INDEX

Sr. No.

Particulars

Page No.

01.

LITERATURE OF REVIEW

06

02.

METHODOLOGY

09

03.

WHAT IS NON-TARIFF
BARRIERS?

10

04.

DEFINITIONS

11

06.

NTBs WITH RESPECT TO

INDIAS EXPORTS

13

07.

TYPES OF NON-TARIFF
BARRIERS

21

08.

ISSUES ABOUT NONTARIFF BARRIERS

28

09.

35

10.

EXAMPLES OF NONTARIFF BARRIERS

CONCLUSION

11.

SUMMARY

38

12.

BIBLIOGRAPHY

40

36

04. NTBs WITH RESPECT TO INDIAS

EXPORTS
To European Countries
Exports of textiles and textile articles, vegetable products, prepared foodstuff,
beverages and footwear face the highest incidence of NTBs and in almost all
countries of the EC. These items contribute 21, 13, 11 and 2 per cent of India's
total exports to the EC respectively and having significant revealed comparative
advantage in the EC in 1983. Other commodities exported by India to the EC
having revealed comparative advantage and subject to various NTBs are:
natural or cultured pearls, raw hides and skins, leather and leather goods and
live animals and animal products accounting for 2, 9.5 and 2 per cent of Indian
exports to the EC respectively. In Greece almost all the items of India's exports
were subject to import deposits.
Exports of Textiles and textile articles account for more than a third of India's
exports to the EC and have been growing rapidly. In particular India's exports of
garment and cotton textiles have increased enormously in 1990. Export of
garments subject to quota increased by 38 per cent as against 72 per cent
increase in non-quota garments. Export of cotton textiles subject to quota
increased by 92 per cent as against 45 per cent increase in non-quota exports.
In spite of numerous NTBs, India's export of textiles and textile articles has
increased in terms of its share in the EC market from 1.6 per cent in 1983 to 2.1
in 1990 though there was a declining trend in between 1983 and 1987. The

satisfactory growth can partly be explained by the high revealed comparative

advantage in this category.
Also, it appears that quotas have not, been a binding constraint to India's exports
in these years as the quota for almost all textile items were underutilised before
1990. In 1990, however, India could reach her quota level and then exports of
textiles would be constrained by the rate at which the quota is increased.
Natural or cultured pearls are the second most important Indian exports. Their
share in Indian exports to the EC fell from 14.38 per cent in 1983 to 11.34 in
1987 but subsequently increased to 13.39 percent in 1990. India's share in the
EC market has increased from 1.84 per cent in 1983 to 2.66 per cent in 1990.
The share of exports of vegetable products from India has been continuously
falling from 11.6 per cent of India's exports to the EC in 1983 to 9.5 per cent in
1987 and to 5.6 per cent in 1990. The share of India in the EC market has
declined from 0.8 per cent to 0.6 per cent during the eighties. This item is the
second worst affected by NTBs. Almost all countries in the EC, except UK and
Ireland, resort to various NTBs at least on some of the tariff lines. The NTBs
have been import deposits, license, variable levy, ad valorem charges,
declaration with visa etc.
A study by Sampson and Yeats (1977) estimated the effective rate of protection
on preserved fruits and vegetables to be as high as 262 per cent taking only the
tariffs and levies. While the incidence of NTBs on this category has increased
the tariff rate has not been reduced substantially so that the effective protection
would now be higher. Therefore, the NTBs in the EC seem to be an important
factor in India's declining share of exports of vegetable products.

