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January 31, 2017

Positive Impact of Export Facilitation Measures on Exports

*Ajay Srivastava  i201713101

Latest data suggests signs of recovery of India’s exports. December 2016 is the continuous 4th month when merchandise exports registered positive growth. Despite weak global demand, India’s overall Trade figures also look good, helped by the strong net foreign exchange earnings from the IT-led Services Export Sector. During this period, Government kept a watch and intervened frequently to improve the export performance through initiatives targeted at improving export competitiveness: both short and long term.

Indian government’s Export Facilitation Measures fall into three categories:

1.Reducing cost disability through new Export Schemes

2.Engaging with the world for protecting India’s interests and promoting market access

3.Strengthening internal Trade Eco System. We will discuss each in some detail.

Measures to reduce cost disability through Export Schemes

High transaction costs are major cost disability for Indian exporters. They spend at least 15% more compared to their international counterparts due to higher credit, logistics and other transaction Costs.  The Government launched the New Foreign Trade Policy (FTP) in April 2015 with a focus on supporting both merchandise and services exports.

FTP also introduced many schemes to reduce cost disability of exporters. The most important is the Merchandise Exports from India Scheme (MEIS). It seeks to reduce part of such costs for products with high export and employment potential in sectors like Food Processing, Chemicals, Pharmaceuticals, Biotechnology, Defence, High Tech, Electronic Hardware, Automobile, Auto Components, Apparel & Textiles etc. MEIS thus compliments the Make in India initiative. MEIS incentives are available at 2, 3 and 5% of the FOB value of exports.

MEIS initially incentivized export under 4914 tariff lines. However, it was expanded to support additional products keeping in mind the adverse environment faced by the exporters. Currently, it covers 7914 lines.  The Government in May 2016 also expanded the scheme to cover all countries. Initially, MEIS was available to a product only when exported to a notified group of countries. Such interventions resulted from the close tracking of exports performance at product and country level.

To support diversified exports from the Service sector, Government introduced Services Exports from India Scheme (SEIS) in the FTP. SEIS supports delivery of services from the healthcare, tourism, hotels, education, Legal, Accounting, Architectural, Engineering, and other business services sectors. Services delivered from or consumed in India are supported under the scheme.

Engaging with the world for protecting India’s interests and promoting market access

Most countries have turned protectionist introducing measures to discourage imports from other countries. Since the economic crisis of 2008, G20 countries alone have imposed over 2000 such measures. To safeguard India’s interests, the government actively engaged with many countries and institutions to ensure best possible market access for Indian products.

India has so far signed 10 FTAs including with Japan, South Korea and ASEAN and 6 small coverage agreements. For ensuring further market access, India is currently negotiating /expanding 16 more FTAs including a mega FTA, Regional Comprehensive Economic Partnership Agreementwith China, ASEAN, Japan, Korea, Australia and New Zealand.

India has ratified the Trade Facilitation Agreement of WTO with the hope that it will make trade regime across countries less cumbersome. India continues duty-free market access to exports from the Least Developed Countries under Duty-Free Tariff Preference Scheme and to neighbors like Nepal, Bhutan, Bangladesh and Afghanistan under SAFTA Agreement. For protecting interests of domestic industry, India took many trade defense measures like imposing anti-dumping or safeguard duties on imports from the firms/ countries using unfair trade practices.

Strengthening internal Trade Eco System

Infrastructure-Logistics costs are a significant part of the export cost. A number of projects are under implementation towards improving the efficiency of select Ports, Airports, Land Customs Stations, Inland Container Depots and Container Freight Stations. The most audacious of these is Sagarmala initiative that aims to reduce logistics cost for both domestic and export-import cargo.

Institutions- Indian Commercial missions located important countries have been activated to identify export opportunities for Indian businesses. Sector specific Export promotion Councils, Federation of Indian Export organizations and number of Trade Associations engage with exporters on resolving day to day and development issues. Export Cum Guarantee Corporation provides insurance facility while Exim bank extends long duration loans to long duration projects located in specified countries. India Brand Equity programme actively promotes Indian brands and traditional goods like tea, spices, ayurvedic products and services like yoga, wellness and health care. Council for Trade Development and Promotion has been created for making states active partners in boosting India’s exports. Board of Trade (BOT) engages with leaders of industry in promoting India’s trade interests.

