The Union Government for the first time has given approval three infrastructure proposals to address the infrastructure problem under the Trade Infrastructure for Export Scheme (TIES).
Decision in this regard was taken at the Inter-Ministerial Empowered Committee (EC) meeting on TIES, chaired by Commerce Secretary.
These three proposals include Integrated Cargo Terminal (ICT) at the Imphal International Airport, Modernisation of infrastructure facility for marine exports in Karnataka and construction of a new ‘Standard Design Factory’ building at Cochin Special Economic Zone (SEZ).
Background According to Department Related Parliamentary Standing Committee on Commerce March 2016 report, deficient infrastructure severely hurting the competitiveness of India’s exports.
Moreover, the manner in which infrastructure is being operated in the country is also obstacles to ensure competitiveness in manufacturing of goods and exports.
It is estimated that the logistic cost in India is about 14% of the GDP whereas in advanced economies like United States and European Union, it is 8% and 10% of the GDP respectively.
Besides, certain sectors dependent on logistics lose as much as 2% on sales return due to sub-optimal logistic capability.
An ASSOCHAM study also shows that due to deficient infrastructure, India runs against a disadvantage of about 11% of its trade.
It noted that India can save up to $50 billion if logistics costs are brought down from 14% to 9% of country’s GDP which will also make domestic goods more competitive in global markets.
About Trade Infrastructure for Export Scheme (TIES) The scheme replaces Assistance to States for creating Infrastructure for the Development and growth of Exports (ASIDE), a centrally sponsored scheme to address the needs of the exporters.
Its objective is to enhance export competitiveness by bridging the gap in export infrastructure, create focused export infrastructure and first-mile and last-mile connectivity.
It is being implemented from FY18 till FY20 with budgetary allocation of Rs. 600 crore.
The beneficiaries of the scheme will be all central and state agencies including Commodities Boards, Export Promotion Councils, SEZ authorities and Apex Trade Bodies recognised under EXIM policy of Central Government are eligible for financial support.
Under the scheme, the cost of projects will be equally shared by the Centre and the states in form of grant-in-aid.
In normal cases centre will borne 50% of the total equity in the project. For projects located in north-eastern and the Himalayan region states, Centre may bear 80% of the cost.
It will provide assistance for setting up and up-gradation of infrastructure projects with export linkages like Land customs stations, quality testing and certification labs, Border Haats, cold chains, trade promotion centres, dry ports, export warehousing and packaging, SEZs and ports/airports cargo terminuses.