A group of officials from the ministries of finance, environment and railways will visit China and European nations to study the best trade facilitation practices with a view to adopting them to reduce transaction cost and boost shipment.
New Delhi: A group of officials from the ministries of finance, environment and railways will visit China and European nations to study the best trade facilitation practices with a view to adopting them to reduce transaction cost and boost shipment.
Worried over the widening trade deficit and declining exports, the government has constituted a committee under Director General of Foreign Trade (DGFT) Anup Pujari to suggest ways to cut transaction cost and promote exporters.
"The group will see the best practices followed by these countries in trade facilitation," a senior official in the Commerce Ministry said.
The group will include officials from Federation of Indian Export Organisations (FIEO), industry body CII, department of revenue, Environment Ministry and railways Ministry.
"Exporters are bearing the brunt of high transaction costs. It is severely affecting the country’s exports," the official said.
He added that the best practices followed by countries like China, Hong kong and few European countries would be added in the final report of the committee.
According to industry experts, the quantum of transaction cost is 7-10 percent of the total value of Indian exports. This amounts to a significant USD 15 billion.
Further, the average cost to an exporter on account of transaction cost has been monetised at USD 945 per container as compared to USD 460 in China and USD 450 in Malaysia.
"These figures clearly reflect the burden of transaction cost on exporters. It needs to be eliminated in order to boost exports and reduce the trade deficit," Apparel Export Promotion Council Chairman A Sakthivel said.
India’s exports grew by a marginal 3.89 percent during April-August to USD 124.4 billion. Trade deficit widened to USD 73.3 billion.
A task force in 2011 had announced few measures to reduce transactions cost, but those steps have not been implemented completely.
The Current Account Deficit (CAD), which occurs when a country’s total imports of goods, services and transfers is greater than the country’s total export of goods, services and transfers, continues to be high due to excessive dependence on oil and coal imports and slowdown in exports.
The CAD had touched a record high of 4.8 percent (or USD 88.2 billion) of country's Gross Domestic Product (GDP) in 2012-13 period.