June 2016 saw a 1.27% rise in India’s export, which touched the mark of $22.6 billion. This growth was seen in the Indian export after a long dull period of 19 months. With this achievement, Indian export has taken a step forward to realizing its $900 billion vision by the end of 2020.
There have always been many problems related to Indian export, with it giving more importance to inbound-oriented import over promotion of export trade. Apart from that, many constraints like financial constraints, credit constraints or export constraints were also the reason behind the 1.5 years-long downward spiral of Indian export sector. There are several other export problems that have been holding back this growth; the 6 biggest of them have been discussed below.
High Government Control
One of the biggest problems faced by the Indian export sector is the high restrictions that the government has put on the trade. Not just the Indian government, but also the government of countries with which you are trying to make trade. A number of licenses and permissions need to be taken by both the countries that create confusion in the mind of the traders who refrain from making export due to this.
Inconsistent Trade Policies
The Indian trade policies are not on the same pace with the international trade policies or requirements. The international traders see India as a very complex market that has many barriers to trade. There are many reasons behind this complexity like paying high taxes, construction permits, cross-border trading, enforced contracts etc.
An increased import tariff dissuades many exporters to make trade in India. Increased import tariff leads to an appreciation in the real exchange rate of the country. Additionally, high import tariff encourages traders to lean towards illegal means of import/export. This leads to smuggling which today has become a full-fledged industry. Traders think Indian market to be corrupt and hesitate from making any trade.
Lack Of Proper Infrastructure
Another factor that leads to low export in India is the lack of proper infrastructure facilities. There is inadequate space, both at the seaports and airports for keeping and storing various goods. In addition to that, many goods require special facilities that India is, unfortunately, still trying hard to provide. India’s export trade would see considerable improvement if the infrastructure facilities are improved here.
Low Export Publicity Or Promotion
India has a pretty good inclination towards adopting means to substituting import and regards export promotion or publicity at a lower scale. Promoting export trade in India is one of the chief issues that Indian government should work on in order to have a considerable growth in terms of export trade. If people don’t get to know about the goods and services that the country has, then they would never be attracted to making trade relations. In fact, India should also implement many tax reforms and concessions to promote export business and set a step forward in Indian export growth.
Lengthy And Complex Process
It is an undeniable truth that trading in the international sphere calls for more time and energy. However, it is known that the export procedure of India is not only lengthier but complex too when compared to other countries. Various documents are required for export trade which makes the process more time as well as money consuming.
These were the major problems that are creating a hindrance in the India’s export business. In addition to that, there are many other factors like language difference, lack of information, jealousy among companies and corruption at borders that can be stopping people making an export trade with India.
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