Prepared foodstuffs and beverages had the fourth rank in Indian exports to the
EC in 1983, but their importance deteriorated to 7th in 1987 and 8th in 1990.
India's share in the EC market also fell from 0.84 per cent in 1983 to 0.24 per
cent in 1987 but has improved to0.38 per cent in 1990. This category is not only
subject to a high tariff of 381 per cent but also various NTBs. The major NTBs
are license for surveillance in France, authorisation depending on certification
in Germany, import deposit in Greece and license, variable levy and variable
component in Denmark. Therefore, in spite of having significant revealed
comparative advantage, India's exports of prepared foodstuffs and beverages
have been declining.
Growth of exports of raw hides and skins, leather and its products has been very
impressive in the 1980s. India's market share in the EC increased from 2.76 per
cent in 1983 to 3.33 per cent in 1987 and further to 4.93 per cent in 1990. The
impressive export performance of this item by India has been backed by its
growing revealed comparative advantage and low tariff rates in the EC. The
tariffs were low and NTBs were not so prevalent.
The other groups of commodities showing increasing exports to the EC are
mineral products, base metals and articles of base metals, footwear and products
of the chemical or allied industries. Incidence of NTBs was marginal in all these
groups except footwear. In footwear, out of 20 tariff lines India's exports in 18
were subject to import deposit from 1985 onwards in Greece. From 1985
onwards 6, 5 and 4 tariff lines were subject to license for surveillance in
Denmark, Italy and Ireland respectively, and 3 tariff lines were subject to
prohibition of indirect imports in UK. In spite of these barriers India's share in
4

the total imports of footwear by the EC has increased from 0.79 per cent in 1983
to 1.30 per cent in 1987 and further to 1.77 per cent in 1990.
Some commodity groups in which declining export shares were observed in the
1980s are works of art; collection pieces, and wood and articles of wood. The
declining share of the former is partly due to high tariff rate. The incidence of
NTBs was only observed in Greece where almost all tariff lines were subject to
import deposit from November 1985. Tariffs and NTBs operating against
imports of wood and articles of wood in the EC were marginal.
Commodity groups in which export share remained more or less stable in the
1980s are machinery and machinery appliances, live animal & animal products,
optical & photographic goods, pulp of wood or of other fibrous cellulosic and
arms & ammunition; parts etc. Average tariff rates in these groups of
commodities have been low except for live animals and animal products but the
incidence of NTBs gives a mixed picture.
Thus we see that application of NTBs to regulate the import trade of EC has
come as a major obstacle to India's exports to EC. Though it is difficult to link
NTBs to deteriorating export performance universally, in certain commodities
such a link may be at work, viz., vegetable product and prepared foodstuff
whose export performance were bad and the incidence of NTBs was also high.
India, in 1990, has been able to utilise the full quota of textile exports to EC.
The prospect for further expansion of textile exports is possible if quota is
raised.

 To United States
The NTBs facing India's export to the US are seasonal specific tariff, variable
levy, global quota, specific taxes, prohibition (wild life), quota, automatic
licensing, countervailing duties, countervailing investigation, monitoring, and
Multi-Fibre Arrangement (MFA). Incidence of NTBs measured by coverage
index reveals that 35 percent of India's exports to the US were subject to NTBs.
On the whole 33 per cent of America's imports from the rest of the world were
subject to NTBs in 1983. This indicates that India's exports to the US face
higher NTBs compared to the average.
There were thirty one categories which were subject to various NTBs in the US
of which ten items face more than one NTB. Non-tariff interventions were the
highest in the textile group which were subject to Multi-Fibre Arrangement
(MFA), (nearly, all the textile categories are subject to MFA). Among the major
textile items, made up articles and garments were mostly subject to MFA, the
coverage of which had been as high as 94 per cent and 74 per cent respectively.
The other major categories subject to NTBs were fresh fruit and nuts excluding
oil nuts, manufactures of leather and works of art, collectors, pieces and
antiques. But the coverage and frequency of NTBs in these categories were very
low. Other categories which were subject to various NTBs in the US cover a
negligible proportion of India's export.

