Trade Facilitation, Information Technology and SMEs: Emerging Evidences from India

Sachin Chaturvedi
JEL codes: 
Discussion Paper # 154

This paper look into the key issues concerning trade facilitation and SMEs, particularly how information technology related measures have influenced SMEs. India undertook focused and dedicated trade facilitation (TF) initiatives for improving infrastructure and the regulatory regime dealing with its external sector. Information technology (IT) and information technology enabled services (ITES) are prominently placed centre-stage of the trade process reforms.
Despite full automation of the cargo clearance process, constant personal follow-up at various stages is still needed, which small and medium enterprises with a low volume of trade find it difficult to pursue. This leaves SMEs with very little option but to rely on CHAs, which has its own implications for transaction costs. Moreover, in India some of the key legislations are also not SME friendly. For instance, the customs automation programme does not distinguish between small and large players, despite SMEs contribution in Indias trade being consistently above the 30 per cent mark.