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Trade Infrastructure for Export Scheme

Trade Infrastructure for Export Scheme

Trade Infrastructure for Export Scheme

After the Assistance to States for Development of Export Infrastructure and Allied Activities (ASIDE) Scheme in 2015, the State Governments have urged and requested the Centre to create export infrastructure. The support from the Central Government is imperative to act as an inducement to the State to channel funds from their increased devolution towards creating export infrastructure. Launched in March of 2017, the Trade Infrastructure for Export Scheme scheme was implemented to enhance competitiveness in export by bridging gaps in the export infrastructure.

Scheme Objective

The critical element of a country’s ability to produce and move goods depends on infrastructure development. A good infrastructure would reduce trade costs substantially. The latest Foreign Trade Policy has targeted a growth in exports to $900 billion, which would make India, by the year 2020, a significant participant in World Trade. To reach this level of growth, there is a need for more affirmative action to create appropriate infrastructure for exports from the country.

The proposed scheme aims to enhance export competitiveness by bridging gaps in export infrastructure, creating export-focused infrastructure, and inducing states to take up more export-oriented projects, including those required for addressing quality and certification concerns. The focus would be to develop an appropriate foundation for the development and growth of exports through the engagement of the Central and State Agencies by extending their assistance.

Scope of the Scheme

The scheme is initiated to provide financial assistance for setting up and upgrading the infrastructural projects with overwhelming export linkages. These export linkages include Border Haats, Land Customs Stations, quality testing and certification labs, trade promotion centers, cold chains, dry ports, export warehousing and packaging, SEZ, and ports/ airports cargo terminuses. Other projects that are considered include last and first-mile connectivity projects that are related to export logistics.

In addition to these, the Department may fund studies related to export logistics that include the identification of infrastructural gaps specific to each sector and mapping assets created.

Projects that are not considered under this scheme are as follows.

  • Projects covered under specific sector schemes such as textiles, electronics, IT, etc.
  • Projects related to general infrastructure projects such as highways, power, etc.
  • Projects where an export linkage cannot be established.

Eligible Agencies

The agencies mentioned below shall be eligible for financial support under this specific Scheme and will be known as the Implementing Agency.

  1. Central Government Agencies, including Export Promotion Councils, SEZ Authorities, Commodity Boards and Apex Trade Bodies that are recognized under the EXIM policy of the Indian Government.
  2. Agencies owned by the State Government.
  3. Joint Ventures that involve any of the Government agencies mentioned above. It should also be noted that the Government agency must have a significant stakeholding in the venture. PPP projects are considered to be eligible as well.

An agency mentioned in the above list must own the facility created under this Scheme and would be responsible for its Operations and Maintenance (O&M).

Documents Required

The documents that are required to be submitted to the Empowered Committee to avail of the benefits of the Scheme are given below.

  1. The prescribed format of the Executive Summary.
  2. Designation of the Head of the Project and the signatory of the Utilisation Certificate by the Head of the Implementing Agency.
  3. Detailed Project Report (DPR)
  4. Recommendation of the Export Commissioner of the appropriate State.
  5. Documents that support the proof of financial closure for the Implementing Agency.
  6. Undertakings by the Head of the Implementing Agency.
  7. Annual reports and Audited Statements of Accounts of the previous two years of the Implementing Agency or the holding PSU.
  8. Any financial assistance from the Department of Commerce in the past, along with the required details of the same, including the details of the ongoing projects under ASIDE/ TIES.

The extent of Financial Assistance

As stated in Annex-A, the Committee is empowered to approve projects/ schemes and would be the final authority to decide on a proposal in question. Mentioned below is the extent of the financial assistance provided under this Scheme.

