India’s dismal record in global enabling trade index; technology adoption, too, is not helping it either

1 December: India although gained few positions retains a low ranking in enabling trade while its ICT adoption is “actually stalling and losing grounds vis-à-vis other countries”, a biennial report of the World Economic Forum (WEF) reveals.

All south Asian economies have improved their Enabling Trade Index (ETI) score over the past two years. Economies that comprise the Association of Southeast Asian Nations (ASEAN) are now a more accessible market for trading goods than the EU or the US, says the Global Enabling Trade Report 2016 published on 30 November.

Reuters

The report published by WEF and the Global Alliance for Trade Facilitation contains the ETI which assesses the performance of 136 economies– on domestic and foreign market access; border administration; transport and digital infrastructure; transport services; and operating environment.

How India fared for enabling trade

Although India has jumped four positions, it remains at a “disappointing” 102nd position out of the 136 ranked countries. Bhutan has jumped 12 places and has exceeded India in the ETI score with a 92 position. Immediately, following India is Sri Lanka ((103rd), Nepal (108th), Pakistan (122nd) and Bangladesh (123rd).

Although the south Asian region has improved its ETI score, but it remains the most closed region in the world and imposes an average tariff of 16.7 percent on imported products as compared to 15.8 percent in 2014 (though the ETI scores between 2014 and 2016 cannot be compared on some indicators because of a change in methodology of calculation).

The report reveals a mixed bag of achievements for India. There have been improvements in terms of border administration (4.4 score out of 7) and clearance efficiency but these gains were “partially outweighed” by a further deterioration of domestic market access conditions (second last globally), with only 13 percent of imported goods free of duty and an increase in average tariffs applied to the 13 percent, the report states.

There have been “large improvements” in terms of transport infrastructure (4.5 score out of 7) and services (4.6) but the local operating environment has improved “slightly” (4.2) with more openness to foreign participation.

Interestingly, for a government that plans to boost a “cashless society”, its ICT adoption is actually stalling and losing grounds vis-à-vis other countries in the diffusion of the most advanced technologies, such as mobile and fixed broadband, ranking an abysmally low 125th and 104th (out of 136 countries) respectively. Overall, availability and use of ICT has only a score of 3.4 out of a total of 7. The cellular telephone subscription is 78.8 per 100 people while mobile broadband subscription per 100 people is 9.4 and fixed-broadband internet subscriptions is 1.3 per hundred people. Internet use for biz-to-consumer transactions is 4.6 while ICT use for biz-to-biz transactions is lower with a score of 4.5.

The Indian economy is also the most closed (ranking 135 and scoring 2.8 out of 7) ahead only of Iran in terms of overall market access, the WEF report says, while foreign market access ranks 2.7 out of a total score of 7.

India’s trade openness is 31.8 percent and its share of world trade is a bare 1.99 percent.

The top seven factors that are termed “problematic” for Indian imports are high cost or delays caused by domestic transportation (15.6 score out of a highest score of 16), crime and theft (15), corruption at the border (13.1), tariffs and non-tariff barriers (12.3), burdensome import procedures (12), high cost or delays caused by international transportation (11.1), and inappropriate telecommunications infrastructure (10.7).

The top five factors inhibiting exports to India are corruption at foreign borders (11.4 out of a total score of 16), high cost or delays caused by domestic transportation (10.7), burdensome procedures at foreign borders (10.5), difficulties in meeting quality/quantity requirements of buyers (9.5) and identifying potential markets and buyers (9.3).

How the world fared for enabling trade

Singapore, Netherlands, Hong Kong, Luxembourg, Sweden, Finland, Austria, the UK, Germany, Belgium were the top ten countries featuring in the ETI 2016 list.

Vast swaths of the global population are unable to participate in international trade or global value chains—therefore, “more effort is needed to ensure that trade is inclusive”.

“Larger emerging markets in particular fare poorly in the ETI, with China representing the only top-10 most-populous nation in the top half of the index. Six others, home to 2.4 billion people, rank beyond the 100th mark – India (102nd), Brazil (110th), Russia (111th), Pakistan (122nd), Bangladesh (123rd), and Nigeria (127th),” the report states.

The Hong Kong economy applies the lowest tariffs for importing followed by Singapore, Mauritius, Georgia, the EU and the US.

Among the countries that apply the highest tariff rates for imports are Iran, Bhutan, Sri Lanka, Nepal, Pakistan, Zimbabwe.

The five economies facing the highest tariffs while exporting to the world are Bhutan, Taiwan, Iran, Russia and Japan.

The Swiss have the most complex tariff system in the world with 6,710 distinct tariffs applied followed by the EU with 1,924 types of tariffs.

Singapore has the most transparent border administration.


The writer is journalist, United Nations Office at Geneva and World Trade Organization.

First Published On : Dec 6, 2016 15:42 IST

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