Need to rejig export incentives
CUTS-TradeForum
From: CUTS International
Need to rejig export incentives
Pritam Banerjee
The Hindu Business Line
June 06, 2017
Promoting sheer labour-intensive exports is passe. A PPP approach that focuses on skill-building at the MSME level is called for
Minster of State for Commerce, Nirmala Sitharaman recently announced that the review of foreign trade policy will be completed prior to July 1 when GST will be rolled out. This review is especially important since it is being done in an environment where India is under some pressure to move away from post-export incentives that are increasingly not compatible with WTO rules.
Besides incompatibility with WTO, giving incentive to a firm that is already exporting somewhat counter-intuitive as it is essentially rewarding a successful and therefore competitive exporter. Logically, investment in developing firm or sector level competitiveness requires support at the pre-export stage. Pre-export production-related subsidies and government support measures are more compatible with WTO rules and extensively used across the world.
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