  1. The Central Government assistance for infrastructure creation will be in the form of a grant-in-aid. This would typically be less than the equity the implementing agency provides or 50 percent of the project’s total capital. In cases of projects located in North Eastern states and the Himalayan States, including Jammu and Kashmir, this grant can go up to almost 80 percent of the total equity.
  2. The grant shall generally be subject to a limit of INR 20 Crores for each infrastructure project.
  3. To calculate the extent of the contribution by the implementing agency, the cost of the land shall not be included in the project’s cost under this Scheme.
  4. Priority would be given to the infrastructure projects that have a significant contribution of stakeholders and bank financing.
  5. The Central Government will not fund recurring expenditure or establishment costs under the Scheme.
  6. The Empowered Committee would finalize the extent of the grants for study related to the identification of infrastructure gaps and mapping of assets in specific sectors.

Submission of Project Proposal

The project proposal to avail the benefits of the Scheme has to be meticulously formulated after surveying in detail and based on the available data. The plan should bring out the identified gaps in the export infrastructure it aims to fill. The project proposal must qualify the factors below to be successful.

  1. The proposal must establish an overwhelming export linkage where credible modalities must be used.
  2. The proposal should fill the gaps in the infrastructure proposed in a way that shows the absence of linkage is impinging upon the industry’s export competitiveness.
  3. The project proposal should indicate the measurable outcomes that are one of the primary criteria for the project’s sanctioning.
  4. The Project Head should be clearly stated in the proposal and certified by the Head of the implementing agency. The authority for the signing of Utilisation Certificates should also be mentioned.
  5. The Implementing Agency would have to prepare an executive summary of the proposal in the format required.
  6. The Implementing Agency would have to prepare a detailed project report covering all the technical, financial, and implementation aspects. This should also include the timelines for completion of the project, including those for achieving financial closure, and the monitoring mechanism that is proposed to be put in place.
  7. All the submitted proposals should indicate the details of Operations and Maintenance of the infrastructure in creation.
  8. The project proposal must be complete with all the required documents ready to be submitted.

The implementing agency may utilize up to 2 percent of the approved grant for appointing consultants and monitoring expenses. The Implementing Agency using its resources, shall bear expenditure beyond the stipulated provisions.

Release of Funds

Disbursement for the project shall be subject to the Implementing Agency after achieving financial closure and the constitution of the Project Monitoring Committee (PMC). The release of the fund would include the following steps.

  1. The funds shall be released to the implementing agency for the approved projects in two or more equal installments.
  2. The agency shall submit a bond to be executed regarding the utilization of the funds granted.
  3. The implementing agency must submit a pre-receipt bill for the funds to be disbursed, along with a certificate stating that it has not indulged in corrupt practices.
  4. The head of the accounts of the Agency would be in charge of the granted funds.
  5. After the approval of the Empowered Committee, the first installment would be released. The second and third installments of the granted funds would be issued based on the recommendation of the Empowered Committee.
  6. The implementing agency shall submit a Utilisation Certificate (UC) for the amounts utilized per the prescribed format.
  7. After furnishing the Utilisation Certificate, Project Monitoring Committee report, and proof of the matching contribution of the implementing agency invested in the funds, the rest of the installments would be released.
  8. Other documents required for the further release of the funds include the Certification of the physical and financial progress by the Project Monitoring Agency related to this Scheme.

Administrative Expenses

The concerned Implementing Agency will meet all the administrative expenses that are related to the implementation of the Scheme from out of their resources. No part of the Scheme funds should be used to meet such expenditures.

Assets

The Agency itself shall own the assets created by the Implementing Agency after the completion of the project. The assets acquired by the Implementing Agency with the Government’s assistance shall not be encumbered, disposed of, or utilized for purposes other than those for which the funds were granted.

A register of permanent and semi-permanent assets acquired partly or wholly out of the funds provided by the Indian Government should be maintained in Form GFR 19. In the case of a cancellation of a project at any given time, all the assets and any unutilized grant shall be returned to the Government of India.

Operation and Maintenance of Assets

The implementing agency shall be held responsible for the Operations and Maintenance of the assets created under the Scheme by collecting user charges from the members. The Agency shall ensure that the services at the facilities formed under the Scheme are extended to the exporters on pay and use basis without any discrimination.

Recall of the Central Grant

The Empowered Committee has the right to recall the Central grant along with an applicable penal interest in the case of an unsatisfactory use of the grant. This includes the compromise with the quality promised or incomplete implementation of the proposed project.

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