IT & ITES, Consulting Services, Accounting and Financial Services will not be affected due to Omicron: Sunil Talati

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Sunil Talati, chairman of India’s supreme trade body under the Ministry of Commerce, has the daunting task of increasing India’s exports to $ 1 trillion by 2030, from a few billion now, but he is hopeful with the measures taken by the ministry. Talati believes services will be in high demand in the US, UK and Australia once the new Covid variant gets a little relief. Talati talks about the future course in an interview with DH‘s Annapurna singh

India’s merchandise exports are likely to meet the target for the very first time. It is expected to reach $ 400 billion for fiscal year 22. What about the services side?

Services exports hit a record high in the first seven months of fiscal year 2021-22 for which data was released by RBI. In the first seven months of 2021 alone, services exports reached $ 133 billion with a growth rate of nearly 20%.

In October 2021, services exports amounted to $ 19.86 billion, showing a positive growth of 19.78% compared to October 2020 ($ 16.59 billion).

If service exports grow at the same rate until March 2022, we could easily meet the target of $ 240 billion set for fiscal year 2021-2022.

The service sector, a mainstay of the Indian economy, had started to recover after the second wave of Covid 19, but Omicron struck almost at the same time. Do you see him as a big threat for next year?

Some of the important service sectors such as tourism, medical travel, education services, aviation services, which are directly linked to the cross-border movement of people, have not been able to recover from Covid-19 . There is no doubt that Omicron has broken travelers’ trust again and it would negatively impact sectors already in mourning. Sectors that have more trade under mode 1 (cross-border supply) such as IT and ITES, consulting services, accounting and financial services, etc. would not be much affected.

Which export sectors are still languishing and unable to perform so far?

Service sectors that are directly related to international travel such as travel and tourism, medical travel, education, aviation, etc. are still struggling to recover as foreign tourists, patients, students and trade commissioners etc. important routes and strict protocols.

Do you see the tourism sector, which contributes massively to the service segment, gaining momentum here?

With Omicron, the new variant of Covid-19 knocking on our doors, the revival of the tourism sector will be further delayed. The industry had started doing business after mass vaccinations and a slight easing of travel restrictions on some major routes and the industry expected an increase in the number of inbound travelers in the coming months, but with l explosion of new variants, this would be further delayed. With the suspension of scheduled international flights until January 31, 2022, we cannot expect any recovery in inbound tourism. The five lakh e-VISA that the government has proposed to inject into the revival of inbound tourism will also have no impact until the resumption of regular flights and the reduction in the cost of the ban on plane tickets. . Industry experts believe that with the upsurge in Covid cases and partial lockdowns and restrictions, the travel and tourism industry cannot expect to fully relive the pre-Covid period and gain momentum. magnitude in the near future.

Does the government’s target of $ 1 trillion in services exports by 2030 seem achievable now?

As the UPCE puts forward its strategies to achieve the goal in synergy with the EP (Services) division of the Ministry of Trade and Industry, the service sectors will need export incentive programs, capacity building programs for sustained long-term growth and supportive measures such as SEIS and short-term relief packages.

The UPCE is working on the formulation and proposal of alternative incentive programs.

What incentives does the service industry need from the government in the next budget to regain its strength, given that services have been hit the hardest during the pandemic?

SEIS definitely for 2020-21 and 2021-22 for business resumption. While the government has said many times that it must stop SEIS, claiming that it has only incentivized large companies. The UPCE suggested a cap so that funds can be distributed among all sectors and help micro, small and medium enterprises (MSMEs) in particular.

Their competitiveness in terms of pricing and access to the world market is totally dependent on SEIS programs.

It should be continued for two years until new projects are developed. For many sectors, the discontinuity will almost be like a supply of oxygen to sectors that are at the end of their rope for renewal.

What are your expectations regarding the next Foreign Trade Policy?

UPCE proposed an alternative regime to SEIS called DRESS (Duty Remission on Export of Services Scheme).

The need of the hour is a level playing field with manufacturing with incentives and support to overcome the pandemic. It is high time that a shift in perception of service was just as important as manufacturing gained ground. Exports of services lead directly to the employment of around 2.6 crore of people in India.

How about a PLI plan for the service sector? Did you demand such a program from the government?

The type of PLI scheme for the service sector can certainly help the sector to grow. Capital-intensive sectors such as education, aviation, health, research and development will gain enormously. Emerging sectors like AVGC, including film production, can be encouraged by this type of program. Similar models for other sectors such as professional services, tourism and hospitality can be developed. We would be interacting with industry on alternative models, including something similar to the PLI.

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