New Delhi, Feb 25 (Calcutta Tube) Even as the prospects for Indian merchandise trade have brightened, it needs further cuts in excise duties, said the Economic Survey for 2009-10.
‘The outlook for India’s trade sector in 2010 has brightened with prospects of recovery in world output and trade volumes. While in the short term, relief and stimulus measures have worked, some fundamental policy changes are needed. For the merchandise sector, these include lowering the peak duties from the present 10 percent to 7.5 percent,’ said the annual economic report card, presented by Finance Minister Pranab Mukherjee in parliament Thursday.
There is a general fear among exporters about the government withdrawing stimulus for exports in Friday’s annual budget. Industry bodies and others have urged the government to continue with the stimulus for exporters as the sector continues to be in the red.
The government had infused three doses of fiscal stimuli – worth Rs.186,000 crore ($37.2 billion) – since December 2008, following the economic slowdown worldwide.
India’s exports rose for the third successive month and logged a 11.5-percent growth in January at Rs.71,700 crore ($14.34 billion), while it grew nine percent and 18.2 percent in December and November last year respectively after 13 straight months of decline.
‘There is (a) need to rationalise the tax structure, including specific duties in a calibrated manner, taking into account the specific duty levels in our trading partner countries and fine-tuning the trade strategy by targeting exports of dynamic products to developed markets,’ the report said.
It further stressed the need to promote employment-intensive non-dynamic products to the developing country market.
‘We have to continue with a pro-active role in multilateral trade negotiations while taking care of livelihood concerns and the needs of the domestic sector,’ the report on Economic Outlook said.
The commerce ministry has said it would review stimulus measures announced earlier for exporters in April. It said it would decide on stimulus for various export sectors running into losses.
The ministry had last month announced Rs.450-500 crore as incentives – raised from its internal budget – to exporters till March 2010 to push exports of 2,000 products which have failed to come out of the red despite fiscal stimulus provided by the government since the global recession.