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CII suggests Multidimensional Approach to achieve US$ 1 trillion Merchandise Exports by 2030; FTA Route will create important market access: CII; Extend RoDTEP to all sectors: CII
Feb 14, 2022

A multidimensional mission is required to take India’s exports to US$ 1 trillion by 2030, suggests a report by Confederation of Indian Industry (CII). It calls for finalising Free Trade Agreements with large markets, extending RoDTEP to all exports, attracting global firms and addressing domestic manufacturing issues to achieve the target.

“The recent surge in India’s exports is heartening evidence of the country’s economic resilience, manufacturing prowess, entrepreneurial talent and ingenuity which have enabled the nation to align with global demand, even at a short notice. With a holistic and aggressive approach, the aim to achieve US$ 1 trillion in merchandise exports by 2030 is indeed achievable if India undertakes a strategic mission,” stated Mr T V Narendran, President, CII.

In its report ‘Achieving $1 trillion in merchandise exports: A Roadmap’ CII has outlined products and destination markets that India should focus on and highlights a range of policy actions towards meeting the target. The need of the hour is for India to integrate closely with global value chains and to attract FDI inflows in its key sectors, according to CII.

Based on the potential to gain global share, 14 products have been identified in the CII report as those which can contribute the most to the increase in exports. These include vehicles, textiles, electrical machinery and equipment, machinery, apparel, chemical products, plastics, pharmaceuticals, etc.

The report also identifies 41 countries where there is scope to expand exports which must be given special attention.

In order to ensure the rise in exports, 9 key recommendations were made in the report encompassing market access on the demand side and domestic competitiveness on the supply side.

One, India must review its existing trade agreements and work towards new ones with its top markets. Currently, more than 20 trade deals are under negotiation including those with the UK, Canada, European Union (EU), Australia, United Arab Emirates, and the GCC countries which must be expedited. Further, non-tariff barriers in existing trade agreements need to be resolved to open market access, says the CII report. The Government must strategize in choosing the right partners and the right markets, with shared complementarities, which in turn will help India to diversify and expand its export baskets, tap newer markets, and achieve higher export targets.

Two, there is a need for investment agreements to be well inked to trade arrangements, given the deep linkage between the two, stressed the CII report.

Three, as investment-led exports are a key feature of export capabilities, multinational companies must be encouraged to set up production base in India to enhance India’s presence in global value chains. The CII report outlines numerous recommendations to improve the efficiency and effectiveness of the Advance Pricing Agreement program and resolving transfer pricing issues, reducing litigation and providing tax certainty for MNCs. Creating a special window ‘Accelerated APA’ similar to Vivad se Vishwas scheme would help address pending cases.

Four, India should set up a dedicated internationally recognized marketing agency for export promotion in key markets. The agency should have offices in key markets and help with connecting buyers with Indian enterprises, especially small and medium enterprises (MSME). The Market Access Initiative and Market Development Assistance schemes should have added funding to support marketing initiatives.

Five, the scheme of Remission of Duties and Taxes on Exported Products (RoDTEP) has been introduced. Its rates need to be extended to all sectors and aligned to taxes and additional costs that are present in the manufacturing ecosystem, said the CII report. Exports of SEZs and EOUs should be included in the scheme.

Six, manufacturing competitiveness must be built through a facilitative investment climate. It is important that the import duty structure encourages participation in global value chains. CII has suggested a 3-slab structure with nil or minimal duty for raw materials, a low slab for intermediate goods and a standard slab for final goods.

Seven, ease of logistics movement and cost of movement of goods should be taken up at the policy level. There is a need for building export connectivity infrastructure and multimodal transport options, stated the CII report. Extra costs arising due to cross subsidies in freight and power must be reduced to make Indian exports competitive.

CII has also suggested an SEZ policy that is WTO compliant. Removal of Net Foreign Exchange (NFE) criteria for providing fiscal benefits to SEZ units is non-compatible with WTO norms and the quantum of incentives could be based on proposed investments, job creation, technology differentiation and priority industry criteria instead. Manufacturing should be encouraged under the Manufacture and Other Operations in Warehouse Regulations (MOOWR) scheme for SME manufacturers in the domestic tariff area (DTA) to access export markets in an incremental manner.

Eight, there is a need for comprehensive trade facilitation measures such as risk management systems, direct port delivery, authorized export operators and digitalization of procedures. The CII report provides a comprehensive list of areas that will improve cross-border movement of goods which need to be taken up on priority basis. Standards and quality certification centres should also be easily accessible and affordable.

Nine, progress in labour reforms, regulations for ease of compliance and education and skill development are required which will add to labour productivity and encourage competitiveness of manufactured goods.

In Jan-Dec 2021, merchandise exports crossed US$ 292 billion, a growth rate of 43% over the previous year. The top products adding to export growth include iron and steel, mineral fuels, cotton, aluminium, vehicles, textiles, electrical machinery and equipment and cereals, amongst others.

With such growth and the government and industry working in tandem, the export endeavour can be strengthened to make India a global manufacturing powerhouse for the world, the CII release said.

New Delhi

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