BUSINESS

Frost & Sullivan tasked with study to revamp trade policy

ACTIVE ROLE:DGFT has been playing the role of a trade ‘facilitator’ instead of focusing mainly on enforcement.  

International consulting firm Frost & Sullivan will carry out a study aimed at revamping India’s foreign trade regulator — the Directorate General of Foreign Trade (DGFT) — and the government’s Foreign Trade Policy (FTP), official sources said. Though the Commerce Ministry had set a deadline of April 11 for consultancy firms to send in their Request for Proposal for conducting the study, it did not get any response. The deadline was then extended to May 13 and firms including PwC, Roland Berger and Frost & Sullivan had applied, sources said. Frost & Sullivan would soon be officially intimated regarding its selection.

First-of-its-kind

The first-of-its-kind study in India will look at upgrading the DGFT to make it on a par with its counterparts in the world’s five leading countries where export and import account for a major portion of their GDP. The study should also have recommendations on the “adequacy of the FTP, in its current form, (in) meeting the policy and regulatory objectives of increasing the exports of goods and services from India,” the sources said.

The consulting firm will have to find out whether the DGFT has been performing its role of facilitating and implementing the FTP to the satisfaction of traders and industry. It will also look into “whether the new FTP 2015-20 has been successful in improving the ease of doing business vis-à-vis the previous policies.”

The U.S.-based Frost & Sullivan would be asked to make an initial presentation on all these aspects by July 8 and it would then be given eight weeks to submit its report, according to the sources in a central government ministry.

Ratifying TFA

In the backdrop of the Union Cabinet in February approving the proposal for India to ratify the World Trade Organisation’s Trade Facilitation Agreement for goods (aimed at expediting the flow of merchandise trade), the Commerce Ministry had in March sought to hire a globally reputed consultancy firm — with expertise in similar studies on economic and commercial policies — to look at the DGFT’s role “in the new globalised world.”

The DGFT is attached to the commerce ministry. Prior to 1991, the DGFT was known as the Chief Controller of Imports & Exports. Till 1991, the organisation was mainly looking at regulation and promotion of foreign trade through schemes and enforcement actions.

Post the liberalisation in 1991, in a bid to boost India’s exports, the DGFT has been playing the role of a trade “facilitator” instead of focusing mainly on enforcement. However, pointing out that the changes in DGFT have “tended to happen in a piece meal manner,” the Commerce Ministry said the new study should “assess how the structure and scope of DGFT is relevant in the present context and what could be the options available.” The ministry has asked the industry body FICCI to carry out a survey on ‘customer satisfaction’ regarding the services provided by the DGFT, sources said. The commerce ministry wants the DGFT to focus on emerging trade areas such as food safety and animal & plant health measures, standards, technical regulations and conformity assessment procedures.

CBEC’s refusal

The ministry is also keen that DGFT officials play a key role in the functioning of the National Committee on Trade Facilitation as well as in India’s negotiations with other countries on trade agreements at the bilateral, regional and multilateral levels.

Taking this into account, the Commerce Ministry had asked the Finance Ministry’s opinion on entirely delegating the DGFT’s FTP implementation work to the Customs offices. However, the Central Board of Excise and Customs (CBEC) is learnt to have shot this down saying it would need amendment of laws — the Foreign Trade (Development & Regulations) Act (which provides the legal basis to the FTP) and the Customs Act (being enforced by the CBEC).

The CBEC said unlike the DGFT, formulating incentives under FTP is not its core competence. It said transferring DGFT’s work will not lead to process simplification as the CBEC will have to create similar structures.



The study will look at upgrading the DGFT to make it on par with its counterparts in the world