PM’s Top Adviser Says India Needs To Fix Slow Pace Of Trade
Prime Minister Narendra Modi’s top economic adviser said India needs to give the highest priority to easing cross-border trade as complex and multiple procedures continue to slow down exports and hurt the nation’s competitiveness despite recent reforms.
There’s a need to integrate and streamline clearances for logistics companies, a report co-authored by Bibek Debroy, chairman of Prime Minister’s Economic Advisory Council, said. The government must address inefficiencies to build on its initiatives in the last three years like the single-window clearance, it said. BloombergQuint reviewed a copy of the report.
Ease of trading remains a challenge in Asia’s third-largest economy, as is evident in the World Bank’s Ease of Doing Business Index. While India’s overall ranking jumped 30 spots, it slipped on ‘trading across borders’ to 146 in 2017 from 143 in the previous year. About 70 percent of the import/export delays are due to ‘port or border handling processes’, the report said. These relate to procedural complexities, multiple documentations, and the involvement of multiple agencies for approvals.
It takes over six days to export from India while imports take more than 13 days, said the report— Simplifying Trading Across Borders—co-authored by Kishore Desai, officer on special duty to Debroy. “This was considerably higher as compared to that in the developed world (average of OECD: High-income group countries).”
Overall logistics costs in India are around 15-16 percent of the total consignment value. That compares with 10 percent in the developed countries, the two wrote. “These issues reduce our trade competitiveness and directly impact our potential to export.”
Debroy and Desai suggest “increasing digitalisation and seamlessly integrating multiple agencies onto a single digital platform can reduce these procedural inefficiencies significantly and improve user experience substantially”.
Other challenges, they said, are inadequate transparency in clearance rules and lack of timely access to regulatory information. And that’s even after the government has rolled out online single-window clearance systems, and are pushing for greater digital governance to enhance transparency.
The Way Forward
They recommend three action points:
- Integrated Policy: Stakeholders have to interact with multiple agencies such as port authorities, customs, shipping lines, other government agencies (Food Safety and Standards Authority of India, Assistant Drug Controller, among others. This leads to numerous interactions with regulatory agencies and documentary requirements.
There is a need to develop an integrated logistics policy to streamline and consolidate multi-department initiatives. This would help monitor outcomes, propose interventions and address complaints. This policy should bring together multiple departments in the central and state governments, and urban local bodies.
- Integrated Digital Platform: A single window digital platform called National Portal for Trade Facilitation would link all trade stakeholders and execute multi-regulatory functions.
That would reduce delays and improve transparency, access to information and overall user experience. It would help reduce the number of trade documents, and can do away with physically submitting papers over a period of time.
- Measure Performance: Create a tool for benchmarking logistics sector performance. This will help policy makers identify what needs to be done to create a “seamless environment”.
The current Doing Business report and logistics performance index released by the World Bank has no mechanism to assess ‘critical’ parameters such as time and cost for loading/unloading at a factory, challenges faced in transportation through roads, railways, inter-state border checks, last-mile connectivity, among others.
The integration is needed to ensure reforms deliver results within a short time frame. That will complement the Goods and Services Tax, which will aid faster conversion of informal logistics setups into formal ones, increase the speed of freight movement at inter-state borders.