It was an "eventful" period for Bolla Buli Ramaiah who had held the portfolio of commerce minister in the past one and a half years. Within a few days of assuming office came the 1996-97 budget that shattered the hopes of Ramaiah and the entire exporting community. The budget brought all non-tax paying corporates within the ambit of the minimum alternate tax provision and also slapped a two per cent customs duty across-the-board on all imports, barring a few. The global trading conditions also turned unfavourable for India. There was a "negative" import growth in the country's major trading partners, substantial fall in world trade and a "paradigm" shift in the demand for soft goods from India. All this led to a measly export growth of 4.13 per cent during 1996-97. Finance minister P Chidambaram, bowing to pressure from trade and industry, scrapped the MAT provision. But exporters were in for another rude shock. The railway freight was hiked, the foreign travel tax doubled, followed by a 10 per cent countervailing duty on imports under the EPCG scheme. Ramaiah spoke to S Venkitachalam on the challenges ahead

How do you view the current foreign trade scenario?

Well, the global trading environment continues to be none-too-favourable with some of the developed countries questioning the basis of many of our export promotion schemes on grounds that they had an element of subsidy and launching investigations. The present political developments have also accentuated the situation. But noting the negative export growth in the first quarter of 1997-98, we took immediate and effective steps to reverse the situation. And exports showed signs of a positive recovery from July onward and the export growth had been sustained at 5.16 per cent during the period ending October. I am confident that the year may end with a growth rate of 8-10 per cent. You are aware that we had to put on hold a medium export strategy in view of the approaching elections. Had the strategy been put into effect, the growth rate would have been more than 10 per cent.Could you spell out the reasons for the poor export performance during 1996-97?

One of the main factors responsible for the slowdown in the export growth during 1996-97 was the MAT provision which I had been pleading with the finance minister to scrap in the interest of promoting exports. Conditions abroad were also not conducive to increase exports. There was a sharp fall in the growth of world trade a shift in the demand for soft goods from India. There were also problems affecting certain sectors identified as having a major export potential.

Have these sectoral problems been resolved? The export performance of gems and jewellery has recorded a turnaround in the second quarter of 1997-98 and is expected to be sustained. Effective steps have been taken in leather and manufactures in consultation with the environment ministry in implementing pollution control measures. An inspection certification process has been introduced to help quality control measures in the marine products sector. Gems and jewellery exports have been encouraged through a facility to sell five per cent of rough diamond/precious stone in the domestic tariff area, re-export of rough diamonds up to 10 per cent by bulk licence holders. Gold jewellery exports have also been liberalised.

What are the steps your ministry has taken to promote exports of electronics and engineering items?

Yes, in the electronics sector, the requirement of RBI permission for obtaining special import licences has been deleted. At a meeting chaired by commerce secretary P P Prabhu, there was a general consensus that the software industry should be treated on a different footing in respect of working capital as it was less capital-intensive but more working capital- intensive. All banks were asked to evolve suitable guidelines to take care of the industry's financial needs.

Could you enumerate some of the institutional measures your ministry has initiated bearing on exports? These measures include operationalisation of the India Brand Equity Fund with a total contribution of Rs 87.26 crore, computerisation of the DGFT offices, upgrading the computer system in the Director-General of Commercial Intelligence and Statistics, Calcutta, and promoting the use of electronics data interchange (EDI) in international trade. In addition, we have identified a set of "next generation" export products.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.