Interview India: Smoothing the way for Indian trade
IAS, Additional Director General of Foreign Trade, Government of India, Ministry of Commerce & Industry, Department of Commerce, Dr Kavita Gupta advises on export initiatives the ministry has in place.
What measures are being taken to increase India’s trade exports?
Dr Kavita Gupta: Various initiatives are in place that encourage trade. The Ministry of Commerce offers help to organize these events in India and abroad. The ministry provides eligible companies with monetary help and facilities as means to reaching out to other countries. In addition to that, the DGFT also has various incentive schemes to promote trade. Some of which also help in compensating costs of transportation, import duty for materials, etc. In addition to this, we have facilitating measures, such as the Export Promotion capital Goods (EPCG) scheme. This facilitates companies to buy new technology that can be used to upgrade their processes: thereby, enabling them to manufacture goods that can be exported. Furthermore, we also give some grants to state governments to improve the infrastructure in order to encourage exports. The DGFT has the initiative of the Niryat Bandhu for mentoring first generation entrepreneurs. Through this initiative, we are educating people, especially SMEs on various schemes and also on the international business arena. Guidance on how to go about it is given, and connecting them with various councils, industries, etc., is also done.
India was not hit as hard this time by the recession as it did other countries. How has this affected our trade with foreign countries?
Dr Gupta: The recession because of the contracting demand in the traditional market (the US and Europe) has not enabled the exports to rise as high as it was hoped to have risen, however, India has managed to maintain the stand. However, to help increase exports, the government of India through the DGFT introduced a scheme called Incremental Exports Promotion Scheme, wherein if the trade in these traditional markets increased, then incremental incentives are awarded to the companies that are increasing trade. Now as far as affecting the trade with foreign countries because of recession, one of the primary things that has happened, is that there has been a fluctuation in the rupee and this did see exports becoming cheaper. This aspect helps exports. Whenever there is a devaluation of the rupee, the exports increase because then the products become cheaper for other countries to purchase.
What policies or schemes is the government looking at introducing especially for the machine tool industry?
Dr Gupta: In order to encourage growth, there is a scheme known as the Town of Export Excellence (TEE) where a number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to India’s exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets. The department of industry also has a theme of making a common facility centre. A lot of the times small industries cannot create a facility. However, small units together could pull their resources and make a common facility for enhancing their businesses. Several schemes and information on them are available on http://dgft.gov.in/
According to you what role does the machine tool sector currently play in India’s GDP and what role will it play in the coming years?
Dr Gupta: The machine tool sector plays a fundamental role in the country’s GDP as everything is centered around this sector. Various innovations, machines that are manufactured have their use in other industrial sectors such as pharmaceuticals, textiles, food and beverage, chemicals, etc.
Everyone talks about foreign trade policy for increasing the GDP of the country. And globalization has been looked at as a road to success. However, considering that India in itself is a growing economy, how will localization play a key role in helping businesses grow? Is the government introducing any schemes or measures to help localization, too?
Dr Gupta: The margin or profit is always more in the domestic market as compared to the exports side. Most of the people go into exports when they are saturated with the domestic capacity and then they want to expand because they have more to sell. This will always be the case. The domestic market naturally grows and as the country becomes more affluent, the capacity to afford will naturally grow and when it naturally grows it creates a vacuum and players will come automatically to fill this gap. All that is required is a facilitative environment, which again meets infrastructure, lesser bureaucratization and ease of doing business.