Gaping holes in trade data

36% export data wrongly classified, 46% quantity misreported.

The government has detected serious irregularities in the manner in which India's foreign trade data are being compiled.

An internal investigation conducted by the commerce department has brought out an "alarming" fact""36 per cent exports have been wrongly classified in terms of the ITC Harmonised System of classification, while a 15 per cent error has been found in the tariff chapters.

This means that in over a third of the cases, export of shirts could well have been reported as export of trousers.

Similarly, in 41 per cent of the export consignment data captured at ports, the quantity has been wrongly reported. The problem crept in as exports of a product in tonnes were recorded as kilograms.

Problems have also been found in imports. While wrong product classifications have been found in 11 per cent of the cases, wrong chapters have been detected in three per cent of the cases. In 46 per cent of the cases, the quantity has not been reported properly.

Trade experts said erroneous data could have serious implications on policy-making.

"You could very well have a situation where the focus is put on a wrong sector based on data. Data compilation is the bottom line. It must be accurate. Exporters and the government need to correct this," said Nagesh Kumar, director-general of Research & Information Systems for Non-aligned and Developing Countries.

Biswajit Dhar of the Indian Institute of Foreign Trade said the reliability of the Directorate-General of Commercial Intelligence & Statistics data had been questioned for a long time.

"The government should not resort to any quick-fix solution as inaccurate data will not only affect policy-making, but will also adversely impact finalising India's negotiating position at the WTO," he said.

"These errors cannot be explained away as data-entry errors as it has become evident that even in the case of electronic data interchange (EDI) ports, the percentage of error in the ITC HS classification is as high as 30 per cent while errors in quantity is 41 per cent as far as exports are concerned," the directorate-general of foreign trade said in a communication to all export promotion councils and commodity boards, issued after a review by Commerce Secretary SN Menon.

The DGFT pointed out that such errors were 41% errors blot export data automatically carried forward from shipping bills that got transmitted electronically in the form of daily trade returns.

As follow-up action, all the councils and boards have been asked to launch sensitisation programmes for their exporters and importers to ensure correct entries in shipping bills and bills of entry over the next three months.

The councils have been asked to particularly sensitise the Customs handling agents to the situation as these agents are used by exporters to fill in shipping bills.

DGFT officials said the DGCIS had also been asked to prepare exporter-specific sample data for selected exporters who were repeatedly found to be filing incorrect bills of entry or feeding wrong data in the shipping bills. The sample will be prepared over the next 2-3 weeks and circulated to the councils.

Officials said if no significant qualitative improvement came about, disincentives or punitive action could be contemplated.