Push for exports, cash in on exchange rates: FM to traders
Chennai: Exhorting traders to push exports by cashing in on attractive exchange rate, Finance Minister P Chidambaram on Saturday said imports cannot be "compressed" too much as they are the lifeline of many domestic industries.
"The trade balance in April - October is USD 90.7 billion. You will remember I said last year that for the full year, the trade balance was USD 190 billion.
"This year we have just crossed USD 90 billion. That is in a period of seven months. We still have five months to go," he said at an interactive meeting organised by Federation of Indian Exports Organisation (FIEO).
Noting that the second half of a financial year always offers "better" economic conditions, he said: "Let us assume that the trade gap grows a little more. As long as we are able to contain the trade deficit to about USD 150 billion, may be even to USD 155 billion, I think we are still on a good wicket."
"The point is we are open to suggestions, we are open to ideas, we are open to hearing you, we are open to make any corrections. We are open to fine tune policies. But our goal must be the same. Our goal must be to maximise exports of this country and this is the best time to do. The exchange rate is quite attractive, competitive," he said.
The rupee closed at 62.87 versus the US dollar on Friday.
The Finance Minister said there cannot be too much compression on imports and India would have to boost exports. Imports are the lifeline of several industries in India without which they would not flourish, he said.
"The key to containing the trade deficit is to increase exports. I sincerely hope that all of you (traders) put your best effort in the next 4 to 5 months and make sure that exports continue to grow," he said.
Exports grew by 13.5 percent in October, the fastest pace in two years.
On introduction of Risk Management Systems for exports this year, which allow faster clearing of customs reducing "dwell time" of a cargo from several days to a few hours in a customs house, he said RMS would help most of the cargo.
"I am told that most of the 70 percent of the cargo go across the customs. (With introduction of RMS facility) 70 per cent of cargo will go without any inspection and we will do a risk management of exporter, the cargo and customs station."
"Every minute cargo either coming into India or going out of India dwells in the customs station, adds to your cost. We are fully aware that this cost has to be minimised in order to keep a competitive edge to our exports", he said.
To a query from a participant on why details of a cargo were not sent to its destination ahead of the flight departure despite there being a law, Chidambaram asked the Central Board of Excise and Customs why no action was taken to implement it.
"I am trying to ask the Board (Central Board of Customs Excise) why this has not been taken all these years? We will find out," he said, when told that Western countries have a concept whereby details of cargo loaded must be sent to the destination airport before it lands there.
Later, a senior Air Cargo Association official told PTI that if cargo details are not sent to any Western country, particularly the US, ahead of the aircraft's departure, a fine of USD 5,000 is instantly levied on the Indian exporter once the aircraft lands. "This is in practice even now", he said.
On the government's measure to control gold imports, he said it was a deliberate policy taken by the government.
To a query by Bhaskar Bhatt, who represented Titan Industries, Chidambaram said: "Our policy today is we are restraining gold coming into India. That is a deliberate policy we have taken".
"Use gold available in the domestic market and use it for jewellery we have no problem. We are not to liberalise gold imports," he said.
Asked if banning of gold imports was leading to smuggling of the yellow metal, Chidambaram said: "We will take care of that. Why you are worried about that?"
"We are fully aware it will affect the gold jewellery business to some extent. But if you are importing gold for the purpose of export, that window is still available. Let me make that very clear. If you want to import gold for the purpose of export, nothing has been done to close that window," Chidambaram said.