Conducive Policy Package:
Fortunately, in recent years, the government has taken several steps in this direction under economic reforms, in general ad the new trade policy, in particular. In the India under Economic Reforms and the Marketing Challenges of the Liberalized Economy, we detailed the welcome changes that have place in recent years in the economic, industrial and trade policies of the country.
By reducing the costs of imported of imported capital goods and raw materials and other inputs, and thereby the overall cost of industrial production, the government has helped the cause of Indiaâ€™s industrial competitiveness. Coupled with the introduction of full convertibility of rupee on the â€˜trade accountâ€™ the cuts in imports duties have helped exports. The negative list of imports has been progressively brought down. The excise cuts also have helped in reducing cost of production and improving competitiveness. The government has also abolished the minimum export price of certain commodities.
The fact that such issues have been grappled with by the government clearly manifests its awareness of the important rule played by government policies in the matter of exports. Many more liberalizations of this kind on the policy front have to be brought in the government to consolidate the process.
Improving the Infrastructure:
We have seen Indiaâ€™s poor rating in the matter of infrastructure. Poor infrastructure has been on main constraints for Indian firms. In many cases, power problems â€“ inadequacy of power, erratic supply, sudden power cut as well as high cost affects the competitiveness of Indian firms. Many units are not able to have optimum utilization of their capacity on account of these bottlenecks. Such disabilities must be overcome if these units have to be price competitive. Transport facilities, rail, road and air, warehousing facilities, port facilities, port facilities, containerization facilities, shipping services and telecom facilities are all inadequate, and Indian exporters are handicapped because of these infrastructure inadequacies.
For example, the available shipping capacity can carry only 40 percent of Indiaâ€™s foreign trade. For the remaining 60 percent, India depends on foreign shipping lines. The poor frequency of services and the higher freight rates charged by Indian liners worsen things. And most of the ports in India are ill equipped to handle large sized ships.
The port charges are also quite high in India that is three or four times that of other Asian counties. Marine insurance is another weak area. Container handling facilities too have to substantially improve.
Only when these inadequacies are removed can business firms attempt any worthwhile activity on the export front.
Market development and promotion is the next area demanding national attention. Only through promotional program, which are planned carefully and sustained over the long term, can India win over the overseas markets on a durable basis.
Effective export promotion is always the result of collective efforts by the government and the industry. The secret of export success of countries like Japan, South Korea, Taiwan or Singapore lies in the close collaboration between the government and the local industry, on the one hand and effective coordination among the many departments of the government, on the other. If India has to make rapid strides, exports promotion must become a national effort and all agencies concerned including the various government departments must make exports a common cause.
It is true that of late the government is giving considerable thought and attentive to export promotion. But the government has to sharpen its focus of the promotional effort and get better returns.
For example, the government has instituted a large number of export promotion agencies â€“ Trade fair Authority, Trade Development, export promotion councils, export corporations, commodity boards, chambers of commerce, trading houses etc. The activities of these agencies have to be better coordinated.