Declining exports and domestic value addition in it require immediate attention: FIEO President

The Dollar Business Bureau   “The changing paradigms of trade and emergence of global production chains have important implications for India in particular and as a result increasing use of imported inputs has generally caused a decline in the domestic value added share of total exports,” said FIEO President Mr Rafeeque Ahmed. Reacting to the Economic Survey 2015-2016, Rafeeque stated that the share of domestic value added exports in total exports has witnessed a decline from 86.9 per cent in 1998-99 to 84.1 per cent in 2003-04 and further to 78.5 per cent in 2007-08. However, the foreign value added share in exports increased. He said that the domestic producers may be encouraged to supply to exporters for higher value addition in the country. Exemption from VAT, discharging of export obligation under EPCG etc should be made available to encourage such supply. On the external sector, FIEO chief explained that exports which showed very high growth of 40.5 per cent in 2010-11, moderated substantially to 1.8% in 12-13, while during 13-14, exports recovered to a growth of 4.7 per cent but again fell to 2.4 per cent (US$ 265.0 billion vis-à-vis US$ 258.7 billion in the corresponding period of the previous year) April- January 2014-2015 implying that urgent policy initiatives need to be taken for the same. Mr Ahmed said that the survey does recognize the global challenges both on account of weaker economic prospects in major economies except US as well as softening of crude, metal and commodity prices. The economic survey has also touched upon the emergence of mega regional trade agreement being negotiated by major trading partners in Asia and Europe which exclude India thereby making our exports less competitive. This needs to be addressed through active engagement of India in RCEP which accounts for 30% of World trade observed FIEO Chief.  

This article was published on February 27, 2015.