Centre pushes for reviving export commissioner posts for boosting trade

The export commissioners will be expected to operate under clear targets to expand exports from their states

The Centre will provide budgetary support to states that revive the scheme of export commissioners to make trade a key deliverable in their economic policies. It is also expected to help the Centre mobilise strong political support from the state governments when it cuts import duties and signs trade agreements to allow more imports.  

Along with the ongoing expansion of the department of commerce at the Centre, pushing for a senior officer-led new department—an export promotion cell at state levels -- is therefore seen as crucial. Central government mandarins hope India's export of goods and services will jump from the current $700 billion to $2 trillion within the next five years.

"The finance ministry has sanctioned the finance for the scheme for export commissioners in every state and it will travel to the cabinet, at some point, " said retired commerce secretary BVR Subrahmanyam. Another official aware of the developments said this would need an expansion of the role of the India Trade Promotion Organisation.

There is a past to the scheme. It was started in 2015 when 21 states appointed export commissioners as part of the Foreign Trade Policy 2015-20. As it turned out, these commissioners were mostly additional designations for their industry secretaries. Even then, 14 states also framed strategies for outward shipments, often assisted by the Centre. The appointment of these commissioners was expected to help India reach an aggregate export volume of $900 billion by FY20.

Export pessimism, however, soon set in, bringing the curtains down on the scheme. By FY18, the Indian government policies turned inward. Former finance minister Arun Jaitley, reversing a long-standing trend of cutting duties on imports, instead raised the duties on about 40 tariff lines. By November 2019, India had also walked out of the 15-nation Regional Comprehensive Economic Partnership (RCEP).

Subrahmanyam said there has been a turnaround in the government's trade policies, which recognises that "splendid isolation will not do". Instead, the country needs exports as an important engine for growth, for which there is a need to be part of the global value-added chain.

Speaking at the India @75 conference, organised by the Deepak and Neera Raj Center on Indian Economic Policies at Columbia University, New York, in late October, the former secretary said the revival of the post of export commissioners at each state was necessary for a "buy in" by them to the ambitious international trade expansion targets of India.

A study by the commerce ministry has found that only about eight states contribute to the export volumes from India, including services. As a political process, this narrows the support for policies to loosen trade rules.

Former commerce secretary Rajeev Kher who had spearheaded the earlier avatar of the scheme, said he welcomed the plans for its revival.

Kher had asked the chief secretaries of the states to push the agenda before he retired. "Most states were not aware of the details of trade policy, much less about what the WTO wanted. Among the few exceptions were Kerala and Karnataka", he said.  

The export commissioners shall now be expected to operate under clear targets to expand exports from their states. While they had a target earlier, too, there was no risk if they missed it since there was no monetary outlay. Since they shall have a budget in the reframed scheme, this will be another centrally sponsored scheme with clear linkages between the spending and the outcome. This is the key difference under which the new scheme shall operate.

In essence, they shall mimic the role ambassadors of India to many countries have been assigned. These ambassadors have a dashboard installed on their tables that give data on how the exports from India to these countries have performed. The data is updated every week. A senior government official said the external mission has begun to show results because the Prime Minister's Office now monitors the data. Prime Minister Narendra Modi has told the ambassadors that trade, technology and tourism are what he expects them to pursue aggressively.

India has begun to reset its trade agenda at a time when the geopolitical wind has changed with a hardening of the position of many countries, vis a vis China.

Endorsing Subrahmanyam's position, finance secretary, TV Somanathan, said at the same event that the government shall push for trade expansion through several means.

Kher said the new proposal would need a revival of the Centre for Research in International Trade (CRIT), at the Centre. The CRIT would act on a hub and spoke model with the states as a multidisciplinary organisation to work on research issues on trade, a sort of federated structure. He agreed that the ITPO (India Trade Promotion Organisation) could take on this role. Surprisingly the commerce ministry had, in the past couple of years, moved to restrict this initiative, reducing their budget.

Subrahmanyam said as part of the shifting geopolitics, many countries have hardened their position on China. As part of the hardening, countries, including India, have begun to reset their supply chains. India has also realised over "the past three-four years that high import tariffs penalise exports".

Incidentally, data shows that two-thirds of India's total export basket of goods are commodities that account for less than 20 per cent of world trade. The government has realised that this means India is selling stuff with minimal demand in the global markets.

As part of the revamp, commerce and industry minister Piyush Goyal has recently introduced the Development of Enterprises and Services Hub (Desh) bill to replace the more than one-decade-old Special Economic Zones Act. It is meant to offer no tax concessions but instead creates a custom bonded manufacturing zone to expand the range of products that can be sold from India abroad competitively.