Govt signals removing Logistics bottleneck than currency manipulation to boost export : Commerce Minister

Posted by Daily Shipping Times on 18-04-2017        Tweet

NEW DELHI - : The appreciating rupee reflects the growing strength of the Indian economy as the Government rolls out second-generation economic reforms such as the goods and services tax (GST), Nirmala Sitharaman, Minister of State (independent charge) for Commerce and Industry said recently.

The Minister’s remarks echo similar sentiments among other members of the Government who have shrugged off the recent appreciation of the rupee, arguing that the exchange rate alone can’t be the sole way of incentivizing exports.

Instead, they say the emphasis should be on addressing other constraints, including the lack of infrastructure and logistics, suggesting a fundamental break by the National Democratic Alliance (NDA) Government with conventional policy thinking in Government wherein a weak rupee is seen as the key incentive for exports.

The rupee, which closed at 64.41 against the dollar on 13th April, has strengthened by 5% against the US currency year to date. This has triggered fears that it would affect India’s export competitiveness. Indian exports rose 27.6% in March.

Sitharaman argued that the rollout of GST, addressing logistic bottlenecks—like the lack of a cold chain system impeding the movement of fresh fruits and vegetables—are the key to improving the competitiveness of Indian industry and consequently of the Country’s exports.

Asked pointedly as to whether it signalled a fundamental rethink by the Government, the Trade Minister said, “Yes, that’s right. That is something that the Government has been looking into. That is one of the reasons why sometimes it may appear as though we don’t put so much emphasis on exchange rate anxieties. We may have to look at it in larger macroeconomic perspective but the attention of policy planners, the State Governments should go towards (improving) logistics, (trade) facilitation.”