There are three categories of export which were entirely subject to NTBs in the
US. These items are chocolates and other food preparation containing cocoa,
structures and parts of structures of iron and steel or aluminium and clothing
accessories of textile fabrics. These were subject to country quota and in each
category India only exported $1000 in 1983.
For India footwear is an important potential export item. However, this item was
subject to countervailing investigation and monitoring from 1981 to 1983. After
the termination of these NTBs in 1983, the share of footwear in India's total
exports to the United States increased from 0.5 per cent in 1983-84 to 1.2 per
cent in 1986-87. Thus, the impact of NTBs as a constraint to export growth is
clearly visible in this case.
The trade restraining impact of these measures is further evident in case of
exports of leather manufactures. Part of the exports of leather manufactures
were subject to investigation and monitoring in the US up to 1983. After
complete elimination of these restriction exports of leather manufactures grew
from 2.1 per cent of total Indian export to the US in 1983-84 to 2.6 per cent in
1985-86.
The impact of countervailing duties on Indian exports of tubes, pipes and
fittings of iron or steel is evident when it was imposed in January 1986 and the
share of this category fell from 0.77 per cent to .31 per cent in 1986- 87.

 To Japan
Japan had been taking resort to various non-tariff trade restrictive measures to
regulate its import trade. These include quantitative restriction in the form of
global quota, health and safety regulations, import authorisation, licensing, state
regulations, import pricing etc. Most of the categories had high incidence of
NTBs. It appears that health and safety regulation is the most widely used form
of non-tariff restriction in Japan. Out of 467 tariff lines which India exported in
1983, 127 were subject to health and safety regulations. These regulations have
been widely applied to imports of food and live animals, beverages, raw hides,
skins, crude fertilizers and crude minerals, crude animal and vegetable
materials, organic chemicals, dyeing stuffs etc.
The second most widely applied non-tariff restriction is import authorisation.
Forty six tariff lines were subject to this restriction in 1983. These measures
were mainly used to control import of textiles and textile articles. Among the
textile categories, textile fabrics were entirely under import authorisation.
The third most widely used non-tariff restriction in Japan was the global quota.
Out of 467 tariff lines under which India exported in 1983, 31 tariff lines were
subject to global quota. Global quota were imposed on products such as fruits
and fruit preparations, certain categories of fish items, beverages, non-ferrous
base metals, leather, floor coverings etc.
The other barriers applied to a few tariff lines. Japan was controlling import of
certain items such as beverages and tobacco and certain categories of crude
vegetable materials through state monopoly of imports and provision of sole
import agency.
8

Six tariff lines in the product groups crude vegetable materials, skins, feathers
and other parts of birds and products of zoological and metallurgical interest
and apparel & clothing accessories were subject to prohibition. Importation of
cocoa leaves, Jaborandi leaves etc. natural gums and vegetable saps and
extracts; certain inorganic compounds were subject to import permit together
with other restrictions. A few items, such as sheep and goat skin, leather,
footwear of leather etc., were subject to tariff with quota. Import of certain
categories of fertilizers was subject to license.
The overall coverage of India's exports to Japan subject to various NTBs in
Japan is 51 percent as against 39 percent of world exports to Japan. Most of the
items subject to NTBs have coverage of 100 per cent.

05. TYPES OF NON-TARIFF BARRIERS

There are several different variants of division of non-tariff barriers. Some
scholars divide between internal taxes, administrative barriers, health and
sanitary regulations and government procurement policies. Others divide nontariff barriers into more categories such as specific limitations on trade, customs
and administrative entry procedures, standards, government participation in
trade, charges on import, and other categories.
The first category includes methods to directly import restrictions for protection
of certain sectors of national industries: licensing and allocation of import
quotas, antidumping and countervailing duties, import deposits, so-called
voluntary export restraints, countervailing duties, the system of minimum
import prices, etc.
10

Under second category follow methods that are not directly aimed at restricting
foreign trade and more related to the administrative bureaucracy, whose actions,
however, restrict trade, for example: customs procedures, technical standards
and norms, sanitary and veterinary standards, requirements for labelling and
packaging, bottling, etc.
The third category consists of methods that are not directly aimed at restricting
the import or promoting the export, but the effects of which often lead to this
result.
The non-tariff barriers can include wide variety of restrictions to trade. Here are
some examples of the popular NTBs.

