Won't curb exporter sops till recovery strengthen: Scindia

Excerpts from What's Hot on CNBC-TV18 Watch the full show » Nifty BSE | NSE 07/02/12 Are Mutual Funds betting on Nifty?

The government is confident that the worst is over for the Indian export sector. Minister of State for Commerce and Industries, Jyotiraditya Scindia says exports growth should turn positive in the January-March quarter.

However, in an exclusive interview with CNBC-TV18, Scindia assured that the government would not withdraw the stimulus for exporters till the recovery strengthens. In fact it may give additional incentives to certain sectors including engineering, gems and jewellery, which may be rolled out by January February.

Further, he said that the government will be reviewing the export situation report by December-end.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Will export sops continue?
 
A: We were very apprehensive and we were very careful in terms of modulating the steps that we took. Needless to say that the situation was not only grim it was alarming. The fact that exports were reducing by 39% month-on-month compared to last year. The year-on-year (YoY) figures have improved considerably from a low of close to USD 10 billion a month in April-May of this fiscal - you are now seeing resurgence in the normal value of exports upto close to USD 13-14 billion.

What is heartening to note - this is something that I had taken the boldness of taking a foot forward - is also the percentage numbers are reducing in terms of negativity from minus 39% to single digits of 6.6%.
 
Last month has been about USD 13.5 billion odd. We have posted to close to USD 90 billion in the first seven months of this fiscal. To reach a target of close to USD 160-165 billion, we need to make sure that we grow at a clip of 12% for the balance five months at about USD 14 billion a month to reach USD 165 billion.

The target we have set for ourselves, which is very important in the foreign trade policy of growing to about USD 200 billion in the year 2011, means that in the next fiscal we have to grow from USD 160-165 billion by about 20%, which I think is achievable.
 
Also a longer-term target - 2013-14 - of doubling in terms of our trade figures, growing compound annual growth rate (CAGR) roughly about 25% is the target that we have set for ourselves.

Today, services and merchandise exports together are close to USD 355 billion odd. That has to grow by almost 20% to reach that level. We are quite confident that with the steps that we have promulgated and the early signs of recovery that we are seeing, we will be able to reach the target that the Ministry has set.

Q: The thing that is worrying everybody is now is that the talk of when we are going to exit from this loose fiscal and monetary policy. Will the stimulus measures for exporters continue because while the domestic economy has picked up, the global economic recovery continues to be fragile? So will the stimulus measures remain as far as the export sector is concerned?

A: Let me say this that, for now, I think so because that is very we are firmly back in the saddle. Once we find ourselves entrenched and firmly back in the saddle in the growth path then we can look at those exit patterns. Also remember that the export sector, many segments of them, are extremely labour intensive and therefore those from a social angle as well, those steps and impetuses need to be in place. Whether you look at handicraft, gems and jewelry or textiles - even though you are seeing recovery in many sectors, there are still some sectors that require a further assistance.

We have decided to conduct a review internally within a department, which hopefully should be out by the second and third week of December wherein we would look at the additional incentives that will be required for certain sectors. For example like in engineering and others, which are still to see a little bit of a revival and hopefully by January, more assistance is required we will put those steps in places.

Q: So this will be assistance or incentives outside of the budget or could we see the budget addressing some of these sectors?

A: This is much more with regards to commerce and industry.

Q: Will this be fiscal incentives?

A: A combination of both fiscal and otherwise.

Q: So you are looking at a review in December and possibly these to be rolled out in January?

A: I don't want to give a strict timeline for that but we are going to evaluate it within this month and then try and see what can be done.

Q: Which are the sectors that you feel at this point in time continue to be in need?

A: Let the analysis come through. But sectors like engineering and others that definitely require a certain impetus to be given. There are other sectors that have seen a little bit of a recovery - gems and jewellery etc. But let that analysis come through and let me not preempt an answer to that question.