Submission #100

Submission information
Submitted by Anonymous
30 June 2016 - 5:52pm
The Challenges of Import-Export Sector

This narrative details experiences of working in the highly controlled domain of imports and exports before 1991. Imports and exports were governed by the archaic Imports and Exports Control Act (1947), a law that was obsolete and unresponsive to the evolving international economy. The fear of dependency led to the pursuit of discouraging imports and attaining self-reliance. This overlooked a fundamentally symbiotic relationship between imports and exports and was detrimental to the technological advancement of Indian industry. The narrative highlights the punitive control exercised by municipal agencies in the governance and regulation of exports and imports. One of the key contributions of the 1991 liberalization reforms was the repealing of the act and the drafting of a new trade policy: the Foreign Trade (Development and Regulation) Act, 1992.

My name is Mr. Fakhri Motiwala. I was born in Mumbai on 27 October, 1952. We were born in a business-class family. My father had a business in Bombay in the wholesale industry. At that time he was dealing in artificial pearls and needles, which were mainly imported goods. And when our business licenses got cancelled, we switched over to glass beads, which had a very wide range. We used to get it from North India from towns like Sarangpur, Mathura, and Firozabad. So after my school ended, I started doing my business, from around 1971 till about a few years ago we were doing our business. In the beginning we were exporting glass beads and handicraft items and in about 1982 we changed our business to finished plastic goods which were sourced from Bombay itself. That is, in short, what I’ve come through. We did not have any major bureaucratic hurdles to face because we were in wholesale business. So we never really encountered any licensing authorities. But the only time the bureaucracy came in was when we were exporting our products abroad. There was a lot of trouble in exporting goods. If we exported goods at a cheaper price, the customs department used to ask us, why is this so cheap? The other exporters are selling at a higher price. So I used to say, that different exporters sell different products, so there will be a difference. But they rarely agreed. So, that hurdle was there. We also had to get licensing of plastic products which we were selling. There were a lot of formalities and we never used to get our benefits in time. Those are a few things. Plus, there was no infrastructure. In our export-import business, there was no infrastructure at all. In our wholesale business, we could easily distribute goods to other parts of the country. Gujarat, Madhya Pradesh, the South. But the problem our export business faced was two. One was with the municipal authorities.

The second was with the police and also with the “goondas”. The area we worked in was very well known for these problems. The police also posed a problem because they always told us that we were breaking the rules. Another thing is that space in Mumbai is at a premium. So, sometimes we had to keep our goods outside our shop and the Municipal van used to come and take away these goods. So we faced daily harassment. The only challenge was the interference by these three or four agencies: police, municipality, sales tax department. It was like a sword hanging on your head. We could never do business freely. There were so many laws. Even if we wanted to store goods, we had this funny system that we were given only some amount of space to store our goods. Bombay Establishment Rules, Labor Rules hindered our business. Even the labor union posed problems. If we fired a worker who was stealing goods, or not working well we had to then face the unions, who wanted to extort us. Those were the main challenges. Now, there is much less interference from these authorities. Now they don’t bother so much. Now the only problem is space and lack of infrastructure. Now if you go to our shop in Crawford Market, it’s difficult even to walk till there. The major impact of liberalization was that a lot of variety of goods from Southeast Asia (Malaysia, Indonesia, Thailand, and Hong Kong, China) has flooded our markets. The variety is tremendous. Before, we could not import very easily. It was quite costly for us. But now because everything has opened up, and they have rested restrictions like custom duties, a lot of goods are coming in from abroad which was earlier not possible. At that time, if there were 500 varieties of goods which we could import, now it is 10,000.We only used to sell plastic goods earlier. Plastic goods are made only from plastic raw materials. Before India got her capability to manufacture, 50% of the raw material used to come from abroad. Very few people were there who could send the raw material. Now, that is not the case. Today even local manufacturers can source their goods directly. Before, they had to go to intermediaries. Now it’s easier to manufacture and sell the goods, even though there is more competition today than before. Earlier, every shopkeeper like us had a monopoly on certain items because there was no competition. So business has become tough. But, whenever the government regulates anything, it is never good. Except is some cases like medicinal products, there government role is to lower the price of the medicines and make it affordable. But that is it. The more liberal a country is, the easier it is do business. And the competition which has come has benefitted everybody. So it is better if the country keeps liberalizing.

Already 75-80% of liberalization has happened. It has certainly made a lot of difference because when you increase businesses, increase competition, and when new industries come in it is benefitting the common man. They get more jobs, compared to earlier. Earlier, they were restricted to agriculture, textile. But that is not the case anymore. The common man is better off. I really don’t think income equality has increased as it is widely said. It is a question of a given time and period. The population has increased a lot as well. So you see a lot more poor people. You feel they are more. But percentage wise, they have decreased. They have got the benefit of infrastructure, communication, less harassment and more transparency. So the common man has definitely benefitted.

The story was collected by IndiaBefore91 fellow Praneet Jaswani, and edited by Simran Uppal, Intern for IndiaBefore91.

Fakhri Motiwala
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