Indian policymakers appear to have finally realized the importance of supporting exports to boost the country’s GDP and revive the flagging economy. After Finance Minister Nirmala Sitharaman’s comments last week about improving finance access for MSMEs and exporters, this week Commerce Minister Piyush Goyal reiterated the same. At a meeting of the Board of Trade, he said that the government would soon finalize norms to increase forex credit to MSME exporters at lower interest rates. Goyal’s comments came against the background of India being increasingly vocal about safeguarding the interests of its exporters, particularly when negotiating the terms of the Regional Comprehensive Economic Partnership (RCEP). The 15 countries of the RCEP bloc are meeting Indian representatives in New Delhi this weekend, and Indian officials have stressed that they will do all they can to protect and promote the interests of the country’s industry. Indo-US relations also appear to be moving towards better times, with talks being initiated to restore GSP benefits for Indian goods and mutual withdrawal of tariffs. Given industry opinion that exports could have a huge role to play in offsetting India’s economic slowdown, such measures make a lot of sense. Further evidence of the government’s support also came this week in MSME minister Nitin Gadkari’s statement that lawmakers are working on an Alibaba-like e-marketplace for MSMEs. Indian policymakers are clearly pulling out all the stops in a bid to support the country’s trade establishment. Now the next important step will be to ensure this momentum keeps going.
Trade Update
14TH SEPTEMBER
# 41
The Union government will finalize norms soon to provide easier loans including foreign exchange credit to exporters at interest rates below 4%, commerce minister Piyush Goyal said on 12th September, in the backdrop of a squeeze in credit availability for them. “We are very concerned that export credit has fallen. We will come up with the contours of a vibrant program to address the issue soon, which will particularly support micro, small and medium enterprises," commerce minister Goyal said while addressing a meeting of the board of trade.
India on 11th September said it will protect the interest of industry and ensure huge opportunities for exporters while getting into the proposed mega free trade agreement RCEP. Commerce and Industry Minister Piyush Goyal said that India has invited representations from all 15 countries of the RCEP bloc on 14th and 15th September in New Delhi to discuss ideas related to the pact. The Regional Comprehensive Economic Partnership (RCEP) agreement is being negotiated between 16 countries including 10-nation grouping ASEAN and India, China, Japan, South Korea, Australia, and New Zealand.
India is in talks with the US for the restoration of the Generalised System of Preferences (GSP), mutual withdrawal of their disputes at the World Trade Organization, and removal of higher tariffs on steel and aluminum by Washington, as the two sides work to resolve their bilateral trade differences. “We have been discussing various issues with the US such as GSP restoration, and withdrawal of their Section 232 tariffs and our retaliatory duties,” said an official.
The government is working on an Alibaba-like e-marketplace for micro, small and medium enterprises (MSMEs) which is expected to bring a turnover of around Rs. 10 lakh crore over the next two to three years, Union MSME minister Nitin Gadkari said. “We are developing an e-market portal like Alibaba. We will call it Bharat Craft. This will provide a direct interface between buyers and sellers. In the next 2-3 years this portal will bring a turnover of about Rs. 10 lakh crore to the MSME sector,” Gadkari said via email communication.
Ahead of the Union Commerce and Industries Minister’s meeting with exporters and importers on 11th September to discuss trade policy instruments, exporters have flagged certain concerns, saying the government should help build large capacity for exports instead of announcing measures only for the MSME sector. “[The] slump/slowdown in domestic manufacturing could be offset by fast-tracking exports...as trade windows open due to trade tensions between the US and China, [they] provide an opportunity for Indian exports to the US market,” said Sanjay Budhia, Chairman, CII National Committee on Exports and Imports.
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