Ease of Doing Business and IT initiatives- Aware of the need to simplify India’s export process, a number of measures have been taken to reduce export, import clearance time and cost. Thus the number of mandatory documents required have been reduced to 3 each for export and import. Earlier 7 documents were required for exports and 10 for imports. Major ports, custom-houses, Special Economic Zones, DGFT etc. are EDI connected. More than 95% of export transactions are processed through EDI-enabled Customs Stations. We are gradually moving towards a trade Single window system. Customs introduced Single Window Interface for Facilitating Trade (SWIFT) integrating approval process of 6 Government agencies on a single platform. On the incentive side, DGFT exchanges data with Customs, Banks, and EPCs through the secured EDI message exchange system, reducing physical interface of exporters with DGFT.

Developing new exporters-Skilling new entrepreneurs into exports is an important priority. In the last two years over 50,000 entrepreneurs have been trained under the Niryat Bandhu program implemented by DGFT, thus complementing the Startup India and Skill India initiatives.

Few web based free access tools have been created for exporters. Many firms get their first insights into India’s export products and markets from the Trade Analytics tool available at the Department of Commerce website. Firms also use Indian Trade Portal to access Trade inquiries uploaded by Indian trade missions.

Many new measures are on the anvil to make exports competitive and reduce cost and time of operations. How do we assess the impact of such measures? It is difficult to draw a linear relationship between export support measure and the real export performance as exports volumes are affected by many factors both internal and international. However, data gives few interesting insights. For example, products covered under the MEIS suffered less than half the impact of export decline than other products. Additionally, since most of the initiatives aim at strengthening the core competitiveness of the sector, they will anyway contribute to overall growth. With a strong core in place, we may soon hope to see a surge.

*Author is from Indian Trade Service.

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KKNPP Mudflats: A home for waterfowl

*J. Devaprakash  i201713011.jpg

It is not just chillness that winter brings us every time, it invites countless birds from elsewhere to India. More than 100 species of birds from several parts of the world travel to the Indian subcontinent on the onset of this coldest season of the year- many from Palearctic countries like Mangolia, Russia and Siberia.

Among several birds that winters India, two class – ducks and waders – are plenty. Although both of these species are water-dependent birds, they differ anatomically and in the way they feed. Ducks are web-footed, broad-billed, and can swim; while waders are tall-legged, long-billed, and can wade.

Unlike humans, the needs of birds in the touring country are simple: Safe habitats for feeding and roosting. Upon arriving the wintering grounds, first they look for suitable places to dwell. Once it is picked and chosen, they settle in that region until the time they fly back to their breeding grounds. It is a widely accepted phenomenon that if birds feel a place or region is safe, they revisit the same place or region year after year and perhaps generation after generation.

In the far-flung lands of Indian sub continent, the migrants visit almost all parts of the country.  They even go up to the southernmost part of mainland India –  the Kanyakumari region in Tamil Nadu – where reasonably good numbers of waterbodies exist.  Here, almost every inland village has either a lake or a pond or both, and most coastal hamlets have canals or backwaters. These water bodies attract a huge population of winter migrants like ducks and waders. While the deep water wetlands like ponds and lakes harbour swimming birds like ducks, the wading birds like stilts and sandpipers rely on shallow waters.

In 2008, the Nuclear Power Corporation of India Limited (NPCIL) which runs the Kudankulam Nuclear Power Project (KKNPP) in southern Tamil Nadu conducted a study on wetlands and waterbirds in and around Kudankulam to create a database on birds and waterbodies in the region as a part of its Environment Stewardship Programme (ESP).

It was carried out in association with one of the countries’ premier conservation institution, the Bombay Natural History Society (BNHS), at 18 wetlands of different sort during the peak monsoon season.

The study painted a broad picture about the condition of wetlands and the kind of birds dwell in these habitats. In the study, it was found that the area lacked dedicated habitats especially for wintering birds, albeit the region has several water bodies. Many of the freshwater wetlands were used for irrigation and fishing, while most of the saline wetlands were used for salt cultivation. This caused an incessant disturbance to the birds and made them wary at times.

During the post-study data analysis, the Deputy Director of BNHS Dr. S. Balachandran suggested the creation dedicated habitats for the winter visitors and resident waterbirds. It was then the idea of making mudflats born.

When the Site Director of KKNPP Mr. R. S. Sundar heard this idea, he had no second thought on it. “We are producing electricity in an environmentally benign way. Besides, we are also taking good care of the environment around us. A full-fledged green belt development programme of KKNPP has transformed this once-barren land into a lush green environment”, said Mr. Sundar. “And, the idea of making wetlands for birds sounds really great”, he then added.

