Commentary/Dilip Thakore

The Exim policy is obviously formulated by economist-bureaucrats who have reduced the high-potential Indian economy to a bit player on the world stage

The Union government's new Export-Import (Exim) policy for 1997-2002 tabled in Parliament on March 31 has evoked mixed reactions. Some economic pundits feel the policy document is in step with the economic liberalisation and deregulation programme initiated in 1991. Others believe it is a minor variant of the previous Exim policy (1992-97) which failed to increase India pitifully small share (0.5 per cent) of world trade despite boosting export revenue from $ 18.5 billion in fiscal year 1992-93 to $34 billion in 1996-97.

There are some some praiseworthy features in the new policy. It has persisted with the liberalisation of imports. As many as 392 additional products have been included in the list of importable products, of which 150 products can now be imported against special import licences and 60 more have been shifted to the Open General Licence list.

Significantly, over two-thirds of the products which have moved into the importable lists are consumer goods. This may mean that a consensus is emerging on the need to remove all quantitative restrictions on imports by 2002, as required by the World Trade Organisation.

As has been often argued here, easier imports mean a better deal for the consumer and a warning to domestic manufacturers to improve quality, or else...

Nevertheless, the Indian economy is still one of the most imports-averse in the world, keeping over 2500 products and most services on the restricted list. Note that the Union Commerce Minister B Ramaiah offered no time-table to phase out quantitative restrictions on imports while presenting the new policy.

There are other features that make it easier for businessmen to upgrade their enterprises and make a splash in the global marketplace. Among them: a new scheme to make it easier for exporters to qualify for duty free imports (duty Entitlement Pass Book Scheme); attempted computerisation of offices and procedures of the all-important Director General of Foreign Trade; the creation of a green channel facility for exporters and importers with good records and the reduction to a nominal 10 per cent of customs duty on capital goods imported under the Export Promotion Capital Goods Scheme.

But the new policy is still cast in the same mould as its predecessor, obviously formulated by the spiritual heirs of economist-bureaucrats who reduced the high-potential Indian economy to a bit player on the world stage. Though the minister seems aware that the biggest bugbear of Indian exporters is the government and the swathes of red tape they have to traverse, the new Exim policy has moved only a short way towards letting "exporters concentrate on the manufacturing and marketing of their products globally and operate in a hassle-free environment".

Bureaucrats in North Block have to learn is that exporting should not require specialised paperwork management skills since, it is just a sale like any other, but to someone abroad. Therefore, it should be similar to the simple transaction it is in the Domestic Tariff Area.

At the last count, each export consignment required some 20 documents and over 200 signatures from an assortment of bureaucrats, clerks and the like. Not only are rules and regulations complex, they are also constantly amended by way of ill-publicised notifications, making things very difficult for exporters.

The people who staff the Directorate General of Foreign Trade are transferees from the office of the erstwhile Chief Controller of Imports and Exports which has ruined India's foreign trade prospects in the past four decades. And their mindset hasn't changed.

The Exim policy has also not addressed the issue of India's obsolete preventive supervision regime. All over the world the general norm is to punish those who violate regulations. India tries to prevent rather than punish it with a plethora of rules, regulations and supervisors.

This over-regulation of foreign trade has much to do with the ridiculously restrictive import policies and the paranoid foreign exchange control laws. Until quantitative restrictions and import tariffs are eliminated and reduced, and exchange controls are rationalised, Indian industry (and agriculture) will continue to be a small player.

Tell us what you think of this column