High transaction costs, levies impacting exports

By Staff
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Google Oneindia News

New Delhi, Feb 19: Industry body Assocham today called for a check on the high transaction costs, levies and cess and poor infrastructure facilities in trade as they are adversely impacting country's export competitiveness.

Post a study on 'Export Turnover, Product Exposure, Territorial Exposure and Capacity to Domestic Sourcing of Inputs', the chamber indicated that key economic activities in engineering goods, metal, ores, textile, leather and pharma are the worst victims of the higher transaction costs, levies and cess, imposed by government.

The aggregate adverse impact of fiscals, poor infrastructure and cumbersome procedures on exports was to the extent of 14 per cent of total value of exports, according to the findings of the study.

The transaction cost is more on exporters who import higher volumes of inputs which leads to higher manufacturing cost. Cess and levies also impact exports the most with incidence of around 5.22 per cent of freight on board (FOB) value.

Problems in exports, impact exports to the extent of 4 per cent of the FOB value.

''Metals and ores sector are most burdened by many number of cess, levies, poor infrastructure and export procedures,'' Assocham President Venugopal N Dhoot said.

The incidence as a percentage of the FOB value of exports is found to be 19.39 per cent, fiscal 7.79 per cent, infrastructure 7.7 per cent and procedures 4.60 per cent. It is followed by the sector pharma with the total impact amounting to 17.10 per cent of the FOB value of exports, fiscal 6.84 per cent, infrastructure 5 per cent and procedures 5.26 per cent, it said.

The survey highlighted that small exporters seemed to constitute the largest percentage share out of the three categories of exporters.

Leather sector has the biggest number of small-scale exporters, that is 88.22 per cent, followed by agro (86.23 per cent), IT hardware (84.25 per cent), gems and jewellery (83.50 per cent), pharma (82.59 per cent), textiles (77.58 per cent), engineering (75.64 per cent), auto (69.11 per cent), metals and ores (68.84 per cent) and project goods (64.72 per cent).

Across the 10 sectors and among the medium-scale exporters, the study observed that the auto sector had the largest number of exporters whose average export turnover ranged between Rs 10-50 crore, that is 26.22 per cent.

Others that followed were the project goods sector (24.82 per cent), metals and ores (23.37 per cent), engineering (20.51 per cent), textiles (20.13 per cent), IT hardware (14.54 per cent), pharma (12.57 per cent), agro (11.53 per cent), gems and jewellery (11.00 per cent) and leather (10.38 per cent).

It also observed that the average share of the large-scale exporters whose export turnover per annum ranged above Rs 50 crore constituted a small share in the three export groups of small, medium and large exporters. Project goods were the sector with the largest share of 10.46 per cent.

Among the agro and food processing exporters, it was found that the marine products constituted the largest share among the most exported products list with a percentage share of 14.06 per cent.

It was followed by rice meal (13.47 per cent), oil meal (7.47 per cent), cashew (6.27 per cent), spices (5.39 per cent), sugar and molasses (4.48 per cent), tea (4.32 per cent), coffee (3.93 per cent), tobacco (3.41 per cent), and wheat (2.76 per cent).

As per the study, the engineering sector's exports can broadly be classified into five products. Among these five the primary iron and steel and items thereof contribute the most to overall engineering exports abroad with share of 39.85 per cent.

Others that follow are export of capital goods (29.49 per cent), consumer durables (19.65 per cent), non-ferrous metals and products thereof (9.36 per cent) and management and technical services (1.66 per cent).

UNI

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