Cut customs duties, promote exports: Survey

The government should cut customs duties and streamline export promotion schemes and pay special attention to infrastructure to overcome the contracting exports on account of recession in India's major trading partners, the Economic Survey said.

The Economic Survey today cautioned that the global meltdown, particularly in the US and EU, is expected to impact the country's export growth in 2009-10.

"With import demand falling from our major trading partners, India's exports of goods and services (are) expected to be impacted," the pre-Budget Economic Survey tabled in Parliament said.

India's exports, after registering a healthy growth rate of over 30 per cent in the first half of 2008-09, turned negative in October 2008. Overseas shipments declined by 29.2 per cent in May -- contracting for the eighth month in a row -- over the same month last year.

In the last fiscal, exports grew by a meagre 3.4 per cent to $168.7 billion. The survey said that besides short-term relief measures and stimulus packages, some fundamental policy changes are needed for the merchandise trade sector.

The measures include continuing to reduce customs and excise duty to make our exports and industry competitive, streamlining existing export promotion schemes, and giving special attention to export infrastructure.

The Survey talked of "weeding out unnecessary customs duty exemptions", and rationalising the tax structure including specific duties in a calibrated manner taking into account the specific duty levels in our trading partner countries.

There is also a need to check the proliferation of special economic zones, evolve clear-cut policy for beneficial Comprehensive Economic Cooperation Agreements even with some developed countries "... which should be well integrated with our economic and trade policy reforms and the blueprint for possible changes due to WTO negotiations."

However, the Economic Survey said the steep fall in petroleum prices and cooling of the prices of commodities could have a positive effect on imports.

Imports dipped for the fifth straight month by 39.2 per cent to $16.21 billion in May over the year-ago month.

It also said in 2010 recovery is expected with IMF projections at 1.9 per cent increase for world output and 0.6 per cent for world trade volume of goods and services.

The Survey emphasised the need to desist from any protectionist tendencies and proceed on the reform path.

"While efforts to promote exports are needed, there is a need to guard against protectionist measures originating from our trading partners," it said.