The Task Force on Transaction Cost appointed by Government of India to "look into various issues affecting the competitiveness of Indian exports" had raised high expectations on the part of exporters. However, the recently submitted report has failed to meet the legitimate expectations of the exporters, even though the trade bodies, in their customary, maybe compulsive necessity, mode have welcomed the report.

While the Task Force gloated over the fact of "accomplishing closure of 21 out of 23 issues", the fact of the matter is that the projected savings of ₹2,100 crore is only 1.9% of the total transaction cost of Indian exports, estimated at (as per the World Bank report) US$ 24.5 billion, as against the total Indian exports of US$ 245.29 billion during 2010-11. What is even more revealing is the fact that 21 of the 23 issues identified by the Task Force had already been implemented even before the Task Force Report saw the light of the day.

The Report of Task Force on Transaction Cost in Exports was released recently by the Finance Minister, Pranab Mukherjee in the presence of Anand Sharma, Minister of Commerce and Industry, and Jyotiraditya M Scindia, Minister of State for Commerce and Industry. The scope of the Task Force chaired by Scindia constituted in October 2009 "covered all parts of the export process, from procurement of raw materials to physical exports and post-export procedures, across all ministries."

According to Scindia, "The mandate of the Task Force was to look into various issues affecting the competitiveness of Indian exports, provide recommendations to the Government and initiate a set of 'executable' remedial measures towards reducing latencies and costs associated with trading across borders." The Task Force based its work on a quantitative approach so that the important issues and initiatives can be prioritized and their implementation tracked.

The Task Force was headed by DGFT and supported by a seven-member Project Management Group that included senior officials from DGFT and Department of Commerce and representatives from FICCI, FIEO, and CII. The Task Force also had a group of experts from six different product sectors and six different functional areas in terms of documentation and clearances. Inputs from these stakeholders were instrumental in order to define transaction cost issues and the required initiatives.

Read Full Report

Here 'I' refers to the author; he shares his comments on the issue of 'Task Force on Transaction Cost'.