New Delhi: Jyotiraditya Scindia, minister of state for commerce and industry, says sops offered to exporters should continue for a while after the government starts exiting its loose fiscal and monetary policies. In an interview, Scindia said the continuation of the sops was essential for a turnaround in exports, although the pace of contraction has eased. Edited excerpts:
How confident are you that in the January-March quarter exports are actually going to turn positive?
Well, let me say this. We are very, very apprehensive and we were very, very careful in terms of modulating the steps that we took. Needless to say the situation was not only grim, it was alarming—the fact that exports were reducing by 39% month-on-month compared to last year. The year-on-year figures have improved considerably from a low of close to $10 billion a month in April-May of this fiscal. You are now seeing a resurgence in the nominal value of exports up to close to $13-14 billion. What’s heartening to note is also that the percentage numbers are reducing in terms of the negativity from -39% to single digits of -6.6%. The last month has been about $13.5 billion-odd. We have posted close to $90 billion in the first seven months of this fiscal. To reach a target of close to $160-165 billion, we need to make sure that we grow at 12% for the balance five months at about $14 billion a month. The target that we have set for ourselves, which is very important in the foreign trade policy, of growing about $200 billion in the year 2011 means that in the next fiscal we have to grow from $160-165 billion by about 20%, which I think is achievable. Also a longer term target we have set ourselves, of doubling exports by 2013-14 means, in terms of our trade figures, growing at a CAGR (compounded annual growth rate) of roughly 25%. Today, services and merchandise exports together are close to about $355 billion-odd. That has to grow by almost about 20% to reach that level. We are quite confident that with the steps we have promulgated, and the early signs of recovery we are seeing, we would be able to reach the targets that the ministry has set for itself.
Making a point: Jyotiraditya Scindia, minister of state, Commerce and Industry. Harikrishna Katragadda / Mint
When we exit from the loose fiscal and monetary policies, will the fiscal stimulus measures for exporters continue? Because while the domestic economy has picked up, the global economic recovery continues to be fragile. Will the stimulus measures remain as far as the export sector is concerned?
For now, yes, I think so. Because it is very important that we are firmly back in the saddle. Once we find ourselves entrenched and firmly back in the saddle in terms of a growth path, then we can look at those exit patterns. Also remember that the export sector, many segments of them are extremely labour-intensive and therefore those (are important) from a social angle as well. Those steps and those impetuses need to be in place. Whether you look at handicrafts, gems and jewellery, textiles, even though you are seeing recovery in many sectors, there are still some sectors that require a further assistance. We have decided to conduct a review within the department, which hopefully should be out by the second or third week of December, wherein we will look at the additional incentives that will be required for certain sectors, for example engineering and others which are still to see a little bit of revival. And hopefully by January if more assistance is required, we will put those steps in places.
Will this assistance or incentives be outside of the budget or could we see the budget addressing some of these sectors?
Well I think this is much more with regard to commerce and industry. This should be a combination of both, fiscal and otherwise.
So you are looking at a review in December and possibly these incentives being rolled out in January?
Hopefully January-February. I don’t want to give any strict timeline for that but I think we are going to evaluate it within this month and then try and see what can be done.
And what are the sectors which you feel at this point in time will continue to be in need of incentives/assistance?
Let the analysis come through, but I think sectors such as engineering and others definitely require a certain impetus to be given. There are other sectors that have seen a little bit of recovery—gems and jewellery and others—but I think let the analysis come through...