Licenses
The most common instruments of direct regulation of exports are licenses and
quotas. Almost all industrialized countries apply these non-tariff methods.
The license system requires that a state (through specially authorized office)
issues permits for foreign trade transactions of import and export commodities
included in the lists of licensed merchandises. Product licensing can take many
forms and procedures.
The main types of licenses are general license that permits unrestricted
importation or exportation of goods included in the lists for a certain period of
time; and one-time license for a certain product exporter to. One-time license
indicates a quantity of goods, its cost, and its country of origin and in some
cases also customs point through which export of goods should be carried out.
11

The use of licensing systems as an instrument for foreign trade regulation is

based on a number of international level standards agreements. In particular,
these agreements include some provisions of the General Agreement on Tariffs
and Trade (GATT) and the Agreement on Import Licensing Procedures,
concluded under the GATT.

Quotas
Licensing of foreign trade is closely related to quantitative restrictions quotas
- on imports and exports of certain goods. A quota is a limitation in value or in
physical terms, imposed on import and export of certain goods for a certain
period of time. This category includes global quotas in respect to specific
countries, seasonal quotas, and so-called "voluntary" export restraints.
Quantitative controls on foreign trade transactions carried out through one-time
license.
Quantitative restriction on imports and exports is a direct administrative form of
government regulation of foreign trade. Licenses and quotas limit the
independence of enterprises with a regard to entering foreign markets,
narrowing the range of countries, which may be entered into transaction for

12

certain commodities, regulate the number and range of goods permitted for
import and export.
However, the system of licensing and quota imports and exports, establishing
firm control over foreign trade in certain goods, in many cases turns out to be
more flexible and effective than economic instruments of foreign trade
regulation. This can be explained by the fact, that licensing and quota systems
are an important instrument of trade regulation of the vast majority of the world.
The consequence of this trade barrier is normally reflected in the consumers
loss because of higher prices and limited selection of goods as well as in the
companies that employ the imported materials in the production process,
increasing their costs. An import quota can be unilateral, levied by the country
without negotiations with exporting country, and bilateral or multilateral, when
it is imposed after negotiations and agreement with exporting country. An
export quota is a restricted amount of goods that can leave the country.
There are different reasons for imposing of export quota by the country, which
can be the guarantee of the supply of the products that are in shortage in the
domestic market, manipulation of the prices on the international level, and the
control of goods strategically important for the country. In some cases, the
importing countries request exporting countries to impose voluntary export
restraints.

Agreement on a "voluntary" export restraint

In the past decade, a widespread practice of concluding agreements on the
"voluntary" export restrictions and the establishment of import minimum prices
imposed by leading Western nations upon weaker in economic or political sense
13

exporters. The specifics of these types of restrictions is the establishment of

unconventional techniques when the trade barriers of importing country, are
introduced at the border of the exporting and not importing country. Thus, the
agreement on "voluntary" export restraints is imposed on the exporter under the
threat of sanctions to limit the export of certain goods in the importing country.
Similarly, the establishment of minimum import prices should be strictly
observed by the exporting firms in contracts with the importers of the country
that has set such prices. In the case of reduction of export prices below the
minimum level, the importing country imposes anti-dumping duty, which could
lead to withdrawal from the market. Voluntary" export agreements affect trade
in textiles, footwear, dairy products, consumer electronics, cars, machine tools,
etc.
Problems arise when the quotas are distributed between countries because it is
necessary to ensure that products from one country are not diverted in violation
of quotas set out in second country.
Import quotas are not necessarily designed to protect domestic producers. For
example, Japan, maintains quotas on many agricultural products it does not
produce. Quotas on imports is a leverage when negotiating the sales of Japanese
exports, as well as avoiding excessive dependence on any other country in
respect of necessary food, supplies of which may decrease in case of bad
weather or political conditions.
Export quotas can be set in order to provide domestic consumers with sufficient
stocks of goods at low prices, to prevent the depletion of natural resources, as
well as to increase export prices by restricting supply to foreign markets. Such
restrictions through agreements on various types of goods allow producing
countries to use quotas for such commodities as coffee and oil; as the result,
14

prices for these products increased in importing countries. A quota can be a

tariff rate quota, global quota, discriminating quota, and export quota.