With the nod from the Kudankulam nuclear power plant management, both KKNPP and BNHS swung into action towards actualising the idea of creating dedicated habitats for waterbirds in the former’s premises. In 2013, a preliminary study to find out a suitable place for the creation of micro habitats like mudflats was pursued in the Anuvijay Township (located in Tirunelveli District, Tamil Nadu) where the families of KKNPP employees reside.

A team of experts led by Dr. S. Balachandran studied the area and zeroed in on two remote locations in the Anuvijay Township. These places, one with an area of 2000 sqm and the other with 840 sqm, were close the Uppar River Canal that flows through the Township.

“Both the locations were ideal for developing intertidal mudflats”, said Dr. Bala in his feasibility study report.

Besides providing land space, KKNPP adopted the project under its Corporate Social Responsibility Programme and decided to fund it fully. “We were looking for environment conservation projects around our site. When the idea of making mudflats came up we instantly accepted to implement it and fund the project”, said Mr. M. S. Suresh, the then Chairman of KKNPP CSR Programme.

The sea mouth where the Uppar Canal meets the Bay of Bengal is only few hundred meter away from the mudflats. Usually, the canal drains fresh water (over flown from the nearby lakes) in to the sea. But sometimes the reverse flow happens. During high tides, the sea water enters the canal and makes it brackish. This slightly salty water was essential for the mudflats. And that was why the places close to the canal was chosen to make use of this salty water to maintain the natural estuarine and marine characters. It was planned to make passages between the canal and mudflats for the water to traverse freely.

In August 2015, the mudflats establishment work was kick-started. The selected locations were surrounded by the exotic prosopis juliflora like most other places in the region. Clearfelling of this invasive thorny bushes in the proposed mudflats area was first step. Eventually, excavation upto 2 feet deep was carried out so as to maintain the water level in the mudflats.

“It is made in a way that periodic flooding and receding of water happen in the mudflats. This is crucial for the waterbirds to replenish the food resources in the mudflats”, said Dr. Bala.

By the end of 2015, the pair of mudflats were almost ready. Soon after, these wetlands started attracting birds. At least 25 species of birds like Spot-billed Duck, Grey Heron, Cormorants, Sandpipers, Stilts, Plovers and Stone Curlews visit this twin wetlands. Besides common birds, some of the rare birds like Darter, Painted Stork, Spoonbill and Spot-billed Pelican too visit here often.

“With a fund of Rs. 11.8 lakhs by KKNPP, we have developed these dedicated habitat exclusively for birds on experimental basis. We have plans to expand the area of these wetlands in near future”, said Dr. Bala.

08july_tipajhi-_ma_2925988f

The Anuvijay Township, which is home to the families of KKNPP employees, is now home also to waterbirds and winter migratory birds too.

*Author is Senior Manager (Public Awareness and Press Relations) at Kudankulam Nuclear Power Project. He writes about nature, energy and communication.

 

Developing an Institutional Framework for Capturing Services Trade Data – Challenges & Opportunities

*Dr. Dipankar Sinha  i201713007.jpg

India’s service sector has been a major driving force in the growth of the economy. In 2015, India’s trade in services was valued at $277 billion, with $155 billion worth of export and $122 billion worth of imports. With a share of 3.3 per cent in world export and a share of 2.7 per cent in world imports, India was ranked the 5th largest exporter and 6th largest importer of commercial services.

Compilation of Services Trade Data

Following the entry into force of GATS in 1995, the demand for detailed and comparable statistics on trade in services significantly increased. Several developed countries such as USA, UK etc. have developed a fairly robust system of collection of data on trade in services. These countries have an institutional framework for services trade data collection supported by appropriate regulations, procedures for regular collection of data from administrative sources, regulators and other partner countries (mirror data) and periodic surveys of enterprises engaged in international trade.

Unlike these countries, Indian services trade data is currently based primarily on International Transaction Reporting System (ITRS) in which foreign exchange transactions channelled through banks are reported to the Reserve Bank of India (RBI). The reporting of foreign exchange transactions is mandated under the Foreign Exchange Management Act (FEMA), 1999.

Dissemination of services Trade data & its limitations

The monthly RBI Bulletin provides aggregate level data following the standard classification as stipulated under the IMF’s Balance of Payment Manual, Version 6, for categories like Travel, Transport, Telecommunications, etc. However, information by partner country, by categories and sub-categories of services as prescribed in the negotiating list W/120 and by mode of delivery of services is not available from the RBI data.This severely restricts study and analysis of the impact of liberalization commitments on bilateral trade and pursuing services negotiations with different countries and trading blocks.

