The Department of Commerce, under the Government of India, has rolled out the Trade Infrastructure for Export Scheme (TIES) to facilitate export growth by setting up adequate infrastructure. The government aims to increase exports, which brings us to the next point.
TIES Scheme: A Major Catalyst for Export Growth
The TIES scheme grants funding to government-owned agencies or their joint ventures for infrastructure projects with a high correlation to export activities. The infrastructure projects covered under the TIES scheme are Border Haats, Land customs stations, quality testing and certification labs, cold chains, trade promotion centres, export warehousing and packaging, Special Economic Zones, and ports/airports cargo terminuses.
PM Gati Shakti National Master Plan (NMP): A Digital Approach to Infrastructure Project Management
The PM Gati Shakti NMP is an innovative digital platform designed to integrate geospatial data related to various infrastructural assets across India. This system aids in data-driven decision-making, thereby enabling synchronised implementation of infrastructure projects. The primary goal of the NMP is to reduce logistics costs and bolster the country’s economic activity.
Duty Drawback Scheme: An Incentive for Domestic and Imported Inputs in Export Goods
The Duty Drawback Scheme helps exporters by rebating customs duties on imported inputs and central excise duties on locally sourced inputs used in manufacturing export goods. The scheme runs on the provisions of the Customs Act, 1962, read with the Customs and Central Excise Duties Drawback Rules, 2017.
Roadblocks to Indian Export Growth
Several challenges plague India’s export growth. One of these is the rise in protectionism and deglobalisation measures adopted by countries triggered by the disrupted global political order (for example, the Russia-Ukraine War) and weaponisation of the supply chain.
Addressing India’s Infrastructure Deficit
India’s manufacturing sector is grappling with a shortage of infrastructure facilities, including manufacturing hubs and internet connectivity. In contrast to China’s 20% GDP spending on infrastructure building, India allocates only 4.3% of its GDP for the same.
Low R&D Spending: An Innovation Drought?
India’s meagre R&D spend (0.7% of GDP) is inhibiting innovation in the manufacturing sector, thereby stunting its growth. As a result, the country struggles to compete globally where most countries are embracing rapid technological advancements.
Mapping The Way Forward
India needs to strengthen its infrastructure network to create a conducive environment for exporters. This includes warehouses, ports, certification and testing labs, etc. Further, India should explore joint development programmes with other countries in areas of space, semiconductor, and solar energy.
The Key Role of MSMEs in Export Growth
MSMEs, which contribute one-third of India’s GDP and account for nearly half of its exports, play a pivotal role in boosting export growth. Therefore, it’s crucial to link Special Economic Zones with the MSME sector and incentivise small businesses.
Reviewing Previous Year Questions (PYQs) in UPSC Civil Services Examination
To understand the significance of the above points, let’s look at previous UPSC questions related to these topics. A question from 2018 reads, “Increase in absolute and per capita real GNP do not connote a higher level of economic development, if…(c) Poverty and unemployment increase.” Another question from 2010 about the SEZ Act, 2005, asks about the objectives of the Act, with the correct answer being “(a) 1 and 2 only.” One more relevant question from 2011 asks to define a “closed economy,” with the right answer being “(d) neither exports or imports take place.”