Trade Infrastructure for Export Scheme

• 17 Mar 2023

For Prelims: Trade Infrastructure for Export Scheme (TIES), PM Gati Shakti National Master Plan (NMP), Duty Drawback Scheme, Russia-Ukraine War, Weaponization of Supply Chain, Special Economic Zones.
For Mains: Major Government Initiatives to Promote Export Growth, Challenges Related to Indian Export Growth.

Why in News?

The Department of Commerce, Government of India, has implemented the Trade Infrastructure for Export Scheme (TIES) to facilitate the growth of exports by creating appropriate infrastructure.

What are the Major Government Initiatives to Promote Export Growth?

• TIES Scheme:
  • The TIES scheme provides grants-in-aid to central/state government-owned agencies or their joint ventures for infrastructure projects with significant export linkages.
    • The infrastructure includes Border Haats, Land customs stations, quality testing and certification labs, cold chains, trade promotion centres, export warehousing and packaging, Special Economic Zones, and ports/airports cargo terminuses.
• PM Gati Shakti National Master Plan (NMP):
  • The PM Gati Shakti NMP is a digital platform that integrates geospatial data related to infrastructure in the country and planning portraits of various ministries/departments of the government.
    • This digital system helps in data-based decision-making for the synchronised implementation of infrastructure projects, aiming to reduce logistics costs and support economic activity in the country.
• Duty Drawback Scheme:
  • The Duty Drawback Scheme rebates the incidence of customs duties on imported inputs and central excise duties on domestic inputs used in the manufacture of export goods.
    • This scheme is operated in terms of provisions of the Customs Act, 1962, read with the Customs and Central Excise Duties Drawback Rules, 2017.

What are the Challenges Related to Indian Export Growth?

• Rising Protectionism and Deglobalisation: Countries around the globe are moving towards protectionist trade policies due to disrupted global political order (Russia-Ukraine War) and weaponization of supply chain, that is in way shrinking India’s export capacities.
• Lack of Basic Infrastructure: India’s manufacturing sector lacks sufficient manufacturing hubs, internet facilities and transportation are costly when compared to developed nations which is a huge deterrence to Industries.
  • India uses only 4.3% of its GDP for infrastructure construction each year, as compared to China’s 20% of its GDP. For infrastructure, Rs 10 lakh crore (3.3% of GDP) was allocated in the budget 2023-24, an increase of three times from 2019.
  • Uninterrupted power supply is another challenge.
• Lack of Innovation Due to Low Spending On R&D: Currently, India spends about 0.7% of GDP on research and development. This prevents the manufacturing sector from evolving, innovating and growing.

Way Forward

• Filling Up Infrastructural Gaps: A robust infrastructure network - warehouses, ports, testing labs, certification centres, etc. will help Indian exporters compete in the global market.
  • It also needs to adopt modern trade practices that can be implemented through the digitisation of export processes. This will save both time and cost.
• Exploring Joint Development Programmes: Amidst a wave of deglobalisation and slowing growth, exports cannot be the sole engine of growth.
  • India can also explore joint development programmes with other countries in sectors like space, semiconductor, solar energy to improve India’s medium-term growth prospects.
• Frontlining MSME Sector: Currently, MSMEs contribute to one-third of the country's GDP, account for 48% of exports making them key players in achieving ambitious export targets.
  • It is important for India to link Special Economic Zones with the MSME sector and incentivize small businesses.

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Q1. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (2018)

(a) Industrial output fails to keep pace with agricultural output.
(b) Agricultural output fails to keep pace with industrial output.
(c) Poverty and unemployment increase.
(d) Imports grow faster than exports.

Ans: (c)

Q2. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)

1. Development of infrastructure facilities.
2. Promotion of investment from foreign sources.
3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

Ans: (a)

Q3. A “closed economy” is an economy in which (2011)

(a) the money supply is fully controlled
(b) deficit financing takes place
(c) only exports take place
(d) neither exports or imports take place

Ans: (d)

Source: PIB