Thrust on EDI to cut transaction costs

NEW DELHI: The government is working on strategies to step up implementation of electronic data interchange (EDI) so that transaction costs incurred by exporters are reduced significantly.

Implementation of EDI has become a major focus area as the Prime Minister’s Office (PMO) is directly monitoring progress on this front, highly-placed sources said.

The primary aim of the government is to connect all ports, customs offices, the director general of foreign trade (DGFT) and all other related departments electronically so that import and export licences are processed on-line.

While commerce & industry minister Kamal Nath has already directed officials to bring most export transactions under the EDI umbrella, work on this area will be co-ordinated with efforts of a committee on reduction in transaction costs, headed by the director general of foreign trade (DGFT).

Reduction in number of documents needed for export and import transactions, combined with expansion of EDI, is expected to result in sizeable cut in input costs of exporters.

Efforts on the EDI front would be dovetailed with the efforts of the DGFT to reduce documentation, the sources said. Details of the current initiatives are expected to be part of the amendments to the foreign trade policy this year.

The primary idea of the current EDI plans is to bring about paperless transactions.

According to the strategy formulated by officials, once a licence is issued electronically by the DGFT, the customs authorities should be in a position to authenticate it on-line.

This will lead to automatic credit of duty drawback, reducing the time taken for transactions. “Reduction in physical interaction between exporters and officials would also eliminate corruption. Exporters can focus on business development instead of liaison with officials,� the sources said.

The five-year Foreign Trade Policy, valid till March 2009, mandates expansion of EDI and delegation of powers to zonal and regional offices of DGFT for speedy disposal of difficulties faced by exporters.

With India’s exports expected to touch $75 billion during 2004-05 and imports to the tune of $100 billion, the current growth in foreign trade is robust, requiring faster clearance of transactions.

Therefore, in addition to speeding up of administration, the government is also looking at sprucing up of physical infrastructure at ports and inland container depots (ICDs).

The government is also planning to introduce self-assessment of import duty at key ports and tracking of imports through automated systems to check frauds.

The Central Board of Excise & Customs (CBEC) is expected to implement use of software-based assessment system but efforts to do so have not been successful so far.

While suo moto efforts are being made for wider use of EDI, countries like the US are also driving the trend by promoting use of electronic documents.