Embargo
Embargo is a specific type of quotas prohibiting the trade. As well as quotas,
embargoes may be imposed on imports or exports of particular goods,
regardless of destination, in respect of certain goods supplied to specific
countries, or in respect of all goods shipped to certain countries.
Although the embargo is usually introduced for political purposes, the
consequences, in essence, could be economic.

Standards
Standards take a special place among non-tariff barriers. Countries usually
impose standards on classification, labelling and testing of products in order to
be able to sell domestic products, but also to block sales of products of foreign
manufacture. These standards are sometimes entered under the pretext of
protecting the safety and health of local populations.

Administrative and bureaucratic delays at the entrance

15

Among the methods of non-tariff regulation should be mentioned administrative

and bureaucratic delays at the entrance, which increase uncertainty and the cost
of maintaining inventory.

Import deposits
Another example of foreign trade regulations is import deposits. Import deposits
is a form of deposit, which the importer must pay the bank for a definite period
of time in an amount equal to all or part of the cost of imported goods.
At the national level, administrative regulation of capital movements is carried
out mainly within a framework of bilateral agreements, which include the
procedure for the admission of investments and investors. It is determined by
mode, order of nationalization and compensation, transfer profits and capital
repatriation and dispute resolution.

Foreign exchange restrictions and controls

Foreign exchange restrictions and foreign exchange controls occupy a special
place among the non-tariff regulatory instruments of foreign economic activity.
Foreign exchange restrictions constitute the regulation of transactions of
residents and non-residents with currency and other currency values. Also an
important part of the mechanism of control of foreign economic activity is the
establishment of the national currency against foreign currencies.

16

06. ISSUES ABOUT NON-TARIFF

BARRIERS
Buyers nomination of the suppliers testing & certification
agencies
Buyers ask the exporter to use accessories from the suppliers and get
certification from the agencies, nominated by them which are usually outside
the exporting country and hence, more time consuming and costly. Buyer
nominates institutions/agencies such as- Singapore for labels (in Coimbatore,
most of the buyers send the model label and instruct exporters to manufacture
accordingly); Hong Kong and China for the purchase of accessories such as zip,
17

zip puller, handbags, badges, plastic strings, tape (cotton), cotton support
(garment) and fabrics; and flammability test from countries other than India
such as Canada and China. In such cases buyer normally specifies the brand for
a particular accessory and vendor for the same.
Many a times exporters need to pay royalties for the labels used, for instance
Adore Apparels, one of the exporters from Bangalore paid a royalty of nearly 22.5 Lakh/year for using the labels of Oxbow, Tom Tailor, C.K. jeans and Jules.
Exporters do not have any bargaining power when buying from the nominated
suppliers and getting certificates from specific testing agencies which often
increases the cost of production, making them less competitive in relation to
their counterparts. However, exporters do not lose anything as all costs are
included in product price however it makes Indias exports less competitive due
to higher price. Additionally, exporters are unable to bargain with supplier
because suppliers are assured of getting their orders. Agents are also nominated
by the buyer that exporters essentially have to route their goods through these
agents.

Less competitive due to NTBs

Indian exports are less competitive in price terms as compared to Bangladesh,
China, Sri Lanka and Pakistan due to various export related NTBs. The prices of
many export items from these countries are lower than India due to cheap
labour, cheap and easy availability of raw material, sufficient power and cheap
credit and/or due to other benefits they receive from importing country;
however, Indian exporters usually face price bargaining similar to other
countries.
Nevertheless, India is unable to offer similar prices due to comparatively high
input cost. Countries such as Vietnam and Cambodia have become good export
18

