The Telegraph
Since 1st March, 1999
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War shield for dollar spinners

New Delhi, March 26: The government has been holding a series of meetings to rethink strategies ahead of the export import (Exim) policy as India’s traditional exports — gems and jewellery, textiles and farm products — are being hit by the ongoing Gulf War.

The finance ministry, which has been co-ordinating with the commerce ministry on the Exim policy, has also set up a high-level strategy group headed by chief economic adviser Ashok Lahiri which will chart India’s policy for the coming global trade talks under the aegis of the World Trade Organization (WTO).

This strategy group will also be dovetailing the Exim policy with India’s stand at WTO. The Indian government’s concern is that its three big exports — gems and jewellery, textiles and farm produce — on which this year’s budget heaped several tax sops in the hope that these sectors would help lead an economic resurgence, will be badly hit by the war.

With global economies expected to go into a temporary tailspin, India’s $ 7.5-billion exports of gems and jewellery is expected to be badly hit. Indian farm produce, much of which is destined for the Gulf, will similarly be hit. Some 45 million kgs or 20 per cent of tea exports that were destined for Iraq will now probably remain unsold or will be sold to other buyers at rock-bottom prices.

Having already invested heavily in terms of tax sops for these sectors, the Indian government wants to give them greater assistance by way of export promotion and market access development funds as also other assistance to see to it that the fall in income from these sectors is not too huge. The government is in touch with major industry and trade chambers to work out trade assistance initiatives.

At the same time, the government wants to give a fresh thrust to other areas which could generate “hard currency earnings”. The sectors selected include automobiles and automobile components, steel and other metallurgical products in physical products. Other sectors are engineering consultancy, banking and insurance, healthcare and education besides skilled and export of highly trained manpower.

Infotech earnings are also expected to drop sharply as western governments are expected to reduce outsourcing of software in a big way.

The government also wants to give a thrust to exports to the Commonwealth of Independent States where it feels India could make better headway than it has made in Latin American countries which was India's thrust zone this fiscal. These thrusts are undertaken as India's trade direction is heavily tilted towards three big zones — the European Union, the US and Gulf countries.

Sources said the high-level group on WTO, headed by Lahiri, will also be working to dovetail Exim decisions with India's stand at the next round of WTO talks.

The government is also considering a proposal to appoint a special secretary who will act as a single window authority to deal with export-related problems. He will report directly to the Prime Minister.

It is also planning to extend the benefits given to export oriented units (EOUs) to the small scale units operating in the domestic tariff area (DTA) which are primarily engaged in exports.

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