What are the factors responsible for India achieving a high 13 per cent export growth compared to a negative 4 per cent last year ?
The export target appears to be high when compared to the low base. India still has a high untapped export potential. But the government, over the years, has been liberalising policies and eliminating the administrative hurdles and bringing in more transparency which have eased the export clearance procedures.

Exporters are getting better incentives and freedom now than before. The government has also rightly stressed on improving export infrastructure like roads and ports which will boost India’s export growth. Export finance is also now available at international rates of interest. Customs rates have also been brought down. Is Indian infrastructure adequate to achieve the export target of 20 per cent for the next year ?
Agreed. Currently, India ranks quite low on the international comparison scale only because of inadequate and poor quality infrastructure. But the government has woken up to this fact and is giving all the push required to improve the infrastructural health of the economy.

FDI is being allowed practically in all sectors except the reserved categories. Private sector participation is being encouraged.

As a result, a vast improvement can be observed in all fronts: roads, highways, ports, bridges, railways and power. And rightly enough, in the latest Exim policy the government has set up a separate Rs 250 crore infrastructure fund to help accelerate the trade movement across the country. This will enhance free movement of goods and help India achieve a higher export share in world trade.

Will the latest amended Exim Policy 1997-2002 help India achieve the over-optimistic export target of 20 per cent ?
Looking at the recent developments where industry has started showing signs of a turnaround after two to three years of sluggish growth, it does not appear to be an impossible task for India to achieve a target of 20 per cent.

However, both the government and the industry will have to play a proactive role. Putting the burden entirely on the government would not be right. Industry will also have to gear up and take maximum benefit of the announced policies.

The government has rightly tried to copy the Chinese model of stressing on export processing zones (EPZs) and special processing zones (SPZs) to help bridge the export gap.

Fiscal, customs and financial procedures are being eased out in these zones and special concessions have been announced. The government has also roped in the state governments to play an active role.

An infrastructure fund of Rs 250 crore has also been set up. This sum is meagre in comparison to the colossal infrastructure investment requirements of the country. But, at least a beginning has been made.

FDI inflows have been further liberalised in the power and e-commerce sectors. China attracts around $40 billion FDI per year of which around 40-45 per cent goes to export -oriented industries which does not happen in India.

But, with the government working towards improving infrastructure and implementing policies to further liberalise exports, it is not very far when India will achieve a higher export growth.

Why has the minister set a target of 20 per cent improvement in domestic exports while being sceptical of India increasing its world share?
The commerce minister Murasoli Maran has rightly pointed out in the latest Exim policy that though India has achieved a double digit growth of 13 per cent, India's world share will not improve beyond 0.65 per cent. This is quite insignificant for a country of India’s size and capability.

Just achieving a high export target one year does not mean that further improvement is not required. India will have to achieve not just high targets but will have to work towards sustaining this performance as well. The world is moving fast. Looking at India closely, it becomes quite clear that it is missing out on opportunities. FDI is flowing into the neighbouring countries but not into the sub-continent. Take the case of the South East Asian economies. These economies which were in the doldrums a few years back on account of a currency crisis have bounced back and today account for a higher share of the FDI cake than India.

Why is this so ?
India is a vast country with a lot of investment opportunities. But, bureaucratic hurdles and cumbersome procedural hassles have made India the least favoured nation.

What further needs to be done to improve India's world share in exports?
The Exim policy has tried to tackle the problems concerning trade policies. As to how far these initiatives will be actually implemented, only time will tell. Murasoli Maran has changed the line of thinking by modeling the policies on the Chinese Shenzen framework. This is to achieve a higherexport target.

The minister might have tried to bring in some policy changes but there is an urgent need for India to become more competitive. Till date, Indian exports are mainly from the traditional sectors, most of which fall in the small scale category. India has the best software brains in the world but full potential of this sector is largely untapped. In contrast to this, the fast-changing world trade is focussing more on office automation, service and IT industries and software exports. Hence, with changing needs, only stressing on traditional items of exports will not help India’s competitiveness.

India has a very productive labour force and is richly endowed with natural resources. But infrastructural bottlenecks and red tapism are hindering the process of growth. Another lacunae is that India’s trade is concentrated in selective countries only. It is mostly to the East European countries. Thus, unless and until India does not look at diversifying and grabbing trade opportunities, it will be very difficult to improve its trade health and enhance its share in world trade.Why is India not attracting FDI in desired volumes?
A look at the FDI figures shows that during the initial stages there was sufficient inflow of FDI. But, in the past two to three years there has been a continuous decline. In fact, last year India barely managed to attract less than $2 billion FDI. This is because the foreign investor finds neighbouring destinations like Thailand, Indonesia, Malaysia and China far more attractive than India. Not only do these countries have investor-friendly policies but they have the necessary infrastructure for the investor to maximise his profits.

In China, most FDI inflows are into sectors that have an export potential. This is not the case with India. Yes, the government is liberalising policies to attract more FDI into sectors like infrastructure which do not have an export potential. This results in poor exports.

But, till such time that the government does not work towards ironing out the administrative bottlenecks such as customs duty, sales tax, local levies and clearances, India's woes will continue.

What more should the government do now to boost exports ?
The government should give the states full autonomy and equal participating powers. This will boost the morale of the states and will result in their good performance. Following the Exim policy announcements, states like Gujarat and Tamil Nadu have approached the government for setting up SPZs. Thus, the government should work towards phasing out archaic policies. Instead, stress should be laid on getting tuned to global changing needs and giving proper weightage to commodities.

It is not the case that India should stop concentrating on the traditional items of exports, only that their weightage should be reduced as these items do not boost growth. Instead they should be replaced by items which not only help improve the forex reserves but also accelerate economic growth.

What about the issue of Quantitative Restrictions ?
So far, India has been following a protectionist policy. But, India will have to liberalise industry to combat global competition. For setting up an open market policy, India will have to phase out Quantitative Restrictions. The government needs to become alert and draw up a tariff structure which will balance interests of both the producers and the users or consumers. A step in this direction has been taken with the government laying emphasis on a more active role for the Tariff Commission.

What are your views on the Rupee ?
The finance minister has rightly announced that the government will not devalue the Rupee to protect the interests of the exporters. But the exporters point out that the Rupee is undervalued compared to other South East Asian currencies and if India has to improve its export performance, it will have to have a weak Rupee.

The need of the hour is not devaluing the Rupee but taking steps to make Indian exports competitive. Apart from monetary benefits, the Indian exporters need to diversify their basket which will improve and sustain Indian exports.

Today, the Indian financial markets are well-integrated with the world markets. So, the exporters do not find it lucrative to park their dollar proceeds abroad. Smelling a rat in the export proceeds, RBI has rightly slapped a 25 per cent surcharge on unbrought export proceeds. This will result in an improvement in forex reserves.