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Govt. to trim transaction costs for exporters
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Namrata Kath Hazarika | 28 Apr, 2010
The government is looking at ways to simplify procedures and reduce transaction costs for the country's exporters and a task force will submit its report on the issue by June-end, Minister of State for Commerce and Industry Jyotiraditya Scindia said in New Delhi on Tuesday.
"We want our exporters to compete globally and for this it is essential to simplify procedures and reduce the transaction costs. It is not just about transportation nor financial costs, we are looking at simplifying the procedures and making things transparent for the exporting community," he told reporters here on the sidelines of an event organised by industry lobby, Federation of Indian Chambers of Commerce and Industry (FICCI).
"The task force was set up in October 2009 and it is being headed by me. It looked at transaction costs incurred by exporters eÂx-factory to the f.o.b (freight on board) stage. The effort is to identify the areas which could be zeroed in on to simplify procedures and make the processes transparent. We expect to come out with the report by June-end," he added.
The minister also said that the government has planned to send a team of experts to Denmark, Singapore and Hong Kong for global benchmarking study, which the minister feel is important for India to simplify it's procedures on the transaction costs.
"It is important to see what's being done in the number one or two economies, like, in Singapore, Denmark, and Hong Kong - what kind of process is done by them. We are sending a group out within 16 days or one month. We will incorporate that as well into our recommendations and then I will be personally be working in each of the ministries and see that what we can achieve from these ministries," Scindia mentioned.
Scindia said that the Task Force was aware of the costs incurred by exporters vis-a-vis other nations. For instance, while it takes 17 days to transport a container in India at a cost of US$ 945, the time taken in Brazil is 4 days, Denmark 5 days, and Mexico 14.
"We will also incorporate the recommendations of this team in the report," he said.
Scindia said the task force has been able to monetise transaction costs worth $12-15 billion, which is around 7-10 percent of exports valued at $160-165 billion. "Even if we are able to work on and reduce up to 30 percent of these costs, we will be rendering a huge benefit to the exporting community," he said.
The commerce ministry will work closely with ministries of finance, agriculture, shipping, and environment for execution of its strategy.
"I will personally pursue with the ministries concerned as execution is the key to delivering benefit to the exporters," Scindia added.
He said that the Task Force, has looked at transaction costs incurred by exporters ex-factory to the f.o.b stage. The effort is to identify the areas which could be zeroed in on to simplify procedures and make the processes transparent.
Along with these, the Ministry of Commerce and Industry has also planned to launch e-portals which help in lowering the transaction costs.
Scindia added, "E-business is in process and the beta version will be launched in next month or two."
"The first is e-trade (portal), where on a vertical access we have put all stakeholders on a single platform. Along with that is the Electronic Data Interchange (EDI). EDI and e-trade are horizontal portals that we will be releasing very soon." he revealed.
"Further, e-biz (portal) is for every entrepreneur and every single profession that we need to take up either from the Panchayat-level or the ward-level or right up to the central government will be through this single portal." Sindia added.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said the simplified procedures and reduced costs will not only benefit the economy but will also lead to a direct economic gain of at least $5 billion to exporters.
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Transaction costs in India
V. Radhakrishnan Iyer | Thu Oct 14 06:17:24 2010
There is lot of room for cutting the transaction cost. To name a few which will have immediate impact is as under:
1. Procedural hurdles in gov departments
2. Policy of handling import/export cargo in ports
3. Too many middleman in logistics business.
If the task force looks into these aspects closely with ground level operational issues, it is possible to bring 40 to 50% of targetted cost reductions.
transaction costs for exporters
R.G.Tantia | Thu Apr 29 01:35:40 2010
Goverment Rules are funny. They are thinking of reducing the transaction cost, giving refund of service tax on Export but could not understand why they CHAGE SERVICE TAX ON BANK CHARGES RELATING TO EXPORT, which no exporter can claim. Goverment should give power to bank for service tax exemption because bank when charging know very well that this charges is relating to export and chances to misutilization of power is verry less.
Export Costs
riyasudeen | Wed Apr 28 05:41:45 2010
It is a right move from the Govt. to look into the problems faced by the exporters to reduce the transcation costs. The Govt. should also take measures to get the currency stabilized against dollar as frequent variations is seriously affecting exporters.
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