Nation losing advantage in leading export sectors

Exports, meanwhile, declined from $468 billion to $437 billion between 2014-15 and 2016-17. In fact, India’s external trade performance has grown to be so acute that the current account deficit in the first quarter of the current fiscal year reached a four-year high of 2.6 percent.

This trend is continuing despite favourable trade conditions in the global markets. Only domestic factors can explain the widening trade deficit. The uncertainty surrounding the implementation of the Goods and Services tax (GST) has had a major role to play. Data due this month will show whether the situation has improved in the second quarter.

The chances of any improvement remain bleak as issues in processing of refunds to exporters under GST has been affecting trading activities. The sops given in the mid-term review should help in pumping up exports to an extent. Labour-intensive sectors under the Merchandise Exports from India Scheme and Services Export from India Scheme, which were introduced in the FTP, were given an incentive raise of two percent each. Here, exporters are granted credit scrips based on the said percentage of the total value of their exports. These scrips can be used for payment of duties on procurement of further inputs. Additional incentives of two percent are expected to boost the subdued export activity of the last few quarters.