Fifty percent of exports to free ports examined physically: FIEO

Sai Nikesh | The Dollar Business Even as the Government of India (GoI) in its Union Budget 2015 announced strict and stringent measures to curb money laundering, sources said a surge in trade between India and the United Arab Emirates during the past few years has been under intelligence watch. Endorsing the same, Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), when contacted by The Dollar Business said, “We have been given to understand that 50% of all consignments exported to Free Ports like Dubai are physically examined. If that be the case, any mischief cannot go undetected for a long time.” However, there is a need to strike a nice balance, so that while revenue interests are safeguarded, genuine transactions are not delayed. Each day delay at the ports add to about 0.5% of Free on Board (FOB) value of exports, added Sahai. Customs need to fine tune its risk-based parameters for Risk Management System (RMS) to detect such cases, he said. When The Dollar Business sought his opinion on GoI’s recent amendment towards inclusion of Customs Act 132 under predicate cases of Prevention of Money Laundering Act (PMLA) in order to curb the trade-based illegal transactions, Ajay Sahai said, “FIEO has always supported genuine and bonafide exports. Therefore, any measure to tackle frivolous exports is most welcome.” However, we have to see that such provisions are not used to harass the genuine exporters. Since only cases of forged documents or false declarations would be covered under PMLA, bonafide exporters should not be worried, he opined. Earlier in 2014, M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) had also said, “Dubai, being one of the most important hubs for exports to other parts of the world, FIEO has already brought to reality its vision of setting up a warehouse in Sharjah in 2008, which the Indian exporters have been using as a base to promote their trade to other destinations around the world very effectively.” UAE is a major destination for Indian goods and a strategic re-export market for India. According to FIEO, UAE is a gateway to several regions including Africa, West Asia and Europe and collectively represents $84 billion business. In FY2013-14, bilateral trade between the two countries stood at around $59.5 billion which is up around 37% from $43.46 billion in FY2009-10, but down about 21% from FY2012-13. According to Ministry of Commerce trade statistics, UAE’s share of Indian imports in dollar terms has been gradually increasing over the years- 2002-03(1.5%), 2003-04 (2.6%), 2004-05 and 2006-07 (4.16%), 2007-08 (5.3%), 2008-09 (7.8%), likewise and it finally came down at a balanced share of around 6% during 2013-14 and 2014-2015 (Apr-Dec). Coming to UAE’s share of Indian exports, in 2002-03 (6.3%), 2003-04 (8%), 2004-05 (8.7%), 2005-06 (8.3), 2006-07 (9.5%), 2008-09 (13.2%) and finally settled at 9.7% in 2013-14 and 10.56% in 2014-15 (April-Dec). Of all the above years, a real trend change/surge in UAE’s trade share with India’s took place during 2008-09, where the imports rose to 7.8% from 5.3% of its previous year and exports to 13.2% from 9.5% year-on-year.  

This article was published on March 09, 2015.