion by 2020.
The Federation of Indian Export Organisations (FIEO) said the Commerce Ministry has agreed to its suggestion to announce the mid-term review co-inciding with the rollout of the Goods and Services Tax (GST) regime slated from July 1. India’s merchandise exports stood at $274.6 billion during 2016-17.
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However, the exporters flagged various concerns owing to the implementation of the GST on India’s shipments, especially owing to the proposed refund mechanism.
“We are worried with the liquidity issue as the refund mechanism would require payment of GST first and its refund subsequently. The additional cost of credit to manage the liquidity should be borne by the Government if present exemption is not brought forward in the GST,” FIEO President Ganesh Kumar Gupta said.
He said rough estimates suggest exports competitiveness of India’s shipments sector will shrink by 2 per cent which needs to be offset.
Gupta said it was difficult to say whether India’s exports would suffer on account of the GST rollout, but asserted that it will take at least 5 to 6 months to adjust to the new regime as there would be teething problems initially.
FIEO highlighted the rupee appreciation and growing protectionism in developed economies as major challenges for India’s shipments sector.
A study undertaken by the exporters’ body revealed that if India can increase exports of the top 200 products it ships outward by 0.5 per cent, the country’s total exports can rise by $80 billion.