Nath trades forex earnings for jobs

Export optimism, coupled with employment creation, is the thrust of the trade policy unveiled by the government on Friday.

With an eye on creating one crore new jobs from the export sector alone within four years, the Foreign Trade Policy has been fine-tuned to grant fresh incentives to manufacturing, retail and rural India.

There are no big-bang concessions for exporters, but it is more than offset by the natural bullishness in exports seen in recent times. Commerce & industry minister Kamal Nath has attempted a new deal, moving away from forex earnings to employment generation for the aam aadmi. As a result, the thrust has now moved way from exports to trade, seeking to provide a greater role for imports as a tool of economic activity.

Thanks to the 11th-hour rescue by PM Manmohan Singh, the mood of exporters has been lifted. The taxman has been halted from re-opening past cases related to the duty entitlement pass book (DEPB) scheme. Import of capital goods has been liberalised to the benefit of everybody — from the kisan to India Inc. Tsunami relief has been provided to the marine sector, and all segments of trade have been offered hope of reduced transaction costs resulting from less-cumbersome documentation.

The retail sector has been allowed to import capital goods at a concessional rate of duty in view of its employment generation. With the government keen to open up retail for foreign direct investment (FDI), more action is expected on this front.

The road ahead is clear from the numbers that Mr Nath played up: exports surpassed targets to touch $80bn during ’04-05, while imports crossed the century-mark at $105bn. It is expected that this momentum will be sustained in the coming years to reach the $150-bn target for exports before ’09.

The current buoyancy has encouraged Mr Nath to raise the bar higher with a $92bn export target for ’05-06 compared to the $88-bn set earlier.

Clearly, eyes are now set on the next century, $100bn in exports by ’06-07. Imports would also increase and the buying power would be leveraged to boost exports further, the minister told ET.

The government’s strategy seems to be aimed at using the $140-bn forex reserves cushion to rev up the economy through foreign trade-led growth. In the process, ‘import’ has turned into a positive word — a far cry from the licence era when a stigma was attached to it.