MUMBAI, February 4: The state governments must initiate steps to help expedite exports by speedier document processing, dereservation of segments like garments, and rationalisation of labour laws etc. This would help the states to increase their own tax kitty, says a study conducted by the Federation of Indian Export Organisation.The study conducted by the Business Consulting Group for FIEO, southern region, has said the southern state economies depend to a large extent on exports. Hence, any attempt to help exports would boost sales tax collections.
Citing an example, the study says in Tamil Nadu, the contribution of the manufacturing sector to the state domestic product (SDP) at 21 per cent is among the best in the country (only below Maharashtra and Gujarat which are at around 30 per cent).
It says the key sectors of Tamil Nadu's manufacturing output are significantly dependent on exports. Textiles and textile products account for about 20 per cent of the manufacturing output. And nearly 25-35 percent of the textiles and textile products output from Tamil Nadu is exported.
Due to textile exports and its global competitiveness, the state also has a dominant domestic market share of 35-50 per cent in the yarn and hosiery markets. Thus, exports from just one sector, contribute to the 4.6 per cent of the Tamil Nadu economy, the study adds.
In the case of leather and leather products, which account for five per cent of the TN's manufacturing output, 75 per cent of the output is for exports.In Andhra Pradesh, the share of manufacturing sector is lower at around 13 per cent of state domestic product. Pharmaceuticals which account for nine per cent share of Andhra' SDP has an export dependence to the extent of 40 per cent of its production.
Even agriculture and allied services which are key to the state's SDP have a strong export dependence: tobacco - 42 per cent, aquaculture - 90 per cent, and chillies - 19 per cent. These sectors also have dominant market shares in the domestic market by virtue oftheir global competitiveness.
In Karnataka, the software industry has been mainly responsbile for the 7 per cent growth of the services sector of the state economy. . An estimated 90 per cent of the software output of the state is exported. The vice-president of Business Consulting Group, V Sridhar, stressed that focussed government intervention is critical for achieving export targets.
This could be through exploiting factor advantage in leather, textile, tobacco etc or investing/attracting investment in potential sectors like floriculture and software.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
