Debroy also noted that ideally the central bank should intervene in the market but intervention by the RBI in the market is not without its cost side.
Exports grew by 4.5 per cent in February, the lowest expansion in the last four months, to $25.8 billion as shipments of engineering, textiles and gems and jewellery declined while trade deficit narrowed to a five-month low of $12 billion.
Stating that India's position has been that the country is in favour of multilateral trading system, the chairman of EAC-PM insisted as long as India's import duties are below the bound rates, it can increase import duties.
Debroy said that some of India's tariff rates are misaligned and the country has signed plethora of free trade agreements.
Noting that traditionally, Commerce Ministry and Ministry of External Affairs (MEA) have worked in silos, he said, "this is first time, they have started working together."
Debroy said that India's trade prospects will depend on the efforts being made to improve logistics, integrate investments in the global supply-chain, improve the business environment and develop infrastructure.
The reforms being ushered by Prime Minister Narendra Modi are fundamental in nature and will require time to bear fruit in terms of improvements in GDP and productivity, he said, adding that the mantra, therefore is 'You fix India and trade will fix itself'.
Talking about indirect tax, Debroy said, "GST is a process and if we expect that the entire process will settle down in anything less than 10 year then we are being unrealistic".