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India Should Consider Imports As Essential Strategy To Boost Exports: Niti Aayog Official
There is no reason why India should lose out on export opportunities in this sector to neighbouring countries as our country has been a global hub for textile manufacturing since time immemorial, he said
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India should consider imports as an essential strategy to boost export competitiveness, instead of worrying about its consequences on the trade deficit, said Suman Bery, Vice Chairman, Niti Ayog.
“It is tempting to impose tariffs on imports to reduce the trade deficit. However, a tax on imports is a tax on exports and hence there is a need to reconsider import tariffs to support our MSME exporters,” he said.
He added that India, which has a surplus in services account and remittances in the balance of payment, has had a reasonably manageable trade deficit in the past, except in the current circumstance when energy prices are abnormally high.
The trade deficit of Asia’s third-largest economy had doubled to USD 70.8 billion in April-June 2022 compared to USD 31.4 billion in the comparable quarter of last year because of an increase in the import bill of crude oil, coal, edible oil and precious metals.
“For a relatively open economy like India, competitiveness is linked to imports. In certain value chains such as precision engineering, India is dependent on imports. There is little reason to consider a significant trade deficit to GDP ratio as worthy of policy attention,” Bery said at an event to release a study on ‘India’s Export Competitiveness’ by MVIRDC World Trade Center Mumbai.
The study is an outcome of an extensive primary survey and meticulous analysis of foreign trade data from authentic sources such as UNCTAD, ITC, Geneva and India's Ministry of Commerce.
The study made more than 8 policy recommendations for boosting exports based on a primary survey with representatives of gems & jewellery, leather, ceramics and special economic zones (SEZs) in India and has identified 100 champion products for exports, highlighted export potential in North Eastern states and examined trends services exports.
Bery said, “There is no reason why India should lose out on export opportunities in this sector to neighbouring countries as our country has been a global hub for textile manufacturing since time immemorial. It is time we leverage our policy initiatives such as mega textile parks to aim for increased exports not only in yarn and fabrics but also in apparel and clothing.”
He also welcomed the idea of encouraging foreign trade settlement in local currency and suggested that RBI and banks may resolve practical difficulties such as free convertibility of local currencies, availability of hedging and trade finance in local currencies, development of alternative payment infrastructure etc.
Earlier in his welcome remarks, Vijay Kalantri, Chairman, MVIRDC World Trade Center Mumbai suggested that the central government may set up a task force under NITI AAYOG to revive local MSME units that became sick due to unfair competition from imports, especially in printed circuit boards, white goods and electronic components.