Slow growth in India’s exports has prompted the government to promote merchant exporters, who contribute almost a third of India’s exports in value terms but can’t avail of some incentives meant for manufacturer exporters.
Merchant exporters do not own manufacturing facilities but buy goods from manufacturers here and sell to overseas customers. They have the flexibility to procure goods from many sellers and sell them after negotiating the best prices to foreign buyers.
They are usually able to negotiate prices with buyers, sellers and shipping lines which are better than regular exporters. The department of commerce is mulling ways to reduce the cost of credit for them.
“It is crucial to promote merchant exporters and make use of their marketing and negotiatingskills with global partners,” said an official in the know of the development.
Merchant exporters indirectly help upgrade the production quality of manufacturers by making them export ready,” said a Delhi-based expert on export-import matters.
Though India’s exports crossed the $300-billion mark after a gap of two years in 2017-18, exports contracted in March after four months with labour-intensive sectors such as gems & jewellery, readymade garments of all textiles, jute manufacturing including floor covering, carpets and agri products showing a dip in outward shipments.
According to Ajay Sahai, director general of Federation of Indian Export Organisations, manufacturer exporters are constrained by their capacity but merchant exporters are extremely competitive, which helps them bring in higher per unit realisation. “Japan and Korea too have adopted the approach of promoting merchant exporters as they follow the aggregator model and it has been successful there,” Sahai said.
The plan to encourage merchant exporters has come at a time when the government is relooking at its export promotion schemes and making them compliant with global trade norms.