Incentives for Exports Justified to Keep Future Safe: Anand Sharma.

Exporters need support despite a good show to retain markets and ensure growth in the gloomy global scenario, says Commerce and Industry Minister   Anand Sharma   . In an interview with   ET   , the minister talks about the economy, the policy on FDI in retail and even the ongoing strike by Maruti staff. Excerpts:

Given strong exports, how critical are the sops announced today ?

There has been a dip in export growth if you look at the July to September numbers. So, we are concerned. These incentives are expected to push up trade further.

Amid the severe fiscal strain, are these incentives justified ?

We need to look at the macro picture. Weak industrial production and exports will have an adverse impact on the economy. Capital formation is at a meagre 0.4% (of GDP), IIP numbers are a matter of concern and manufacturing and mining sectors have seen sharp falls. It is important for us to ensure that the economic activity stays robust, else it will affect us socially. It will lead to loss of jobs as can be seen globally and sustainable household incomes will decline. On the other hand, we need to take care of other aspects.

India is dependent on imports as we are not that richly endowed in minerals, oil and gas, which are necessary for growth. These are turbulent times and commodity prices are volatile. So, our import bill shoots up which puts strain on current account balance and trade account deficit. If exports too remain strong then the deficit is kept within manageable limits like last year. If import bills outstrip exports then our economy gets hurt badly.

How do you view rupee depreciation?

I don't think rupee fall is helping because long-term orders have not been booked. Importers also follow the currency so some exporters may benefit but not all.

But what will happen to our imports in dollar terms?

It should be calculated. It is not a situation that moves in one direction. It cuts both ways.

What is holding back FDI in multi-brand retail?

It is not a question of holding back something. We are a democracy and also in a coalition government. A political consensus becomes an imperative on policies. We know that reforms must continue as the PM has said and I reaffirm that many things are in the pipeline. We hope soon some of these initiatives will roll out and will help in reassuring the industry.

Source : economictimes.indiatimes.com