Business Economics & Services Team (BEST)
Tailors & Cobblers Syndrome in Exports
Not long ago, one of the noted industrialists had famously commented against a clarion call given by the government to industry to augment the exports from the country. His intemperate response was that industrialists were not tailors and cobblers to help the government to up the exports from the country. Admittedly, the main manufacturing products exported from the country were garments and shoe uppers and the industrialist was ostensibly got agitated at the government's indiscreet reference to bracket industrialists with the category of low ended professions like exporting business. Even though that silly comment had come out from one of the most flamboyant industrialist of the time, who was well traveled, educated and one among the most anglicized men of that tribe, he could get away with that comment, apart from some angry commendations from media, government and the exporting community, who were terribly upset by his comments bordering apartheid. It was because it was a control raj and was in tandem with the widespread belief that export was untouchable to an established industrialist or a business house
At least, three decades had passed since that incident and the industrialist had long left his terrestrial existence. Has his dictum still hold good? Admittedly, it is a debatable point. One may easily dismiss the tailors and cobblers syndrome in exports these days. But a deeper insight may provide enough inputs to a hypothesis that it is still continuing in a surrogate form or the other. Before we discuss this issue, let us differentiate between merchandize exports and services exports. When the famous lamentations were uttered, there was mostly one type of exports and that was merchandize exports. Services exports were Greek and Roman to most of the people except a few categories like tourism and manpower exports, the receivables under these categories were termed as invisibles and were not treated at par with mercantile exports.
Now, a total transformation has taken place with the software exports, which are counted under services exports. Many new companies have come up and they are known more prominently than the manufacturing industries in India. The brand values of the top 10 software export companies in India is perhaps higher than all the manufacturing companies put together.
Therefore, let us take these two types of exports separately and examine the efforts of the manufacturing companies towards augmenting India's exports. How many manufacturing companies take pride in achieving higher growth in the exports sector. We get to know about their profit margin, turnover growth, mergers and acquisitions and of late their corporate social responsibility. That does not mean that corporations are not exporting to other destinations. They are doing that and not as a part of their larger corporate game plan like the foreign companies are doing or what the Chinese are aggressively doing. China manufacturers for the world. EU does it for the world and the US, of late, after a bad current account crisis, has started focusing on exports. But where is India? How many Indian companies have a separate strategy for exports or a long term plan to capture a sizable market abroad
Exports are still being considered as an exclusive realm of .service providers, small and medium enterprises, and of course tourism and manpower exports that brings in hordes remittances. Nay, still the old abusive idiom of tailors and cobblers is seemingly fit into the scheme of things in India.
The government has unsuccessfully tried to shake off the stigma by coming out with newer plans and strategies. But they have failed miserably. We have created SEZs and similar zones in order to promote exports from the country giving the units several concessions. The recent findings of the Comptroller and Auditor General of India about the efficacy of such zones are depressing. According to its findings, the government had lost several thousand crores of rupees by way of tax exemptions and there are instances when the units have come up in such enclaves only to corner the tax benefits and not to partake in the export drive from the country.
The latest thinking is that the entire country should be made an SEZ to pep up the manufacturing and exports from the country. In theory it is good and can give a leg up to both manufacturing and exports. But the trillion dollar question is how many large corporations will come out with an undertaking that they will use the facility and bring a qualitative change in India's export profile.
Tailors & Cobblers Syndrome in Exports
Not long ago, one of the noted industrialists had famously commented against a clarion call given by the government to industry to augment the exports from the country. His intemperate response was that industrialists were not tailors and cobblers to help the government to up the exports from the country. Admittedly, the main manufacturing products exported from the country were garments and shoe uppers and the industrialist was ostensibly got agitated at the government's indiscreet reference to bracket industrialists with the category of low ended professions like exporting business. Even though that silly comment had come out from one of the most flamboyant industrialist of the time, who was well traveled, educated and one among the most anglicized men of that tribe, he could get away with that comment, apart from some angry commendations from media, government and the exporting community, who were terribly upset by his comments bordering apartheid. It was because it was a control raj and was in tandem with the widespread belief that export was untouchable to an established industrialist or a business house
At least, three decades had passed since that incident and the industrialist had long left his terrestrial existence. Has his dictum still hold good? Admittedly, it is a debatable point. One may easily dismiss the tailors and cobblers syndrome in exports these days. But a deeper insight may provide enough inputs to a hypothesis that it is still continuing in a surrogate form or the other. Before we discuss this issue, let us differentiate between merchandize exports and services exports. When the famous lamentations were uttered, there was mostly one type of exports and that was merchandize exports. Services exports were Greek and Roman to most of the people except a few categories like tourism and manpower exports, the receivables under these categories were termed as invisibles and were not treated at par with mercantile exports.
Now, a total transformation has taken place with the software exports, which are counted under services exports. Many new companies have come up and they are known more prominently than the manufacturing industries in India. The brand values of the top 10 software export companies in India is perhaps higher than all the manufacturing companies put together.
Therefore, let us take these two types of exports separately and examine the efforts of the manufacturing companies towards augmenting India's exports. How many manufacturing companies take pride in achieving higher growth in the exports sector. We get to know about their profit margin, turnover growth, mergers and acquisitions and of late their corporate social responsibility. That does not mean that corporations are not exporting to other destinations. They are doing that and not as a part of their larger corporate game plan like the foreign companies are doing or what the Chinese are aggressively doing. China manufacturers for the world. EU does it for the world and the US, of late, after a bad current account crisis, has started focusing on exports. But where is India? How many Indian companies have a separate strategy for exports or a long term plan to capture a sizable market abroad
Exports are still being considered as an exclusive realm of .service providers, small and medium enterprises, and of course tourism and manpower exports that brings in hordes remittances. Nay, still the old abusive idiom of tailors and cobblers is seemingly fit into the scheme of things in India.
The government has unsuccessfully tried to shake off the stigma by coming out with newer plans and strategies. But they have failed miserably. We have created SEZs and similar zones in order to promote exports from the country giving the units several concessions. The recent findings of the Comptroller and Auditor General of India about the efficacy of such zones are depressing. According to its findings, the government had lost several thousand crores of rupees by way of tax exemptions and there are instances when the units have come up in such enclaves only to corner the tax benefits and not to partake in the export drive from the country.
The latest thinking is that the entire country should be made an SEZ to pep up the manufacturing and exports from the country. In theory it is good and can give a leg up to both manufacturing and exports. But the trillion dollar question is how many large corporations will come out with an undertaking that they will use the facility and bring a qualitative change in India's export profile.
