Govt banks on reforms in trade infrastructure

Fasterpaymentprocesses,easierclearancesamong thoseexpectedtobetteritsEaseofDoingBizscore

With two months before a World Bank team visits India to assess the ‘Ease of Doing Business’, the government is banking on reforms in trade infrastructure to jump to a higher ranking this year.

India had managed to move up by only one rank, to 130th, last year as part of the Doing Business Report 2017. India’s position on seven out of 10 parameters also went down compared to the previous year.

On “trading across borders”, which takes into account the entire exportimport infrastructure, India had gone up by a single spot to 143rd last year.

Now, the government is hoping to better its score significantly, with changes such as the Import Data Processing and Monitoring System (IDPMS) becoming active since then, a senior official said on condition of anonymity. Over the past year, single-window clearance for traders at major ports was implemented, apart from logistics data tracking at the country’s largest port, JNPT in Navi Mumbai.

The system, rolled out by the Reserve Bank of India, is aimed at facilitating faster and efficient data processing for import payment. All an importer has to do for releasing payment to a seller abroad is to quote the IDPMS number. In the past, importers had to send physical copies of all import documents, said Ajay Sahai, director-general of the Federation of Indian Export Organisations.

This was a bulky list — of GAR 7 forms, TR 6 Challans, Trans-Shipment Permit, Shipping Bill (Exchange Control copy and Export Promotion copy) and Bill of Entry (Exchange Control Copy) to banks, the DGFT and Customs/Ports.

The system, from October last year, has already covered all EDI (electronic data interchange) ports, which account for 85 per cent of trade flows. However, the system can be fully utilised only when banks integrate their systems to it and offer a payments channel. Citi Bank is the only one to have done this. The bank handles 6.6 per cent of India’s trade flow, according to Debopama Sen, head of its South Asia treasury & trade solutions division. Major public sector banks are yet to log into the system.

Last year’s ranking had made Prime Minister Narendra Modi’s aim of pushing India among the top 50 nations in this regard by 2018 a bit doubtful. India will have to improve its position by a whopping 80 places to meet the Prime Minister’s target, in one year.

The government had argued that the rankings failed to take into account the various reform initiatives undertaken by it, owing to low awareness of these among end-users.

The multilateral body ranks countries on 10 parameters. Such as rules for starting a business, dealing with construction permits, getting electricity and registering property, among others. India’s position had deteriorated on five parameters, with improvement in four and no change on ‘paying taxes’, something on which the nation has one of the lowest international scores among major economies.

“Important reforms by the government not considered last time such as the enactment of the insolvency and bankruptcy code and introduction of the online single-window system for building approvals in both Delhi and Mumbai will be included this time,” said the official mentioned earlier. Recently, Commerce and Industry Minister Nirmala Sitharaman said the government had taken about 7,000 different measures to boost the ease of doing business.