"Ease of Doing Business" - India improves in World Bank ranking
VK Sharma
"Ease of Doing Business" - India improves in World Bank ranking
Based on ten criteria, World Bank has given 142 ranking to India out of 189 countries as far as overall "Ease of Doing Business". The Prime Minister is said to have directed his Ministers to take immediate measures to improve its ranking. The department and trade associations have woken up and started a debate on this matter with all seriousness.
India is aiming to improve its ranking to 50 within the next 3 to 4 years. Mr Omno Ruhi, Country Director of WB, is said to have stated that India has improved its ranking to 130 from 142 as per the latest news from WB. Earlier reports had hinted that India has registered/improved only 4 points.
The blame for India’s poor ranking should go to the previous UPA government. They should have taken action to stop the decline at the appropriate time because World Bank’s DB Report means a lot as far as investment in business ventures in India is concerned. The Prime Minister, Mr Narendra Modi, who makes frequent foreign visits to improve India’s image among world community, may want the country to improve its ranking to a respectable position.
A note on this subject, based on Economic Survey 2013-14, DGFT committee report and World Bank DB report is presented hereunder on measures to be undertaken on war-footing.
1) There are 344 ports or Customs points thro’ which export/imports take place.
2) Out of 344, only 126 ports are EDI enabled and 218 ports are still operating on manual system or on non-EDI mode.
For exports, 88.61 per cent transactions accounting for 65.19 per cent value are in EDI mode. Around 11.39 per cent transactions accounting for 34.81 per cent of value data are still transmitted with greater time lag (one month).
Exports and imports taking place from SEZs are presently facilitated thro’ SEZ online system which is not integrated with ICEGATE system of Customs. Urgent need is to integrate the SEZ online system with ICEGATE or better still extend the ICEGATE system to all SEZs. Also, CBEC is of the view that the present ICEGATE system had almost reached in full capacity (about 97 per cent), hence it was not possible for them to extend the ICEGATE system to new port locations and convert them into EDI port without upgrading their system and enhancing the capacity of their server. The proposal is submitted to the government in this regard and is awaiting its approval.
DGFT makes the following recommendations:
1) All non-EDI ports should be converted into EDI ports at the earliest. A timeline for doing this must be finalised by CBEC
2) The proposal for capacity enhancement/upgradation of ICEGATE system should be cleared on priority
3) SEZ online system should be integrated with ICEGATE or ICEGATE should be extended to SEZs and is also recommended that seaports/airports should work 24x7 and clearance of export/import facility should be provided.
Presently, airports at Bengaluru, Chennai, Delhi and Mumbai provide such facility. Besides, clearance of specified import and export items or export made under free Shipping Bills is allowed from four ports, i.e. Chennai, JNPT, Kolkata and Kandla and also from 13 Air Cargo Complexes and 18 sea ports would become operational on 24x7 basis.
The main constraints in this regard are:-
a) Non-availability of infrastructure and manpower of Customs as well as other repulatory agencies
b) Hence recommended that CBEC should provide facility for 24x7 clearance of export/import consignments from all ports.
c) This would require working out manpower and logistics arrangements for Customs and allied agencies (Drug Controller, FSSAI, Textile Commissioner, etc.)
DGFT committee has recommended that Customs EDI should be enabled to accept pdf images of authorisations, invoices, packing lists, etc. so that the requirement for any physical paper copy is dispensed with. In order to ensure legal validity of such documents, Customs can insist on formal digital signature of the party submitting a specific document is used.
The above recommendation is made to correct the defects in the present system. While exporting, a firm is required to file shipping bill, export invoice, packing list, declaration and many other documents. Of these, Customs EDI system allows online filing of only shipping bill and not the remaining documents that are to be filed manually.
The current procedure requires mannual signing of documents (commercial invoices, packing list, examination report, excise invoice, ARE-I).
Non-acceptance of pdf images and non-implementation of widespread use of digital signature at Customs is leading to duplication of efforts and use of paper. This adds to transaction costs in terms of additional staff to deliver and receive/process paper documents and create a paper trail that leads to delays. Hence, the above recommendation made to CBEC.
Another recommendation by DGFT committee relates to replacing the present system with another system in which Customs and Excise to function on single integrated EDI platform. It will dispense with the need for submission of physical copies of ARE-I.
Secondly, in case of factory stuffing in the presence of Excise officers, an integrated document submitted online to Customs EDI should suffice as the final Customs clearance as well. This would mean that such a factory cleared and sealed shipment would have no further requirement for any document submission at port/airport/ICD Customs and procedures at the gateway port/airport/ICD (only check would be to see that the seals are intact).
An RMS can flag particular shipments for random physical inspection factory sealed and cleared shipments would be handed over directly to the custodian/shipping line and Let Export Order (LEO) can be generated online based on the confirmation of handover to shipping line/custodian.
Under the current system, Central Excise and Customs are not linked thro’ a common EDI system. This leads to avoidable transaction costs and delays due to following procedures:-
As goods destined for exports are exempt from Central Excise is chargeable on such goods. However, an exporter has to follow detailed procedure (ARE-I) and there is an obligation cost on the exporters to provide proof of exports to the Central Excise authorities. Current ARE-I procedure requires a lot of documentation in the procedures involved.
Although, there are different procedures for removing export consignments from the factory for the port, factory stuffing under Excise supervision is preferred by most of the exporters so that physical inspection by Customs authorities at the port can be avoided.
However, the need to submit documentation at the Customs in this regard leads to duplication of efforts at both ends, i.e. Customs and Excise.