Such vigilance has become necessary especially given the recent disclosure of a case wherein unscrupulous players acting in the name of trade misled the central bank and the government to siphon capital out of the country. At the same time, the government must also realize that re-exports will serve only up to a point to right the huge trade and current account imbalances. The real remedy here is export promotion and correcting wrong tariff policy to check uncalled-for imports. Hence, the government must instantly adjust duties on commodities like gold to bridge the duty differences with India—a factor that has been pushing up their imports for smuggling purposes. This adjustment will correct the existing gaps partially. As for a full correction that will happen only when the government takes specific steps to promote exports.
Exports are directly related to the country’s capacity to produce goods and services. Hence, steps to promote exports must come first at the production (industrial) level and then at the trading stage. To improve the situation at the industrial level, the government must address the problems of insecurity, power shortage and labor unrest—the three key constraints. It must instantly forge a broader political understanding to address security and labor issues, especially as these are politically sensitive matters. Supporting industry to produce power, providing income tax exemptions temporarily and duty concessions on import of machinery, raw materials and the like for export-oriented industries and making sure that strikes and bandas do not impede industrial operations are other much-needed steps. In this connection, the Ministry of Industry and the Ministry of Commerce and Supplies have already submitted their respective proposals to the cabinet. All these steps are essential for keeping industry humming and exports flowing, and maintaining economic stability. Just as important, they must come on time.
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