As mounting transaction costs hamper exporters’ competivity, the government has announced a slew of measures to address this.
The steps include 24x7 customs clearance in eight ports like Mumbai, Jamnagar and Chennai to facilitate faster movement of goods, reduction in charges levied for screening express cargo and courier shipments, round-the-clock plant quarantine services in Mumbai and Chennai international airports and so on.
“We plan to first tackle what is within our ambit to enhance competitiveness of Indian exports,” said Union minister of state for commerce and industry, Jyotiraditya Scindia.
The steps are part of 44 measures to be gradually taken to help in cutting business costs by up to Rs 4,200 crore over a period of time, he said.
The steps were identified by a task force constituted by the government under him to address the issue.
Transaction costs are incurred under various heads which include manpower cost, cost of money locked as a result of bank guarantees and other direct costs. By official estimates, transaction costs are annually around seven to 10 per cent of the total value of Indian merchandise exports, amounting to $13-15 billion (Rs 59,300-68,400 crore).
Of this, almost $6 bn is because of numerous paperwork and loss of manpower, resulting in delay in operation and myriad layers of rules and regulations. The rest is because of infrastructural bottlenecks emanating from poor roads, ports and air transport facilities.
The minister said that though various ministries have been implementing measures suggested by the task force in recent months, much more needs to be done.
“The big difficulty will be in convincing other ministries in implementing the remaining 23 proposals as identified by the task force because it involves big revenue generating proposals like bringing down carriage charges, etc,” Scindia added.
Apart from the steps already announced, the government also plans to start a system of single bond for multiple customs authorisation needed for exports, which would save Rs 400 crore.
The government also plans to bring a uniform service tax rate to expedite refund of service tax rate.
“Permanent reduction of transaction cost through these initiatives will have a long-term positive impact on the competitiveness of India’s exports,” Ficci said.
“Reducing transaction cost is the key to export development as global competitiveness on Tuesday depends on being able to be a low-cost producer and at the same time a reliable supplier,” CII said.
