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Business News/ Politics / Policy/  Government in favour of trade facilitation, says Arun Jaitley
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Government in favour of trade facilitation, says Arun Jaitley

Jaitley says the government is in favour of trade facilitation since it helps cut transaction costs for businesses

Finance minister Arun Jaitley. Photo: MintPremium
Finance minister Arun Jaitley. Photo: Mint

New Delhi: Less than a fortnight after India scuttled the multilateral trade facilitation agreement (TFA) at the World Trade Organization (WTO), finance minister Arun Jaitley on Monday said the government is in favour of trade facilitation since it helps cut transaction costs for businesses.

Jaitley was speaking at a two-day annual conference of chief commissioners and directors general (DGs) of customs, Central Excise and Service Tax, after India rejected the measure in Geneva on 31 July, insisting that its concerns on finding a permanent solution to food security must be addressed simultaneously.

“The finance minister Shri Jaitley said that trade facilitation will not only bring ease in doing business in the country but will also reduce the cost of doing business," a statement by the finance ministry said.

The TFA requires developing countries to build infrastructure capacity for faster and hassle-free clearance of cross-border shipments.

Under the agreement, India has also given a binding commitment for speedy shipment of air cargoes.

While rich nations have pledged to provide technical and financial help to the world’s poorest nations in order to build the necessary infrastructure, India is unlikely to seek any such support.

India was meant to have notified a timeline to implement its commitments under the TFA by 31 July.

The government will now have to make amendments at two or three places in domestic legislation in order to implement the TFA.

The Economic Survey released on 9 July said India has initiated inter-ministerial consultations for drafting India’s notifications on “category of commitments required under the Trade Facilitation Agreement".

Mint on 23 July reported the government has allocated huge sums of money for the development of ports and has announced a single-window clearance mechanism for imports in the budget that will help it meet its commitments under the TFA.

Revenue secretary Shaktikanta Das, while speaking at the same event, said it is in India’s interest to improve trade facilitation measures because they will ultimately benefit the country.

Das said that the finance minister in his 10 July budget had announced that 24x7 customs clearance facilities would be extended to many more ports, airports and sea ports, and that the officials posted at these ports would have to ensure their implementation. Das said the budget pays a lot of attention to simplification of procedures, rationalization measures and ensuring that the revenue department plays a non-adversarial role.

“(Das) asked the chief commissioners and DGs that as leaders of their team and the leaders of their zones, they should play a facilitating and non-adversarial role," the finance ministry statement said.

J.M. Shanti Sundharam, chairperson of the Central Board of Excise and Customs (CBEC), said in order to reduce the cost of transaction to the taxpayers, the department (CBEC) has already initiated steps such as implementation of a risk management system for exports covering 89 locations and a roll-out of a “precious cargo customs clearance module" at Bandra Kurla complex in Mumbai.

“On CBEC’s latest initiative of Single Window, she added that the ‘Indian Customs Single Window Project’ is a large and complex IT initiative to enable a single-point interface for the trade to lodge, complete and obtain clearances for all import, export and border control related regulatory requirements. It will involve coordination between more than 14 other agencies under different ministries," the finance ministry quoted Sundharam as saying.

Speaking at Monday’s event, Jaitley also said that the revenue targets for indirect taxes for the current fiscal are a challenge but very much achievable.

The revenue target for indirect taxes for the current fiscal is fixed at 6.23 trillion, with an overall growth rate of more than 25%.

Revenue secretary Das said indirect tax collections grew by only about 4.5% in the first quarter, but that in June 2014, the growth has been 13.5% overall and of that, service tax collections accounted for nearly 28%. He said that in July 2014, too, the growth pattern is “very good".

Jaitley said that in order to spur economic growth, the government has in the past few months concentrated on improving manufacturing and infrastructure.

“The government has taken a series of measures in the last two months, both inside and outside the budget process, in this direction to boost the performance of these sectors," he said.

Jaitley said the figures relating to the manufacturing sector for the months of June and July this year are quite encouraging, but added it will constitute a pattern only if the trend continues for a few more months.

Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, said there is no contradiction between India’s stand at the WTO and Jaitley advocating trade facilitation. “Overall, India’s stand is that we are dismayed at the lack of progress on food security while trade facilitation negotiations have galloped. So it is no more an issue of whether TFA is good or bad for India," he said.

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Published: 12 Aug 2014, 12:48 AM IST
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