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Last Updated:[09-02-2011 05:54:53 EDT] Zoom in Zoom out Back to Tradenews

Govt implements measures to reduce export transaction costs

tradenews The government has implemented some significant measures to reduce transaction costs for exporters - a move based on the report of a task force formed to look after the issue exclusively.

Union Minister of Finance, Pranab Mukherjee has released the task force report in New Delhi on Tuesday in the presence of Anand Sharma, Minister of Commerce and Industry and Jyotiraditya M Scindia, Minister of State for Commerce and Industry.

As per the report, the government has also implemented 21 recommendations and other two are likely to be implemented in couple of months out of 44 identified issues across 7 line of ministries for action.

The task force chaired by Scindia was constituted in October 2009 to identify and suggest ways to achieve significant improvement in the functioning of export processes and reduce time and money spent in export transactions, with a view to enhance the competitiveness of Indian exports.

While congratulating the ministry leaders in his inaugural address, Mukherjee said, "I am indeed happy to learn that the Task Force on Transaction Cost set up in October, 2009 has finalized the report suggestion measures to reduce transaction cost and time impacting the country’s Foreign Trade transactions."

"Many discussions were held by Jyotiraditya M. Scindia with me on implementation of various suggestions made by the Task Force pertaining to the Ministry of Finance. Ministry of Finance has proactively supported many suggestions made by the Task Force," he added.

The task force identified 44 issues across 7 line ministries for action. The issues were then taken up with the relevant Ministries and extensive consultations were held. After consultations, Ministries agreed to implement 32 issues.
Out of the 32 agreed issues, 21 issues have been implemented immediately and 11 issues are under process of implementation.

It is expected that with the implementation of new measures and further 2 issues pertaining to filing of a single running bond for all Custom locations and refund of service tax in the form of All Industry Service Tax rate, which are likely to be implemented in near future, the transaction costs will be mitigated by approx. Rs.2100 crores.

Mukherjee also said that reduction in transaction cost and time in foreign trade requires support of all concerned Ministries/ Departments as the value chain of the Foreign Trade transaction cuts across various inter connected processes.

Meanwhile, Sharma, in his address said that this has been part of overall competitiveness paradigm of India's export sector to enable cost effective production, storage, transportation and distribution mechanisms. Sharma said, "It was with this objective that a Task Force was established under the guidance of Minister of State, Jyotiraditya Scindia to identify the key bottlenecks and suggest measures for improving efficiency of the processes in the entire export value chain."

"Obviously, this entailed a huge amount of inter-ministerial consultation and intense dialogue with key stakeholders," he added.

The task force included a large 'Group of Experts' that included industry experts from six sectors including agriculture, chemical, readymade garments, textiles, engineering and leather, that are major contributors to exports. Functional experts from six different export functions like custom house agents, CA/ tax experts, exim consultants, export managers, logistics managers and overall experts were also included.

Permanent reduction of transaction cost through these initiatives will have a long term positive impact on the competitiveness of India's exports, Scindia told SME Times on the sidelines of the event.

"All the efforts made by the government towards export promotion schemes and stimulus packages will not be able to yield desired results, unless we are able to substantially cut down these 'transaction costs' impeding our export efforts," he told our reporter.

"I am hopeful that the initiatives taken currently and the findings and recommendations for the future would go a long way in initiating appropriate measures towards making doing business in India much easier," he added.

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