Have you scaled down the target?
We havent done it officially, but the performance so far shows $38 billion is difficult to reach. Three main product groups, gems and jewellery, textiles, and leather goods, have seen prices drop over 9-15 per cent. Theres a global downturn in our major purchasers, the US, Japan and Germany. In the remaining half, we have a mixed picture. Electronics, software and engineering goods are doing well, but bulk chemicals prices are sharply down. Id say our export growth would be edging towards 15 per cent. The high volume growth and the relative stability of the rupee are affecting competitiveness. We have to make more efficient use of infrastructure resources and cut down transaction costs. Its a serious disincentive for the exporter, all these size barriers, licence barriers, customs barriers.
Would you suggest a devaluation to bring down the cost?
The exchange rate is really led by market forces now. The level of interest rate in the financial system is just too high. But the RBI has given the right signals to the market. You cant make very sudden changes, it has to be gradual.
Is the slowdown due more to poor prices than volume?
Both. The orderbook position is poor. Theres a pattern change in global trade. Our small scale reservation policy needs a review. They cant match the weekend delivery system some nations have.
What steps are needed now?
Genuine exporters should get green-channel treatment, and officials delaying the process should be tried by a tribunal. Second, the EPCG scheme (zero duty import of capital goods) floor should be cut from Rs 20 crore to Rs 1 crore to help small exporters. Third, we should augment our marketing effort. The market development fund is just Rs 30 crore, when exports are Rs 1,06,000 crore. None of these are in our hands.
Is MAT affecting exports?
There should be no taxation of export profits at all till we reach $100 billion. There should be a bold view on this.