Aiming at increasing exports

Interview with Murasoli Maran.

Two days after presenting his Export-Import policy, Murasoli Maran, the Union Minister for Commerce, spoke to Sukumar Muralidharan about its underlying principles. Excerpts:

Could you explain the basic objectives of the Exim Policy announcement, particularly in the context of the current global economic situation?

There is a global slowdown and the International Monetary Fund has predicted that next year's world economic growth will be less than 2 per cent. That is why we need to make a massive effort to increase our exports. We have a target of doubling our exports within the next five years - now our export share in the world is 0.6 per cent and we want to increase it to 1 per cent. That means we have to increase our exports from $46 billion to $80 billion.

But in many ways the export component is only a reiteration of announcements made in the policy announcement of 2000.

We cannot have radical changes all the time. The Special Economic Zones (SEZs), for example, are a medium-term strategy. They are developing 4,500 hectares in Positra and in Tamil Nadu, 2,500 acres. This means, they have to provide infrastructure (in this much area). And there is a proposal to have a cargo airport inside these zones. I am told that they have entered into separate arrangements with Singapore-based companies for providing infrastructure.

Regarding SEZs, the Union government has nothing to do except offer permission and facilities. Positra is 100 per cent in the private sector and in other states, they are joint ventures.

Then with respect to the centres of export excellence: there are about 250 modern industrial clusters in India, and some 2,000 artisan-based rural clusters. We are looking at the export aspect here. We will see the pilot projects and then extend it. This is not a new concept. If you want a famous example: Hollywood is a cluster and so is Silicon Valley.

Now with the ASIDE (assistance to States for infrastructure development for exports) programme and other initiatives, you are trying to create the conditions, not just in the SEZs but also on a broader scale, for a major export thrust.

I want to make exports a national endeavour. So my policy encompasses agricultural products, village artisans, handicrafts, small-scale and cottage industries. And from here to electronic items and software. We are trying to involve all sections of the people in this export effort, otherwise we cannot succeed in this competitive world. We cannot do all this without the help and cooperation of the State governments. This is a major shift in our policy. We now have full confidence in our exporters, which is why we have removed many of the checks and counter-checks. We will now only do some sample checks.

Some of the schemes that you propose, like transport assistance and energy subsidies, could in some respects fall foul of WTO (World Trade Organisation) rules.

They are all WTO-compatible. They are not direct subsidies given in the hands of beneficiaries. These practices exist all over the world. We are working out a formula to make them WTO-compatible.

And in agriculture, for example, you mentioned that wheat is a success story because you have managed an export of 7.3 million tonnes. But this was done at a highly subsidised price.

We are giving WTO-compatible assistance in the form of transportation charges, holding charges, etc. We have now started having a surplus so we are in a very comfortable position to export. That is why in our negotiations on agriculture in the WTO at Geneva, we gave a proposal asking the advanced industrial countries to phase out their subsidies.

If you look at the plantation sector, which contributes to export earnings in a major way, there is evidence of a great deal of distress there. How does your policy address this concern?

In rubber we have now banned procurement for actual user licence holders and we are giving the same kind of transport assistance. Now we have got orders for about 20,000 metric tonnes. Regarding coffee, we are rescheduling loans. So naturally, this will ease the situation. But all over the world the commodities market situation is not comfortable.

The specific provisions you have made in computer hardware, do they not they go against the trend of the last decade or so?

It has been a neglected sector. But we can compete with the world in hardware because we have got comparative advantages. At least in the beginning, we cannot go into very advanced manufacturing, but for things like keyboards, we can slowly develop and show our expertise. This would require very large scales of production.

Were not some of the special duty incentives that are applicable in the export sector due to be phased out this year?

Yes, I had announced that, but because of the grim picture on the export front, we do not want to disturb exporters any further. Generally, if we have to withdraw these incentives, the essentials are very necessary. For example, we should have a uniform VAT (value added tax) all over the country. And that system should be transparent.