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From ‘export or perish’ to ‘export and stop imports’ of cheap goods!

‘Export or perish’ was the clarion call given by Jawaharlal Nehru. Now, with a staggering import bill of $491.9 billion, India needs to stop imports of cheap goods and encourage buying indigenous equipment, even if it costs 15% to 20% higher than overseas

In a written reply to the Lok Sabha, Anand Sharma, minister for commerce and industry, has confirmed India's exports at $300.3 billion as against a staggering import bill of $491.9 billion during the year 2012-13. 

 

He has further stated that 10 countries, which account for this trade deficit of $191.6 billion, are China, Switzerland, Saudi Arabia, Kuwait, Iraq, Qatar, Venezuela, Nigeria, Australia and Indonesia. These account for as much as 76.5% of our deficit. There are 70 more countries that have a favourable balance of trade against India!

 

The reasons are not far to seek.  Saudi Arabia, Iraq, Kuwait, Qatar, Venezuela and Nigeria are our principal suppliers of oil and gas, which we produce indigenously but in insufficient quantity and thus have to import for catering our growing needs. Australia and Indonesia supply coal, again an essential energy base. India has the resources in substantial quantity but is unable to excavate and distribute in an efficient manner, due to bureaucratic bungling in environmental clearances and logistical issues.

 

China is well entrenched in India in supplying cheap electronic goods, thereby killing the domestic industry and, of course supplying various power generating equipments, which have been found to be of inferior quality and workmanship. However, this factor is conveniently overlooked due to cheaper Yuan credit that China can give.

 

It took months of protests and appeals before the government imposed an increased tariff on these electrical equipments that were actually hurting the indigenous industry.

 

Now, the Heavy Industry Minister Praful Patel is seeking to have the import duty cut to 14% from the revised rate of 21% imposed a few months earlier. We do not know what has caused him to make this suggestion.

 

On these issues, we appear to brazenly overlook the fact that we need to seriously improve our own production capacity of all electrical power generating equipments, which we import from China, the main supplier, and others.

 

Secondly, apart from maintaining the current tariff, the government must consider giving a preferential treatment in obtaining indigenous equipment, even if these are 15% to 20% higher than the imported counterparts. Treating such supplies as "deemed export" is one thing, but giving this sort of direct price advantage is a key element to facilitate growth.  Besides, a whole lot of foreign exchange can be saved in this manner. Employment opportunities will increase as will consumption and growth of essential raw materials, like steel, that are indigenously made.

 

The Government must have a think tank to work on these lines of import substitution more seriously than what it being done so far.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

TIHARwale

3 years ago

Please explain why Indian companies price their product same like MNCs (compare Bata and Lakhani). Please also explain why Lakhani is defaulting and last week Canara Bank had published possession notice (http://www.canarabank.com/Upload/English... for default amounting to more than 39 crores. Basically Indian companies are willful defaulters. Just for information during the past 15 days TOI is publishing possession notice and amount is nearly 1000 crores. So let it be Mallya, WINSOME DIAMOND are cheating PSBs in thousands of crores, Lakhani do it at less amount.

Dr Anantha K Ramdas

3 years ago

Thank you Mr Srinivas. During my first ever posting abroad, while shopping at Takla (a supermarket), I was accosted by a gentleman who asked, if I could speak English, so that I can assist him?

When I responded positively, he requested that he be directed to the section where Japanese goods are shelved! I did that, but asked him, why? He said: "Sir I am Japanese, here in Lebanon, and I want to first buy products from my country before buying others. I will support local products also but first preference is Japanese!

He taught me a lesson, and to this day, I continue to follow it. I am proud and happy to buy Indian products.

Srinivas

3 years ago

Good article sir - unless all of us citizens decide that we are interconnected - when I choose a Washington apple over a cheaper Himachali apple, without realizing it, we are driving a nail in our country's coffin. However, what we do not need is protectionism, we need less interference from the Government - automatically enterpreneurship will flourish. But today's businessmen find it tough to encourage their children to join their business - why ? Because the kids have seen their father suffer at the hands of different authorities !

If you care to ask anyone in Maharashtra ( except the industry minister himself), we entrepreneurs are desperately trying to get our VAT audit for the year 2005-2006 ( yes that old cases ) completed ! And VAT was supposed to be a no-harassment system !Everything online, so phataphat ho jayega .... was what we were told.

The governance machinery is like crabs, pulling away chunks of flesh ( in the form of official extortion ) and thus you find bleeding entrepreneurs thinking how long this can go on - and the government wants us to export ? If possible, we would like to export ourselves !


Vinayak Bhimarao Mudholkar

3 years ago

If "swadeshi" is to be accepted in the end then why was Globalisation accepted?....Where was our think tank then?....Mr. Obama also says "Be American, By American"....Is this the failure of Globalisation?

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