SPEECH OF MR.RAKESH SHAH, CHAIRMAN
ENGINEERING EXPORT PROMOTION COUNCIL OF INDIA
SOUTHERN REGION AWARD PRESENTATION FUNCTION
ON MARCH 1, 2006 AT BANGALORE
It is my privilege to greet His Excellency Shri T.N.Chaturvedi, the Hon’ble Governor of Karnataka who has spared his valuable time to grace this occasion.
Ladies and gentlemen, Shri Chaturvedi has a formidable record of public service. In his first innings, he was an outstanding public servant known for his erudition, integrity and enviable administrative skills. Responsibilities of state have rested lightly on his shoulders. His published books reveal enormous insight into the public psyche.
In his second innings he took fresh guard in politics and again made an immediate impact. Twice elected to the Rajya Sabha, he has served on many parliamentary committees with distinction. At the end of his tenure in the Rajya Sabha, he assumed the high office of the Governor of Karnataka. Sir, we are honored to have you today.
My thanks to Shri P.K.Dash for attending this Award Presentation ceremony in spite of his busy schedule. Friends, though Mr Dash has recently assumed this new office, we have known Shri Dash since his very successful stint as the Chairman & Managing Director of Export Credit Guarantee Corporation. The exporters have always found a friend in you, Sir, and we are sure of your continued support.
Today we have gathered here to honour those hardy bands of exporters who have, with their brilliant performance in 2003-04, won the prestigious EEPC Regional Award for Excellence. Undoubtedly, you have put the growth of engineering exports from our country on the fast track. Your sterling performance brings to mind that famous saying attributed to the legendary American football coach Vince Lombardi:
“Winners never quit. Quitters never win.”
Your Council is proud to recognize your contribution to the national economy.
Sir, the Southern Region has made its mark as the hub of economic development. In the last decade, exports from South have grown keeping pace with exports from the country. Many international majors are now beating a path to India and the Southern Region in particular, to set up manufacturing bases for their global operations.
I however feel that the best is yet to come. I have always been amazed by the latent potential of the Southern Region, be it industry as a whole, or be it exports in particular. The automotive sector which is driving our export growth today, is being driven forward by none other than this region. Experts say that we see only the tip of the iceberg, and the sector will only grow in the coming years. I have every reason to believe that the Southern Region will make its foothold stronger in international trade holding the arms of the automobile sector.
Sir, let me take this opportunity to share a vision of the Council with you. The big names in the Indian engineering industry and their excellent performances suggest that India can be exploited as a major outsourcing hub. In fact, in the larger global arena, awareness of India’s engineering capabilities is on the rise.
India is already an established centre for the Business Process Outsourcing (BPO). Our country now is creating a niche for itself in KPO i.e. Knowledge Process Outsourcing. So why can’t we have a path breaking concept of EPO? I mean let us develop India as a centre for Engineering Process Outsourcing (EPO) by making full use of Indian intellectual capabilities. EPO work will involve delivering services relating to Project Management, Manufacturing Process improvement, process simulation study, product design support, product performance testing through virtual simulation, Research & Development etc.
Sir, I strongly feel that proper development of EPO in the country will have an enormously positive and long term impact on the export of engineering goods. The Council is preparing a roadmap for success in EPO. We have already submitted a proposal to the Ministry of Commerce & Industry, and we hope to take this forward.
Friends, the Government has set before the exporters a target of USD 100 billion for the ongoing fiscal. The broader goal, as many of you are aware, is to cross 1.50% of global exports by 2008-09. For the exporters of engineering goods, the Council has set USD 18.3 billion. Latest data available from DGCI&S suggest that engineering exports have reached almost USD 11 billion at the end of November last year. This means a growth of over 20% over the same period of 2004. However, one should not be complacent. Exports have fallen in November 2005 over November 2004 and October 2005. This is an alarming situation which we all should take note of.
