Cross-border trade ranking: Reforms yet to reach the shores

Lower ranking as World Bank did not take into account some changes

India’s ranking on the “trading across borders” category slid in the World Bank’s Doing Business Report because several reforms were not considered, senior officials said.

The government had undertaken a number of reforms in the trade infrastructure space, too. Such changes helped India enter the top 100 list. But the indicator taking into account the export-import infrastructure showed India’s position had gone down to 146, from 143 the previous year.  

The reforms were not taken into consideration for a variety of reasons, such as these were not making a sizable impact yet and because the reforms were outside the purview of the assessment process, a senior Department of Industrial Policy and Promotion (DIPP) official said on condition of anonymity.

For next year, the government is putting its weight behind reforms that have been implemented but not considered by the World Bank.

One such reform is the single-window clearance for traders implemented at major ports, apart from logistics data tracking, at the Jawaharlal Nehru Port Trust in Navi Mumbai. The system, rolled out by the Reserve Bank of India, was aimed at facilitating faster data processing for import payment. All an importer has to do to release payment to a seller abroad is to quote the import data processing and monitoring system number. Earlier, importers had to send physical copies of all import documents, said Ajay Sahai, director-general of the Federation of Indian Export Organisations.

However, the system can be fully used only when banks integrate their systems and offer a payments channel. Some such as Citibank have done this but major public sector banks have not, senior officials from the Federation of Freight Forwarders Association of India said.

DIPP Secretary Ramesh Abhishek said: “We are going to focus on these over the coming months and ensure these are added to the list of India’s achievements in easing business climate before next year’s rankings come out.”

The government also expects a number of reforms to take time to fructify, after which users will give their feedback to the World Bank.

On Tuesday, Abhishek had said the government was also focusing on a list that has 122 specific changes and 90 new reforms, a significant number of which were part of the trading-across-borders indicator. These included around-the-clock Customs clearance at 19 seaports and 17 air cargo complexes since January 2017 and deferred payment of import duty provided to certified importers.

STUMBLING BLOCK

• World Bank hasn’t considered a long set of reforms for several reasons, according to sources

• This includes differences in de-jure and de-facto positions and minimum impact on ground

• Reforms not considered by the World Bank include round-the-clock Customs clearance at 19 seaports and 17 Air Cargo Complexes since January 2017

• Deferred payment of import duty has been provided to certified importers

• Reforms like import data processing and monitoring system didn’t help, since banks are yet to hook onto the same