Local products can boost exports

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Local products can boost exports

Thursday, 09 November 2023 | AS Mittal

Local products  can boost exports

States can enhance their exports by making their districts as export hubs and marketing the local products with geotags, to enhance their appeal

Geographical location is a pivotal factor in making trade competitive which is crucial for overall economic growth. Haryana, a state that was born out of Punjab 57 years ago, was once a barren land with minimal development. However, today, it ranks among the top ten states in terms of export values, mainly due to its geographical advantage of being close to the National Capital Region(NCR). It has five times more exports than Punjab. Similarly, coastline states that have access to ports are better equipped to engage in international trade, while landlocked regions like Punjab face higher trade costs and challenges in transit from the seas. Unfortunately, policymakers have not prioritized overcoming geographical challenges and regional disparities, the focus must shift towards developing each district of such states as an export hub to ensure balanced economic growth.

 In the era of the fourth digital industrial revolution and e-commerce channels, developing countries have been able to meet the increasing demand for goods and services from developed countries, thereby exploring new opportunities in international trade. India's goal of making each district an export hub highlights the need for active participation from all districts to promote exports of goods and services produced or manufactured there. It is high time to work actively to overcome the trade challenges faced by landlocked states like Punjab.

To achieve the goal of 'Atmanirbhar Bharat', it is imperative to promote export growth of local goods and services and increase local production, for which export promotion activities must be decentralised. India has already signed several Free Trade Agreements and is currently signing more, which will provide greater access to export markets and raise India's exports to GDP ratio from the present 22.74%.

However, in the latest ranking of states based on the Export Preparedness Index (EPI), Punjab is positioned at a low 10th with a score of 58.95, whereas Haryana takes the lead at 5th with a score of 63.65. It is noteworthy that Gujarat has the highest number of 8 districts among the top 25 districts of the country in terms of export share (54%), followed by Maharashtra with 5 districts, Haryana with one, and Punjab with none. To increase exports significantly, states must actively participate in export promotion activities in each district.

 Punjab, in particular, has untapped potential in the form of unique products in each district. Identification of these districts as export hubs would unlock their local potential and fuel economic growth, generate employment, boost rural entrepreneurship, and enhance exports. It's high time that Punjab takes the necessary steps to actively participate and promote export operations in each district, in tandem with 'Vocal for Local' and 'Make in India' initiatives.

The Foreign Trade Policy (FTP) 2023-28 is determined to boost India's foreign trade through decentralized export promotion. As a part of this policy, the Districts as Export Hubs initiative has been introduced as a crucial strategy. This initiative aims to identify potential export products and services in all districts and create institutional mechanisms to promote them, which is a significant step towards achieving the policy's objectives.

To make this initiative a grand success, the Districts as Export Hubs Initiative proposes several strategies. These include creating a robust institutional framework, identifying potential export products, building the capacity of new exporters, conducting outreach programs for export promotion, addressing bottlenecks related to infrastructure and logistics, and converging ongoing government schemes to support these initiatives. These strategies will ensure that India's potential for foreign trade is fully realized, and the country becomes a major player in the global market.

Permission must be granted for the flow of bilateral trade from Punjab through Pakistan Territory to Middle-East Countries, CIS Nations to Europe and the US to further boost competitive trade. To synchronize the state and centre policy of exports and act as the nodal coordination point for exporters between the state and centre, the establishment of a Directorate of Exports in the state is of utmost importance.

Given that most trade is shifting to global value chains that require timely deliveries, exporters must be allowed to choose the shipment mode as per their business requirements. China has already created an efficient and seamless logistics system to ship goods to global customers, and we must take action now to ensure that we do not fall behind.

The government must create a separate customs code for e-commerce shipments to match the emerging channels. This will not only reduce costs but also expedite the delivery of merchandise by exempting import duties on rejects and treating re-imports as duty-exempt imports in line with global practices. It's high time that the exporters should be allowed to claim GST refunds.

To boost export orders for high-potential product categories like engineering goods, chemicals, telecom equipment, and processed food items, we must focus on developing market intelligence, organizing training for MSMEs, and facilitating the fulfilment of export orders. This is a must-do to stay ahead of the competition.

The Districts as Export Hubs Initiative should be prioritized with the objectives of enabling farmers and MSMEs to benefit from export opportunities in foreign markets. To achieve this, we need to create a district-level ecosystem for innovation and technology utilization to increase export competitiveness and reduce transit and transaction costs for the exporter at various stages of the export cycle. Platforms should also be provided for wide and global reach of products and services from the district, which in turn, will promote local farmers and small entrepreneurs. This is a win-win situation for all.

To create a competitive space in the export market, it is essential to implement the initiative effectively. State and District Export Promotion Committees have been formed, but they are not functioning effectively to meet key target areas such as disseminating market intelligence, improving quality standards, and providing access to international certification industries, as well as monitoring export performance at the district level. The District Export Action Plans aim to identify goods and services for export promotion, employment and revenue generation to drive the local economic growth.

(The Author is Vice-Chairman of Sonalika Group, Vice-Chairman of the Punjab Economic Policy and Planning Board; views expressed are strictly personal)

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