Reforming the export data system

S Venkitachalam

Data in respect of the country’s foreign trade continues to be compiled without any major refinements by the Kolkata-based Directorate General of Commercial Intelligence & Statistics (DGCI&S) for a number of years now. That the data is crucial as it indicates the direction in which the economy moves has been well recognised by the government.

The import figures given out by the customs department to DGCI&S are reliable because of the duty incidence and there is no dispute about it. But the same cannot be said about the export data. The department has nothing at stake as exports do not attract any duty at present. It is not therefore surprising that there is a substantial backlog of the data compiled by the department. And the situation continues. This means work relating to computation of export statistics is not undertaken seriously or systematically. The irony is that we could obtain the latest figures in regard to imports into the USA from the US customs website. But in the case of India’s exports to the USA, there is a backlog of 6-7 months of data reported by DGCI&S.

A recent case is the different growth rates shown by the European Union and the US and the DGCI&S of India’s textile exports to these two major destinations during January-May 2005. The differential growth rate is significant coming as it does after the complete phase-out of the three-decade-old quota regime under the Multi-Fibre Arrangement (MFA) put in place by the industrialised countries. The MFA was replaced by the WTO Agreement on Textiles and Clothing which ended on December 31, 2004.

The growth rate computed by both the EU and the US was substantially higher than that notified by DGCI&S. In fact, this subject figured during discussions in the recently-concluded parliament session. Replying to questions, the textiles minister Mr Shankersinh Vaghela admitted that there was a difference in the data given out by the US and EU and DGCI&S. He even promised to constitute a panel to look into the matter. The DGCI&S has been forwarding the export figures to the commerce ministry every month based on the information provided by exporters to the customs department. But these figures are incomplete as these do not include all the data from all the ports. If data collection is to be improved, it should be done at the level of customs.

At the moment, what is happening is that the customs department while compiling the data relies on the information provided by exporters. There is no way by which it can verify the authenticity of such information - whether it conforms to the Harmonised System of 8-digit classification (HS Line number) which gives the product description. This is because in most cases the person who deals with the department is not necessarily the exporter concerned. The person may be a clearing agent acting on behalf of the exporter who submits the HS line number. The HS line number is different for different export products. It has to be quoted by exporters while offering their goods for shipment. Therefore, the number has to be indicated correctly. If it is given wrongly, it will relate to a product not actually shipped. This will arise in cases where exporters quote the number based on the product description given by their buyers while opening the letter of credit.

There are a few suggestions so that the data compiled by the customs is complete. First, the government should evolve what can be called a ‘standard’ description for every export product. The software in the customs department should be managed in such a way that the description given by exporters corresponds to the standard description. This job can be undertaken by the Director General of Foreign Trade in the commerce ministry or a consultant appointed for the purpose.

This standard description should be made mandatory and have a link with the HS line number. And when the number is punched, the standard description should appear automatically below the HS line number in brackets. This will ensure that the data furnished by customs is correct and that it is transmitted to DGCI&S correctly. Secondly, all the customs ports should be linked to a computer network. At present, all major customs ports are computerised, but there are a few where the entry and exit points are not computerised. At the same time, DGCI&S must ensure that it has received reports from all customs ports. The intention is that it is able to obtain all the data from one place.

Finally, customs statistics should generate two kinds of area network - confidential and non-confidential. The confidential information about export pricing, etc need not be divulged, while the non-confidential part - which gives the trade data - can be made available to interested people by giving them the Electronic Data Interchange (EDI) connectivity on payment. The customs can recover the cost of giving this facility. If these suggestions are seriously considered by the government and implemented, DGCI&S can be gradually phased out. The customs department will remain the only government arm whose export data will be transparent, eliminating delays in compilation.