Indian exporters and businesses in general are faced with uncertainty, as the US tariff onslaught begins to play out. But in every crisis, there lies an opportunity. In this case, India can focus on reducing internal encumbrances to business with a renewed sense of urgency, to at least partly offset the new adversities. To its credit, the Centre has been cognisant of the need to embark on another round of ‘ease of doing business’, with the Budget and Economic Survey 2024-25 stressing the same. More recently, the Prime Minister and Finance Minister referred to the intent of Jan Vishwas Bill 2.0 to reduce compliances and punitive provisions. In recent post-Budget interactions that dwelt on ‘deregulation’, it was evident that exporters still face considerable hurdles.
Exporters have been grappling with age-old concerns, which begin with lack of clarity on the maze of compliances to start a business. A master document in this regard would go a long way in promoting entrepreneurial activity. Besides, single window clearance is notably absent for exporters. A ‘national trade network’ that integrates the clearances of different departments concerned would help. HSN product classification needs to move from eight digit to 10-digit level to do justice to the complexity of the products exported and imported and arriving at the right levies for the latter.
Where exporters pay GST on inputs and apply for a refund (in cases where the inputs are not zero rated), it could take three or four months for them to recover their money, locking up working capital. Needless to say, some exporters find ways to get their money back earlier. There is also the issue of inventory being locked in bonded warehouses, awaiting physical verification by customs staff — a process that can take time when warehouses are located in areas where such officials are not posted. It is inexplicable that such processes are so slow in this time and age. Likewise, physical verification of consignments by customs authorities can be exceedingly slow. But the biggest Achilles heel in India’s export-import sector is the slow port turnaround time, owing to the process of clearing consignments, difficulties in determining levies and the high levels of documentation. The recent active use ‘quality control orders’ on imports has complicated matters, and must be reviewed. India cannot viably plug into global value chains, driven by just-in-time systems, if products take days to be offloaded and loaded back.
Even as world markets readjust to a new normal, India must be in a position to retain its export share, if not expand it. To this end, deregulation of internal and external businesses must assume priority and it is just as well that a high level panel has been entrusted with this task. While the EoDB 2.0 project lists out specific areas of reform, mentioned in the Survey, the big picture should not be overlooked — namely, regulation of business should be marked by trust rather than suspicion.
