Introduction: In a recent statement by Commerce and Industry Minister, Mr. Piyush Goyal, the discussion about non-tariff barriers has gained prominence. This article aims to delve into the concept of non-tariff barriers, their impact on Indian exporters, and potential solutions. Understanding these barriers is crucial for comprehending the challenges faced by the Indian export industry.
Amidst the enormous advices of reading newspaper, my search for a few interesting news made me land on these headlines, by our Commerce and Industry Minister, Mr. Piyush Goyal, “I have told them (other countries) very categorically that if you put one non-tariff barrier we will put two. It is reciprocal.” The sentence was a true representation of a hindi proverb, Eent ka jawab patthar se dena!
What is meant my Non-tariff barrier?
It is important to know this because non-tariff barriers are the reason why Indian exporters are not able to leverage the low duties consequent to India’s FTAs.
- The purpose of non-tariff barriers is to restrict trade through barriers other than tariff barriers like quotas, embargoes, sanctions etc.
- It is generally the political and economic strategy of companies to restrict trade through such barriers.
- It is done to protect the domestic industry from low-cost imports and growth being a form of protectionism.
- Compliances are costly for both producers and consumers.
- They essentially distort international trade and affect global economies.
Among other challenges posed by such barriers to the Indian exporters, the most significant are:
1. Increases the Compliance cost
2. Documentation and Administrative Burden
3. Complex Customs Procedures
4. Sanitary and Phytosanitary Measures (SPS)
What are Foreign Trade Agreements?
In simple words, Free Trade Agreements are the treaties between countries to reduce or eliminate certain barriers to trade and investment.
Apart from their major benefit of reducing tariffs they also facilitate ease of trade, access to new markets, technology transfer, better integration, reduce monopolies, increase competition, improve quality of life and create more jobs.
India currently has 13 FTAs but India’s utilisation of FTAs is just around 25% while for other countries it is 70 to 80% !!
Solutions:
The government announced Trade connect e -platform to cater to this problem. It is an intermediary platform that aims to facilitate connections between Indian exporters and entrepreneurs and various international trade stakeholders.
It will help new exporters access markets and analyse market trends better consequently making high utilisation of FTAs.
Conclusion: Non-tariff barriers pose substantial challenges to Indian exporters, impacting compliance costs, documentation burdens, and customs procedures. Understanding the intricacies of these barriers is crucial for devising effective solutions. The Trade Connect e-platform emerges as a promising initiative by the government to mitigate these challenges, fostering better utilization of FTAs and enhancing India’s position in the global trade landscape.
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