March 28, 2024

General Studies Paper 2

Context: The Department of Commerce, Government of India, has implemented the Trade Infrastructure for Export Scheme (TIES)  to facilitate the growth of exports by creating appropriate infrastructure.

What are the Major Government Initiatives to Promote Export Growth?

  • TIES Scheme:
    • The TIES scheme provides grants-in-aid to central/state government-owned agencies or their joint ventures for infrastructure projects with significant export linkages.
      • The infrastructure includes Border Haats, Land customs stations, quality testing and certification labs, cold chains, trade promotion centres, export warehousing and packaging, Special Economic Zones, and ports/airports cargo terminuses.
    • PM Gati Shakti National Master Plan (NMP):
      • The PM Gati Shakti NMP is a digital platform that integrates geospatial data  related to infrastructure in the country and planning portraits of various ministries/departments of the government.
        • This digital system helps in data-based decision-making for the synchronised implementation of infrastructure projects,aiming to reduce logistics costs and support economic activity in the country.
      • Duty Drawback Scheme:
        • The Duty Drawback Scheme rebates the incidence of customs duties on imported inputs and central excise duties on domestic inputs used in the manufacture of export goods.
          • This scheme is operated in terms of provisions of the Customs Act, 1962,read with the Customs and Central Excise Duties Drawback Rules, 2017.

What are the Challenges Related to Indian Export Growth?

  • Rising Protectionism and Deglobalisation:Countries around the globe are moving towards protectionist trade policies due to disrupted global political order  (Russia-Ukraine War) and weaponization of supply chain, that is in way shrinking India’s export capacities.
  • Lack of Basic Infrastructure:India’s manufacturing sector lacks sufficient manufacturing hubs, internet facilities and transportation are costly when compared to developed nations which is a huge deterrence to Industries.
    • India uses only 3% of its GDP for infrastructure construction each year, as compared to China’s 20% of its GDP. For infrastructure, Rs 10 lakh crore (3.3% of GDP) was allocated in the budget 2023-24, an increase of three times from 2019.
    • Uninterrupted  power supply is another challenge.
  • Lack of Innovation Due to Low Spending On R&D:Currently, India spends about 7% of GDP on research and development. This prevents the manufacturing sector from evolving, innovating and growing.

Way Forward

  • Filling Up Infrastructural Gaps:A robust infrastructure network – warehouses, ports, testing labs, certification centres, will help Indian exporters compete in the global market.
    • It also needs to adopt modern trade practicesthat can be implemented through the digitisation of export processes. This will save both time and cost.
  • Exploring Joint Development Programmes:Amidst a wave of deglobalisation and slowing growth, exports cannot be the sole engine of growth.
    • India can also explore joint development programmes with other countriesin sectors like space, semiconductor,   solar energy to improve India’s medium-term growth prospects.
  • Frontlining MSME Sector:Currently,  MSMEs  contribute to one-third of the country’s GDP, account for 48% of exports making them key players in achieving ambitious export targets.
    • It is important for India to link Special Economic Zones with the MSME sector and incentivize small businesses.
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