Business Economics & Services Team
Are We happy to Court CAD All the Time?
Do not go overboard to decipher what I meant by CAD. I have used the terminology to mean the obvious: Current Account Deficit. Many dub this as the single most disease afflicted on our economy: our imports exceed the exports and sometimes by leaps and bounds to cause consternation among the powers that may be. But at teh end of the day, we care two hoots as to how we get into that trap. Once discerned, I believe that it is the age old syndrome that the left hand does not know what the right hand is doing.
I take only three goods to prove the point. One, telecom equipment and to be precise the mobile telephones, two-gold, for which the Indians have an insatiable appetite and the third and lesser known segment -equipment related to sexual wellness. Let me start of with the third and more exotic products-sexual wellness equipment. Let me narrate an incident that had happened years back. I was wandering through the crowded road in Calcutta (Kolkata). The name of the street I do not recall. It was just back on the erstwhile Great Eastern Hotel near Shakespeare Sarani, a crowded market there. One person sitting in a shop beckoned me to visit his shop, which was a very small and cramped up one. I went inside the shop and not many people were there except myself and the shopkeeper. He opened a drawer and show me a variety of sex gadgets, which I must say, was gender neutral. he told me that all those were imported and since it was not licensed import, they could not display to the public.
I am told that this business in India is now close to US$ 250-300 million that too a conservative estimate. Most of them are smuggled in to the country. Now most of the orders are transacted through the net and th delivery is safe either at home or at a place of your choice.
Secondly, again an electronic device-our expanding varieties of smart phones. Xiaomi smart phones are the latest craze and they are being sold through the net. China is raking huge resources through the import of this magical device. products are sold out within minutes of its launch, even in India where the Chinese imported goods are discounted in terms of its quality and durability. Despite the whopping trade deficit with China, which ir presently pegged at US$ 36 billion-Imports from China US$ 50 Billion and exports to China US$ 15 billion), the government seems to be unmindful about the trend, which has the potential to further jeopardize our external resources situation.
The third is the gold, which Indians horde or wear as nobody's business. Gold imports is substantial. The gold lobby may argue that most of the gold is for re-exports as jewellery or similar things. But the domestic consumption is also very high. Definitely, our households can do without much of gold even during marriages. The new generation shuns gold and getting decked up in gold ornaments during special days like marriage. But the power of advertisement and the cajoling by the jewelers are so strong that they get tempted to go for gold with little push from their conservative parents and relatives. Could we launch a movement to use gold minimally or totally eliminate it like Swatch Bharat. Of course, one has to overcome the lobbying tactics of gold and bullion dealers in Surat and other places.
Now coming back to mobile phone and sexual wellness equipment, I do not want to wear the hat of moral policeman. Those who want to use them , let them do that freely. The more you suppress it, more the demand for smuggling and clandestine operations that can lead to revenue loss. But my point is encourage manufacture of these items domestically. When I say encourage, I mean that under the present law it is advantageous for a telecom giant to import equipment rather than manufacturing them domestically. It is on account of our skewed indirect tax laws, wherein the raw materials and intermediates that go into the manufacture of a final goods attract more customs duty than the finished prducts.
Are We happy to Court CAD All the Time?
Do not go overboard to decipher what I meant by CAD. I have used the terminology to mean the obvious: Current Account Deficit. Many dub this as the single most disease afflicted on our economy: our imports exceed the exports and sometimes by leaps and bounds to cause consternation among the powers that may be. But at teh end of the day, we care two hoots as to how we get into that trap. Once discerned, I believe that it is the age old syndrome that the left hand does not know what the right hand is doing.
I take only three goods to prove the point. One, telecom equipment and to be precise the mobile telephones, two-gold, for which the Indians have an insatiable appetite and the third and lesser known segment -equipment related to sexual wellness. Let me start of with the third and more exotic products-sexual wellness equipment. Let me narrate an incident that had happened years back. I was wandering through the crowded road in Calcutta (Kolkata). The name of the street I do not recall. It was just back on the erstwhile Great Eastern Hotel near Shakespeare Sarani, a crowded market there. One person sitting in a shop beckoned me to visit his shop, which was a very small and cramped up one. I went inside the shop and not many people were there except myself and the shopkeeper. He opened a drawer and show me a variety of sex gadgets, which I must say, was gender neutral. he told me that all those were imported and since it was not licensed import, they could not display to the public.
I am told that this business in India is now close to US$ 250-300 million that too a conservative estimate. Most of them are smuggled in to the country. Now most of the orders are transacted through the net and th delivery is safe either at home or at a place of your choice.
Secondly, again an electronic device-our expanding varieties of smart phones. Xiaomi smart phones are the latest craze and they are being sold through the net. China is raking huge resources through the import of this magical device. products are sold out within minutes of its launch, even in India where the Chinese imported goods are discounted in terms of its quality and durability. Despite the whopping trade deficit with China, which ir presently pegged at US$ 36 billion-Imports from China US$ 50 Billion and exports to China US$ 15 billion), the government seems to be unmindful about the trend, which has the potential to further jeopardize our external resources situation.
The third is the gold, which Indians horde or wear as nobody's business. Gold imports is substantial. The gold lobby may argue that most of the gold is for re-exports as jewellery or similar things. But the domestic consumption is also very high. Definitely, our households can do without much of gold even during marriages. The new generation shuns gold and getting decked up in gold ornaments during special days like marriage. But the power of advertisement and the cajoling by the jewelers are so strong that they get tempted to go for gold with little push from their conservative parents and relatives. Could we launch a movement to use gold minimally or totally eliminate it like Swatch Bharat. Of course, one has to overcome the lobbying tactics of gold and bullion dealers in Surat and other places.
Now coming back to mobile phone and sexual wellness equipment, I do not want to wear the hat of moral policeman. Those who want to use them , let them do that freely. The more you suppress it, more the demand for smuggling and clandestine operations that can lead to revenue loss. But my point is encourage manufacture of these items domestically. When I say encourage, I mean that under the present law it is advantageous for a telecom giant to import equipment rather than manufacturing them domestically. It is on account of our skewed indirect tax laws, wherein the raw materials and intermediates that go into the manufacture of a final goods attract more customs duty than the finished prducts.
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