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  • ‘Focus should be on value addition in trade’

    Dec 19th, 2019


    The domestic bulk drugs industry, which has been a stronghold of Telangana, took a beating in the recent times with China getting aggressive by supplying the required raw materials at lower prices, according to Bipin Menon, Addl DGFT, Government of India. The industry, which did not pay enough attention to opportunities in the domestic market, is now once again building the bulk drugs segment with innovation and value addition, he said.

    The Indian enterprises should now look to tap in to the opportunities that will evolve due to the China-US trade war. There should be a greater focus on value addition and taking up appropriate branding exercises apart from taking a hedge cover to deal with currency fluctuations, he said in his key note address at a conference, Rise Above, organised by CII Telangana.

    Menon said that more than 50-60 per cent of the imports to India under Free Trade Agreements (FTAs) are raw materials needed by industries. There is asymmetry in trade agreements and that industry members should be actively engaged in trade agreements to reap benefits of incentives and leverage the opportunities.

    Citing rice exports as an instance, he said the domestic logistics costs for Punjab farmers to take their rice to ports for export are high. This erodes the profit margin from exports, he said. In another case, India lost out its strong position in cashew trade to Vietnam, which mechanised the industry for faster turnaround. However, both the countries still are majorly into raw cashew and shell cashew. But it is the salted and roasted cashew, which the US is doing in a big way, where the money is, the explained.

    G Seetharam Reddy, Addl DGFT and Development Commissioner, AP Special Economic Zone (Visakapatnam) said the DGFT is currently reworking on making its schemes compliant with WTO guidelines. He said a new foreign trade policy will be launched next year and asked the industry members to make suggestions on the pain-points that need to be addressed.

    Telangana Industrial Health Clinic Limited Advisor Yerram Raju said that the economy is currently facing a downturn but industry must turn it into an opportunity. “How we address the transition to free trade agreements is important for SMEs,” he said. Cleaning up the financial ecosystem, which is fraught with inefficiencies, frauds and balancesheet fudging, should be the priority for the economy, he said stressing on the need for alternate institutional mechanisms. Sick units should look to find a strategic partner and go for cobranding to improve their market holding. There is a need for data on the number of units getting closed in the SME sector for policy action.