Indian Foreign Trade: Implications of Covid Crisis

Professor Dr.M. M. Goel MPhil (Gold Medallist), PhD, PGDJMC (Gold Medallist) Formerly as: Vice-Chancellor, JNU, Jaipur Director, RGNIYD ( Govt. of India) Pro Vice-Chancellor, V K S U (State University), Ara Dean of Colleges & Faculty of Social Sciences, KUK. Chairman, Dept. of Economics & Dept. of Journalism, KUK First ICCR Chair Professor of Indian Economy in South Korea at HUFS, Seoul Ambassador for Peace by Universal Peace Federation Mobile: 09896362620 Email: mmgoel2001@yahoo.co.in 894 Sector 13,Urban Estate, Kurukshetra 136118 (HARYANA)

 

(The Asian Independent)

– Professor Dr. M.M. Goel*

The impact of covid crisis is bigger than expected difficult to quantify as measurement is merely a guess work but there are implications for the Indian economy including foreign trade in terms of recession (if not depression) with the proportionate economic consequences with all of the weaknesses, limitations, threats and challenges. The extension in foreign trade policy 2015-20 up to 31 March.2021 reveals that the government is not serious for globalization and is ignoring the relevance of exports, beyond my comprehension as needonomist.

The proposal of US president Donald Trump for Indian inclusion in G7 is a good hope for India to emerge as global leader with opportunities. Namaste stands globalised as positive impact of covid due to health protocol of social (physical) distancing to replace hugging and shaking hands which is a good omen for internalization of Indianization.

To overcome covid challenges, the exporters needs loans of sufficient quantum on zero rate of interest under the monetary policy for saying no to second hand imported technology under the foreign trade policy with no to subsidies under fiscal policy. We have to be very diplomatic strategically for bringing back the good days for the Indian exporters.

To rise above the covid challenges for Indian foreign trade, we have to stop the exploitation of small exporters by the banks for currency conversion charges, the Reserve Bank of India (RBI) should make retail forex trading platform work effectively and allow transfer of funds online. It is to be noted that small exporters survive on as low as 3-4 percent operating margins and the banks extract 2-3 percent of export earnings as currency conversion charges.

To inspire greater confidence among small exporters as entrepreneurs , Khadi and Village Industries Commission (KVIC) needed to be converted into a multinational corporation (MNC) for giving a brand name to the products of MSMEs. We need cooperation and coexistence of MSMEs with large enterprises without competition.

To boost textile industry, the government should ensure fibre neutral regime for import duties without discriminations.

We can check unnecessary imports by preferring weak rupee in comparison to import duties as being practised by China keeping its currency at low rate of exchange for boosting exports.

The recent measures by the Reserve Bank of India (RBI) for reviving exports and imports by increase in the period of realisation and repatriation of export proceeds to India and increasing the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks to 15 months, for disbursements made up to July 31 were necessary but not sufficient. The genuine difficulties of delay or postponement of orders and delay in realisation of bills by the exporters adversely affect their production and realisation cycles.

For facing challenges to raise funds in international debt capital markets, RBI extended a line of credit of Rs 15,000 crore to the Export-Import Bank of India (EXIM Bank) for enabling to avail a dollar swap facility to meet its foreign exchange requirements is fine.

RBI also announced its decision to extend the time period for completion of remittances against normal imports into India (except in cases where amounts are withheld towards guarantee of performance) to 12 months (from six months) from the date of shipment for such imports made on or before July 31.

The disruptions to cross-border trade has resulted in a slowdown in manufacturing/sale of finished products and delay in realisation of sale proceeds, both domestically and adversely affecting the operating cycle with difficult to pay for their imports within the time stipulated under the Foreign Exchange Management Act (FEMA).

It needs to be noted that about 3/4th of the potential productivity growth come from the broader adoption of best practices or catch up improvements and remaining comes from technological, operational or business innovation that goes beyond today’s best practices and pushes the frontier of India’s GDP potential.

To run the vehicle of success in entrepreneurship for exports, we need the wheel of hard work and fuel of self-confidence with wisdom as accelerator and knowledge of the eleven steps in the procedure of exports including orders from the importers, letter of credit, foreign exchange formalities under FEMA and preparing Documentary Bill of Exchange.

There is a strong case for understanding, analysing, interpreting & adopting entrepreneurship of goods & services for exports within WTO framework and foreign trade policy of India.

Entrepreneurs for export goods and services are to be action-oriented and highly motivated individual who is ready to achieve the objective of internationalization of Indianization. Entrepreneurs have to ensure quality, timely delivery with guarantee and warranty of the goods and services and use e-marketing through ‘Cloud Shop’ as perfect for micro and small business with website of its own. To be motivated for self-employment in export business, we have to think of exporting services more than manufacturing with ample opportunities including empowerment of global consumers with competitive advantage, convenient, fewer hassles, quick adjustment to market conditions and low cost marketing online and offline.

Exports can be made importer friendly and socially beneficial only if undertaken in accordance with NAW (Need, Affordability and Worth) approach.

To calm China’s nerves, we needed certainly diplomacy of highest order by replacing theatrics of settling the scores with blame game. The gain, pain and cost of war must be understood, analysed, and interpreted with alertness, awakening and awareness.

To make India production hub, we should be diplomatic to use ‘Glocalization’ (think globally and act locally) and promote ‘Vasudhiava Kutumbakam’ by avoiding emphasis on ‘vocal for local’ under Atamnirbhar Bharat Abhiyan. There is a case for exports of agro products including gur (jaggery) as a natural product of sugarcane, a brown raw mass of sucrose used by most of the Indians and possess the potential to become appetiser and desert for the global citizens around the world.

We have to adopt ‘Needonomics’ ( economics of needs) which is nonviolent, spiritual and ethical in nature and deserve attention of the prime minister and his think tank to prove Atamnirbhar Bharat Abhiyan as an insurance to the Indians.

For achieving self-reliance, we are to become street smart Indians as consumers, producers, distributors and traders. An exporter is street smart with the attributes including simple, moral, action oriented, responsive and transparent (SMART). The exporters have to adopt SIMPLE model of empowerment consisting of six human development activities such as spiritual quotient (SQ) development, intuition development, mental level development, love oneself attitude development and emotional quotient (EQ) development. The synergy of these six aspects is essential requirement for them to emerge and realize the full potential.

We have to accept the call of awakening as alarm with awareness and alertness with wisdom and rationality ( vivek) for the challenges and remain enthusiastic to work without worries. We need to create hope and confidence for replacing gloom and despair of covid crisis among the exporters. For me ‘hope is a good breakfast but it is a bad supper’ (Francis Bacon) and I believe in the capabilities and capacities of Indians more than Bharat called India in English as independent nation declared in August.

* Former Vice Chancellor and known Professor as ‘Needonomist’ (economist for needs) retired from Kurukshetra University, Kurukshetra.