If Indian exporters say the biggest exports they do are within India, it would be only half in jest. It would be a tongue-in-cheek commentary on the red tape that has long plagued the sector, which requires them to ship tonnes of documents such as letter of credit, copy of proof of advance payment, print-out of application form, foreign inward remittance certificate etc to government offices, accompanied by numerous visits. Taken together, these documents would total a whopping 25,000 pages every month, never mind that they ultimately gather dust in storerooms.
In the first week of January, the government decided to rid exporters and itself of this system. Director general of foreign trade (DGFT) Anup K Pujari, who issued the notification, sees the end to submission of documents a New Year gift to exporters, particularly those in the business of commodities such as cotton yarn, nonbasmati rice, wheat, sugar and the like. "We are trusting our exporters. If a cotton yarn exporter, for example, gives us details of his export online, we won't press for any proof," he says.
The idea behind doing away with document submission is to make exports hassle-free, according to Pujari. To be sure, it is not a one-off step. Pujari's department had earlier enabled exporters to electronically avail a bank realization certificate (BRC), which is essential to receive refunds from the government under various schemes. This not only ended a visit to the bank branch, it was also 25% cheaper. Thanks to e-BRC, the government claims that exporters are saving about Rs 2,000 crore annually.
Tonnes of Problems
These reforms are godsend for exporters. But many hassles remain. The list is actually pretty long — for instance, there are multiple bottlenecks in custom clearance and delays in receiving refunds.
But for many exporters, the real monster is customs, the government agency tasked with collecting duties on foreign trade. Exporters turn nervous wrecks as the bill of entry undergoes scrutiny by clerks, appraising officers, assistant commissioners, preventive officers and so on. A two-day sick leave by a customs officer may delay the shipment and result in huge losses to an exporter, particularly in a non-EDI (electronic data interchange) or manual port.
OP Hisaria, senior vice-president of Reliance Industries (RIL), says the introduction of e-BRC has not only removed the drudgery from the process but also reduced transaction cost and time. But he is quick to add that removing hassles in exports and simplification of processes is a continuous process.
The exports of India's largest private enterprise, owned by billionaire Mukesh Ambani, are worth $44 billion a year and constitute over 14% of India's total exports. Reliance has made various recommendations to the government to make exports easy, Hisaria adds, without disclosing the details of the company's wish-list. For RIL and other export majors, shifting to electronic mode of BRCs is a game-changer in itself. "Obtaining physical BRCs from more than 15 banks that we deal with for 18,000 shipping bills per year was tedious and time-consuming," says Hisaria.
A Positive Beginning
That said, the reforms in recent times can at best be termed baby steps. India has not yet moved to a regime where trust, and not suspicion, is the hallmark of the country's export policy. Add to that the multiple government agencies and departments that play some role or the other, exporters live in constant trepidation, even dread. KT Chacko, former
DGFT and former head of Indian Institute of Foreign Trade, says the government should not suspect that all exporters are wrongdoers. "Once we have such a mechanism, 95% of exporters who believe in self-compliance will benefit. But it should be made clear that deviations from rules will be dealt with a heavy hand, maybe even cancellation of export licences," he says.
Exporters say India should borrow a page from the rulebooks of Australia and Singapore on simplifying exports. The single window approach in clearances and use of electronic mode in all trades give those countries an edge over others. "The problem in India is that many departments don't care much about simplifying procedures, as export promotion is considered to be a responsibility only of the commerce ministry," says Chacko.
Countless Councils
Indeed, there are as many as 14 export promotion councils under the administrative control of the commerce ministry alone. To name a few, these are Council for Leather Exports in Chennai, Mumbai-based Gem and Jewellery Export Promotion Council, Services Export Promotion Council of Gurgaon, Engineering Export Promotion Council (EEPC) in Kolkata and Sports Goods Export Promotion Council based in New Delhi. The textiles ministry too sponsors export promotion councils.
Source : blackseagrain.net