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New directorate chief should simplify rules
November, 20th 2006

The new Director General of Foreign Trade BS Meena has taken over at a time when exports are booming. He should strive to further simplify the foreign trade policy and procedures, bring in more transparency in administration, co-ordinate better with the finance ministry and use information technology more effectively. 
Meena should end the suspense about the continuation of the duty entitlement passbook scheme as quickly as possible to enable exporters factor in the incentive while quoting prices. 
It should be possible to give transferable duty credits to service providers even if it means reducing the entitlements. 
Exporters have to satisfy the Customs and licensing authorities that they have fulfilled their export obligations against advance licences. Such unnecessary duplication should end. The focus market scheme benefit should be extended to all exporters regardless of the port they use. 
The paperwork, such as complex application forms, supporting documents and declarations, can be reduced. There is enough time before the March-end annual revision of the foreign trade policy for a fresh look at the policy, especially the procedures. 
The process of fixation of standard input output norms is fraught with corruption and delays. There is no provision for a review by a third party or appeal against the decisions of the technical officers who decide the fate of the applications to fix the norms. The website of the Director-General of Foreign Trade (DGFT) reports many decisions of the committees but has no information about the facts of the case or the basis for decisions. Exporters and importers will benefit if brief details of the cases decided are made known. 
The licensing offices are quick to issue licenses but tardy in admitting discharge of export obligation. Exporters, especially small ones, find it very difficult to get their work done in the licensing offices without paying bribes. The staff in the offices of the DGFT need to be better trained. Special efforts need to be made to change attitudes at the ground level. 
The DGFT needs to comprehend more than the policy and understand how the customs and excise departments work. He should be able to take up matters regarding all imports and exports with the finance ministry. For example, the exemption notifications relating to re-imports are outdated and lead to harassment of exporters. Getting drawback of duties against re-export of imported goods is also a serious problem. The Central Board of Excise and Customs can very well update its manual of supplementary instructions issued in 2001. 
Information technology is a powerful tool for transmission of information regarding shipments from the Customs directly to the DGFT. Even information from banks regarding receipt of foreign exchange can be sent directly to the DGFT. It should be quite possible to issue duty credits or admit discharge of export obligation on the basis of information gathered electronically. This is much better than expecting an exporter to submit documents and employ an army of clerks to find fault with them. 
The new DGFT should meet exporters and importers, especially small players, and look for ideas to improve the systems. He should not rely only on briefings from his subordinates.

T N C Rajagopalan

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