Transaction cost for Indian exporters may be cut 40%

Exporters might soon benefit from a series of measures that seek to reduce the transaction cost by as much as 40 per cent, according to the Business Standard.

The committee set up under Minister of State for Commerce and Industry Jyotiraditya Scindia has already given its report to the ministries concerned for finalisation of the measures.

The committee was set up in December last year to look into some of the persistent problems faced by exporters and importers in terms of money spent by them in order to follow several complex rules and regulations related to the foreign trade policy of the country.

The recommendations have been forwarded to the ministries of finance, railways, shipping and agriculture.

Some of the measures expected to be announced relate to streamlining of various forms of levies and taxes that would need to be approved by the Department of Revenue under the Ministry of Finance. Other measures likely are significant reduction in freight costs and port charges which come under the Ministry of Shipping.

The government is also looking at reducing Container Corporation of India charges and other such fees charged by the railways, according to sources in the Ministry of Commerce and Industry.

“The measures, once implemented, will result in reduction of transaction cost by as much as 40 per cent, making our exports more competitive,” said a senior official, who refused to be identified.

Exporters had long been pushing for measures that would seek to save their time and money in order to follow the norms. They have been constantly complaining of procedural delays at the Customs clearance, infrastructure logjam and complex paperwork, resulting in a cascading effect and delay of shipments.

The report has also recommended doing away with some of the time-consuming procedures such as filling of several forms of various departments and agencies that would seek to do away with corrupt practices like bribing inspection officials. The report has also suggested ways to streamline the problems of duplicate documentations, Customs compliances and duty refund.

“We have finalised the report based on the recommendations of various stakeholders. It is now up for an inter-ministerial consultation as the measures will have implications on some ministries. We have given specific measures to the individual ministries, which pertain only to them. All ministries are extremely cooperative and we hope to come out with tangible measures soon that will have tangible results,” Scindia told Business Standard.

He added that the measures would seek to either streamline some of the complex procedural norms or also eliminate some of rules that hamper a speedy and smooth transaction.

The members of committee include representatives from the Federation of Indian Chambers of Commerce and Industry (Ficci), Confederation of Indian Industry, Federation of Indian Export Organisations (FIEO) and experts.

“The report has narrowed down to as many as 44 rules of the government cutting across various ministries which inhibit business and make our exports uncompetitive by high transaction cost that also jacks up inefficiency. There should be speedy implementation of the measures, which will significantly reduce the cost and make our exports competitive compared to other countries,” said Amit Mitra of Ficci.

FIEO Director General Ajay Sahai said transaction costs constitute five to eight per cent of the FOB (free on board) value. The measures recommended in the report would enable reduction of the transaction cost to the extent of more than US$6 billion annually.
(Source:www.cargonewsasia.com)