The 2020 Union budget has attempted at structural changes in agriculture, horticulture and pisciculture, through 16 Action Points, to make India a major player in agri and allied sectors exports in medium to long-term basis besides simultaneously doubling our farmers income.

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The focus on standards and quality will facilitate exports of quality products from India fetching better unit realisation and enabling Indian manufacturers to meet the technical standards, barriers erected by many of our trading partners, while also stemming cheap quality imports.

The one district one product can be a game changer for exports. Substantial exports can be targeted by focusing at the district level besides creating exports culture in India. Such a strategy will be extremely helpful for upliftment of artisans and craftsmen. However, the scheme should be supplemented by forming “district exports council” on the pattern of the United States.

The new scheme for electronic sectors including mobile, semi-conductors and electronic goods will pave the way for increasing electronics exports from the country particularly of the mobile in which substantial domestic capabilities have already been created resulting in exports of mobile phones from India to the Middle-East, South Asia and Africa. Further support to this sector, which has also been provided additional MEIS (Merchandise Exports from India Scheme) support recently, will help India to enter the markets of advance economies as well.

The scheme of Niryat Rin Vikas Yojana (NIRVIK) will ease the lending process and enhance the availability of credit to exporters. Under the scheme, the insurance over guarantee will now cover upto 90 percent of the principal and interest both on pre- and post-shipment credit.

The Export Credit Guarantee Corporation (ECGC) currently provides such guarantee only up to 60 percent of the loss to the banks. The premium for the coverage will also get reduced thereby benefiting the micro, small and medium enterprises (MSME) exporters. This in turn is expected to enhance accessibility and affordability of credit to exporters, besides less provision requirement and liquidity due to quick settlement of claim ensuring availability of adequate working capital to the export sector. Looking into the rising uncertainties and slowdown, the scheme is most timely as credit defaults are set to rise in such challenging times.

The new scheme to provide digital payment of the taxes which have not been integrated under the goods and services tax (GST) like electricity duty or products and services not covered under GST such as petroleum products and electricity will help in providing some more competitiveness to our exports and moving towards the avowed objective of zero rebating of exports. While the scheme will be rolled out during the next financial year, the fixing of rates for a large number of products would require elaborate institutional mechanism to work out such rates. However, the scheme would be compatible with “Agreement on Subsidies and Countervailing Measures (ASCM)” of WTO. Thus, it can sustain exports on long term basis.

The various initiatives to make the logistics efficient, including proposed announcement of the New Logistics Policy, will help exports as high logistics cost in India — which is almost twice that of Bangladesh and thrice that of China — is making Indian exports less competitive.

Ajay Sahai is director general and CEO, FIEO

First Published:Feb 1, 2020 6:10 PM IST