Sir, states have got a major role to play in providing quantum jump in exports, the role is that of a facilitator. The state governments can promote exports by providing an environment conducive for international trade. It makes me happy to see that all states are becoming increasingly aware of this, including the state of Karnataka. However, there are issues like infrastructure, labour, power and state level taxes including VAT, to name a few, which need to be seriously addressed by the state governments to achieve the set targets.
Friends, now a few words about the Council. The Council now understands your needs better. We are at an advanced stage of ERP implementation in the Council’s offices, which would help us in providing you better services. The Council’s new web site is now updated regularly to keep you abreast of the changes taking place around you. I am happy to say that the measures initiated by the Council are yielding dividends. I will mention just a few of such measures.
There’s an ancient saying that if the Prophet wouldn’t come to the mountain, the mountain would come to the Prophet. Through our Indian Engineering Exhibitions (INDEEs) we have done just that. Two INDEEs have been planned in Russia and China. We have planned an India Engineering Meet in New Delhi, where 200 foreign business delegates from Latin America, CIS countries, Africa, Southeast Asia, Australia, New Zealand and Europe will be invited. The Council is organizing such an event for the first time. This initiative is especially for the benefit of smaller exporters who are unable to take part in foreign trade exhibitions.
To cut the handicap of geography we evolved the strategy of Indian Engineering Centers at strategic points. The first one of its kind has already been set up in Chicago. You can take help of this display cum warehouse cum distribution centre to market your goods in the entire American continent. We have also got the logistics lined up for you.
Friends, our cumulative efforts have invited a rare honour – your council has been chosen to coordinate the Indian participation at Hannover Messe, world’s most prestigious engineering fair, where India is the partner country. This exhibition is taking place between 24th and 28th April this year. The event is likely to be inaugurated by Hon’ble Prime Minister of India and Her Excellency, Chancellor of Germany. More than 200 Indian companies representing a wide cross-section of industry will participate in a huge space of 1 lakh sq feet. This would be a great occasion to take India to the world.
While this happy occasion is not the place for carping, I cannot help touching issues which we consider are preventing industry from playing to its potential. The Union Budget 2006-07 announced yesterday, I am sorry to say, does not have anything for the exporting community. Although the Hon’ble Finance Minister expressed his optimism to reach 1.5% of world exports by 2008-09, no definite roadmap was evident from the measures he announced.
Service tax was levied on Payment of Commission to foreign agents, participation in Trade Fairs, Warehousing etc. This is baffling since these services are provided outside India to the Indian exporter. The exporters wanted exemption of Service Tax on all export-related services. The tax rate has been hiked.
Fringe Benefit Tax was levied on travel, Trade Fair Participation, Free trade samples and even invitations to overseas buyers to visit India. Sir, it is only ironical that while the Government is actively encouraging exporters to participate in trade fairs by giving grants under MDA and MAI, such activities are being taxed!
We wanted removal of the Fringe Benefit Tax. It was only reduced in certain cases.
The issue of 80HHC for income arising out of sale of DEPB have not been addressed at all. The new amendment to the Act gives full relief to exporters with turnover less than 10 crores. For larger exporters the situation remains unresolved.
The Goods and Services Tax (GST) is now expected to be in place by 2010, which will greatly delay uniformity of taxes in our country.
The DEPB Scheme, the most popular export promotion scheme has been extended up to 31st March 2006. Sir, short term extensions like this are actually hurting exports. The Scheme should be continued for at least two more years. By then import duties are expected to come down to the ASEAN level.
Refund of VAT paid by exporters on inputs has emerged as a major issue and still remains unresolved in most of the states
All these issues need immediate attention to achieve the set goal.
Friends, before winding up let me share with you what Martina Navratilova, the famous tennis player, realized after winning her first Wimbledon title in 1978:
“With the trophy in hand, I thought that the whole world was going to stop and admire me for what I’d done. But the world couldn’t have cared less. I was the headline story one day and the next day there were new headlines. The bottom line was that I had to keep playing and keep winning”.
My dear friends, I congratulate you once again on winning EEPC awards for excellence in exports. Keep exporting & keep winning.
Thank you!
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