centres mainly due to proximity to China and are providing tough competition
to Indian exports. Costs of Indias exports are higher due to bottlenecks in
custom procedures, high transit cost due to inadequate port infrastructure, nonharmonization of working days, high turnaround time of Indian shipments,
unavailability of quality raw material in time (quality cotton, pantone cards,
dying facility especially for nylon and polyester), power shortage/costly power,
relatively high credit interest rates, higher wages, labour unrest and problems of
contractual labour.
Big Indian exporters procure raw material like cotton from other countries such
as China, Ireland, Korea and Japan to provide delivery in time and as per
desired quality. To avail benefits such as duty free status, cheap labour, finance
and power etc. similar to other exporters and to compete with them, few Indian
firms have established manufacturing facilities in Bangladesh and exporting raw
material from India which is then processed and exported from there.

Many Indian exporters also have established their offices in USA and EU in
order to export on Landed Duty Paid (LDP) basis. In LDP shipment procedure,
firms factory based in India supplies goods to its foreign office (i.e. US or EU)
which subsequently sales to the buyers in abroad. This improves firms market
power, helps in compliance with standards and overcomes export related
problems.

Discriminatory treatment
Main countries which discriminate against Indian exports are USA, EU, Canada
and Germany. Exporters reported that Sri Lanka is still getting duty-free entry of
19

goods under the EU Generalised System of Preferences (GSP) plus program,

granted in 2005 to help Sri Lanka to rebuild after the 2004 Tsunami; and
Vietnam also gets GSP benefit. USA provides duty free access to Jordon, Egypt,
Bahrain, Ireland and Caribbean countries but not to India. Indias exports face
higher import duty on bed linen, made ups and textile handicraft items in EU
and South Africa than that of competing countries such as China.
Imports from India to Europe attract 4% import duty against GSP while imports
from Egypt are free from any import duty as reported by exporters. Import duty
and other competitive factors increase the landed cost of an Indian product in
the range of about 15-20% which decreases the exporters margin. Additionally,
sometimes even Indian suppliers are discriminated from one to another. There is
specification of the port through which goods are to be shipped, for example
exporters are asked to route their goods through Chennai ports instead of
availing local facilities of Tirupur Inland Container Depot (ICD) which
increases their transport cost.
Also the lead time (to export) given to Indian exporters is less than that of
Bangladeshi and Sri Lankan supplier.

Stringent social compliance measures

Firms usually comply with the buyer requirements and their audits however;
many tough requirements are also put in place to make compliances very
difficult. Such requirements are - provision of cold water or normal water,
seating facilities, canteen facilities, use of metal detectors, ethical issues of
work, test report of drinking water, restrictive chemical norms etc.

20

Insistence on some specific code of conduct regarding social compliance is

reported in Tirupur by buyers such as Kappa and H&M. Similarly, other
measures such as Custom Trade Partnership against Terrorism (CTPAT) are
relatively more rigid than other competing countries such as Bangladesh and Sri
Lanka. Non-compliance with any of such measure results into the delay in order
processing and extra cost through additional audit. Labour is always in the
lookout to take undue advantage of such measures in order to reduce their work
levels which ultimately reduces the overall productivity.

Demand for discounts through import detentions

Detention generally does not take place if the order is processed through the
nominated forwarders/agents of buyer. However, sometimes chemical tests
failed even when the chemicals were procured from nominated supplier and in
such cases exporter is penalized.
In case of any detention, buyer always tries to bargain for discounts on
payments on the detained goods imposing stringent quality norms or citing any
other reason; and cost incurred in such incidences is nearly 5-20 percent of the
consignment value. Exporters either have to provide huge discounts to importer
on detained goods or have to dispose of such goods in domestic market at paltry
price.
For example, C&A buying KG, one of the buyer from Germany had asked for a
discount of about 10-20 percent to accept the goods rejected on the ground of
chemical test failure of sewing thread from Sowkar Textiles, Tirupur although,
chemicals were bought from nominated suppliers. In some cases, such losses
may be partially recovered by future order which is very uncertain and largely
depends on the buyer-seller relationship.
21

