Trade reforms high on the agenda

The Economic Survey 2013-14 strikes a reformist note on aspects related to trade, highlighting key issues such as rationalisation of export promotion schemes, a reality check of existing trade agreements with other countries and greater trade facilitation measures.

There are multiple and overlapping export promotion schemes with many focus markets and products, the Survey says, and argues for rationalising them to a “bare minimum” in order to reduce transaction costs and litigation. For duty drawback schemes, there should be limited rates instead of having different rates even for similar items, the Survey says, adding that such a move will make things simpler and avoid discretionary decisions.

The Survey bats for simpler procedures for documentation pointing out that an exporter in India needs nine documents compared to just three in Singapore while an importer needs 20 in India against four in Singapore. Consequently, it takes 16 days to export out of India compared to six in Singapore.

“Export infrastructure should be built on a war-footing,” says the Survey and issues such as port connectivity, poor conditions of roads and poor cargo handling techniques and equipment need to be addressed.

Pointing out that some of the trade agreements that India has signed have led to an inverted duty structure where it is cheaper to import the finished product than the raw material, the Survey says that a “reality check” of these trade agreements is required.

Arguing for product diversification of our export basket, the Survey points out that in the top 100 imports of the world, India has only five items with a share of 5 per cent or more.

The electronic hardware manufacturing sector comes in for special mention with the Survey arguing that special attention needs to be given to that sector which virtually collapsed with the signing of the Information Technology Agreement-1 by India.