Select export sectors may get more sops: Minister

Labour-oriented export sectors like handicraft, jute, engineering goods and electronics registered negative growth in March, despite the country's overall exports showing 54.1% expansion

Exporters of engineering products and handicrafts may get more fiscal sops to help them tide over the demand crunch, according to commerce and industry minister Anand Sharma, reports PTI.

"We will have to tweak those sectors which have not recovered," Mr Sharma said.

He said the Directorate General of Foreign Trade (DGFT) in his ministry would complete a performance review of different sectors in July.

Labour-oriented export sectors like handicraft, jute, engineering goods and electronics registered negative growth in March, despite the country's overall exports showing 54.1% expansion.

In a similar exercise in December, the government had provided some market- and product-linked incentives. For encouraging export diversification outside the western economies, the commerce ministry had extended incentives on shipments to 41 new markets.

The government intervened with a stimulus packages when exports plunged after October, 2008, under the impact of global financial woes.

"It was a tough call because last May, our exports were in deep red, -39.4%," Mr Sharma said, adding that the export sector has seen a broad-based consolidation.

According to a senior commerce ministry official, incentives could be shuffled among different sectors. Those doing well like gems and jewellery may have to vacate some sops for the segments still in trouble.

In 2009-10, India's exports dipped by 4.7% to $176.5 billion from $185.29 in the previous fiscal.

Mr Sharma, who is also in charge of the industry department, said consolidation has also taken place in the manufacturing sector.

The manufacturing sector, which saw growth dive to 3.3% in March, 2009, had peaked at 18.5% growth in December, 2009.

His ministry is working on a plan to give a fresh impetus to the sector. A concept paper on setting up National Manufacturing Investment Zones (NMIZs) has been placed in the public domain.

Some of the suggestions, like giving flexibility to units in NMIZs to downsize the workforce, are considered radical.

Mr Sharma said, however, there would be provisions for social safety for the workers.


Law and market efficiency

Laws introduced to protect privilege distort the incentives and disincentives to such an extent that the normal market mechanisms lose their efficiency

The Declaration of Independence of the United States contains a false assumption. Although it might be agreed that people are endowed with certain unalienable rights, it is absurd to believe that they were created equal. Some people are more intelligent or better looking or more verbal or better coordinated than others. Some people were born to wealth. Some were born to be kings or princes, while others are born into poverty. The random nature of birth for any country has little to do with economic growth. What is important are the possibilities during life. Potential individual merit is often limited by lack of personal connections.
In game theory there are two types of systems, rule-based systems and relationship-based systems. In rule-based systems agreements, laws and regulations are dependent upon enforced rules. In relationship-based systems outcomes are determined by networks. One system is not morally better than the other. Both systems co-exist in all countries. What is true is that rule-based systems are more economically efficient.
The distinctions between rule-based and relationship-based systems are not black and white. Instead there is a spectrum. Even in law obsessed countries like the United States and France, relationships are exceptionally important. In France, seven of the past 12 prime ministers, and two of the past three presidents, including both current incumbents, went to one of the “grandes écoles” as did 50% of the chief executive officers (CEOs) of the CAC 40 index companies.
Emerging markets are more on the relationship end of the spectrum. The economic impact can be enormous. The Philippines, in theory, has a democratic system. It has a lively press and regular elections. In contrast, China has an authoritarian one-party state where information and speech is regulated and suppressed.
It would seem that these countries have little in common. China has been growing rapidly over the past twenty years in a seemingly unstoppable drive on the road to development. In contrast the Philippines seem stuck. Their per capita income is less than half of the income for Thailand, less than a quarter of Malaysia and only a tenth of the average income of Taiwan. This was not always the case. In the 1950s Philippines and Japan were considered prime candidates for rapid economic growth.
What has gone wrong? One possibility was suggested by the great economist Mancur Olson. Olson argued that certain elite power groups tended to subvert laws and institutions to their benefit. They take more of the economic pie rather than enlarging it. The real damage is not the extra money that the elite garner, in any economy certain commodities including talent are worth more than other commodities. What slows the economy and eventually decreases the pie are the laws. The laws introduced to protect privilege distort the incentives and disincentives to such an extent that the normal market mechanisms lose their efficiency. The result is that over time the economy slows.
The Philippines, like many Latin American economies, has a very few spectacularly rich citizens and masses of the abjectly poor. With the odds stacked in their favour, the rich have huge economic incentives to maintain the system— often at any cost. Worse they become rent seekers, so the system keeps getting worse. The only potential limit is the law itself. Since the law is controlled by the elite, its function is reversed and it is used to extend their power rather than restrict it.
In emerging market after emerging market the pattern repeats although by different names. In Russia the present ruling elite are known as “siloviki”, "strong guys" from the security services who surround prime minister Putin. In Africa they are known as Big Men, who utilize regulations to monopolize imports like petrol for Nigeria. India must labour under the caste system and now a new generation of political heirs from the Gandhi progeny to alumni of the Doon School, Stanford, Harvard Business, and investment banking continue a system that distorts investment.
Still Russia, Nigeria and India are all as least nominally democratic and all three countries have multiple parties and some speech is protected in widely varying degrees. The laws that allow these rights provide some limits to the power of the elites. Not so in China. In this nominally socialist country the higher ranks are dominated by so called taizidang or "princelings".
These children of senior Communist party officials are blessed with superior connections denied mere mortals and foreign investors. In an unstable and often arbitrary legal environment these connections are often the only way to get things done, so the princelings are on the A list of every western investment bank and have amassed wealth to match their status.
When capital is limited to connections, it fails to find the most economical efficient path. Over time these decisions will slow the economy as has occurred in the Philippines and will eventually occur in China.