Services Trade Data & the Role of Department of Commerce (DoC)

Given the lacunas in the existing framework, the DoC has been working relentlessly to develop a robust framework for collection of statistics on services trade. The following initiatives of the DoC deserve a special mention:

Expert Committee in Central Statistics Office (CSO) & Technical Group on Services in DoC

Amongst the important recommendations made by the Expert Committee and the Technical Group are designating a nodal agency with a mandate to collect, compile and disseminate services trade statistics, integrate some of the data requirements of DoC on external trade in services with the Annual Survey on Services to be launched by CSO, capture information on exporting units in the Sixth Economic Census to be used for conduct of future surveys and undertake more pilot or methodological studies in areas identified for creation of services database.

Implementation of Recommendations of the TG

DoC, on 30th September 2015, designated DGCI&S as the nodal agency to collect, compile and disseminate services trade statistics.

On the request of the DoC, provision was made for collection of some basic information on international trade in services in the 74th Round of NSS survey launched in August 2016.

After the pilots in health and education sectors, several new pilot studies were taken up by DGCI&S with the approval of DoC in sectors like Tourism, Telecommunication, Audiovisual, Logistics, Computer & IT services, Professional services etc. Report of the pilot study on audiovisual, logistics, professional and telecommunication sectors, conducted in partnership with ICRIER was released in June 2016.

Services Trade data for IT, ITeS

Since bulk of IT exporting units are located in STPs and SEZs, arrangements for transmission of data from SEZs to DGCI&S have been put in place to publish quarterly estimates of exports from SEZs from April 2016. A few issues regarding coverage are being sorted out with STPI before the quarterly data on export of IT & ITeS from STPIs can be released.

The code structure for compilation of IT & ITeS data adopted by various stakeholders has also been reviewed in the DoC and a new code structure developed in consultation with DeitY, STPI, NASSCOM and RBI which is likely to be notified by RBI soon for adoption in SOFTEX form.

Medical Tourism

To promote medical tourism, GOI has a proposal to build up a databank of available resources in the field of medical & wellness services and develop mechanism to disseminate such information.

As a part of this effort, DoC has launched a Medical Tourism survey in June 2016 with a view to collecting information on export earnings/import expenditures by country, distribution of number of non-residents by country of residence and export of health services by discipline. The survey report will be released in April 2017.

Tourism

With inputs from Bureau of Immigration and the Ministry of Tourism, Indian Statistical Institute (ISI) Kolkata is currently working with DGCI&S on developing a model for generation of quarterly estimates of export earnings from the tourism sector.

Education

Two pilot studies had been conducted by the DoC covering Higher Education services and undergraduate courses. With the survey instruments already in place and the list of institutions which had enrolled foreign students available from the HRD Ministry, preparatory work for launching a pan India survey for this sector is currently in progress.

Strengthening data collection mechanism to reduce non response

Non-response is a serious issue in the successful conduct of any enterprise survey. An appropriate administrative set-up to strengthen the data collection set up of DGCI&S is currently under examination in the DoC in consultation with MOS&PI.

Trade data Classification

Trade negotiators require disaggregated statistics as a guide for future negotiations of specific commitments and for evaluating and monitoring their economic impact in respect of each type of service. CSO in 2010 had developed the National Product Classification for Services Sector (NPCSS) for non transportable goods based on the Central Product Classification (CPC) (Version 2.0) which has been subsequently updated by DGCIS on the basis of CPC Version 2.1 released by UNSD in August 2015. The new Services Classification (NPCSS 2016) has 1277 services instead of 1842 appearing in the previous version of NPCSS. The updated classification will facilitate the category and sub-category-wise data collection in services trade as well as ensure international compatibility.

Enterprise Surveys in Other Sectors

Preparatory work for launching of surveys in other sectors like Logistics, Audiovisual, Professional services as well as the Insurance sector in collaboration with the regulator IRDA is in progress.

Opportunities

The plan of action as envisaged by DoC will help to generate data by services category & trading partner as well as make data available on some of the categories like education and health not covered through ITRS. This data will provide vital inputs for various policy making decisions in the government and meet the long standing demand of researchers and analysts working in the area of services trade.

*Author is an Advisor, Directorate General of Commercial Intelligence and Statistics, M/o Commerce & Industry, Government of India.

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