Adopt various improvement mechanisms to enhance exports

April 07, 2008 - India

Exporters, especially from the Small and Medium Enterprises (SMEs) feel that both the government and exporters need to go on war-footing to make exports more competitive in the wake of rupee appreciation for fiscal 2008-09.

Appreciating the government's initiatives mainly in helping the export sector to tide over the rupee appreciation, exporters added that without untiring support of Commerce Ministry, EXIM community would not have achieved what they have in the last fiscal (2007-08).

The assumptions are based on the feedback received from exporters representing a wide range of industry sectors in a survey conducted jointly by ASSOCHAM and which was released here by the ASSOCHAM President, Mr. Venugopal N. Dhoot.

“Almost all respondents were of the opinion that considering the changing world scenario, products exported to various countries need to change too according to the changing consumer taste and trends, said Mr. Dhoot.”

They felt that instead of always looking for support from the government, exporters need to go into the details of the changing designs, patterns, product development, requisite change in production facilities for a variety of materials, production techniques, related expertise to achieve a leadership position in the fast growing competitiveness with other nations.

The rupee appreciation against the dollar is significant as the bulk of India's external trade is invoiced in US dollars. Many exporters who took the survey believe that the export target set for this year (2008-09) can be met if the export sector works in accordance to the changing market trends.

Respondents however said that the slowdown in the exports due to rupee appreciation came as a prime dampener. Citing that appreciation of the rupee by more than 9 percent during April-January 2007-08 has meant a reduction in realisation of export orders, exporters agreed that large-scale adjustments need to be incorporated in their business module.

Many of the exporters felt that the sector can tide over the situation by adopting various mechanisms like forward contracts, shifting to other currencies and establishing protective clauses in their contracts to safeguard their interests, adding that exporting more to regions such as West Asia and the European Union, can be a strategic move to partially nullify the impact of the strengthening rupee vis-a-vis the US dollar.

More than 67 percent of the respondents hailed the government's decision to extend the Duty Entitlement Pass Book (DEPB) adding that the relief measures initiated by the Centre come at the beginning of the financial year and at a very crucial juncture giving the much-needed relief to exporters to tide over the crisis in the light of rupee appreciation.

However, respondents felt that with allegations of being WTO-incompatible, the government will have to find an alternative sooner or later which would reimburse prior stage cumulative indirect taxes, which do not come under VAT including reimbursement of CST, and duty on inputs like electricity and fuel.

Exporters, went to say that the DEPB scheme be allowed to continue till 2010 when the common goods & services tax (GST) comes in force. Once GST is in place, reimbursement of input duties to exporters will be easy and transparent as the GST will be common across the country, they opined.

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