Round-the-clock customs clearance at eight major ports, reduction in bank charges on foreign currency and concessional loans are among the measures announced by the government to cut transactions cost.
As many as 21 measures have been unveiled on the recommendations of a task force headed by Minister of State for Commerce and Industry Jyotiraditya Scindia which examined the problems faced by exporters that pushed their transactions costs.
According to government estimates, the implementation of these steps would result in reduction of business cost for exporters to the extent of Rs. 2,100 crore, which however is considered small given the country’s export value of $ 200 billion.
The other cost saving step include reduction of charges by the Delhi International Airport for screening express cargo and courier shipments from Rs. 6 to Rs. 1.65 per kg for the export courier.
The booking charges for foreign currency by banks have been reduced from Rs. 750 to Rs. 400-500 per transaction.
Leading banks have been asked by the RBI to extend pre-shipment credit in foreign currency at the global benchmark of LIBOR (London Interbank Offer Rate) + 2 per cent interest rates.
“I am told that quantum of transaction cost is about 7-10 per cent of total value of Indian exports. This amounts to a significant, about $ 15 billion. In that context these initiatives by the ministry of Commerce is really a welcome step,” Finance Ministry Pranab Mukherjee said while releasing the report.
Besides the monetary measures, several procedural issues have also been addressed. These include round the clock availability of the plant quarantine services at Chennai and Mumbai international airports.
The move would help importers and exporters of plant materials and agricultural commodities.
The eight major ports where round-the-clock customs clearance would be provided include Vizag, Kolkata, Jamnagar, Mangalore, Bhubaneswar and Chennai.
After a decline in 2009-10, India’s exports, which contributes about 20 per cent to the country’s GDP, have grown by an impressive 29.5 per cent during April-December 2010-11 to $ 164.7 billion from a year ago period.
However the shipments from the country was suffering from the cost disadvantage as pointed out by Commerce and industry Minister Anand Sharma.
“The average cost to an exporter on account of transaction cost has been monetised at a level of $ 945 per container as compared to $ 460 in China, $ 450 in Malaysia and $ 625 in Vietnam,” Mr. Sharma said.