 NTBs to promote efficiency and competitiveness

One of the important observations from field was that exporter feels that NTBs
in the form of quality and standard requirements are good for Micro, Small and
Medium Enterprises (MSMEs) as these firms increase their competitiveness
during the process of meeting standards. NTBs promote internal competition
among exporters thereby increasing firms efficiencies and competitiveness.
For instance, establishment of a water treatment plant is a capital expenditure
which is mainly for environmental requirements however at the same time it
saves regular expense on water which varies according to the firm size.
Although big and small exporters have divergent view on this issue, some, if not
all, of the exporter feels that NTBs are one of way to maintain the confidence of
high end customers.

NTBs as marketing and promotional tools

Surprisingly, the multiple certifications are seen as marketing and promotion
tools rather than NTBs by few exporters. Exporters opined that getting
certificate is costly (i.e.1500-2000 US$/certificate) but it may bring good
business opportunities and benefits outweigh cost especially in long run.
Though there are multiple standards and certification bodies in the recent past
which are now getting very organized e.g. formation of SEDEX Supplier
Ethical Data Exchange. Once a member is registered with SEDEX, it can
display all its certifications which can be viewed by all the buyers across the
globe. This could overcome social compliance audits requirement by each buyer
repetitively.
22

Ethical and social NTBs if implemented in true spirit would result in creation of
a better and competitiveness business atmosphere. Exporters argue that one time
investment may result into fivefold return; and NTBs should be used as business
and marketing tool. In Coimbatore, majority of exporters are not worried about
NTBs as they feel that some of the certifications are desirable and it also helps
them to differentiate their product from the competitors. Obviously, standards
increase the product quality which is always good from customers viewpoint.

Export procedures and related NTBs

Its not that only importing country NTBs but also Indias export procedure and
related NTBs are also hampering the trade. The commonly cited problems are
procedural delays, lack of convergence in various export promotion schemes
and bodies, vague government notification, non-harmonization of working days,
lack

of

infrastructural

facilities

at

ports

etc.

For example, some Middle East countries such as Egypt and Oman ask for
legalization of export documents which is first done at Indian chamber of
commerce, then at the embassies of destination country. However, their
embassies are not working on Friday while there is official holiday in India on
Saturday and Sunday therefore clearance is possible only during four days in a
week which delays the shipment resulting into a delay cost of about 250USD.
This cost is charged by the bank for honouring the documents in case of any
delay. Similarly preparing export document and legalizing them for exporting to
Argentina and Mexico is more complex and time consuming where exporter
may end up spending 1-2 months in the whole process.

23

The port facilities are also not good, for instance for South Indias exporter
mother vessel facility is available only at either Colombo or Mumbai port which
results into transhipment of goods leading to higher transportation costs.
Moreover local exporters are preferred in providing space in mother vessel if
shipment is done through Colombo port. Current turnaround time is about 100
days which should be curtailed to 60 days in order to ensure in time delivery.
Exporters demanded removal of all export related NTBs with immediate effect
and streamline the export procedures.

07. Examples of Non-Tariff Barriers

Non-Tariff Barriers to trade can arise from:
Import bans
General or product specific quotas
Complex/discriminatory rules of origin

24

 Quality conditions imposed by the importing country on the exporting

countries
Unreasonable/unjustified packaging, labelling, product standards
Complex regulatory environment
Determination of eligibility of an exporting country by the importing country
Determination of eligibility of an exporting establishment (firm, company)
by the importing country
Occupational safety and health regulation
Employment law
Import licenses
Restrictive licenses
Export subsidies
State subsidies, trading, state ownership
Fixation of a minimum import price
Product classification
Quota shares
Over-valued currency
Inadequate infrastructure
25

