NEW DELHI: The government and financial sector regulators flagged shrinking exports as a major area of concern, amid warnings that an aggressive use of trade defence tools might adversely impact the manufacturing sector.
A proposal to put in place a mechanism for expedited recovery of funds mopped up through collective investment schemes (CIS) was also discussed at a meeting of the Financial Sector Development Council (FSDC) chaired by finance minister Arun Jaitley on Thursday.
CIS have emerged as a major area of concern, given that deposits are being accepted by unregistered or unregulated schemes and re covering money from them is often a tricky issue.
While the report by a task force headed by Ajay Tyagi, additional secretary in the finance ministry , is yet to be made public, some officials suggested that the move would not be easy to implement, considering the states would have to enact separate laws, while the Centre could only provide a model legislation. “It will be a time-consu ming process and in the interim we need to recover the money and end disputes,” said a source.
At the FSDC meeting, some options to bolster exports were also discussed as part of an overall review of the economy , sources said. Although there were suggestions of using anti-dumping duty to check cheap imports, especially from China, which has surplus capacity for several products due to low domestic demand, some officials cautioned against a blanket use.
“There should be a distinction between how the duties are levied. It needs to be done carefully ,” said a source. For instance, it was pointed out that higher levies, including customs duty , on raw material or intermediates, could push up the price of finished goods and a specific reference was made to steel, where several steps have been taken, and automobiles.
Exports, which have declined for 10 months in a row, are a major policy worry , although the government has so far done little beyond offering benefits to a few more industry segments. A proposal to provide interest subsidy to exporters has been pending and the commerce ministry has virtually no action plan to bolster trade in medium term.