| Fear is worse than reality, and it often turns true in the world of economy as well. Over the past few years, the world economy has been making valiant attempts at recovery, time and again raising concern about future prospects of our exporters, but fortunately, most of the times the sector has come out a winner, undermining grim business sentiments.
This time again pessimism is in the air, so much so that recently our Commerce Secretary has expressed concern, according to a media report, that the nation's exports growth rate may reduce to half in FY13, due to demand slowdown in key markets such as Europe and the US. I think it's unwise to spread such pessimism at this point of time. Having said that I don't want to give a rosy picture for our exporters, but my point is that they have already displayed great resilience to a more difficult situation in the recent past years.
Over and above that pessimism doesn't help at all, and it's far better for policy makers to focus on something constructive, something we can still do. Ahead of the foreign trade policy (FTP) review for the fiscal 2012-13, it should be the spirit of the Centre to encourage our exporters and promote interest of the sector.
First and foremost, I think the export diversification strategy should be pushed further. Over the recent years, the Focus Market Scheme (FMS) and the Focus Product Scheme (FPS) have yielded good results, and it's important now to widen the scope of these schemes to cover new product categories as well as markets. As far as India's international trade relation is concerned, I think, among other things, the government should look at new and enhanced partnership with African and Latin American nations. In addition, India needs to push for the much-awaited services and investment agreement with the Association of Southeast Asian Nations (ASEAN) that has reached an impasse. The pact has potential to give our service exports a new dimension.
High interest rate has remained a huge weight on our exporters, with export credit interest rate in India remaining at around 12% while in most countries it falls in the range of 2% to 6%. We must get rid of this disadvantage. What should at least be done here is to reintroduce the interest subvention scheme on Rupee credit, and expand its scope to cover new sectors. In addition, availing adequate credit in foreign currency for exporters is also the need of the time.
At present, the economy is facing some major challenges also at the domestic front, most notable among them are slowing industrial growth, widening fiscal deficit, rising external debt, falling capital flows, and more recently the depreciating Rupee. In the background of this, combined with the global trade outlook as of now, I think it will be interesting to see what measures the government takes in the forthcoming FTP review in June. Ahead of that our exporters would certainly like to remind decision makers of something forgotten in the recent Budget: the challenges being faced by our export community.
This is not the time to cower in the bunker, and definitely not to spread pessimism.