India’s merchandise exports have been remarkable in 2021-22 achieving the target of $400 billion well before the end of the financial year. Exports have increased from $290 billion in 2020-21 to $419 billion in 2021-22 reflecting an increase of more than 40 per cent on an annual basis.

The government is of the view that the momentum of India’s merchandise exports needs to be sustained to achieve the ambitious export target of $1 trillion by 2030. In order to achieve this, the government has recalibrated its FTA strategy and has signed trade pacts with the United Arab Emirates (UAE) and Australia. It is also negotiating FTAs with the UK, Israel, Canada and the European Union.

A stable and sustained increase in India’s export requires next generation reforms in its domestic trade institutions which act as catalysts to the growth of exports. These reforms should adopt a holistic approach rather than a piecemeal progress. Let us focus on some of the key institutional reforms that are critical to revitalise domestic trade institutions and need to be considered in the upcoming foreign trade policy.

To promote and facilitate trade, India has set-up 37 trade promotion bodies, known as Export Promotion Councils, Commodity Boards, and Export Development Authorities and Federation of India’s Exporters Organization. Majority of these bodies were set-up in the period 1960-80 and many of them have outlived their relevance with India’s changing export basket.

On revamp mode

In a value-chain-driven globalised set-up, there is a need to develop deeper insights into trade related issues not from a perspective of industry but at a firm and product level, thus demanding the revamping of these trade promotion bodies.

The NITI Aayog is analysing the existing architecture of EPCs to explore the possible areas of reforms in their institutional and organisation structure. It is important that these reforms should be comprehensive, firstly the governance structure, how these are constituted (electoral process), formation of committees and sub-committees, and clearly defining the expectations from each of them in India’s trade promotion efforts.

There is a need to bring transparency and accountability to the merit-based, rule-based and result oriented system. The role of trade promotion bodies (EPCs/Boards, etc) should not be limited to product-mandate but to ensure research-supported and competition-based advisory and facilitative role to strengthen India’s external trade regime, business ecosystem, and export ecosystem.

This will ensure global competitiveness of Indian products in international markets. EPCs need to come-out of their business as usual scenario and must delve deep into India’s product capabilities, capacities and competences, minimum at sub-heading level (ITC-HS Subheading) and explore the global business opportunities in the right segments with right targeting and positioning.

Further, trade promotion bodies should not act in a silo but as a consortium of creating business ecosystem for start-ups, new exporters through skills development, product and market identification, hand-holding and advisory services, buyer-seller meets, participation in market access initiatives including trade fairs, and tying-up with research and capacity building organisation to continuously strengthen India’s business and export eco-system..

Secondly, India has 63 Partner Government Agencies (PGAs), facilitating Indian Customs for compliance of product standards, for instance Food Safety Standards Authority of India for food and eatables, and Plant Quarantine for ensuring Sanitary-Phyto-Sanitary Standards in compliance to domestic as well as international rules/treaties. A few of the PGAs are networked with EDI enabled platforms but a vast majority is yet offering services in physical mode to Indian Customs.

As the size and scale of India’s external engagements is growing, it is paramount to strengthen the governance structure, regulatory framework and public service delivery of these PGAs.

One way of doing so can be through a universal Application Programming Interface (API) platform which offers the harmonised set of programming instructions to all 63 PGAs under standardised web-based software applications to communicate with each other.

The API enabled PGA platform will reduce the time in communication between Indian Customs and PGAs and help them interact effectively thus transforming the exim compliance eco-system of India. This will bring efficiency and transparency in regulatory clearances both at the time of export or imports and also for registration and audit compliances.

States’ role

Thirdly, in a federal set-up, there are a large number of business services and policy initiatives which are under the mandate of respective State government(s). With ever-increasing external engagements and to continuously strive to achieve a target of $1 trillion of exports, it is the high time to frame clear, definable and ambitious mandates for the State-level trade promotion bodies.

These bodies exist more on paper today, offering an industrial plot(s), and some other industrial promotion services. For India to emerge as a champion of exports, the State level bodies should be empowered, envisioned and enthused with business targets in the area of their product or services strengths.

Further, these bodies should be the nodal point of communication, coordination, and resolution of exporters’ problems related to the constitutional mandate of the State List.

The State level trade institutions can play a vital role in not only resolving State level infrastructural problems (State and local roads, pollution, land, power stabilisation, water treatment, sewerage etc) but also the associated administrative challenges.

Moreover, the spirit of functioning should promote, facilitate and constantly develop external trade engagements of India, both in goods and services. Hopefully, the new foreign trade policy takes a cognisance of the aforementioned domestic institutional reforms.

The writers are with Indian Institute of Foreign Trade, New Delhi, and FORE School of Management, New Delhi, respectively. Views expressed are personal