PM Modi Holds Crucial Meet with Export Bodies on Competitiveness Amid Global Headwinds

Prime Minister Narendra Modi recently held a significant meeting with major export promotion councils and bodies to address the growing concerns around India's export competitiveness in the face of global economic challenges. The meeting included representatives from sectors like textiles and apparel, seafood, engineering, leather, and gems and jewellery. These sectors are currently facing headwinds, including substantial US tariffs which are impacting their market access and profitability. Engineering goods, for instance, are subject to sectoral tariffs that began in March, while textiles, leather, and marine products face reciprocal and secondary tariffs of up to 50%.

During the deliberations, industry leaders, such as Kirit Bhansali, chairman of the Gems and Jewellery Export Promotion Council, proposed actionable steps including facilitating easier credit flow, amending the Special Economic Zone (SEZ) Act, and revamping the Customs Act. Exporters have also voiced concerns about high capital and logistics costs, and the impact of numerous quality control orders (QCOs) on their operations and imports of essential inputs. The government is actively working on an Export Mission, announced in the budget, aimed at improving cost competitiveness, assisting in product showcasing, and aiding exporters in navigating trade barriers.

To mitigate current challenges, the government has advised exporters to diversify their markets, suggesting increased focus on Europe, West Asia, and Africa, leveraging existing and upcoming Free Trade Agreements (FTAs). The Finance Ministry and the Reserve Bank of India have also been engaged, with exporters seeking interventions such as loan moratoriums, interest subsidies, and fiscal support. In a separate discussion, the Federation of Indian Export Organisations (Fieo) also highlighted concerns regarding QCOs and tax credit issues related to goods purchased before GST rate adjustments.

Impact: This news is highly significant for Indian businesses involved in exports across various sectors. It signals government focus on boosting international trade, which can lead to increased production, employment, and foreign exchange earnings. Policy interventions discussed could directly improve the operational efficiency and profitability of affected companies, potentially boosting their stock performance. Rating: 8/10

Difficult Terms: Quality Control Orders (QCOs): These are government regulations that specify the quality standards products must meet before they can be manufactured or imported into the country. Special Economic Zone (SEZ) Act: This is an act that provides for the establishment, development, and regulation of Special Economic Zones in India, offering tax incentives and other benefits to encourage exports. Free Trade Agreements (FTAs): These are pacts between two or more nations to reduce or eliminate barriers to international trade, such as tariffs and quotas, making it easier to trade goods and services. Goods and Services Tax (GST): A comprehensive indirect tax levied on the supply of goods and services, applicable across India, replacing multiple indirect taxes.