Presenting the budget on Wednesday, Finance Minister Nirmala Sitharaman highlighted customs reforms and duty rate changes that could benefit the exports sector. “Customs’ reforms have played a very vital role in domestic capacity creation, providing level playing field to our MSMEs, easing the raw material supply-side constraints, enhancing ease of doing business and being an enabler to other policy initiatives such as PLIs and phased manufacturing plans,” she stated.
Talking about how this will aid the objective of Make in India and Atmanirbhar Bharat, the minister said that the removal of exemption on items that can be manufactured in India and offering concessional duties on raw materials that go into manufacturing of intermediate products would be beneficial.
Experts say that such measures will help in building an ecosystem of parts and components that can be manufactured in India. “It will enable a conducive vendor ecosystem to be built in India. Such incentives seem to address the granular aspects of the PLI scheme so that parts are made in India. However, besides that, exports as a segment did not get any special emphasis. Perhaps more specific sector export promotion measures are likely to be addressed by the Foreign Trade Policy,” says Atul Gupta, Partner, Deloitte India.
Gupta adds that the global recessionary trends may have acted as a dampener. “There has been no increase in Market Development Assistance. One big demand of industry body FIEO (Federation of Indian Export Organisations) was the creation of an export promotion fund, which also hasn’t come by.”
Some of the other exemptions in the budget were for items such as embellishments, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods.
Duty, the budget stated, was also being reduced on certain inputs required for shrimp aquaculture so as to promote exports. Nitin Kunkolienker, President Emeritus of MAIT and Director, Electronics Product Foundation (EPIC), says that the budget should have focussed more on the facilitation of exports. “The government has to touch upon the value chain. There are a lot of issues in the value chain. Ports are located in states and there is a lot of apathy in states. Look at port connectivity and labour issues at play. We may talk of ease of doing business, but when you start importing or exporting via ports, labour does not cooperate if their demands are not met. Such issues are not dealt with and these impact the overall system,” he says.
Echoing similar views, A Sakthivel, President, FIEO, says there is a need to encourage aggressive marketing. While the allocation for the Market Access Initiative (MAI) Scheme has increased from Rs 160 crore in 2022-23 to Rs 200 crore in 2023-24, this may not be adequate. “Global trade shows are increasingly giving opportunities for showcasing goods, and this needs to be exploited. A planned scheme for aggressive overseas marketing may be notified with a sizeable corpus to encourage exporters to showcase globally,” he says.
India has seen a steady rising trajectory in exports. The country achieved an all-time high annual merchandise export of $422 billion in FY22, the Economic Survey had stated on Tuesday. However, it also added that the global economy has started facing formidable headwinds and the ripple effect of the global trade slowdown has started showing in India’s merchandise export growth, where a moderation in pace was observed in 2022.
Talking about the services sector, it noted how India maintained its dominance in global services trade in FY22. “Despite pandemic-induced global restrictions and weak tourism revenues, India’s services exports stood at $254.5 billion in FY22 recording a growth of 23.5% over FY21 and registering a growth of 32.7% in April-September 2022 over the same period of FY22,” it added.
