Explained: NITI Aayog on India’s export competitiveness

Reading time: 8-10 minutes.

For India to be a global economic achiever it will have to take export as the key to achieve it. Although India has a huge domestic market it still lacks in export sector due to various reasons which includes payment constraints, fostering specialisation, and critical mass and productivity. To overcome these lacunas the Think Tank of India ‘NITI Aayog’ has been taking various steps to boost up India’s ability to compete in the export sectors.

In total 17 measures have been proposed by NITI Aayog to improve the trade capabilities of India’s foreign trade. A National Commercial Network (NTN) has been established which will improve the flow of information, and will also assess in making the custom process as well as the Information Technology system more efficient. NTN was established in accordance and maintaining the norms of the Goods and Service Tax(GSTN) which will integrate all departmental data streams into one integrated system to enable all the similar online compliance with export and Import.

NTN has also focused on assessing the MSMEs which at present takes assistance from third party to have export done through various exporting companies. NTN will allow MSMEs to export without taking any sort of assistance which inturn reduce the cost of transaction and thus making India an efficient country.

NTN being an online portal will allow all the exporters to achieve all the information and documents in relation to their products online in one place. There will be no need to deal separately with various departments which includes customs, the general directoral of foreign tade, shipping companies, ports, and maritime and air banks.

Use of simple and vernacular language is suggested in order to improve flow of information which will help the exporters to understand the communication been taken place and the use of NTN will ensure more and more transparency in the issuance of notices, publishing all previous court decision online which will help the exporters to look into various issues that had come up and what were the remedy provided to the exporters in those situation.

Focusing on making the process of customs more efficient, experts has suggested modifying the risk management system (RMS) which will track the action of the field officer right from the beginning of removing the products from the factory to final export.

Significance of this development:

Development of NTN will have a significant impact on the export efficiency and transparency. Since it focuses on various factors which were the reasons due to which India’s export was not able to compete with the world. NTN will provide better information regarding the export and the exporter will have access to all the documents which will improve the efficiency. With regard to the custom process, the officer were indulged in various unethical activities which included demanding cars, free meals etc and these was done even in the absence of rent seeking. These reforms could further assess India in improving its rank on ‘Trading across borders’ parameters in the World Bank’s ease of doing business. At present India stands at 68 where as in 2018 it was on 146th rank.

What is export competitiveness?

It is considered as the ability of a country/state/region to export more in value added terms than it imports when including for “terms of trade” to reflect all government “discounts” and import barriers.

If we go by the above definition, a nation will be able to run a large trade surplus, but if it does so by providing large amount of discounts to the exporters or building up huge barriers for importers, it would not be considered truly competitive.

What is the relevance in current time?

Only when country focuses on export competitiveness it will be able to make it place in the International market. Export will generate foreign income which will help the country’s economy grow at larger scale which will lead to development of the country. Every country should focus on making the export competitiveness efficient and transparent enough for the other countries to rely on the policies of the country for importing the goods from the exporting country.

India’s policy regarding Export Competitiveness

For years India has been focusing on the betterment of export quantity and quality. The textile and clothing industry has a significant importance in Indian economy due to its significant contribution to the total exports. Due to abundant raw materials, low labour cost and vertically integrated production facility India’s textile and clothing industry has strength and competitiveness in the global market. To improve export competitiveness and productivity, the Indian government allowed 100% foreign direct investment in the textile and clothing industry through an automatic route. In other sector as well government as has been taking various steps to promote more of export by providing various set of immunity in taxes and other benefits to boost up India’s Export Competitiveness  

Scope of improvement

With the fast growing economies around the world the competing nations have to gear up in order to make their place into fastest growing nations, and efficient export competitiveness is one of the important factors that help a country to have better economy. In this era there are varieties of new technology which have the potential to profoundly transform trade in which India lags far behind then the other nations. Thus NTN is one of the major assessing source through which India can boost up the export competitiveness. With the help of various technologies India will be able to make it place up in fastest growing nations, what is required is that the government starts making use of technologies which will better the traditional goods export but it will also move up the value chain and export medium and high technology goods.

Conclusion

The think tank is making a progressive step towards betterment of India’s export Competitiveness by using the NTN which will help the exporter in various sectors and thus boost up the economy of India. NITI Aayog is focusing on providing assistance to the exporters where they will have to go through minimal effort and they will be able to export their products round the world. Which will not only boost up the export but will also build up trust of the exporters in the government as they will be able to access all sorts of document at one stop and the officers will not be able to continue with all sorts of unethical work they do to suppress the exporters during the custom process. If India is able to bring uniformity and transparency in the custom process then in no time India’s export competitiveness will have a great impact on the economy.

Author: Shruti pandey from ICFAI Law School, Hyderabad.

Editor: Silky Mittal, Junior Editor, Lexlife India.

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