Cut duties, hike FDI in education, insurance

The finance ministry has advised lowering of peak duties for goods and liberalising of foreign direct investment (FDI) in services like insurance, banking and higher education to facilitate further growth. While nearly all economic indicators resulted in a world-wide grimace by trade experts in 2008-2009, India’s trade and growth is far closer to a full recovery than other economies according reports by the World Bank and The International Monetary Fund (IMF) in the 2009-2010 Economic Survey.

In order to go beyond short-term, stimulus-based recovery, the survey has advised the government to lower peak duties from 10 per cent to 7.5 per cent; weed out “unnecessary” customs duty exemptions and streamline export promotion schemes including reduction of tariffs on all capital goods to 3 per cent, while withdrawing the export promotion capital goods scheme; reduce excise duties to make exports more competitive; issue special improvement on export infrastructure and place an emphasis on trade strategy to target exports of dynamic products to developed markets.

For services, the survey describes open FDI policies for health insurance, rural banking and higher education as “more conducive…as FDI inflows and trade in services have a close relationship.” Real GDP growth rates are projected at 2.7 per cent globally while the World Bank’s projection for India logs in at 7.5 per cent and 7.7 per cent by the IMF in the new fiscal. “The outlook for India’s trade sector in 2010 has brightened with prospects and recovery in world output and trade volumes,” reads the survey tabled in Parliament on Thursday.