This is despite the global challenges of falling global aggregate demand, the economic downturn in the USA, the UK, and Japan, geopolitical rivalries, global supply chain realignment, and the Red Sea-induced global shipping disruptions.

In 2023-24, India exported to 115 out of 238 countries. A key takeaway has been that over the past two years, India’s exports of labour-intensive goods have declined. 

The export share of textiles, garments, leather products, marine, gem and jewelry dropped from 29.8 per cent to 19.5 per cent from 2018 to 2023. Though the reasons can be market access barriers etc, it is worrisome since a large number of semi-skilled and unskilled workers are engaged in these sectors.

The Ministry of Commerce and Industry has set up an ambitious export target of US $1 trillion by 2030. To achieve this, it is placing a lot of emphasis on signing trade agreements with the United Kingdom, European Union, Canada and Middle East countries.

Among the many reasons why the trade pacts are signed: they also address market access barriers, particularly non-tariff barriers, such as sanitary and phytosanitary measures (SPS), and technical barriers to trade (TBT). But before we sign more trade deals with countries, a set of structural changes are required in domestic trade promotion institutions to shore up exports growth.

Though the NITI Aayog and Indian Institute of Foreign Trade have studied the institutional framework of export promotion councils (EPCs) and their performance at all levels, it is unclear if the studies proposed significant reforms in the institutional design and structure of EPCs.

There is a need to overhaul EPCs to make them more competitive, democratic, inclusive, and participatory. In this realm, four areas deserve attention – governance structure, overlapping product classification, lack of dynamism, and integration of EPCs of states.

A Family Concern

First of all, the EPCs’ governance structure needs to be revamped to enhance functioning and efficiency.

This would require reforms in their by-laws, electoral process, the formation of committees and sub-committees, and clear and well-defined deliverables from each of them in India’s trade promotion imperatives.

Barring a few, EPCs operate like family institutions where family members or extended relatives find space in governing councils. 

This not only compromises the democratic set-up of government-supported entities but also undermines the inclusive participation of industry at large. There is a need to develop a system that introduces transparency and accountability to the institutional architecture of EPCs. 

The function of EPCs should go beyond business-as-usual scenarios and focus on research-supported and competition-based advisory and facilitative roles to enhance India’s trade promotion efforts.

Further, EPCs should not work in silos but form a consortium to foster an enabling business environment for start-ups and new entrepreneurs through training and capacity building, market identification, handholding, and participation in international trade fairs and exhibitions.

Product Classification Confusion 

Overlapping product classifications are a major concern in defining the responsibilities and accountability of EPCs.  

They often compete in terms of product classification, according to the Harmonised System (HS). For example, brass locks/handles are classified as engineering products but are also considered a handicraft product. 

The lack of jurisdictional boundaries in classification of products leads to information asymmetries, which, in turn, creates an unviable dilemma for exporters in classifying products and coordinating with EPCs.

Furthermore, the World Customs Organization (WCO) updates HS at five-year intervals, shifting products from one chapter to another chapter or one tariff heading to another tariff heading. These updates are not considered by EPCs.

Therefore, it is important for the Ministry of Commerce and Industry to stipulate clear guidelines and directives for the classification of products at the HS-level and their regular updates.

Trapped In The Old World 

A majority of EPCs were established in the late 1960s and the 1970s. They are not only outdated but adhere to conservative business practices and their lack of dynamism remains a major challenge.

EPCs hardly understand the intricacies of the ever-changing nature of global trade, which has become much more complex because of geopolitical tensions, global supply chain disruptions, and economic nationalism. 

To promote internal dynamism in the functioning of EPCs and make them more relevant to 21st-century trade, organisational unions in EPCs could be abolished since they often create impediments to reforms. Further, they also foster inefficiencies, nepotism and corruption.

Introducing dynamism through granular reforms in close consultation with the government and relevant stakeholders is vital to keep them relevant.

State governments are now actively participating in boosting exports. They are establishing state export promotion councils to support entrepreneurs to venture into export business.

For example, the Uttar Pradesh government set up the Uttar Pradesh Export Promotion Council to promote state exports. Though trade is a central subject, the integration of state EPCs into the framework of central trade institutions is critical for enhancing their participation in national trade policymaking.

This will help them to keep themselves updated with national and international trade policy developments and engage with businesses in a more productive manner.

Therefore, policymakers need to adopt a holistic approach to drive crucial reforms in EPCs to enhance their efficiency in rendering quality services. It is hoped the Commerce Ministry takes note of the institutional reforms possible in EPCs and acts on them. 

Such changes can help achieve the export target of US $1 trillion by 2030 and will be in consonance with the vision of Viksit Bharat by 2047. 

(The writer is Associate Professor, Jindal School of Liberal Arts and Humanities, O.P. Jindal University. Views are personal)