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100 signatures, no infrastructure: the exporter's nightmare

Panic sirens are beginning to sound in the usually languid and laidback warrens of bureaucracy in North Block, New Delhi, which house the central government's economic ministries, over the marked declaration of the rate of growth of India's exports. Between the period 1992-93 and fiscal 1995-96, when Indian industry export drive was in top gear, the nation's export revenue grew by an impressive 20 per cent annually in dollar terms. But in fiscal 1996-97, India's revenue from foreign trade, estimated at $33.5 billion, indicates a mere 4.5 per cent increase over the previous year. And miserable aggregate export receipts at the start of the current fiscal year (April and May) is the cause of panic sirens beginning to wail in North Block, New Delhi.

To his great credit, despite his preoccupation with ensuring the survival of his 13-party coalition government in the maelstrom of caste politics which characterise the nation's populous cowbelt states, Prime Minister Inder Kumar Gujral made time to convene an inter-ministry meeting to find ways and means to revive the nation's flagging export drive. The consequences was the setting up of an Export Promotion Board constituted by representatives of every ministry involved with export-related activities.

The constitution of the board will hopefully help to remove some of the bureaucratic hurdles which exporters have to negotiate before they can get their wares and services to customers overseas. One of the major impediments to the growth of the nation's foreign trade is the vast amount of paperwork that exporters are obliged to complete.

According to my information, every export consignment requires clearance from over 20 government agencies (each loading him/her with their ill-designed and poorly printed forms) which require over 100 signatures! Moreover, each of these export clearance agencies has the discretionary power to hold up a consignment with deficient paperwork instead of the usual power to impose ex post facto fines. Little wonder exporting out of India is viewed as a specialist activity instead of a natural adjunct of domestic marketing.

Better inter-ministry coordination and the reduction of paperwork and discretionary power of exports clearance agencies are important issues. Because unless the community of exporters out of India continues to grow and the new generation of entrepreneurs enters the foreign trade sector, Indian industry is unlikely to improve upon its pathetic 0.5 per cent share of world trade.

Established exporters tend to gloss over the subject of the amazing paper intensity and the exercise of arbitrary discretionary power of clearance agency officials monitoring India's foreign trade, I suspect this is because having learned the ropes the hard way, they are not in favor of further simplification of foreign trade procedures because a continuous flow of entrepreneurs into this sector would mean more competition for established exporters.

Another fundamental infirmity of India's pusillanimous export drive is the over-emphasis on manufactured goods. The great potential of the agro-industrial sector remains substantially untapped. With over two-thirds of India's population deriving a livelihood from agriculture and the nation's farmers having established himself as the world's largest grower of fruits and the second largest producer of vegetables, agro-industry products stand a better chance in foreign markets than the me-too manufacturers produced by Indian industry.

Yet, barely one per cent of India's horticulture produce is preserved and processed. In the absence of a meaningful cold chain, efficient transport, storage and backward and forward infrastructure linkages, 40 per cent of India's horticulture produce rots before it gets to any market -- domestic or foreign. Little wonder that despite the dramatic gains the nation's farmers have registered in terms of farmland productivity, rural India remains steeped in shocking poverty.

Even the export drive for manufactures and services wallows in shallows and misery. The India Brand Equity Fund is inhibited about helping the export promotion efforts to a few high-potential brands to lend a measure of respectability to the Made in India label. And the union government's ill-chosen representatives are unable to negotiate easy passage of service industry personnel into foreign markets.

In sum, the federal and state governments need to seriously ponder their role in the foreign trade sector. Essentially, their role is to create a facilitative paperwork-free environment in which a sale to a customer overseas is a near approximation to a sales transaction in the domestic market. Secondly, government need to concentrate on infrastructure building to release the huge export potential of rural India. And thirdly, the central government needs to sharpen the negotiating skills of its representatives in the World Trade Organisation in Geneva so that India's high-potential service industries have access to foreign markets.

Leave the rest to the nation's business persons.