 Corrupt and/or lengthy customs procedures

08. CONCLUSION
Unexpectedly, the NTBs are not only seen as marketing and promotional tool
but also they promote efficiency and competitiveness within the industry.
Further, financial crisis has reduced the export orders and the impact is more
severe on high end fashion garments where product and market diversification
is unlikely due to ever changing customer preferences.
Under the WTO India is persuaded to liberalise the economy and join the
process of globalisation. It has been asked to reduce the level of tariffs, open the
markets for agricultural products, provide more access to foreign investment,
allow the intellectual property rights to foreigners including multinationals and
finally open the service sector for foreign companies.
India is worried about the ability to compete in an increasingly open global
market. With technology, resources, technical know-how having concentrated
with advanced countries; it feels it is fighting a losing battle. The developed
countries under the WTO system have the advantage of extended market and
cheap labour for their economic activities.
The world economic order under GATT and subsequently under WTO
according to the developing countries is titled against them. In spite of the
safeguards provided, the developing countries like India feel their domestic
industries will not have the required protection.

26

To deal with trading partners on an equal footing and force them to concede
bilateral 24 concessions, India needs to create its own mandatory standards and
testing requirements which will be in consumer interest also. The industry needs
to work as a team with the government to tackle the NTBs at bilateral and
multilateral level; and government may consider the reasonable demands of
industry which are urgently required to face NTBs. Simultaneously efforts have
to be put on the trade facilitation measures otherwise impact of NTB may
magnify. India is also required to strike a balance of safeguarding their
economies from the new threats and also at the same time prepares them to face
the challenges.

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09. SUMMARY
NTBs can be a problem to export growth and that they are something that the
Government of India should be aware of and concerned with. There are a
number of actions that the Government of India, in association with the private,
can take, to extract a more positive and dynamic private sector response to the
challenges posed by NTBs.
Institutional support, both generic and industry-specific, should be further
developed to create an enabling environment which provides a coherent and
supportive infrastructure to facilitate company compliance with NTBs, both
technical regulations, which are mandatory, and standards, which are
voluntary.

Conformity assessment procedures (that is, ensuring that standards are

complied with, requiring product testing, labelling, etc.) can be facilitated by
government. Larger companies are more likely to be able to provide the
necessary facilities in-house, and the Government of India will thus need to
create an environment rich in infrastructure services targeted specifically at
small and medium sized enterprises (SMEs) which are most vulnerable to
NTBs and least able to deal with their consequences.

29

 The Government should encourage the private provision of certain services

required to improve the capabilities of enterprises to respond positively to
NTBs, in such areas as consultancy services, testing and certification
facilities and quality control issues. An important role for government is to
make industry more aware of the extent and significance of NTBs and to
make small and medium enterprises (SMEs) in particular more aware of the
importance of compliance issues.

Increased government funding and resources for public sector institutions,

such as standard setting bodies (SSBs), will complement the efforts made by
the private sector. Government at all levels must work closely with both Pan
Indian and specific industry associations to encourage the positive
competitive strategies that are so important to Indian enterprises to sustain
existing and develop new competitive advantages.

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31

10. BIBLIOGRAPHY
NON-TARIFF MEASURES AFFECTING INDIAS TEXTILES AND
CLOTHING

EXPORTS:

FINDINGS

FROM

THE

SURVEY

OF

EXPORTERS BY GORDHAN K. SAINI

NON-TARIFF BARRIERS TO TRADE: CASE STUDY OF INDIA VIS-AVIS EC, JAPAN AND USA by MADANMOHAN GHOSH
TARIFFS

AND

TRADE

BARRIERS

IN

RELATION

TO

INTERNATIONAL TRADE, PROCEEDINGS OF THE ACADEMY OF

POLITICAL SCIENCE, VOL. 15, 1993 BY ROORBACH, G.
ECONOMICS OF GLOBAL TRADE AND FINANCE BY JOHNSAN
AND MASCARENHAS
www.usitc.gov/publications/332/pub4107.pdf
www.vu.lt/leidyba//dokumentai/zurnalai/EKONOMIKA/Ekonomika
%2091%202/38-48.pdf
www.tradeportalofindia.com
www.wickipedia.com
www.tradebarriers.org

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