24x7 customs clearance to reduce export transaction costs

New Delhi, Feb 8 (PTI) Round-the-clock customs clearanceat eight major ports, reduction in bank charges on foreigncurrency and concessional loans are among the measuresannounced by the government to cut transactions cost.

As many as 21 measures have been unveiled on therecommendations of a task force headed by Minister of Statefor Commerce and Industry Jyotiraditya Scindia which examinedthe problems faced by exporters that pushed their transactionscosts.

According to government estimates, the implementationof these steps would result in reduction of business cost forexporters to the extent of Rs 2,100 crore, which however isconsidered small given the country''s export value of USD 200billion.

The other cost saving step include reduction of chargesby the Delhi International Airport for screening express cargoand courier shipments from Rs 6 to Rs 1.65 per kg for theexport courier.

The booking charges for foreign currency by banks havebeen reduced from Rs 750 to Rs 400-500 per transaction.

Leading banks have been asked by the RBI to extendpre-shipment credit in foreign currency at the globalbenchmark of LIBOR (London Interbank Offer Rate) + 2 per centinterest rates.

"I am told that quantum of transaction cost is about 7-10per cent of total value of Indian exports. This amounts to asignificant, about USD 15 billion. In that context theseinitiatives by the ministry of Commerce is really a welcomestep," Finance Ministry Pranab Mukherjee said while releasingthe report.

Besides the monetary measures, several procedural issueshave also been addressed. These include round the clockavailability of the plant quarantine services at Chennai andMumbai international airports.

The move would help importers and exporters of plantmaterials and agricultural commodities.

The eight major ports where round-the-clock customsclearance would be provided include Vizag, Kolkata, Jamnagar,Mangalore, Bhubaneswar and Chennai.

After a decline in 2009-10, India''s exports, whichcontributes about 20 per cent to the country''s GDP, have grownby an impressive 29.5 per cent during April-December 2010-11to USD 164.7 billion from a year ago period.

However the shipments from the country was suffering fromthe cost disadvantage as pointed out by Commerce and industryMinister Anand Sharma.

"The average cost to an exporter on account oftransaction cost has been monetised at a level of USD 945 percontainer as compared to USD 460 in China, USD 450 in Malaysiaand USD 625 in Vietnam," Sharma said. .