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Rediff.com  » Business » Want higher exports? Unleash labour reforms

Want higher exports? Unleash labour reforms

Source: PTI
February 25, 2005 14:44 IST
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The pre-budget Economic Survey on Friday asked the government to immediately unleash labour sector reforms and rectify infrastructure bottlenecks for doubling Indian exports to $150 billion in the next three years.

Cautioning against slippages in export target to avert trade and current account deficits in the face of import surge, the Survey, tabled in Parliament on Friday, said the government should remove outdated labour laws, aggressively push FDI and hasten special fiscal and regulatory regime for Special Economic zones.

"Constraints like infrastructure bottlenecks, outdated labour laws, SSI reservations and high transaction costs need to be attended to urgently to reach the ambitious target of $150 billion exports by 2008," the Survey for 2004-05 said.

Against the government target of $75 billion this year, the country recorded exports of $34.5 billion during the first six months, a significant improvement over $27.9 billion in the comparable period of 2003-04.

"FDI in export industries will not only increase the rate of investment in the economy but also infuse new technologies and management practices in these industries," it said. "Given the global reach and marketing ability of FDI, export promotion policy further need to utilise the natural complementarity with export activity," it said.

Pointing out at the reduction in sector specific fiscal incentives in WTO compatible trade regime, the Survey stressed on the need to focus on supply side constraints, greater use of currency hedging, shifting the pattern of currency invoicing and reduction in tariffs.

The Survey also expressed concern over the use of non-tariff measures against developing countries exports and pointed out that such barriers were considerably stiffer for products with lower value addition and technological content like agriculture, textiles and leather products.

Noting the slowdown in export credit, the survey said availability of adequate export credit at export competitive rates should be an important policy consideration for the government to push exports.

The Survey pointed at the faster growth rate of services exports over merchandise exports and said, "There is potential for technology intensive services exports with India being seen as a global destination for research and development, engineering design, telecom, super-speciality healthcare."

However, it said dominance of competitive pricing pressures in the new regime imply that the benefits to the industry will depend critically on expediting domestic policy reforms to enhance its competitiveness.
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