(The writer, William Gamble, is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected]).




6 years ago

The framers of the American constitution were not silly. The term "equal" in the constitution, means equal before the law.

In India, however, the term has been taken literally and this assumption, of everyone being equally talented and gifted, has been the basis of State action. The results are for all to see, in the pathetic, even disastrous quality of governance in India. The government servants are the true rent seekers, the Kulaks of modern India.

Mahindra Xylo: One Kasbekar, zillion sexy legs

Xylo brand managers must be the rare marketers who conceal the good and reveal the rubbish

So, that multi utility vehicle (MUV) called Xylo has come a long way. From 'The Time of Your Life' nonsense, they have moved on to promising many 'Happy Legs'. Looks like a step in the right direction. Or so it seems.
Xylo’s earlier commercial totally went over my head. The swank gaadi boasts some cool features: foldable flight trays, walk-through aisles, flatbed seats, individual reading lamps, digital drive assist system, etc. And what did the commercial highlight? Hard partying dudes and tight close ups of anatomies. All grooving to the eighties track, ‘Have the time of your life!’ Serious ad spend down the tube, is the most polite way to describe this.
Well, at last they seem to have found their bearings. Only somewhat. Now the ad is pushing space and comfort. Well, at least that’s tangible, at least now Xylo stands for something! And in order to make the effort a little more memorable, fashion photographer Atul Kasbekar has been hired to do the honours. No issues with that. A much better choice than the done-to-death movie and cricket stars. He doesn’t plug a hundred other brands, so that’s unique for Xylo. What the photographer does in the commercial is to place lots of pretty, leggy models in his Xylo, who, because of the ample space in the car, arrive at the location of the shoot with happy legs, and perform well.
Now here’s where things go horribly wrong, although the strategic intent is right. The commercial is extremely shoddily conceptualised, directed and edited. The expressions from Kasbekar and the models are forced and artificial, and whatever little they may have captured at the shoot, gets lost in the edit suite. In fact, the film is so badly crafted, even the legs of the pretty models give out no expressions! And that’s saying a lot. And Kasbekar looks so out of place and lost, it’s almost as if he’s yelling loudly, “Guys, please let me be BEHIND the camera!” And just in case you forgot their earlier ridiculous commercial, this one ends with the same old: ‘Have the time of your life!’
Wow, some more fat loads of money down the drain! What I don’t understand is this: Mahindra Xylo has great features. Why don’t they create nice little commercials revolving around them, so that at the very least the audiences know about them, at least the ad offers something fresh. And yes, if they have signed a long-term contract with Atul Kasbekar, their best bet is to hire his services to do what he’s best at: shoot cool stills of the sexy, lovely legs.
Xylo brand managers must be the rare marketers who conceal the good and reveal the rubbish.



Madhukar Sheth

6 years ago

Xylo is any day a better "car" than most in the mkt. It has many more features than costlier cars/suv.
Apart from being most spacious, it has good power and BEST interior.
If you dont have financial ego and dont want to show off your status with BMW/Merc, than Xylo is much
better (per rupee).
Its reading lights are brighter than most others. BUT Mahindras and Tatas need to refine their engineering for lowest defect tolerance and for a higher MTBF ( mean time between failures ). Today, the best MTBF is in Honda vehicles.
I recently drove Honda Pilot 10,000 Km in 10 days from NYC-JFK to San Diego and return, fully loaded, and
hence the opinion.

Look at M&M's share price after Anand took over, it gave better return than most manufacturers, world wide.
Thank God Anand failed in film line, his 1st choice.
Anand ( and Kumar Birla) behaved novice, when he stood up in the audience and meekly asked Amir Khan a question on
success of 3 idiots
Anand, you are any day more successful and pay far more taxes to the nation and employ more people than Amir Khan. You were looking star crazy. I know south Indians are star crazy and you need to be a star to start a political party but you are from Punjab ( I suppose) where every 10th boy is a star.
In olden times of illiteracy, gods and saints used to be stars, then we had filmi stars.
Believe me, in new literate times, Industrialists and wealth producers will be stars.
You are in right line, Anand.


6 years ago

The great thing about the Scorpio and Xylo ads is that they end up managing to sell more Boleros and "ordinary" M&M vehicles for the company on an all-India basis. That has to be saluted. Aspirational ad aimed at the city dweller who wants a pretty toy to climb pavements with actually manages to somehow reach out and convince the rural/semi-urban customer that the older vehicle is tougher.

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