Economic Survey 2020-21: Enhanced trade facilitation a priority to make exports more competitive

Recognising how trade facilitation is a priority of the Government for cutting down transaction costs and time and rendering Indian exports more competitive, The Economic Survey 2020-21 highlighted the initiatives undertaken by the government to meet this objective.

It drew attention to the Foreign Trade Policy, 2015-2020 being extended for one year i.e., up to 31st March, 2021 to lend continuity to the existing schemes.

Trade Facilitation

Citing how India has made proactive strides in Trade Facilitation Agreement (TFA) under the guidance of National Committee on Trade Facilitation (NCTF), it stated how many of the commitments which are otherwise due by 2022, have already been notified to WTO as implemented. “Further, the transparency notifications covering information on import and export procedures, enquiry points, single windows etc., have also been notified in April, 2019, reflecting India’s commitment towards facilitation of trade with an emphasis to transparency and openness,” the Survey said.

It also shed light on how various regulatory relaxation measures were extended for facilitating trade during COVID-19, which include 24X7 clearance, dedicated single window, condonation of delay in filing import declarations, waiver of late filing fees, undertakings instead of bond, etc.

Remission of Duties and Taxes on Exported Products (RoDTEP)

Reflecting on the history of previous export promotion schemes including Merchandise Exports from India Scheme (MEIS), the Survey stated that it was challenged by the United States in WTO in early 2018. “The final report of the WTO panel observed that MEIS is a “prohibited subsidy” and needs to be withdrawn, against which an appeal has been filed by India. In order to continue supporting the industry and to eliminate any uncertainty amongst the exporting community, the Government has rolled out a new WTO compliant scheme, namely RoDTEP, for all export goods with effect from 1st January, 2021,” it explained.

Under this Scheme, duties and taxes levied at the Central, State and local levels, such as electricity duties and VAT on fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism will be refunded to exporters in their ledger account with Customs. The RoDTEP rates would be notified by the Department of Commerce.

Production-Linked Incentive (PLI) Scheme

Delving further on initiatives to boost domestic manufacturing and exports, the Survey mentioned the PLI scheme which had been introduced with an outlay of Rs 1.46 lakh crore. “This Scheme aims to give incentive to companies on incremental sales from products manufactured in domestic units. The ten-identified champion sectors under PLI scheme are advanced chemistry cell (ACC) battery (approved financial outlay over a five year period of Rs 18,100 crore), electronic/technology products (Rs 5,000 crore), automobile and auto component (Rs 57,042 crore), pharmaceuticals drugs (Rs 15,000 crore), telecom and networking products (Rs 12,195 crore), textile products (Rs 10,683 crore), food products (Rs 10,900 crore), high efficiency solar photovoltaic modules (Rs 4,500 crore), white goods (ACs and LEDs) (Rs 6,238 crore) and specialty steel (Rs 6,322 crore),” it highlighted.

These, the Survey added, are in addition to the already notified PLI schemes for mobile manufacturing and specified electronic components (Rs 40,951 crore), critical Key Starting materials/Drug Intermediaries and Active Pharmaceutical Ingredients (Rs 6,940 crore) and manufacturing of medical devices (Rs 7420 crore).

It further noted that the scheme is expected to make Indian manufacturers in these ten sectors globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; establish backward linkages with MSMEs; enhance exports and make India an integral part of the global supply chain.

Trade Related Logistics

Stressing the significance of a resilient logistics sector especially in the backdrop of the Covid-19 pandemic, the Survey noted how such resilience could go a long way in responding to emergencies and supply chain disruptions.

Mentioning how India has made remarkable progress in the logistics sector despite the bottlenecks at play, the Survey stated that India’s rank has improved significantly in trading across borders parameter of ‘Ease of Doing Business’ index from 146 in 2018 to 68 in 2020. “The Logistics Performance Index (LPI), released by the World Bank, assesses relative logistics efficiency of countries. On this index, India was ranked 44 out of 160 countries in 2018 vis-à-vis rank of 54 in 2014. India is among nine countries having an area above ten-lakh square kilometer out of 24 countries analyzed by LPI in 2018, with a score above three. India performs above average after controlling for the level of development and better than some of its BRICS peers,” it said.

The Survey further highlighted how The National Logistics Policy is in an advanced stage of roll-out with a vision to develop a modern, efficient and resilient logistics services sector.

Highlighting some of the process related reforms which have contributed towards improving logistics efficiency, it noted that these include reduction in waiting time for inter-state border crossing due to GST, revision in axle load norms for heavy vehicles leading to better carrying capacity, introduction of paperless EXIM trade process through E-Sanchit, faceless assessment by ‘Turant Customs’ by Central Board of Indirect Taxes and Customs (CBIC), installation of scanners at major ports, implementation of Port Community System 1X at all important ports, Radio Frequency Identification (RFID) tagging of all EXIM containers for track and trace and mandatory electronic toll collection system (FASTag) for reducing time loss at time toll plaza among others.

Economic Survey 2020-21: Enhanced trade facilitation a priority to make exports more competitive Economic Survey 2020-21: Enhanced trade facilitation a priority to make exports more competitive Reviewed by TechCO on 1/29/2021 Rating: 5

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