Chamber urges govt to promote export of manufactured goods

New Delhi, Oct 12 (UNI) Expressing concern over one of its lowest growths of just 1.1 per cent in August, Federation of Indian Chamber of Commerce and Industry (FICCI) has urged the government to make promotion of exports of manufacturing sector as centrepiece of its foreign trade policy.

The chamber, in a study, pointed out that manufacturing sector is not only facing slowdown in domestic market but is also losing-out on export front.

It said currently India has a share of only one per cent in the world's manufactured goods exports and share of manufactured goods in the country's total exports has fallen from 76 per cent in 2001 to 63.6 per cent in 2007-08.

On an average, share of manufactured goods in a country's exports is around 70 per cent worldwide and in case of China it is over 90 per cent, Ficci noted.

At current pace, even Turkey's share in the world's manufactured goods trade would surpass that of India by 2011, while that of China would be 16 times more than that of India, it added.

Ficci suggested the government to fix target of doubling share of India's manufactured goods exports in the world's exports in the next three years with appropriate interventions and policies.

Government should also endeavour to achieve second target of ensuring that 75 per cent of India's merchandise exports comprise of manufactured goods in the next five years as is the case in most developed and some developing countries.

To achieve the objective, Ficci said government should reduce tax on the manufacturing sector to bring it at par with what is applicable in competing economies like China where it is 17 per cent as against 28-35 per cent in India.

The chamber also wanted rationalisation of taxes at state level and refund of state level duties for exports. The incidence of state level taxes is six per cent of export price of manufactured item.

Ficci suggested the Centre to refund such state level taxes to exporters and then adjust the amount it has to release to states in the Plan.

It also sought immediate rationalisation of custom and export procedures and benchmarking them to international levels to reduce time and cost for clearance for exports.

Quoting the latest World Bank Report on Doing Business 2009, Ficci pointed out that cost to export a container from India remains one of the highest in India vis-a-vis its competitors. As against 945 dollar per container in India, the cost in China is 460 dollar, Korea 767 dollar, Indonesia 704 dollar, Thailand 625, Pakistan 611, and Malaysia 450 dollar.

In the long run, Ficci suggested the government focus on exports of high technology items as these are going to occupy more share in the trade in years to come.

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